NEC unit will pay $20.6m school fraud fine

NEC-Business Network Solutions (NEC/BNS), a subsidiary of NEC America, will pay a $20.6m fine to settle collusion and wire fraud...

NEC-Business Network Solutions (NEC/BNS), a subsidiary of NEC America, will pay a $20.6m fine to settle collusion and wire fraud charges involving a US programme to fund internet use in schools.

Under the E-Rate programme, schools apply for funds to cover cabling, internet equipment and monthly connectivity fees.

NEC/BNS was charged with allocating contracts and rigging bids in violation of the Sherman Antitrust Act at school districts in Michigan, Wisconsin, Arkansas and South Carolina, according to the US Department of Jusstice.

It also has been charged with wire fraud in connection with a scheme to defraud E-Rate and the San Francisco Unified School District.

In the San Francisco case, NEC/BNS inflated bids, agreed to submit false and fraudulent documents to hide plans to install ineligible items and agreed to donate "free" items for which it planned to bill E-Rate.

The company also filed false and fraudulent documents to cut off inquiry into the legitimacy of the funding request. Under the plea agreement, NEC/BNS would pay a $4.7m fine for those crimes.

NEC/BNS also entered into a civil settlement yesterday to provide restitution for the harm caused by its crimes. It will pay $10.3m in cash and provide $5.6m in goods and services to designated school districts as a condition of a three-year probation.

The company is co-operating in a government investigation.

"When we realised we had an issue here, we co-operated with them, we investigated ourselves and we have taken all the appropriate actions to make sure this can't happen again," said Tom Burger, president and chief executive officer of NEC Unified Solutions and NEC/BNS.

Stephen Lawson writes for IDG News Service

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