On December 22, 2016 Preet Bharara, U.S. Attorney for the Southern District of New York, in cooperation with the Federal Communications Commission (FCC) and a private whistleblower lawsuit under the False Claims Act announced a $30 million settlement of a civil fraud lawsuit against Total Call Mobile, LLC. The lawsuit alleged that Total Call Mobile of Gardena, California received federal government reimbursements for tens of thousands of ineligible consumers across 19 states seeking low-cost mobile phone services.

The U.S. government supports mobile phone access for even the least privileged in the country through its Lifeline subsidy program for persons with income at or below 135% of the Federal Poverty Guidelines. The government offers reimbursements to the companies that provide access to mobile telecommunications for these eligible low-income consumers. The companies in question must comply with FCC regulations and eligibility requirements including properly identifying potential consumers by social security number, food stamp, or Medicaid card, employment history and income, and any previous enrollment in Lifeline. These eligible telecommunications carriers such as Total Call must submit monthly reports to the government outlining new enrollments and proper vetting to seek reimbursement.

The recently settled lawsuit against Total Call Mobile for defrauding the government’s Lifeline program alleged that Total Call Mobile hired various managers who in turn hired “field agents” to court and enroll people in their program, often falsifying and forging identification records to do so. Specifically, their methods involved repeatedly using the same eligibility proof to enroll multiple consumers, tampering with identification or eligibility proof documentation, intentionally altering the way consumer information was input to avoid the detection of duplicate subscriber enrollments, and submitting false consumer addresses and social security numbers. Although Total Call’s managers were aware of fraudulent practices, the company continued to approve “enrollments” and request government reimbursement.

Preet Bharara commented: “By routinely looking the other way while its sales agents repeatedly engaged in obvious fraud, Total Call Mobile undermined the goals and depleted the resources of a federal subsidy program designed to provide discounted phone services to low-income individuals. While it certified its compliance with FCC rules, Total Call enrolled and claimed federal payments for tens of thousands of consumers who did not qualify for the program.”

U.S. District Court Judge Jed S. Rakoff approved a settlement stipulation on December 22, 2016 to resolve the government’s claims against Total Call Mobile that requires the company to pay the U.S. government $22.54 million and to forego payment of $7.46 million of Lifeline reimbursements. Most notably, the settlement stipulated that Total Call Mobile must cease providing Lifeline services indefinitely. Total Call Mobile admitted and accepted responsibility for numerous fraudulent practices involving acquisition of consumers, employee conduct, and falsification of identification in order to sign up more consumers.