E-Rate Program

In 1996, Congress established the E-Rate Program—also known as the Federal Schools and Libraries Program. The E-Rate Program is a multi-billion dollar federal program intended to close the digital divide between the have and have-not children of the nation by subsidizing educational computer technology for school children living in economically disadvantaged and rural areas. The Program is funded by taxpayers, through taxes paid by phone customers across the nation on their monthly bills. The Federal Communications Commission (FCC) oversees and regulates the program, which is administered by the Universal Service Administrative Company (USAC), a private non-profit.

In 2009, the U.S. Department of Justice settled a qui tam case involving E-Rate Program fraud brought by Whistleblower Action Network attorneys Steve Cohen and BethAnne Yeager. The case alleged that Computer Assets, a telecommunications company based in New Mexico, targeted poor school districts in the Southwest and used them to defraud the E-Rate Program out of tens of millions of dollars via ineligible and/or nonexistent technology upgrade projects. According to our complaint, Computer Assets billed the E-Rate Program for work on buildings that was not done and for work on buildings that did not exist, put school district employees on its payroll, failed to follow the rules regarding competitive bidding, and built extravagant and redundant systems that the schools could not use.