Dive Brief:
- In the Cleveland, OH, school district, $8.57 million worth of federal E-rate rebates were never collected between 2006-2011, and district lawyers now say that it's impossible to collect the money, sticking taxpayers to with the bill.
- The Cleveland school board is said to be considering legal action against a contractor called E-Rate Central, which it had hired to help with the rebates, and also against two former employees who played a role.
- At the time E-rate Central was hired, the district's COO was Dan Burns; Burns has since been convicted of racketeering, theft, and tampering with records, though The Plain Dealer reports the E-rate rebate loss was not due to intentional or related fraud.
Dive Insight:
Around the country, E-rate fraud has popped up in unique ways. For example, New York City's Department of Education allegedly violated the competitive bidding rules of the program, forcing the department to reach a $3 million settlement with the FCC. On top of that, the NYC DOE also agreed to cancel all of its E-rate funding requests from 2011-2013, file compliance reports, retain all E-rate related documents for 10 years, and appoint an E-rate compliance officer. At the time, the CommLaw Monitor hailed the FCC's move as one that "signals a new chapter in E-rate enforcement."
Chicago's charter network Concept Schools is also currently under investigation for similarly violating E-rate bidding rules, but no decision has been reached yet.
It's important that schools and districts keep proper records in relation to all E-rate transactions, in case of confusion or malicious intent on the part of contractors or school staff. In a case that may have parallels to what's unfolding in Cleveland, a consultant who served as project manager for NYC’s Project Connect was found guilty of overbilling the school district over four years. The consultant was charged with theft and fraud.
