(Adds details on settlement)
By Nate Raymond
NEW YORK, Dec 22 (Reuters) - A KDDI Corp mobile phone unit has agreed to pay $30 million to resolve U.S. government claims that it defrauded a low-income subsidy program by seeking reimbursement for ineligible consumers, prosecutors said on Thursday.
Total Call Mobile LLC agreed to no longer participate in the Lifeline subsidy program or reimburse tens of thousands of ineligible consumers who had enrolled, Manhattan U.S. Attorney Preet Bharara said in a statement.
The settlement also ends an administrative investigation by the U.S. Federal Communications Commission, which in April announced plans to fine Total Call $51 million.
“We have no toleration for fraud,” said FCC Enforcement Bureau Chief Travis LeBlanc said in a statement.
Gardena, California-based Total Call admitted and accepted responsibility for its conduct at issue in the case. A lawyer for Total Call did not immediately respond to a request for comment.
Launched in 1985, the $1.5 billion Lifeline program provides a $9.25 monthly subsidy to help low-income Americans get telephone service. The FCC in March approved a plan add internet access.
In a lawsuit made public on Thursday, Bharara’s office accused Total Call of knowingly submitting from 2012 to 2016 false claims for federal payments by enrolling tens of thousands of ineligible consumers into Lifeline.
The lawsuit alleged Total Call’s sales agents employed a range of fraudulent enrollment practices, including tampering with identification documents and submitting false consumer addresses and social security numbers.
While Total Call’s managers were notified that a large number of sales agents were engaged in fraudulent conduct, the company continued to approve ineligible consumers and seek reimbursement for them, the lawsuit said.
The lawsuit was first filed under seal as a whistleblower action in 2015 by a New Jersey man who worked at Locus Telecommunications LLC, a company also owned by Tokyo-based KDDI. Bharara’s office intervened in the case.
The case is U.S. v. Total Call Mobile Inc et al, U.S. District Court, Southern District of New York, No. 15-8869. (Reporting by Nate Raymond; Additional reporting by Eric Beech; Editing by Mohammad Zargham and Richard Chang)