An Arthur Andersen audit of 18 recipients of first-year eRate funds has sparked an investigation of one of the beneficiaries for possible fraud, eSchool News has learned. The Federal Communications Commission (FCC) has confirmed that the suspected eRate violations are an "ongoing law enforcement matter" but has rejected an eSchool News Freedom of Information Act request to identify the recipient being investigated.

The Schools and Libraries Division (SLD) of the Universal Service Administrative Co. (USAC), the group that administers the eRate, had asked the New York-based accounting firm to examine whether the 18 recipients were...

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