Dem Sen. McCaskill calls for criminal charges for ‘Obama phone’ cheats

Sen. Claire McCaskill (D-Mo.) on Monday called for criminal charges to be filed against people who defrauded a federal phone subsidy program.

McCaskill sent a letter to the Federal Communications Commission, urging the agency to refer examples of fraud in its Lifeline program to the Justice Department for prosecution.

“Knowingly providing false information to a government agency for profit must be investigated. If these companies are found in violation of federal law, I expect the DOJ will prosecute those responsible to the fullest extent of the law,” she wrote. 

{mosads}She also urged the FCC to more aggressively use its own enforcement authority to fine companies abusing the program. She warned that Congress could kill the program unless the FCC institutes tough new reforms.

“The FCC’s failures in oversight and enforcement are unacceptable and inexplicable,” she wrote. “The FCC must drastically improve its oversight of the Lifeline program, or face the likelihood that lawmakers like myself, whom are deeply troubled with both the structure and activities of the Lifeline program will be able to garner adequate support to terminate it.” 

McCaskill asked the FCC to particularly investigate two companies receiving Lifeline funding, TerraCom and YourTel, for abuse.

McCaskill was the only Democrat to join Republicans in a failed vote in March to cut funding to the cellphone portion of the program.

Conservative critics have claimed the FCC’s Lifeline program is a wasteful government handout and refer to it as the “Obama phone” program, although it began long before Obama took office.

Congress first enacted the Lifeline program in 1985, during the Reagan administration. In 2005, under President George W. Bush, the FCC expanded the program to cover cellphone service.

The program pays for phone service, not the phones themselves. But many companies that receive funding through the program offer free and low-cost phones to their subscribers. The program is funded through fees that the telephone companies pass on to consumers on their monthly bills.

There have been reports of widespread abuse of the program, with some companies signing up people who are not eligible or have no interest in the program. In some cases, multiple companies received subsidies for the same consumer.

Last year, the FCC toughened Lifeline’s eligibility standards and created a database to track who is receiving service through the program. 

Those reforms trimmed $200 million from the program last year and are on track to save $2 billion by the end of 2014, according to the FCC.

In a speech earlier this month, acting FCC Chairwoman Mignon Clyburn said the idea of restricting Lifeline to landline phone service is “one of the most illogical things” she’s heard since her appointment.

“Even suggesting this is taking a major step backwards and ignores the critical telecommunications of needy Americans and is out of step with the communications evolution,” she said.