Three charged for $32 million in ‘Obamaphone’ fraud

The Justice Department is charging three men with defrauding the Federal Communications Commission (FCC) out of about $32 million.

According to the charges unsealed on Thursday, the men took part in a scheme to file false claims with the FCC’s Lifeline program, which subsidizes phone service for poor people and has sometimes been called the “Obamaphone” program.

ADVERTISEMENT
FCC Chairman Tom Wheeler, in a statement, cheered the announcement as proof that the government is working to crack down on fraud in the program.  

“Lifeline helps ensure that all Americans can afford phone service, providing connections to jobs, family and 9-1-1,” he said. “But we will not tolerate abuse of this program, and are gratified to see the results of our hard work to battle fraud.”

The program was created in 1985 and expanded to cover cellphone service in 2005, under former President George W. Bush.

Despite its long history, Lifeline became politicized as the Obamaphone program in recent years after viral videos posted online seemed to show a string of fraud connected to the program. For conservative critics of the Obama administration, the program became a symbol of government waste and mismanagement.

According to the Justice Department, Thomas Biddix, 44, Kevin Cox, 38, and Leonard Solt, 49, ran a holding company than owned multiple subsidiary phone companies participating in Lifeline.  

Through false claims filed the with FCC, the company allegedly raked in more than $32 million from the government program from 2009 to 2011.