A chain of charter schools based in Chicago has agreed to pay a $4.5 million civil fine to close a federal corruption investigation that first came into public view in June 2014. In its statement announcing the settlement, the U.S. Department of Justice (DOJ) accused the charter school of violating the False Claims Act “by engaging in non-competitive bidding practices in connection with the Federal Communications Commission’s (FCC) E-Rate Program.” Under the E-Rate program, the U.S. government may subsidize certain equipment and services for public schools and libraries so that these institutions can have better access to internet and networking services.
According to the DOJ, the Chicago charter school chain used their E-Rate subsidies to pay an inflated price to “chosen vendors without a meaningful, fair and open bidding process.”
While the settlement does not include any criminal charges, it does require the charter school chain to enter into a compliance plan with the FCC. According to the FCC Inspector General, “E-Rate contractors and schools receiving E-Rate funds must understand and know that actions that undermine the contracting process, such as conspiring to rig competitive bidding, will not be tolerated and will be investigated aggressively.”
The charter school chain is slated to receive another $40 million in government funds for the management of four Chicago-area schools, but officials stated that none of this money may be used to pay its $4.5 million penalty. The charter school chain has indicated that it does not need funds from its schools to pay the fine, which will come from the organization’s “savings.”
“Today’s settlement demonstrates our continuing vigilance to ensure that those doing business with the government do not engage in anticompetitive conduct,” said Jeffrey Bossert, the Acting Assistant Attorney General for the DOJ’s Civil Division. “Government contractors and schools that seek to profit at the expense of taxpayers will face serious consequences.”
The attorneys at Chilivis Grubman represent both companies and individuals in connection with government investigations, both criminal and civil, and in False Claims Act litigation. If you have any questions related to such matters, please contact us today.