New York Attorney General Eric Schneiderman filed a tax fraud lawsuit against Sprint Nextel seeking more than $300 million, the attorney general’s office said. All of Sprint’s major wireless competitors, including Verizon, AT&T, T-Mobile, and MetroPCS, have followed the tax laws in the state, it said. New York tax law has required mobile phone companies to collect and pay sales taxes on the full amount of their monthly access charges for their calling plans. The lawsuit, filed at the New York Supreme Court, the state’s highest civil trial court, alleged that Sprint failed to collect and pay New York sales taxes on an arbitrarily set portion of its revenue from these fixed monthly access charges. It claimed that to carry out this plan, Sprint repeatedly and knowingly submitted false records and statements to New York State tax authorities. Brought under the New York False Claims Act, the lawsuit seeks to have Sprint to pay three times its alleged underpayment of over $100 million, plus penalties if found liable. The complaint is without merit and Sprint categorically denies the complaint’s allegations, a spokesman said. Sprint has collected and paid over to New York “every penny of sales taxes on mobile wireless services that we believe our customers owe under New York state law,” he said. “With this lawsuit, the Attorney General’s office is claiming New York consumers, who already pay some of the highest wireless taxes in the country, should pay even more,” he said: Sprint intends to “stand up for New York consumers’ rights and fight this suit.”
AT&T overcharged U.S. businesses millions of dollars by improperly handling and billing thousands of Internet Protocol relay calls made by Nigerian scammers, the Department of Justice alleged in a complaint filed Wednesday. The DOJ says AT&T violated the False Claims Act by seeking payment for IP relay calls made by international callers who sought to use the system for fraudulent purposes. The Telecommunications Relay Services Fund has reimbursed AT&T more than $16 million since December 2009, of which up to 95 percent of payments were made for non-compensable IP relay calls, the complaint said.
Verizon settled a whistleblower lawsuit accusing it of overcharging the federal government for voice and data services. The carrier agreed to pay the government $93.5 million. The complaint, filed in 2007 in the U.S. District Court for the District of Columbia, alleges that Verizon had billed for “tax-like” surcharges that it wasn’t entitled to impose on the government. The settlement covers 2004-2010, when Verizon was accused of having billed the government items including property tax surcharges, carrier cost recovery charges, state telecom relay service surcharges and public utility commission fee surcharges. The complaint alleges that the “fraudulent billing” began in 1999, under an MCI contract to provide the GSA landline and long-distance voice and data services. Verizon got the GSA contract by taking over MCI in 2006. The settlement benefits all involved, a Verizon spokesman said. Verizon and the government disagree over whether some fees should be charged, he said. The contract entitled Verizon to fees for property tax and other charges, the spokesman said. “Corporations that contract to provide services to federal, state and local governments must play by the rules,” Assistant Attorney General Tony West said.
Hewlett-Packard agreed to pay $16.25 million to settle claims that the company’s contractors defrauded the federal E-rate program, the FCC said. Whistleblowers told investigators that HP contractors “lavished gifts” on school officials in Dallas and Houston in order to win $17 million in equipment contracts, the agency said. The gifts included yacht trips and tickets to the 2004 Super Bowl, the Justice Department and FCC alleged. Most of the civil settlement will go back into the E-rate fund. HP has also signed a compliance agreement to be overseen by the FCC and Justice, the FCC said. HP blamed rogue contractors for the scandal. The company said in a statement that it has “terminated” the contracts and fired employees involved in the case. HP said it has cooperated fully with investigators.
