Three telephone company owners who supplied phone service to low-income consumers have been accused of defrauding the federal Lifeline program of more than $32 million, reports the Tampa Bay Times.
Federal prosecutors have filed charges against Leonard I. Solt, 49, of Land O'Lakes; Thomas Biddix, 44, of Melbourne; and Kevin Brian Cox, 38, of Arlington, Tenn.
Created during the President Ronald Reagan administration and expanded under President George W. Bush, the Lifeline program was designed to lower phone bills by $9.25 a month. Under the plan, phone companies are required to screen applicants and then get reimbursed from the Universal Service Fund.
In Tampa, a grand jury indictment said that these three people inflated the amount of low-income clients served by five corporately linked companies, including American Dial Tone, Bellerud Communications, BLC Management, LifeConnex Telecom and Triarch Marketing.
The Tampa Bay Times reported that the indictment charges the defendants with one count of conspiracy to commit wire fraud and 15 substantive counts of wire fraud, false claims and money laundering. According to the record, between 2009-2011 these service providers gained more than $46 million through the Lifeline program.
Tom Wheeler, chairman of the FCC, hailed the efforts to crack down on fraud. "Lifeline helps ensure that all Americans can afford phone service, providing connections to jobs, family and 9-1-1," Wheeler said last week in response to the indictment. "But we will not tolerate abuse of this program, and are gratified to see the results of our hard work to battle fraud."
In 2012, the FCC passed a measure to reform the Lifeline phone subsidy program and reduce waste by preventing consumers from claiming services from multiple service providers. At the end of 2012, the FCC said that its reform of its Lifeline program enabled it save $214 million.
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Updated article on April 14 to reflect that the phone companies were not rural.