U.S. Government Says Sprint Overcharged $21 Million For Surveillance Services


Sprint is facing charges from the U.S. government for allegedly overcharging federal agencies $21 million for wiretapping and other surveillance-related expenses.

According to a complaint filed Monday in the U.S. District Court for the Northern District of California, carrier giant Sprint submitted false claims to government agencies, including the FBI and the Drug Enforcement Agency (DEA), seeking reimbursement for "unallowable costs" when carrying out court-ordered wiretapping and other surveillance services.

Telecommunications companies are allowed to bill government agencies for "reasonable expenses" incurred when ensuring their equipment could be used by U.S. law enforcement to monitor and intercept phone calls, according to the filing. Sprint, however, allegedly inflated its charges to the government by 58 percent, or $21 million, between January 2007 and July 2010.

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In a statement to CRN, Sprint said it's fighting the charges.

"Under the law, the government is required to reimburse Sprint for its reasonable costs incurred when assisting law enforcement agencies with electronic surveillance," said Sprint spokesperson John Taylor. "The invoices Sprint has submitted to the government fully comply with the law. We have fully cooperated with this investigation and intend to defend this matter vigorously."

According to the filing, Congress in 1994 passed the Communications Assistance in Law Enforcement Act (CALEA), requiring carriers like Sprint to ensure that their equipment, facilities and services are capable of helping the government intercept phone calls.

In 2006, however, the Federal Communications Commission (FCC) ruled that carriers weren't allowed to seek reimbursement for the costs of "modifying equipment, facilities or services" related to CALEA compliance. Sprint, however, "knowingly" sought reimbursement for these items in its intercept charges to the government in 2007 to 2010, alleges the filing.  

The government's lawsuit against Sprint comes after President Barack Obama in January announced wide-ranging reforms regarding the National Security Agency (NSA) eavesdropping and monitoring U.S. citizens and allies. Obama said at the time that some of the biggest changes would relate to the mass collection of U.S. phone data, such as requiring officials to obtain a court order from a national security court before performing a search.

The government said in its filing Monday that it's seeking three times the amount of its said damages from Sprint, or $63 million.

PUBLISHED MARCH 4, 2014