Iceland wants to position itself as a model for freedom of communications in the digital age, the Icelandic Modern Media Initiative said Monday. A parliamentary resolution introduced Feb. 16 asks the government to enact the best laws from around the world to protect freedom of expression and information and provide strong safeguards for reporters’ sources and whistleblowers, IMMI said. The move is the result of the collapse of the country’s banking sector in the global financial meltdown, and is intended to “make Iceland an attractive environment for the registration and operation of international press organizations, new media start-ups, human rights groups and Internet data centers,” it said. One aspect of communications protection is the provision in the EU e-commerce directive which provides indemnity for “mere conduits” such as telecom networks and Internet hosting providers, it said. There are a few, well-defined exceptions to the immunity, but the exemption for general court orders without more definition is “worrying,” it said. The exact circumstances when an ISP or other provider loses its liability should be clarified, it said. The legislation also provides protection from “libel tourism,” a statute of limitations to counter recent European court rulings that Internet page views constitute new publications regardless of how long ago the material was first released, and a court process that can’t be used to suppress free speech through unequal access to justice, IMMI said. French digital rights advocates La Quadrature du Net called the project “a major breakthrough.” Far from the conservative vision displayed by many “confused” governments seeking to control free communications on the Web through “three-strikes” anti- infringement regimes, Internet blocking and filtering or the Anti-Counterfeiting Trade Agreement, the legislative initiative will be a “historic event,” it said. It urged people to support the proposal, saying ACTA and other repressive measures mean “we might all end up hosting and sending our data through Iceland.”
AT&T Missouri agreed to pay $1.4 to settle a civil lawsuit alleging the company violated the False Claims Act in connection with the E-Rate program, the Justice Department said. The government contended that AT&T Missouri provided “false information to the E-Rate program and otherwise violated the program’s requirements by engaging in non-competitive bidding practices for E-Rate contracts,” the department said. It also claimed “AT&T Missouri employees colluded with officials in the Kansas City, Mo., School District to award contracts to the company, extended contracts in violation of E-Rate rules and provided meals and other inducements to school district employees.” While the government gets most of the money, American Fiber will pocket $195,000 under the settlement.
FCC Chairman Martin must “immediately notify” FCC aides of their right to communicate with Congress, House Commerce Committee leaders said in a letter sent Tuesday to Martin. The instructions are related to an investigation that the committee began Dec. 3 to examine whether the FCC’s regulatory practices are fair and open. Among commitments sought was a promise that Martin would publish the text of proposed rules before commission meetings to give adequate time for review.
Telecom companies shouldn’t get amnesty in legislation the Senate Judiciary Committee plans to mark up Thursday, privacy advocates said at a press briefing Wednesday. Many of Americans’ phone calls and e-mails are being listened to every day, said former AT&T engineer and whistleblower Mark Klein, describing work he did for AT&T in California on the project. Klein said he learned in 2003 that domestic and international Internet traffic -- including on e-mails, documents, phone conversations and Web browsing -- was being “hard wired” to the National Security Agency. Based on documents he studied, Klein said he believes the activities are continuing, with data gathering operations in 15 to 20 cities. Klein, who worked for AT&T for 22 years, said he retired after being offered a buyout package. He said he came forward with the information on the surveillance activities because he believes it is illegal, and he’s helping the Electronic Frontier Foundation in a lawsuit against AT&T. He and other privacy advocates said it’s critical that lawsuits exploring telecommunication carriers’ role in the surveillance program not be preempted by Congress. “Lawsuits may be the only way to stop companies from spying,” said Cindy Cohn, legal director, Electronic Frontier Foundation. “These telecom companies committed crimes.” Judiciary Committee Chairman Patrick Leahy, D-Vt., said last week (CD Nov 1 p5) he didn’t support provisions offering immunity for phone companies offered in a Senate Intelligence Committee bill (S-2248) that Judiciary is slated to mark up. Committee aides said only the first title of the bill, dealing with foreign surveillance rules, would be taken up Thursday. The immunity provisions were put off till next week.
Bill Proenza, ousted director of the National Hurricane Center, is reportedly fighting to get his job back. His lawyers sent an 11-page letter to the National Oceanographic & Atmospheric Administration arguing he was removed in retaliation for speaking out about the status of the Quikscat satellite. The action violated the Whistleblowers Protection Act, his lawyers said.
The Senate was to vote late Tues. on an amendment to restore funds allocated to states for a homeland security grant program for first responders, including for emergency communications, proposed for removal from an omnibus 9/11 security bill (S-4). The first responder program is a small part of the 13-title bill, whose whistleblower and labor elements have brought partisan splits. Leahy’s amendment would restore allocation of federal funds to 0.75%, from the Senate bill’s proposed 0.45%; the House (HR-1) seeks 0.25%.