FCC fines High-Cost Carrier nearly $50 Million for Defrauding USF

Today, the FCC issued a Forfeiture Order imposing a $49.6 million fine against Sandwich Isles, Waimana Enterprises, and Albert S.N. Hee for defrauding the Universal Service Fund. 

From 2002-2015, Sandwich Isles served as a designated High-Cost carrier in Hawaii.  During this time, the FCC found that Mr. Hee used his control of Sandwich Isles, Waiman, and other companies to misuse corporate funds for personal gain, including falsely reporting personal expenses as regulated costs eligible for High-Cost support.  Specifically, the FCC found Hee, Sandwich Isles, and Waimana liable for the following violations of the High-Cost program rules:

  1. filing inaccurate data in its annual cost studies; 
  2. falsely certifying the accuracy of the data contained within the cost studies; 
  3. misclassifying costs relating to its cable and wire facilities; 
  4. overstating the costs related to the lease of abandoned water mains; and
  5. failing to keep its accounts, records, and memoranda as prescribed by the Commission’s rules.

The FCC imposed the maximum forfeiture to reflect “the extraordinary gravity” and extent of the company’s “willful and fraudulent violations.”  The FCC also noted it has an ongoing obligation to ensure that universal service funds are used properly and to protect the Universal Service Fund from waste, fraud, and abuse.  


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