Avaya linked to eRate probe

Avaya Inc. has received a subpoena to produce documents related to the government’s investigation of violations of the federal eRate program, which dispenses subsidies for internet and telecommunications services to schools and libraries.

The Basking Ridge, N.J.-based provider of communications systems said in its quarterly report filed with the Securities and Exchange Commission that the subpoena was issued for a grand jury case at a federal District Court in South Carolina.

The subpoena, which Avaya received on April 29, requests records from Jan. 1, 1997, to the present.

Also in the filing, Avaya said it received a separate subpoena on May 3 from the Office of Inspector General, U.S. General Services Administration, related to a federal investigation of its billing for telecom equipment and maintenance services. That subpoena requests records from Jan. 1, 1990, to the present.

The filing didn’t provide any additional information about the subpoenas or the investigations surrounding them.

Avaya said it can’t currently determine if the investigations will have any effect on its business.

The Justice Department recently announced that six companies have been indicted for defrauding the federal eRate program (see “Six firms charged with eRate fraud“), but Avaya wasn’t among them.

The $2.25 billion-a-year eRate is funded by the Universal Service Fund, which is paid for through fees levied on telecom companies. The program is run by the Universal Service Administrative Co. (USAC), which was set up by the Federal Communications Commission.

The fraud schemes alleged by the Justice Department as part of an ongoing investigation occurred between 1998 and 2003. Charges range from rigging bids to scheming to defraud the FCC and USAC by including the cost of ineligible equipment and fees with those covered by the program.

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