Sprint to pay $15mn for overcharging feds as it wiretapped its customers

Reuters/Keith Bedford

Reuters/Keith Bedford

Telecommunications giant Sprint has agreed to pay $15.5 million to settle a lawsuit in which the the Obama administration alleged that the company overbilled the government while conducting “court-ordered intercepts” of its customers.

, the government sued Sprint, claiming that it has
overcharged by $21 million – a 58 percent markup, according to
the suit – for its services between January 1, 2007, and July 31,

The Obama administration’s claim that Sprint “knowingly”
submitted false claims is an accusation that the company either
knew it had falsified records, acted in “deliberate
or with “reckless disregard” of the

Sprint, along with Verizon and ATT, are regularly required
to aid government investigations – doing so by facilitating phone
surveillance, also known as pen registers, which contain metadata
about a phone call, not its content. In exchange for standing at
the ready, the companies are permitted to charge law enforcement
agencies for “reasonable expenses” related to the

In March of 2014, US Attorney Melinda Haag of the Northern
District of California said Sprint, the third largest US wireless
network provider, pocketed an extra $21 million, arguing that the
company “knowingly submitted false claims to federal law
enforcement agencies, such as the Federal Bureau of Investigation
(FBI), Drug Enforcement Agency (DEA), US Marshals Service (USMS),
Bureau of Alcohol, Tobacco and Firearms (ATF), Immigration and
Customs Enforcement (ICE), and others, by including unallowable
costs in the charges for carrying out court orders authorizing
wiretaps, pen registers, and trap devices.”

The suit asserted that Sprint violated the False Claims Act, an
anti-fraud law, and broke federal regulations that forbid
companies from using government reimbursements to update
unrelated equipment or services.

READ MORE: CIA, US Marshals engaged in domestic
phone spying – report

Those actions violate 2006 guidelines from the Federal
Communications Commission, the government said.

“Despite the [Federal Communications Commission’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,”

the suit alleged.

CALEA is the Communications Assistance in Law Enforcement Act, a
1994 law that says companies like Sprint must be technologically
ready and able to wiretap customers based on government orders.

was announced Thursday by the Department of

“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,”
the Justice Department claimed.

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In 2013 — the latest year that government
wiretap data
is available — the feds reported 3,576
wiretaps. Of that number, around 88 percent were related to

Sprint, which did not admit fault through the agreement, said it
had followed the law in seeking compensation for “reasonable
involved in customer surveillance.

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