Phones for Dead People: GAO Report Uncovers Massive Fraud in ‘Obamaphone’ Program

Democratic presidential nominee U.S. Sen. Barack Obama (D-IL) speaks on a cell phone to a potential voter during a stop at a campaign office October 26, 2008 in Brighton, Colorado. Obama continues to campaign as Election Day begins to draw near as he runs against his Republican challenger, Sen. John …
Joe Raedle/Getty

A new report from the Government Accountability Office (GAO) reveals that the infamous “Obamaphone” program, meant to provide low-income Americans phone and internet service, is riddled with waste, fraud, and abuse.

A three-year investigation into the controversial Lifeline Program, requested by Senator Claire McCaskill (D-MO), says some 10.6 million Americans have an Obamaphone and more than 3.8 million or 36 percent of them may not be eligible.

GAO investigators sampled the program’s population and found that it had been paying for nearly 6,400 phones for people whom the government has listed as deceased; another 5,500 people were enrolled for two phones, and another group of people couldn’t prove they were eligible to receive their free phone.

“A complete lack of oversight is causing this program to fail the American taxpayer — everything that could go wrong is going wrong,” McCaskill said in a statement. “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.”

Originally conceived during the Reagan administration, Lifeline was initially meant to provide poor people with a phone in case of an emergency or, as time went on, to apply for a job.

Administered by the Federal Communications Commission, Lifeline requires telecommunication companies (At&t, Verizon, Sprint) to pay a percentage of their voice service revenues into a pool called the Universal Service Fund that is administered by an independent nonprofit company called the Universal Service Administrative Company. Telecom companies pass on the cost of their contributions to consumers, whose monthly bill includes a “universal service fee” charge.

The three-year GAO investigation found that the program has put away more than “$9 billion, as of September 2016 outside the Department of the Treasury in a private bank account.”

A spokesman for FCC Chairman Ajit Pai, who had already put the dubious program under review, said the “GAO report confirms that waste, fraud, and abuse are all too prevalent in the program.”

“Chairman Pai looks forward to working with his colleagues to crack down on the unscrupulous providers that abuse the program because every dollar that is spent on subsidizing somebody who doesn’t need the help by definition does not go to someone who does,” Pai’s spokesman added.

In an April interview on Fox Business Network’s Varney & Company, Commissioner Pai said he was told to keep quiet about potential fraud in the Obamaphones program.

Commissioner Pai and a group Congressional Republicans’ reforms plans for the program include setting a limited budget of $1.5 billion to the Universal Service Fund to cut waste and abuse within the program.

Follow Jerome Hudson on Twitter @jeromeehudson


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