(Adds details on settlement)
By Nate Raymond
NEW YORK Dec 22 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
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
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)