Obamaphone Fraud as High as 65%

phone fraud security ObamaphoneA massive portion of Obamaphone recipients are receiving the benefit after lying on their applications, according to a new 90-page report from the Government Accountability Office.

An undercover sting operation showed ineligible applications were approved 63 percent of the time, and a review found that 36 to 65 percent of beneficiaries in various categories had lied in easily detectable ways but were approved anyway.

The GAO reports that after basic eligibility checks were instituted, the cellphones-for-the-poor program shrunk by a third, from $2.2 billion to $1.5 billion. In the 30 days following the addition of meager but previously absent anti-fraud measures, monthly payments dropped $40 million. Incredibly, the 65 percent rate of easily detectable fraud is what remained after those huge numbers of fraudsters dropped off the rolls.

The GAO undercover investigators applied for free government phones 19 times using criteria that should have been rejected, and “we were approved to receive Lifeline services by 12 of the 19 Lifeline providers using fictitious eligibility documentation.”

All someone has to do to apply for free cellphone service is say that they are on another welfare program, such as food stamps or disability, known as SSI.

But nationwide, “only 35.5 percent of people claiming eligibility based on SSI could actually be confirmed as eligible,” the GAO found. That means 64.5 percent of people appear to have lied and may not even be poor. The rate at which the GAO’s undercover applications were approved works out to a nearly identical figure as the SSI metric.

The Federal Communications Commission took applicants at their word and did not consult intra-governmental databases to see whether they were actually on SSI. In Georgia, the percentage who appear to have lied about their SSI status to attain benefits is 79 percent.

That national rate of 64.5 percent is three times higher than the next-highest fraud-ridden federal program, the earned income tax credit, at 24 percent, according to PaymentAccuracy.gov.

Yet because the FCC doesn’t run data checks necessary to uncover fraud, it officially reports an improper payment rate of 0.45 percent—a clearly implausible figure that would make it the second-cleanest program in government.

Democratic Sen. Claire McCaskill of Missouri requested the audit after she was received a mailer at her home encouraging her to sign up for what it assured was a “free” phone. She called for criminal charges against phone company executives.

“Universal service fees” cellphone subscribers pay on their monthly bills supply money for the program, formally known as Lifeline, rather than funding from Congress.

The Anti-deficiency Act prevents agencies from spending more than funds appropriated by Congress, so the move effectively allowed the FCC unlimited spending for the program. Mignon Clyburn, the daughter of South Carolina Democratic Rep. Jim Clyburn, headed the FCC for much of the period scrutinized, and she remains a commissioner.

“While the Anti-deficiency Act applies to appropriated funds, since 2004, Congress has exempted the USF from the Anti-deficiency Act,” the GAO said.

Special interests have aggressively employed a bootleggers-and-Baptists model, with companies who profit greasing the wheels of government with donations and influence-peddling and poor people being used as props in marketing campaigns.

When Congress considered reforms, phone companies took out daily full-page ads in publications read by Capitol Hill staffers. The wife of the CEO of TracFone, the largest beneficiary of Obamaphones, was a mega-fundraiser for former President Barack Obama.

A Republican operative who later worked for President Donald Trump’s campaign took money from phone companies and set up a front group that implied that veterans would die if free phones came with more scrutiny.

In an infamous YouTube video during the 2012 presidential campaign, a woman said she would vote for Obama because “he gave us a phone,” adding that “everybody in Cleveland low minority got an Obamaphone.”

The cause of the fraud rates, shocking even by federal government standards, was always clear: The FCC allowed companies with a profit motive to sign up as many people as possible to determine eligibility.

Phone companies swooped into housing projects in vans with neon flashing lights to register users. A woman approached by one such representative outside of a welfare office told The Daily Caller News Foundation Investigative Group the man encouraged her to enroll her 2-year-old.

The companies weren’t checking eligibility and the FCC wasn’t ensuring they did or punishing those who didn’t. Additionally, the FCC failed to provide many companies with the intra-government databases that would give them the ability to perform some checks, the GAO found.

The program “relies on a ‘pay-and-chase’ model of oversight. ‘Pay-and-chase’ refers to making disbursements on the front end and relying on audits or reviews after the funds have been disbursed to check for any noncompliance,” the GAO said.

Only no one was doing much chasing.

“These reviews are fairly limited,” the GAO said. “FCC awarded a contract to … improve the oversight and operation of universal service programs. However, FCC officials told us that FCC subsequently terminated the contract and the study was not conducted.”

When the GAO focused on the program and analyzed data, investigators quickly found numerous red flags, any one of which could have been used to deny eligibility but weren’t.

“We found a total of 5,510 potential internal duplicates whereby the last name, first name, date of birth, and last four digits of the [Social Security number] of one record matched another record exactly,” the GAO wrote. More than 6,300 recipients were in government databases that showed the phone recipient as being dead.

The only available evidence was that the poor didn’t need the program, and it might not have been fulfilling its stated mission. The FCC has declined to assess whether the program actually does what it is supposed to do even in the face of previous negative audits.

For a time, there were more Obamaphones in Maryland than there were poor people in the state.

