Sprint is in trouble.
The U.S. Government has filed a civil lawsuit against telecommunications giant Sprint for allegedly bilking law enforcement agencies out of millions of dollars with regard to surveillance matters.
According to a complaint filed on Tuesday, Sprint allegedly overcharged the government $21 million between 2007 and 2010 when it sought compensation for modifying telephone equipment to make the company compliant with federal surveillance law.
The 1994 law, called the Communications Assistance in Law Enforcement Act (or CALEA), requires companies that provide telecommunication services to use equipment that would allow law enforcement agencies to intercept and monitor things like phone numbers, phone calls and text messages, pursuant to a court order. Under the law, telephone companies may charge the government for “reasonable expenses” incurred in complying with court orders with respect to wiretaps and other surveillance measures, but companies cannot charge the government for upgrading equipment over time to stay compliant with CALEA.
But that’s exactly what Sprint did, according to the suit. The government alleges that Sprint “inflated” its wiretap expenses by as much as 58% by inconspicuously adding equipment upgrade charges and other expenses.
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“Because Sprint’s invoices for intercept charges did not identify the particular expenses for which it sought reimbursement, federal law enforcement agencies were unable to detect that Sprint was requesting reimbursement of these unallowable costs,” the government’s complaint said.
In other words, the government alleges Sprint — a company that provides itemized, detailed phone bills for its customers — didn’t itemize wiretap charges when it billed the government. The government paid what it was billed, something it now calls a “mistake.”
Sprint denies the government’s charges, saying it has complied with CALEA and the FCC’s rulings with respect to recovering surveillance costs.
“The invoices Sprint has submitted to the government fully comply with the law,” Sprint spokesperson John Taylor told TheBlot by email on Tuesday. “We have fully cooperated with this investigation and intend to defend this matter vigorously.”
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The suit is seeking to recover the $21 million under the False Claims Act, a statute that allows the government to recover money it lost due to fraud. In addition, the government is seeking a civil penalty between $5,500 and $11,000 for each violation a court finds against Sprint.
The government has requested a jury trial in San Francisco.
It is unclear if the charges are exclusive to known domestic surveillance operations or if they extend to Sprint’s purported compliance with once-secret spy programs.
In 2006, Sprint was one of three telephone companies identified in a USA Today report that initially shed light on the U.S. government’s warrantless wiretapping of phone communications between suspected terrorists and other individuals.
Last year, a Sprint competitor was revealed to have cooperated with the government in handing over call logs and other subscriber information in bulk to spy agencies under a secret surveillance program. The classified court order, leaked by former government contractor Edward Snowden and published by The Guardian, only identified Verizon Wireless, but it is widely believed that all four major mobile telephone companies — including Sprint — cooperate with the government under the program.
