Six companies indicted for allegedly defrauding federal Internet program for schools - NewsOn6.com - Tulsa, OK - News, Weather, Video and Sports - KOTV.com |

Six companies indicted for allegedly defrauding federal Internet program for schools

Updated:
SAN FRANCISCO (AP) _ Six electronics companies have been indicted for allegedly defrauding a $2.25 billion-a-year federal program that gives poor schools and libraries money to help them connect to the Internet.

The indictment, which also named five individuals, did not say how much the E-Rate program lost because of the alleged wrongdoing.

Some of those indicted Thursday are accused of submitting fraudulent documents to the government and being overcompensated for equipment headed to school districts in Arkansas, California, Michigan, New York, Pennsylvania, South Carolina and Wisconsin.

Others are accused of rigging bids and charging the government for items not covered under the program, such as video equipment.

``This indictment sends a strong signal that defrauding federal programs and thereby jeopardizing future funding for schools will lead to criminal charges,'' Kevin Ryan, the U.S. attorney in San Francisco, said in a statement.

The Federal Communications Commission inspector general has said the E-Rate program is hampered by poor design and susceptible to abuse by companies selling equipment to the schools. The official has said about a third of 122 audits of the program last year had revealed substantial violations.

Those named in the indictment include: Howe Electric Inc. of Fresno; Sema4 Inc. of San Juan Capistrano; Digital Connect Communications of San Juan Capistrano; Expedition Networks Ltd. of North Hills; ADJ Consultants Inc. of Temecula and their owners Allan Green and Judy Green; Video Network Communications Inc., of Portsmouth, N.H., and its former sales representative George Marchelos of Saratoga; and two other people.

Howe's attorney, Michael Molfetta, said the allegations are ``based on the assertions of a lot of people who are either making assumptions or are flat out misrepresenting what occurred.''

Tauren Clark, Expedition Networks' attorney, said the company got mixed up with the wrong people, never intended to defraud the government and made no money from the E-Rate program.

``We were taken advantage of,'' Clark said. He said the company will try to settle the charges.

Attorneys for the other defendants did not return phone calls.

Thursday's indictments come on top of similar allegations levied last year against Inter-Tel Technologies Inc. of Arizona and NEC Business Network Solutions Inc., part of Japanese electronics maker NEC Corp.
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