NEC division guilty of fraud

NEC-Business Network Solutions, a subsidiary of NEC America, is to pay a $20.6 million fine after pleading guilty to charges of collusion and wire fraud in the Federal Communications Commission’s E-Rate program.

NEC-Business Network Solutions (NEC-BNS), a subsidiary of NEC America, is to pay a $20.6 million fine after pleading guilty to charges of collusion and wire fraud in the Federal Communications Commission’s (FCC) E-Rate program.

The E-Rate program, created by the US Congress in the Telecommunications Act of 1996, provides funding for needy schools and libraries to connect to and use the Internet. Under the E-Rate program, which is funded by money collected from telephone users, schools apply for money for cabling, Internet backbone equipment (i.e. servers, PBX, and switches), and monthly connectivity service fees.

TX-based NEC-BNS was charged in San Francisco by the US Justice Department with allocating contracts and rigging bids for E-Rate projects at five different school districts in Michigan, Wisconsin, Arkansas, and South Carolina, in violation of the Sherman Antitrust Act.

The company was also charged with wire fraud by entering into a scheme to defraud the E-Rate program and the San Francisco Unified School District by inflating bids, agreeing to submit false and fraudulent documents to hide the fact that it planned on installing ineligible items, agreeing to donate “free” items that it planned to bill E-Rate for, and submitting false and fraudulent documents to defeat inquiry into the legitimacy of the funding request.

“Congress established the E-Rate program to help educate the underprivileged. This criminal attempt to steal funds from the program comes at the expense of children across the country, and is totally unacceptable,” said US Attorney Kevin Ryan.