The DOJ has announced that Armstrong Group, a telecommunications company based in Pennsylvania, has agreed to pay $6.5 million to resolve allegations of violating the False Claims Act (“FCA”). Armstrong Group allegedly violated the Federal Communications Commission’s (“FCC”) rules by submitting improper costs to inflate federal funds received from the Universal Service Fund (“USF”). This settlement also resolves qui tam claims initially brought by Armstrong Group’s former controller, James Ranko, in August 2017.
The USF was established to ensure access to efficient communications services at reasonable prices. The High-Cost Program, which is one of the four programs used by USF to meet its goals in rural areas, provides federal funds to incumbent local exchange carriers (“ILECs”) who receive subsidies to expand infrastructure within the United States. Armstrong Group owned five ILECs. According to the government, from 2008 through December 31, 2023, the Armstrong Group ILECs submitted unsubstantiated and improper expenses to unlawfully obtain excessive federal funds under the High-Cost Program. The foregoing conduct allegedly violated the FCA.
Armstrong Group has now agreed to pay $6.5 million. Mr. Ranko will receive $1,267,500, 19.5% of the settlement, and Mr. Ranko’s attorney will receive $411,482.44 in attorneys’ fees and costs. Upon announcement of the Armstrong Group’s settlement, Inspector General Fara Damelin of the FCC commented that “[c]arriers receiving support from the USF or any FCC benefit program must understand that actions undermining the claims process will not be tolerated and will be investigated vigorously”.
The government will undoubtedly continue to use the FCA, one of its most valuable tools, to combat federal fraud. The attorneys at Chilivis Grubman represent clients of all types and sizes in connection to False Claims Act investigations and litigation. If you need assistance with such a matter, please contact us today.