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US says Sprint fraudulently charged hidden fees for government wiretaps

US says Sprint fraudulently charged hidden fees for government wiretaps

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The US government is taking Sprint to court for allegedly inflating the cost of performing wiretaps by millions of dollars. In a complaint filed on Monday, the government said Sprint had asked law enforcement agencies for an extra $21 million in reimbursement for its surveillance costs over a period of several years, raising its total bill by around 58 percent. As a penalty for adding "hidden costs" in requests between 2007 and 2010, the Obama administration wants Sprint to pay damages and separate penalties of between $5,500 and $11,000 for each of 29,000 expense claims, a number that could add up to hundreds of millions of dollars.

Companies are entitled to reimbursement for the expense of performing wiretaps or installing pen registers and trap devices to capture phone records. But the government alleges that Sprint also included the cost of upgrading its systems to make this surveillance feasible. It's possible Sprint could have been reimbursed through another government agency, but lumping these budget items in with charges to law enforcement violated explicit FCC rules, says the filing. Because Sprint allegedly didn't lay out these costs in the bills, agencies paid out, not knowing about the unreasonable charges. In 2010, the price of surveillance dropped after Sprint stopped adding in equipment costs. But Sprint, the administration says, never paid back the money it had gotten before then.

Of the roughly $37 million in bills to federal agencies, $20 million went to the Drug Enforcement Administration, while the FBI was charged $10.5 million; Immigration and Customs Enforcement was billed for $2.4 million, and the Secret Service, US Marshals, and Bureau of Alcohol, Tobacco, Firearms and Explosives were all asked for smaller amounts. Previous reports have said that the CIA also reimburses companies for information requests, but any charges from intelligence agencies aren't listed here.

Sprint has told Reuters that it intends to fight the charges. "We have fully cooperated with this investigation and intend to defend this matter vigorously," said spokesman John Taylor. It will be prosecuted under the False Claims Act, which is meant to prevent deliberately fraudulent expenses from being submitted to the US government.