Forged Lifeline applications prompt calls for investigation of TerraCom and YourTel America

Several members of Congress are calling for the U.S. Department of Justice to launch a criminal investigation of two phone companies that have used forged records to receive federal funds.

Responding to a Scripps News investigation into the national Lifeline phone subsidy program, Sen. Claire McCaskill, D-Mo., and Rep. Tim Griffin, R-Ark., independently said they would request a federal probe of Oklahoma City-based TerraCom Inc. and affiliate YourTel America Inc.

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Additionally, Rep. Darrell Issa, R-Calif., chairman of the U.S. House Committee on Oversight and Government Reform, told Scripps he plans a hearing on Lifeline fraud. He blasted officials of the program's custodian, the Federal Communications Commission, "for not doing their job."

The lawmakers' plans emerged after a Scripps News investigation found 50 individuals listed on Lifeline applications from TerraCom and YourTel who said they'd never seen nor signed those applications made in their names. Former TerraCom and YourTel sales agents said that they, not applicants, fabricated and signed forms on instruction from superiors.

"That's a crime," McCaskill said. The former prosecutor said she would ask the FCC to bar TerraCom from Lifeline. TerraCom and YourTel last year collectively received nearly $90 million from the program, federal filings show.

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In a statement Monday to Scripps, a spokesman for TerraCom and YourTel said the companies had "zero tolerance regarding fraud or abuse … related to the Lifeline program. If any individual's information was used without their knowledge, those responsible should be held accountable."

The FCC declined to comment.

Issa said the FCC must do a better job policing the program, which he called "fraught with fraud -- fraud at the company level (and) certainly individual salesmen in desire for their commissions."

McCaskill said the FCC's Lifeline rules are lax, allowing "a lot of companies that -- I think graciously -- could be described as ‘fly-by-night' to get into this program to make a quick buck."

She called on the FCC to forbid companies from paying sales workers on commission, a practice identified in Scripps' reporting.

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