WASHINGTON, DC. - Darryl Nelson studied the completed application form in his hands. He’d never heard of TerraCom Inc., a company offering subsidized phone service through the federal Lifeline program. But there was his home address in San Antonio, Texas, and his Social Security number. There was his signature on the bottom -- misspelled and in someone else’s handwriting.
“This is crazy,” said Nelson, 51. “This is wrong.”
Likewise, a Milwaukee woman was surprised to find her name, improperly spelled but linked to the correct address, on a TerraCom application. “I don’t even know no ‘Roby,’ ” said Ruby Dixon, 57, shown the form at her home.
They’re among at least 50 people who had applications submitted in their names, without their knowledge, for Lifeline, a Scripps News investigation finds.
TerraCom and its affiliate, YourTel America Inc., together provide Lifeline phone service in 21 states. Their issues reflect broader concerns about administration of the government program, which aims to ensure that low-income households have an open line to jobs and medical care.
Former contract agents for TerraCom and YourTel told Scripps they forged application signatures, manufactured addresses and retained legitimate applicants’ Social Security numbers and other sensitive personal information.
“The people were not signing those. We were, as the workers,” said Reginald Strode, 35, a former St. Louis-area contract sales agent for YourTel.
One former agent said he believes his boss “double dipped,” taking TerraCom applicants’ information and submitting it to another Lifeline company to collect extra commission. Scripps could not independently verify allegations.
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The Federal Communications Commission, which declined comment for this article, has warned Lifeline carriers that they face fines of up to $1.5 million if sales representatives break program rules. It hasn’t specified how companies must vet and supervise agents.
The Project on Government Oversight, a watchdog group in Washington, D.C., called for stricter controls across Lifeline and close scrutiny of TerraCom’s applications.
“The FCC needs to tighten up its program,” said Scott Amey, general counsel.
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Launched in 1985, Lifeline expanded to wireless service in 2005. Its price tag rose from $800 million in 2009 to $2.2 billion last year, the congressional Energy & Commerce Committee reported this spring .
The introduction of cellphones contributed to abuses. Customers found ways to receive duplicates ; phone companies double-counted some customers, forged applications or failed to verify eligibility.
In response, the FCC tightened regulations last year; the number of participating households plummeted from a peak of 18.2 million last August to 13.2 million in April.
Among the roughly 2,000 Lifeline phone companies, salespeople commonly have financial incentive to enroll as many customers as possible. Agents typically get one-time commissions of $3 to $5 per enrollment from participating companies, which receive $9.25 a month for each customer household -- $34.25 for those on tribal lands. American consumers pick up the tab for Lifeline and other federal communications programs through an average $2.73 monthly surcharge on their phone bills, the Government Accountability Office reported last year .
Launched in 2004, Oklahoma City-based TerraCom’s business mushroomed after acquiring YourTel in December 2010. That year, TerraCom and YourTel cumulatively received $21.3 million from Lifeline, Scripps’ analysis of federal filings show. Last year, their combined Lifeline disbursements reached $89.6 million.
Troubles also have mounted for TerraCom. Last year, the FCC began investigating after learning the company had been paid multiple times for the same customers. The FCC closed its investigation after TerraCom promised to increase oversight and pay $1 million in reimbursements and fees.
Questions about the company’s business practices have led to investigations in Illinois, Indiana, Oklahoma and Texas.
In Indiana, where TerraCom acquired 30,000 subscribers in less than a year, the state Utility Regulatory Commission sought answers from the firm’s chief operating officer at a July hearing. Dale Schmick rejected the suggestion that his company profited by cutting corners on Lifeline oversight.
“There has to be some assumption of morality here -- that we’re doing the right thing,” Schmick told the panel of Indiana regulators.
He didn’t acknowledge to the regulators that TerraCom had begun terminating all 700 Lifeline sales workers out of concern that rogue agents were breaking program rules.
Before terminating its sales program, TerraCom had a "comprehensive