FCC Proposes $51 Million Fine For Company Ensnared In CBS4 Investigation

By Brian Maass

DENVER (CBS4)- The Federal Communications Commission plans to fine Total Call Mobile more than $51 million for systematically abusing and defrauding the government's Lifeline program which was designed to provide cellphones and monthly wireless service to the needy and poor.

A CBS4 undercover investigation in November 2014 showed how agents for the company were attempting to fraudulently enroll ineligible customers in the program.

"I am greatly troubled by what appears to be an intentional and widespread effort to enroll duplicate and ineligible consumers into the Lifeline program," said FCC Commissioner Michael O'Rielly.

Commissioner Mignon Clyburn said, "Total Call Mobile's actions were, in a word, reprehensible, which is why I support taking decisive enforcement action."

According to a news release from the FCC, the company enrolled tens of thousands of duplicate and ineligible consumers into the Lifeline program in Colorado and 18 other states and U.S. territories. The Commission said that since 2014, Total Call took in an estimated $9.7 million in improper payments. The $51 million proposed fine is the largest the FCC has ever considered against a Lifeline provider.

The federally regulated Lifeline program provides free cellphone service and phones to the poor and needy. The $2 billion a year program handed out more than 13 million free cellphones in one six month period. The free phones and their wireless plans are paid for by a monthly tax on your cellphone, called the Universal Service Tax.

The program has strict guidelines, which calls for applicants to be on food stamps, Medicaid, housing assistance or some other government program to prove they are low income and receive their free phone and monthly plan. But in 2014, the CBS4 Investigation found Total Call agents circumventing the strict government rules, trying to give free phones to people who didn't qualify.

When a CBS4 producer asked about signing up, a Total Call rep at Colfax and Broadway asked if the producer had any documents indicating he was low income. When the producer responded that he did not, the Total Call agent used another person's food stamp card to establish eligibility for the CBS4 employee.

"It's verification that you are on some kind of assistance program. It's to get you through," said the Total Call agent.

He promptly gave the CBS4 producer a free phone. The agent said he received $3 for every phone he was able to give away.

The FCC was able to duplicate what the CBS4 Investigation found.

"Sales agents shared eligibility documents... in order to use the documents to conduct multiple enrollments," said the FCC.

CBS4 Investigator Brian Maass has been with the station more than 30 years uncovering waste, fraud and corruption. Follow him on Twitter @Briancbs4.