Obamaphone Fraud Exposed

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Major fraud has been uncovered in the federal Lifeline program – colloquially known as “Obamaphone.” While the program was intended to help low-income Americans receive cell phone service, the real beneficiary is “Total Call Mobile,” a phone company that bilked roughly $84 million from taxpayers by giving phones to ineligible customers.

In some instances customers already had an Obamaphone, but Total Call Mobile allowed them to receive additional ones in order to obtain more federal funding.

According to FCC Commissioner Ajit Pai, “In November 2014, the Universal Service Administrative Company was able to identify 32,498 intracompany duplicate subscribers enrolled by over 800 Total Call Mobile sales agents.” In other cases, Total Call Mobile handed out food stamps that they had obtained for customers to use as need-based verification for the phones.

While Total Call Mobile is now facing a $51 million fine from the FCC for illegally siphoning taxpayer dollars, Commissioner Ajit Pai believes this is not nearly enough.

Pai stated, “[the $51 million figure] treats less than 10% of Total Call Mobile’s subscribers as likely ineligible when we have evidence that up to 99.8% were. Using that metric of likely ineligibility (one Total Call Mobile refused to rebut by withholding information in response to Commission subpoenas) would yield a forfeiture amount of roughly $84 million”.

Commissioner Pai’s claim that up to 99.8% of Total Call Mobile’s subscribers were ineligible is deeply troubling considering the millions of tax dollars spent on this program. Pai concludes that “Total Call Mobile apparently and repeatedly violated federal law” and that the FCC’s fine on this company is “hardly the type of justice the American people deserve given the sheer magnitude of misconduct at issue.”

Is the FCC scaling back this program that’s been proven vulnerable to massive, wide-scale fraud? No, they are doing just the opposite, voting last week to expand the program to subsidize not just phones but broadband Internet access as well.

This huge increase in program spending will be paid for by everyone who has a phone bill through so-called Universal Service Fund fees that have been increasingly dramatically. And the Total Call Mobile scandal shows the fraud risk will be massive.