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HP Settles E-Rate Fraud Case For $16.3 Million

Hewlett Packard has agreed to pay $16.3 million to the federal government to settle whistle-blower lawsuits over alleged E-Rate fraud.

The E-rate is a government programme that funds Internet connections in schools and libraries in poorer areas from money collected from telephone users.

Acting on tips from whistle-blowers, the US Department of Justice and Federal Communications Commission launched an extensive investigation into the matter.

According to the lawsuit, contractors working with HP and other companies lavished expensive gifts on Dallas and Houston independent school district personnel in an attempt to get inside information and win contracts.

The lawsuit states that school employees were granted expensive gifts, like trips on a yacht and tickets to the Super Bowl, which helped HP to secure E-Rate contracts worth $17 million in the form of HP equipment originally meant to be awarded through competitive bidding.

Most of the settlement money will be returned to the E-Rate programme. The two whistle-blowers in the Dallas case are set to share $1.4 million, and $800,000 will go to the whistleblowers in the Houston case.

Additionally, the FCC has said it will oversee the compliance agreement with HP.