Au­dit: Thou­sands of fake or dead peo­ple en­rolled in pro­gram

Lodi News-Sentinel - - Front Page - By Lind­say Wise

WASH­ING­TON — One in three peo­ple en­rolled in a govern­ment-sub­si­dized phone pro­gram might not qual­ify for the ser­vice, with thou­sands of ac­counts be­long­ing to ei­ther fake or dead peo­ple, ac­cord­ing to a govern­ment au­dit re­leased Thurs­day.

The over­sight is cost­ing tax­pay­ers more than $100 mil­lion worth of im­proper pay­ments per year, ac­cord­ing to the au­dit by the Govern­ment Ac­count­abil­ity Of­fice, a non­par­ti­san fed­eral watch­dog.

Cre­ated in the 1980s, the Fed­eral Com­mu­ni­ca­tions Com­mis­sion’s Life­line pro­gram helps low-in­come peo­ple pay for phone and in­ter­net ser­vice.

The fed­eral govern­ment re­im­burses telecom­mu­ni­ca­tion com­pa­nies that of­fer dis­counts to el­i­gi­ble sub­scribers through a fund made up of fees col­lected from con­sumers’ tele­phone bills.

Life­line paid $1.5 bil­lion in sub­si­dies last year to more than 12 mil­lion house­holds. But an es­ti­mated 36 per­cent of the pro­gram’s sub­scribers might be in­el­i­gi­ble for en­roll­ment, ac­cord­ing to the au­dit.

The GAO re­viewed 3.5 mil­lion Life­line ac­counts dur­ing its three-year probe and was un­able to con­firm el­i­gi­bil­ity for 1.2 mil­lion.

In­ves­ti­ga­tors also found that thou­sands of ac­tive Life­line ac­counts be­long to non-ex­is­tent or dead peo­ple, and that the FCC has pro­vided lit­tle to no sub­stan­tive re­view of the pro­gram dur­ing its 30 years of ex­is­tence.

As of De­cem­ber 2016, Life­line pro­gram sub­scribers were el­i­gi­ble to re­ceive $9.25 per month to­ward their voice tele­com ser­vices, or $9.25 to­ward broad­band costs.

El­i­gi­bil­ity is de­ter­mined through par­tic­i­pa­tion in other fed­eral ben­e­fit pro­grams, such as food stamps, Med­i­caid, pub­lic hous­ing as­sis­tance, Sup­ple­men­tal Se­cu­rity In­come and vet­eran pen­sion and sur­vivor pro­grams. Peo­ple who make at or be­low 135 per­cent of the fed­eral poverty line also qual­ify.

“A com­plete lack of over­sight is caus­ing this pro­gram to fail the Amer­i­can tax­payer — ev­ery­thing that could go wrong is go­ing wrong,” said Sen. Claire McCaskill, the Mis­souri Democrat who re­quested the GAO in­ves­ti­ga­tion.

McCaskill, a for­mer Mis­souri state au­di­tor, has been push­ing for stronger scru­tiny of Life­line for years. She asked the GAO to look into the pro­gram in 2013 in her role as chair­woman on a Se­nate panel on fi­nan­cial and con­tract­ing over­sight.

“We’re cur­rently let­ting phone com­pa­nies cash a govern­ment check ev­ery month with lit­tle more than the honor sys­tem to hold them ac­count­able,” McCaskill said.

The GAO’s find­ings are in line with the re­sults of an in­ves­ti­ga­tion FCC Chair­man Ajit Pai conducted last year that re­vealed “se­ri­ous weak­nesses” in the Life­line pro­gram’s fed­eral safe­guards, said Brian Hart, an FCC spokesman.

“To­day’s GAO re­port con­firms that waste, fraud and abuse are all too preva­lent in the pro­gram,” Hart said in an email.

“Chair­man Pai looks for­ward to work­ing with his col­leagues to crack down on the un­scrupu­lous providers that abuse the pro­gram be­cause ev­ery dol­lar that is spent on sub­si­diz­ing some­body who doesn’t need the help by def­i­ni­tion does not go to some­one who does,” Hart

“Chair­man Pai looks for­ward to work­ing with his col­leagues to crack down on the un­scrupu­lous providers that abuse the pro­gram be­cause ev­ery dol­lar that is spent on sub­si­diz­ing some­body who doesn’t need the help by def­i­ni­tion does not go to some­one who does.” BRIAN HART, AN FCC SPOKESMAN


Dur­ing the GAO’s three-year probe, un­der­cover in­ves­ti­ga­tors ap­plied to work for a com­pany that con­tracts with Life­line providers to ver­ify ap­pli­cants’ el­i­gi­bil­ity. The com­pany, which the au­dit does not name, hired them with­out back­ground checks or in­ter­views and then paid them as they en­rolled fake ap­pli­cants in the pro­gram us­ing fab­ri­cated el­i­gi­bil­ity doc­u­men­ta­tion.

Au­di­tors said they plan to re­fer this com­pany “for ap­pro­pri­ate ac­tion” to the FCC and to the pri­vate non­profit cor­po­ra­tion that ad­min­is­ters the Life­line pro­gram, the Uni­ver­sal Ser­vice Ad­min­is­tra­tive Com­pany, or USAC.

USAC is sup­posed to au­dit tele­com providers to make sure they’re pay­ing their share of con­tri­bu­tions into a fund for the Life­line pro­gram. In its au­dit, the GAO re­ported that the cor­po­ra­tion never au­dited more than one half of 1 per­cent of providers.

USAC also keeps $9 bil­lion in tax­payer funds for the Life­line pro­gram in a pri­vate bank ac­count rather than the U.S. Trea­sury, against the GAO’s long­stand­ing rec­om­men­da­tion, au­di­tors re­ported.

The FCC has a pre­lim­i­nary plan to move the funds from the pri­vate bank ac­count to the U.S. Trea­sury, but un­til that hap­pens, “they do not en­joy the same rig­or­ous man­age­ment prac­tices and reg­u­la­tory safe­guards as other fed­eral pro­grams,” ac­cord­ing to the GAO.

Chris Hen­der­son, re­signed in May as USAC’s CEO af­ter Pai sent him a scathing let­ter crit­i­ciz­ing the cor­po­ra­tion’s ad­min­is­tra­tion of an­other FCC pro­gram, E-rate, which sub­si­dizes in­ter­net con­nec­tions for schools and li­braries.

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