Memphis, TN – Charles A. “Chuck” Jones, 51, a Kentucky businessman, has pleaded guilty to a decade-long scheme and conspiracy to defraud the Federal Communications Commission’s (FCC) E-Rate Program. Joseph C. Murphy, Jr., United States Attorney announced the guilty plea today.
According to information presented in court and the indictment, the E-Rate Program is an FCC program that provides money to needy schools, often in rural areas of America, for internet access and telecommunications services. The program has specific rules that forbid service providers to the schools, such as Jones, from paying kickbacks to school officials and consultants. The E-Rate Program also requires participating service providers to charge participating schools at least a 10% co-pay.
For approximately 10 years, Jones paid kickbacks to an E-Rate consultant working with the Missouri and Tennessee schools involved in this case. During this 10-year conspiracy, Jones, one of his employees, and the school E-Rate consultant, made false statements and submitted fabricated documents to the E-Rate Program regarding the required co-pays and the program’s fair and open bidding process. In essence, Jones and his co-conspirators used the victim schools as vehicles to fraudulently obtain money from the E-Rate Program for Jones. The loss to the E-Rate Program was approximately $6.9 million dollars.
“The E-Rate Program was designed to assist the children in our nation’s neediest schools, and we are committed to pursuing investigations into those who would corrupt this program for personal gain.” stated FCC-IG David Hunt. “The result in this case demonstrates the outstanding working relationship between the FCC Office of Inspector General and the U.S. Attorney’s Office for the Western District of Tennessee. We remain dedicated to our mandate to investigate fraud, waste, and abuse in FCC subsidy programs. The OIG will actively continue to support the investigation and prosecution of individuals who defraud this, and all other FCC programs established to ensure that students, school staff and library patrons have necessary access to the internet and the telecommunications tools and services they need.”
“The FBI is committed to investigating allegations of fraud related to federally funded programs, especially when those egregious schemes impact programs designed to help rural schools in need,” said Special Agent in Charge Douglas M. Korneski of the Federal Bureau of Investigation’s Memphis Field Office. “This guilty plea is the result of the focus and coordinated effort of the dedicated investigators and prosecutors involved.”
Jones has pleaded guilty to conspiracy to commit wire fraud which carries a maximum possible term of imprisonment of 20 years. He is scheduled to be sentenced on June 1, 2022, before United States District Judge Mark S. Norris in Memphis.
The FCC-Office of Inspector General and the Federal Bureau of Investigation (FBI) investigated this case.
Assistant United States Attorneys Murre Foster and Tony Arvin are prosecuting the case on behalf of the government.
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