Justice: Guilty Plea in E-Rate Bribe Scheme


The former head of a pair of Illinois-based tech companies has pleaded guilty to bribing school officials to steer E-rate funding their way, the Justice Department's Antitrust Division said Thursday.

Gloria Harper was initially charged in a New Orleans U.S. District Court last November with conspiracy to defraud the program. She pled guilty to providing bribes and kickbacks to schools in Arkansas, Illinois and Louisiana.

The E-rate program is overseen by the FCC and provides subsidies--up to 90% of the cost--for Internet access and service to schools and libraries. It is near and dear to FCC Chairman Julius Genachowski, who helped first implement the program.

The FCC has pledged reforms to the Universal Service Fund, of which the E-rate program is a part. Those include cutting down on waste, fraud and abuse.

Hewlett-Packard agreed last fall to pay $16.25 million to settle an investigation by the FCC and DOJ into E-rate fraud and violations of FCC competitive bidding rules.

The investigation was into allegations that HP and others had provided Dallas and Houston school personnel Super Bowl tickets, yacht excursions, meals and other entertainment to get inside info and secure contracts, which included $17 million in HP equipment, that were supposed to be competitive bids.

Justice says that seven companies and 24 individuals have now pled guilty to defrauding the program, with $40 million in fines and restitution and 15 jail sentences resulting.

The e-rate program, which provides more than $2.25 billion in support annually, was "upgraded" last September in a vote to, among other things, promote the use of handheld devices and e-books and to boost speeds by making so-called "dark fiber"--unused but already-laid infrastructure--eligible for that funding.