How deep is the dirt surrounding school technology purchasing, and how far spread? Those are questions that no one seems yet able–or willing–to answer. But a parade of federal investigations is making the effort, especially when it comes to troubles with the eRate.
In recent years, the eRate–the $2.25 billion-a-year federal program that since 1998 has subsidized the purchase of telecommunications equipment and services for schools and libraries–has come under intense scrutiny. Several reports have found fault with the program, which is managed by the Federal Communications Commission (FCC) and administered by the nonprofit Universal Service Administrative Co. (USAC).
All have pointed to gross problems with the eRate that leave it open to unscrupulous activity as well as error. The latest, issued in October by the House Energy and Commerce Committee, described the eRate as “a well-intentioned program that nonetheless is extremely vulnerable to waste, fraud, and abuse, is poorly managed by the FCC, and completely lacks tangible measures of either effectiveness or impact.”
Such reports helped prompt a telecommunications bill this summer that, among other things, directs the FCC to improve the eRate program by establishing more oversight and a better means of evaluating how efficiently and effectively districts spend their eRate funds. The bill also calls for harsher penalties for applicants and vendors who repeatedly and intentionally violate rules.
Amid the backdrop of reform talk, however, investigations march on. The U.S. Department of Justice, together with the FCC and the Federal Bureau of Investigation, has focused for several years on rooting out eRate wrongdoing. So far, according to the Justice Department’s tally, 13 individuals and 12 companies have been charged in its investigations into eRate abuse. Of those, three individuals and six companies have either pleaded guilty to charges or entered into civil settlements. Two people have each been sentenced to serve six years in prison.
Officials with the Justice Department’s antitrust division described the division’s scrutiny of eRate abuse as “midstream.” And while officials wouldn’t comment on open investigations, they said four out of seven of its antitrust field offices currently are investigating cases pertaining to the eRate–Cleveland, Chicago, Atlanta, and San Francisco–and that the pursuit of such cases is at the top of the agenda.
The largest case filed so far is set to go to trial in January. It charges six corporations and five individuals (none of whom are school district employees) with fraud, collusion, aiding and abetting, and conspiracy in connection with eRate projects in seven states–Arkansas, California, Michigan, New York, Pennsylvania, South Carolina, and Wisconsin. The case alleges a conspiracy that touched 23 school districts, the largest of which is the 60,000-pupil San Francisco Unified School District.
Two investigations involving school administrators did lead to charges and indictments this past spring–one in Michigan and one in South Carolina. A former assistant superintendent of the Ecorse (Mich.) Public Schools was arrested in May on various charges of fraud in an alleged scheme to obtain nearly $7.3 million from the Ecorse schools and the eRate program. According to the Justice Department, Douglas A. Benit, along with his wife Mary Ann Elam Benit, allegedly tried to steer the Ecorse district’s technology contracts to a technology company that Douglas Benit controlled while working for the district. The charges involve alleged activity between 1998 and 2003.
In the South Carolina case, Cynthia Ayer, the former technology director of the Bamberg District I schools, was indicted in April on charges she defrauded the eRate program between 1999 and 2003. According to the Justice Department, the indictment says Ayer used her former position within the district to award technology contracts to her own technology company without doing any competitive bids. The charges allege Ayer submitted fraudulent applications for more than $3.5 million to the eRate program and, as a result, obtained more than $468,000 in payments.
Other recent stories don’t necessarily involve eRate funding but do involve, at the very least, questions of conflict-of-interest and impropriety. These include:
“The Philadelphia story about the trip to South Africa and the subsequent software contract has led city officials to call for an investigation (see main story). One of the school administrators involved, Rosalind Chivis, told the Philadelphia Inquirer she didn’t know PLATO was subsidizing the trip; the other, Gregory Thornton, told the paper he knew about PLATO’s role but didn’t see the need to remove himself from involvement in the software contract at the time. Neither official listed the trip on financial disclosure forms. Philadelphia Schools Chief Executive Officer Paul Vallas told the Inquirer, “I don’t need a lawyer to tell me this is a violation of ethics policy. These two individuals stumbled.” Vallas is now calling for annual ethics training for administrators and required disclosure and approval of trips, among other measures.
“According to the Dallas Morning News, the FBI and the FCC are investigating a situation in which Ruben Bohuchot, the Dallas Independent School District’s former associate superintendent for technology services, repeatedly used a yacht owned by executives of Micro System Enterprises, a Houston-based company that has been listed as the major recipient of $369 million in district eRate funding since 2003. Bohuchot resigned his position in February, the Morning News reported.–Jo Anna Natale