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Fraud Rampant in Federal ObamaPhone Program

In yesterday's Washington Times, Stephen Dinan begins, writing, "The controversial “Obamaphone” program, which pays for cellphones for the poor, is rife with fraud, according to a new government report released Thursday that found more than a third of enrollees may not even be qualified."

Dinan goes on, explaining:

"Known officially as the Lifeline Program, the phone giveaway became a symbol of government waste in the previous administration. Now a new report from the Government Accountability Office bears out those concerns.

"The report, requested by Sen. Claire McCaskill, Missouri Democrat, also says the program has stashed some $9 billion in assets in private bank accounts rather than with the federal treasury, further increasing risks and depriving taxpayers of the full benefit of that money.

“A complete lack of oversight is causing this program to fail the American taxpayer — everything that could go wrong is going wrong,” said Mrs. McCaskill, ranking Democrat on the Senate’s chief oversight committee and who is a former state auditor in Missouri.

“We’re currently letting phone companies cash a government check every month with little more than the honor system to hold them accountable, and that simply can’t continue,” she said.

"The program, run by the Federal Communications Commission, predates President Obama, but it gained attention during his administration when recipients began to associate the free phone with other benefits he doled out to the poor.

"Some 10.6 million people have an Obamaphone, but 36 percent of them may not qualify, investigators said after sampling the population and finding a huge chunk of people couldn’t prove they were eligible.

"More than 5,500 people were found to be enrolled for two phones, while the program was paying for nearly 6,400 phones for persons the government has listed as having died.

"Investigators also submitted fraudulent applications to see what would happen, and 12 of the 19 phone carriers they applied to approved a phone.

"The theory behind the program was that poor people needed a phone to apply for a job or conduct other business in the modern economy, so they were provided with what was supposed to be a low-cost, limited-service benefit."

He also noted this was only the GAO's latest warming, noting, "Previous reports had warned the Obama administration the program was susceptible to double-dipping, and that the FCC didn’t even have a good yardstick to measure whether the program was meeting its goals."

The Daily Caller's Luke Rosiak also reported on the findings of the GAO audit. He pointed out, "The fraud reached unheard-of proportions because the Federal Communications Commission let the task of screening for eligibility fall to phone companies that profit off of enrolling as many people as possible."

Rosiak reminds us that just who is paying for the fraud in the ObamaPhone program:

“'Universal service fees' cell phone subscribers pay on their monthly bills supplies the money for the program, formally known as Lifeline, rather than funding from Congress. The Anti-deficiency Act prevents agencies from spending more than funds appropriated by Congress, so the move effectively allowed the FCC unlimited spending . . . ."

Free Republic posted an earlier ObamaPhone report about waste, fraud, and abuse -- a Daily Signal story dated November 24, 2013 written by Mathew Sabas, who provides a bit of historical context:

"Free cell phones for low-income Americans, one of the fastest growing welfare programs in the United States, is—by the Federal Communications Commission’s (FCC) own admission—rife with “waste, fraud and abuse.” And who is paying for these free Obamaphones? If you have a phone subscription, you are.

"The program, officially called Lifeline, predates Obama’s presidency but has earned the colloquial name “Obamaphone” after nearly tripling in cost since 2008.

"Almost everyone who pays a phone bill has an extra monthly charge that contributes to the Universal Service Fund, which covers Lifeline access. The government pays companies $9.25 for every person connected through Lifeline. Recipients typically receive a free wireless phone and a certain amount of airtime.

"These Obamaphones aren’t iPhones, but they typically have nearly all the capabilities offered through a standard phone contract."

At American Thinker, you can watch a 2013 Fox Business 4:23 minute video as "Jillian Melchior sat down with Fox Business Network's Melissa Francis to shed light on how the $2.189 billion Lifeline program, which is supposed to provide subsidized phone service to the poor, has become notorious for fraud and abuse."

For your information, most of the above links include embedded links that will take you to additional source material.

To read the entire 89-page General Accountability Office report, or the 1-page highlights, click here.

Growls readers are encouraged to take a few minutes to write or call their Congressional representatives. Ask them to tell you what they have personally done to hold the Federal Communications Commission (FCC) accountable for the LifeLine (aka ObanaPhone) program. Contact information is available at the Library of Congress' Congress.gov. Taxpayers living in Virginia's Arlington County can contact:

  • Senator Mark Warner (D) -- write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376

And ask for a written response. And tell them ACTA sent you.

UPDATE (7/3/17) At American Thinker yesterday, Rick Moran, citing a Breitbart News story, concludes with the following observations:

"President Reagan started the program at a time when there were no smart phones and few cell phones. The idea was to get the big telephone companies to supply land line phones to the poor for emergency use. Since no taxpayer money was being used for the phones themselves, it seemed to be an acceptable partnership between the government and private businesses.

"But like almost all government programs, this one got out of control. The explosion in wireless communications made it ridicuously easy to defraud the companies until today, nearly 2 in 5 participants in the program are not eligible.

"Ultimately, the government is responsible for the administration of the program. The FCC has been lax in the past in oversight, but with a new chairman dedicated to rooting out fraudsters, that's going to change."

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