Government Sues Sprint For Overcharging For Wiretaps Under CALEA

from the everybody-loses dept

Thu, Mar 6th 2014 11:34am — Karl Bode

As we just got done discussing, AT&T, Verizon and Sprint recently were able to dodge a long-running lawsuit alleging the companies have been dramatically overcharging the government for wiretaps for more than a decade. The lawsuit was filed by former New York Deputy Attorney General John Prather, who spent thirty years in the AG's office (and six years on the Organized Crime Task Force in NY) helping to manage wiretaps and invoices for wiretap provisioning. Prather filed the suit on behalf of the U.S. government, but telco lawyers were able to have the suit dismissed by arguing that Prather couldn't technically sue the telcos under the False Claim Act as a whistleblower, because he filed the original complaint while working for the government.

Now it appears that at least one of the telcos is being focused on for round two, with the news that the government is suing Sprint for overcharging for wiretaps under CALEA. Under CALEA phone companies are allowed to recoup "reasonable expenses," but the lawsuit claims that Sprint overcharged the government to the tune of $21 million, overinflating charges by approximately 58 percent between 2007 and 2010. The Prather case claimed the telcos overcharge for taps in general, but have historically dodged culpability by simply hitting the government with large bills that don't itemize or explain why a wiretap should magically cost $50,000 to $100,000.

Sprint appears to have been specifically nabbed by the Justice Department’s Inspector General because it wasn't clever enough about passing on the costs of modifying its network to adhere to CALEA back to the government, something the law prohibits:

"Despite the FCC’s clear and unambiguous ruling, Sprint knowingly included in its intercept charges the costs of financing modifications to equipment, facilities, and services installed to comply with CALEA. Because Sprint’s invoices for intercept charges did not identify the particular expenses for which it sought reimbursement, federal law enforcement agencies were unable to detect that Sprint was requesting reimbursement of these unallowable costs."

It should be interesting to see if AT&T and Verizon face similar lawsuits down the road, or if their lawyers and accountants were simply better at obscuring overbilling. It's kind of a lose-lose scenario for you and me either way. Not only do we get to be spied on, we likely paid for these wiretaps both on the taxpayer side and on the telco side as the companies passed on both real and imaginary wiretap costs to you.

Sprintcomplaint (PDF)Sprintcomplaint (Text)

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Filed Under: calea, john prather, new york, wiretap
Companies: at&t, spring, verizon

14 Comments

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Anonymous Coward, 6 Mar 2014 @ 11:56am

It's interesting the US Gov chose to only go after Sprint, which is mostly owned by Japanese telecommunications corporation, SoftBank.

http://gigaom.com/2013/07/10/the-softbank-deal-is-done-sprint-clearwire-officially-turn-jap anese/

I remember seeing something similar happen between a South Korean and American smartphone company. I believe the foreign company also lost their case in an American court.

I wonder if AT&T and Verizon are owned by American corporations? Does anyone else see the pattern?
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pegr, 6 Mar 2014 @ 11:56am

I'm all for it
If the telcos overcharge for wiretaps, there will be fewer of them. Win/win!
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Anonymous Coward, 6 Mar 2014 @ 12:01pm

we likely paid for these wiretaps both on the taxpayer side, and on the telco side as the companies passed on both real and imaginary wiretap costs to you.

Nothing likely about it, citizens pay all government bills, and ultimately all corporate bills. This includes the costs of the law suites.
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Anonymous Coward, 6 Mar 2014 @ 12:05pm

FUFCC
Because the cost of installing new equipment solely for the purpose of complying with CALEA apparently isn't part of the cost of complying with wiretap requests. Yes, I understand that's how the law is written, but they're really just forcing providers to pay for making the government's jobs easier.
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David, 6 Mar 2014 @ 12:11pm

Peanuts
Let's be realistic here. NSA got a budget passed to the tune of 40billion. That's about $130 per citizen, or probably about $500 per internet connection for the privilege of having everything wiretapped and eavesdropped.

Quite a few people will end up paying more to have their communications intercepted than they pay for having them in the first place.

Of course, the government finances a significant part of all that through national debt, so they are not just bullshitting their own citizens for the costs of sabotaging the internet.
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crade (profile), 6 Mar 2014 @ 1:01pm

So, if I'm hearing this right, the government told sprint it must provide wiretaps, sprint needed to make changes to it's network in order to comply, govt said they had to do this out of pocket at gunpoint, and now they are getting in trouble for sneakily charging the govt for it anyway.. sound about right?
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crade (profile), 6 Mar 2014 @ 1:04pm

Re: FUFCC
yeah thats how I read it to. The govt robbed them at gunpoint and sprint is getting in trouble for not coughing up everything.
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Anonymous Coward, 6 Mar 2014 @ 1:12pm

Re: Peanuts
"Quite a few people will end up paying more to have their communications intercepted than they pay for having them in the first place."

Coming soon in the small print of all phone, internet invoices:

"Regulatory Voluntary Mandatory Required Permanent Surveillance Donation: 0.1984/byte"
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FM Hilton, 6 Mar 2014 @ 1:23pm

Extra charges
Not only are we paying for the government to spy on us, (by paying our taxes, which help fund the NSA) we're also paying the taxes on the services that are part of the account on every phone bill, as well as the usual phone fees.

So in effect, we're paying triple for being customers of a phone company which is billing the government for the 'privilege' of allowing them the access to our account details and spying on us all at once.

I'd say we're not only being robbed blind, but also mugged at the same time.

Only in capitalist America: "Greed is good!"
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Jay (profile), 6 Mar 2014 @ 1:29pm

Ironic
If I were Sprint, I would claim that I couldn't properly represent my case to the court without being able to disclose every request, i.e. all the data covered by the NSF letters. Then they would either have to allow the disclosure of exactly how often, and all the parameters of the request, or bugger off, and forget this case. Either way, a win for Sprint. Either looking like a good guy (Sprint could use a win here... badly...) or getting the Govt. to back down (something the we need more of in general really).
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P., 6 Mar 2014 @ 2:09pm

Re: I'm all for it
No, it means the government will just pay for it. They have deep pockets... our pockets.
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Mike Gale (profile), 6 Mar 2014 @ 3:27pm

So the US is a bit like Russia
In Russia they have a system called SORM. As I understand it the ISP pays for the boxes of SORM which can spy on people at will.

Seems the NSA has taken a leaf out of the FSB book and wants a similar charging model. Difference is that the Russian system is public knowledge (AFAIK).
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Anonymous Coward, 7 Mar 2014 @ 6:39am

They waste taxpayer money on all sorts of stupid things, why is this such an issue? I am totally In favor of charging the government through the nose, because if it costs a crapload of money to spy on me maybe they will quit. I also wish to point out that if the only person you can get these wiretaps from is Sprint, then Sprint can charge whatever the heck it likes because there is no competition for wiretapping the Sprint network.
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Reality bites, 8 Mar 2014 @ 10:33am

Anyone stupid enough to be a ATT customer deserves it.
AT&T haven't ever been an ethical company since they were formed, the only thing that changes are the dumb customers signing up to be raped.
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