The Armstrong Group has agreed to pay $6.5 million to settle accusations that it breached the False Claims Act.
The allegations were tabled against the communications group for knowingly breaching the Federal Communications Commission’s (FCC) rules and cooking the books to inflate the reimbursement the company gained from the federal Universal Service Fund (USF).
Armstrong Group pays the price
The Armstrong Group specialized in improving communications throughout the United States. The FCC has created the High-Cost Program, which would be given to elite telecommunications companies that could enhance mobile and broadband connectivity in rural and isolated areas in lockstep with urban standards.
The High-Cost Program had criteria for companies like the Armstrong Group to use their skills and experience to develop communications infrastructure. They would then be reimbursed as part of the USF.
The Armstrong Group owned several incumbent local exchange carriers (ILECs), the regional providers of their services.
The court documents allege that five ILECs owned by the group charged for costs that exceeded the FCC’s regulations. The Department of Justice report stated that the entities “failed to comply with FCC regulations that governed what costs they were allowed to report for purposes of claiming subsidy payments from the government, and as a result these companies received greater subsidy payments than those to which they were entitled.”
The five companies were:
- Armstrong Telephone Company, Maryland
- Armstrong Telephone Company, New York
- Armstrong Telephone Company, Northern Division
- Armstrong Telephone Company, Pennsylvania
- Armstrong Telephone Company, West Virginia
Inspector General Fara Damelin of the FCC said of the communications provider’s actions, “Carriers 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 civil settlement and the charges incurred involved James Ranko, Armstrong Group’s former Controller. As part of the resolution under the qui tam or whistleblower provisions of the False Claims Act, Ranko will take $1,267,500 as his share of the recovery.
“Telecommunications providers that seek to participate in important FCC programs like the High-Cost Program must comply with applicable rules, including those governing how they report the costs used to calculate their subsidies,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “Today’s settlement demonstrates our continuing commitment to protect the integrity of the FCC’s operations and services.”
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