Company's CEO pays $400,000 to settle personal liability for false claims in E-rate program

by Ben Vernia | August 7th, 2013

On August 7, the Department of Justice announced that a Houston, Texas-area executive has paid $400,000 to resolve claims that he (with his company, Acclaim Professional Services) defrauded the FCC’s E-rate program. According to DOJ’s announcement:

Larry Lehmann of Giddings, Texas has agreed to pay $400,000 to settle allegations that he violated the False Claims Act in connection with the Federal Communications Commission’s E-rate Program, the Department of Justice announced today. The E-rate Program, created by Congress in the Telecommunications Act of 1996, subsidizes eligible equipment and services to make Internet access and internal networking more affordable for public schools and libraries. The Houston Independent School District (HISD) was one of the applicants that successfully sought and received E-rate subsidies from 2004 through 2006.

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Lehmann functioned as the CEO and managing partner of Acclaim Professional Services (Acclaim), which partnered with other companies to provide E-rate funded equipment and services to HISD during this period. The United States contended that, in violation of E-rate competitive bidding requirements and HISD procurement rules, Lehmann provided gifts and loans to HISD employees, including tickets to sporting events and two loans totaling $66,750 to an HISD employee who was involved in the procurement and administration of HISD’s E-rate projects.

The United States also alleged that Lehmann helped devise a scheme in which HISD outsourced some of its employees to Acclaim, which allowed them to continue to work for HISD while passing the cost on to the E-rate Program. The United States further alleged that, with Lehmann’s approval, Acclaim hid the cost of these employees in its E-rate Program invoices by rolling them into the cost of eligible goods and services.

The settlement with Lehmann is part of a broader investigation by the United States of E-rate funding requests submitted by HISD and the Dallas Independent School District (DISD). The government previously recovered $16.25 million from Hewlett-Packard, $850,000 from HISD, and $750,000 from DISD. The government’s investigation was initiated, in part, by a qui tam or whistleblower lawsuit filed under the False Claims Act by Dave Richardson and Dave Gillis, who investigated allegations of improprieties based on Richardson’s experience bidding for contracts at HISD and DISD. The False Claims Act authorizes private parties to file suit for false claims on behalf of the United States and share in the government’s recovery. The United States intervened in Richardson and Gillis’ lawsuit, and added Lehmann as a defendant.

This blog reported on the settlement with HISD in 2010.

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