And a Pew Research Center report found that the problem of lack of access to technology is far less than it once was, the GAO noted. The FCC’s own data shows that “millions of Lifeline-eligible households are obtaining voice service without Lifeline,” while the fraud rates show that many of the people who do sign up are wealthier than those who don’t.

“While some academic studies have raised questions whether Lifeline is a costly and inefficient means of achieving universal service, FCC has not evaluated the program to determine whether it is efficiently and effectively meeting its goals, as we recommended in our March 2015 report,” the GAO said.

Instead, the program is being expanded to include free internet.


From - The Daily Signal - by Luke Rosiak

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Elena Tellez
3 years ago

Why should ANYONE get a free phone OR free Internet on taxpayer money? And why should a government program of any kind be put into place without a fail-safe backup to monitor potential fraud. Why aren’t employees who administer government programs told if they don’t follow honest rules, they will be fired? What a crock. This has to STOP. NOW.

Fred Smith
3 years ago

This is just one of many things Obama needs to be called on. If we had honest reporting we could easily spend the next four years hearing about all the fraud and ceaseless corruption.

3 years ago

This entire program with cell phones to the poor, SSI, whoever needs to be shut down immediately. Then a new one set up including internet to only be available to veterans, disabled veterans, and the disabled who require government support; no one else! Poor, no, there is no reason for them to have a cell phone, they want them, they can purchase TracFones which are very reasonable in cost. I use TracFone and buy time as needed. NO MORE CELL PHONES TO THE POOR OR WELFARE RECIPIENTS, PERIOD! NO INTERNET TO THE POOR, THEY CAN OBTAIN THEMSELVES IF THEY NEED… Read more »

3 years ago

Fraud in an Obama giveaway ?
No shock there.
The bureaucratss are gonna sign up as many as possible.
That way they perpetuate the program the agency
And assure themselves a government job.
Job security in the leviathan

June Vendetti
3 years ago

As I’ve been saying, the corruption runs high down in Washington, D.C. The swamp needs to be drained! These people who applied for free phones should return them, if they were not eligible to receive them. Obama has done a lot of things that he should not have done. This is just another example of his abuse of power. Thank God the GAO found out about the fraud and did something about it! It annoys me to no end how he took advantage of the middle class, who got stuck paying for his “free” programs, in the form of fees!… Read more »

3 years ago

The American people have been duped for a long time I encourage you to go on to you tube and watch Creature of Jekyll Island. There have been many of good men that have talked about how we are being duped. Obama was trained to do what he has done to America and has a life of royalty on the American tax payer. We the American people need more than the swamp drained as we need a new Constitutional government. Only we the people can change that and I realize that but stupidity is what stupidity does. Do your research… Read more »

3 years ago

Does anyone remember that our country was driven into the economic ditch by the Obama left? We are 20 TRILLION dollars in the hole, an amount that (according to BMO) is NOT SUSTAINABLE! Why do such liberal Socialist/Communist/Democrat entitlement programs still exist??? Why are healthy individuals that are able to work, NOT WORKING but continuing to receive handouts that put our once great nation further into an unrecoverable hole???? BECAUSE THERE ARE STILL PEOPLE OUT THERE VOTING FOR THE LEFT, THEREFORE, THE HOUSE AND SENATE STILL HAVE ENOUGH LEFTISTS TO BLOCK US FROM RESCUING OUR NATION!!!! AND THE LEFT CONTROLS… Read more »

3 years ago

As high as 65%?!!! I’m surprised it’s as LOW as 65%!

Tom Wilde
3 years ago

Well, when you combine crooked politicians, crooked government employees and crooked citizens what else would you expect?

Does anyone still wonder why the Lefties are so afraid of an investigation into VOTER FRAUD?

John H.
3 years ago

I’m glad to see such an enlightening expose’ such as this . . . However, does this really come as a shock to anyone? The GIMME’s have expertly been gaming the system without shame for over 50 years. Obama was just the latest in a long line of opportunists purporting or pretending to be bleeding hearts for political gain. “Vote for ME. I’ll give you MORE FREE STUFF than my opponents.” I wholeheartedly agree that this is wrong and should be stopped yesterday, unless, of course, there might be some politicians afraid of losing votes by taking back some improper… Read more »

Dolores Adams
3 years ago

The government ought to take all the phones away from the people that lied on their application.

3 years ago

My Maryland brother receiving social security got several(one at a time). of these “obamaphones (program started under Jimmy Carter)”. Somehow Tracphone with provider ATT allows more voice and data than most people purchase for themselves. And when he had to call 911 the polite recording told him to contact his ATT representative to get more voice minutes. He is ok, was probably supposed to text 911.

michael j mceachern
3 years ago

OUTRAGEOUS! FCC higher-ups should be dismissed, then imprisoned. Telephone execs should be criminally charged and given maximum available prison terms. The program should be shut down and those users found to have committed fraud should be heavily fined or jailed. I voted for Obama twice, and still think highly of him, but this is going to cause me to reconsider. This is as bad as his public bathroom foolishness. It’s obvious that Trump is a buffoon, a liar, a total incompetent, a thief, a whore and a misogynist, but even so it’s understandable that many people voted for him.

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