Hewlett-Packard to Pay $16.25 Million for Alleged E-Rate Fraud

WASHINGTON, November 11, 2010 - The Justice Department revealed Wednesday that it has reached a $16.25 million civil settlement with Hewlett-Packard for alleged E-rate fraud, following an investigation with the Federal Communications Commission. The program funds internet connections in schools and libraries. HP's payment will flow back into the E-rate program.

Acting on tips from whistleblowers, the government investigated allegations that contractors working with HP and other companies gave gifts to staff at the Dallas Independent School District and Houston Independent School District to get contracts that included approximately $17 million in HP equipment.

Meals and entertainment, which included trips on a yacht and tickets to the 2004 Super Bowl, were provided by the contractors to get inside information and win contracts that were supposed to be awarded through a competitive bidding process, according to the FCC.

"Broadband is key to our children's 21st century education," said FCC Chairman Julius Genachowski. "That's why one of the FCC's top priorities is making sure E-rate works to benefit students and libraries. Today's settlement shows the extensive efforts of the FCC and DOJ to protect the E-rate program from waste, fraud, and abuse, and to deter misconduct in the future."