Government Sues Sprint For Overcharging For Wiretaps Under CALEA

from the everybody-loses dept

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.

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

Telcos Dodge Suit Claiming They Overcharged For Wiretaps, But At Least They'll Have To Pay Their Own Legal Costs

from the not-so-hard-justice dept

AT&T and Verizon's ultra-close relationship with government surveillance efforts have been profitable in innumerable ways. Obviously being a loyal patriot means you'll have a better chance of grabbing multi-billion dollar military and government communications contracts. Carriers also pass on most of the costs of outfitting their network for easier surveillance (like those live fiber splits AT&T whistleblower Mark Klein exposed) directly to you, the consumer. Lastly as we've discussed more than a few times whenever pricing sheets leak, they make a pretty penny on law enforcement wiretap requests. Maybe a bit too pretty.

Back in 2009, former New York Deputy Attorney General John Prather filed a lawsuit on behalf of the U.S. government, accusing Verizon, AT&T, Sprint and Qwest (now CenturyLink) of overcharging federal, state and city governments for services under CALEA. Prather, who helped lead the NY AG's Organized Crime Task Force from 2002 to 2008 as part of thirty years as a prosecutor, was intimately familiar with wiretap procedure and spent years in charge of invoices for wiretap provisioning. Prather claimed telcos had aggressively been price gouging law enforcement for some time, jacking up prices year over year without any sensible explanation why some wiretaps should cost in some cases $50,000 to $100,000 each.

Prather claims he filed a complaint with the FCC in 2004, who did nothing about it. Prather's lawsuit was dismissed a few months back (pdf) after the court claimed his insights were conjecture in that he didn't provide enough first hand evidence of fraud. That degree of proof was required because, according to telco lawyers, Prather technically couldn't file a whistle blower lawsuit under the False Claim Act and claim he himself was the "original source of the information" -- because he filed the original complaint while working for the government.

As a tiny win however, the court this week stated that phone company lawyers couldn't prove that Prather was filing the lawsuit simply to harass the phone companies, and as such they're be required to at least pay their own legal costs related to the case:

"Furthermore, the phone companies "fail to show that Relator's action was 'clearly vexatious' or 'brought primarily for purposes of harassment' as there is no evidence that relator pursued this litigation merely to annoy or embarrass defendants," the ruling states. "Conversely, Relator asserts that he brought this action 'in an attempt to bring to light the fraud of the telecommunications carriers, and to help insure that the Law Enforcement Agencies would not be hindered in their investigation of crime.'"

Understand that Verizon and AT&T have a long and proud history of taking all manner of subsidies, tax breaks or other incentives for services never delivered, and when they do deliver, over-charging like any good unaccountable government contractor. The combination of excellent lawyers, an apathetic government afraid of taking on larger companies and the fact that phone companies are simply damn good at it -- has historically allowed them to get away with pretty much whatever they've wanted. Actually requiring the phone companies to pay their own lawyers may not not sound like much, but when AT&T and Verizon lawyers are involved, it's dramatically more than you'll usually see in cases like this.

Filed Under: john prather, telco, whistleblowing, wiretap
Companies: at&t, centurylink, qwest, sprint, verizon