FCC Settles E-rate Violation Investigation with IBM

On December 23, 2020, the Federal Communications Commission announced a settlement of more than $24 million with IBM for E-rate violations.

The investigation found IBM violated competitive bidding rules with the New York City Department of Education (NYC DOE) for Funding Years 2005-2008 and provided ineligible equipment and services to the El Paso Independent School District for Funding Year 2001. IBM has also agreed to provide training to its employees prior to submitting future bids in the E-rate program. This is the third settlement with respect to the NYC DOE E-rate case, which involved more than $1 billion in disbursed or requested funding. In 2015, the FCC settled with the NYC DOE for $3 million and in 2017, the FCC settled with Verizon for $17.68 million.

The Commission’s investigation stemmed from a 2011 report issued by the Special Commissioner of Investigation for the New York City School District (SCI). The SCI’s report found that Ross Lanham, a consultant who was the project manager for NYC’s Project Connect, Lanham created a scheme for several years from 2002 to 2008 using two primary vendors associated with Project Connect to misappropriate money from the NYC DOE, without the NYC DOE’s knowledge. A portion of the funds that Lanham misappropriated came from the E-rate program. Lanham was convicted on theft and fraud charges and debarred from the E-rate program.