The Kansas City, Missouri School District (KCMSD) has agreed to relinquish over $13.6 million in claims for federal funds and to pay the United States $66,000 to resolve fraud allegations about the school district’s E-Rate program stemming from a “qui tam” (whistleblower) lawsuit, the Justice Department announced today.

The E-Rate program, created by Congress in the Telecommunications Act of 1996, provides funding for needy schools and libraries to connect to and utilize the Internet. The E-Rate program is funded by monies collected from telephone users. The Federal Communications Commission oversees the program.

The U.S. contended that from 2002 to 2006 the KCMSD pursued claims for payments for a contract that had been cancelled, did not comply with the mandatory competitive bidding process and improperly extended contracts to avoid re-bidding. As part of the settlement, KCMSD agreed that three of its employees and the district’s consultant, Deitrich Lockard Group, all of whom handled KCMSD’s E-Rate applications, would no longer play a role in the program’s application and funding process for the school.

The government became aware of the fraud through a qui tam lawsuit that American Fiber Systems Inc. filed in May 2006.


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