SAN FRANCISCO (CBS DC/AP) — Federal officials filed a lawsuit Monday alleging that Sprint Communications Inc. overbilled government agencies $21 million for wiretap services, alleging that the telecom giant inflated its bills by 58 percent in false claims for “carrying out court orders authorizing wiretaps, pen registers, and trap devices.”
The lawsuit filed federal court in San Francisco alleges that that subsidiary of Sprint Corp. collected unallowable expenses from the FBI, U.S. Bureau of Alcohol, Tobacco and Firearms and other government agencies while carrying out court-ordered wiretaps and other electronic intercepts of its customers.
Communication companies ordered by courts to intercept customers’ communications are allowed to recoup the cost of installing and maintaining the wiretaps.
The lawsuit arises from a dispute between communication companies and the federal government over the expense of installing and maintaining wiretaps. In 1994, lawmakers passed a law requiring communication companies to upgrade their equipment and facilities to ensure they can comply with court orders seeking wiretaps of their customers.
“By including the unallowable costs of financing CALEA modifications in their intercept charges, Sprint inflated its charges by approximately 58 percent. As a result of Sprint’s false claims, the United States paid over $21 million in unallowable costs from January 1, 2007 to July 31, 2010,” Courthouse News first reported. The U.S. is seeking damages, penalties and costs from the allegedly fraudulent claims.
The companies and government tussled for 12 years over who was responsible for those expenses. The Federal Communications Commission settled the dispute in 2006 in favor of the government, ruling that companies can’t bill for modifying its equipment and facilities to more efficiently intercept communications.
The Department of Justice claims in its lawsuit that Sprint received payments for such modifications between Jan. 1, 2007, and July 31, 2010.
The DOJ is seeking $63 million, a tripling of its damages it said it’s entitled to if a jury finds Sprint filed false claims.
A Sprint spokesman said the company denies the allegations.
“Under the law, the government is required to reimburse Sprint for its reasonable costs incurred when assisting law enforcement agencies with electronic surveillance,” Sprint spokesman John Taylor said. “The invoices Sprint has submitted to the government fully comply with the law. We have fully cooperated with this investigation and intend to defend this matter vigorously.”
(TM and © Copyright 2014 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2014 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)