FCC OIG—Semiannual Report to Congress October 1, 2021 – March 31, 2022

Federal Communications Commission

Office of Inspector General

Semiannual Report to Congress

October 1, 2021 — March 31, 2022
FCC OIG—Semiannual Report to Congress October 1, 2021 – March 31, 2022

THE FEDERAL COMMUNICATIONS COMMISSION

Left to Right

Chairwoman Jessica Rosenworcel, 

Commissioner Brendan Carr, Commissioner Geoffrey Starks, 

Commissioner Nathan Simington 
FCC OIG—Semiannual Report to Congress 1 October 1, 2021 – March 31, 2022

COVER MEMORANDUM

DATE: May 6, 2022

TO: Chairwoman Jessica Rosenworcel

Commissioner Brendan Carr

Commissioner Geoffrey Starks

Commissioner Nathan Simington

FROM Inspector General

SUBJECT Semiannual Report to Congress

In accordance with Section 5 of the Inspector General Act, as amended, 5 U.S.C. App. 3 § 5, 

I have attached my report summarizing the activities and accomplishments of the Office of the 

Inspector General (OIG) during the six-month period ending March 31, 2022. In accordance 

with Section 5(b) of that Act, it would be appreciated if this report, along with any associated 

report that you may prepare, be forwarded to the appropriate Congressional oversight 

committees within 30 days of your receipt of this report.

This report describes both audits and investigations that have been completed during the 

preceding six months, as well as those in process. Where appropriate, reports of completed 

audits and investigations have been forwarded to the Commission's management for action. 

I have been the Inspector General since June of 2009. OIG remains committed to maintaining 

the highest possible standards of professionalism and quality in its audits, investigations, 

inspections and consultations. We welcome any comments, suggestions or questions you may 

have. 

 

David L. Hunt

Inspector General

Enclosure
FCC OIG—Semiannual Report to Congress 2 October 1, 2021 – March 31, 2022

TABLE OF CONTENTS

INTRODUCTION ............................................................................................................................ 3 

OFFICE OF MANAGEMENT ......................................................................................................... 4

Office Staffing ................................................................................................................................... 4

Process Improvement ....................................................................................................................... 4

Legislative and Policy Matters.......................................................................................................... 5

OFFICE OF INVESTIGATIONS ..................................................................................................... 7

Activity During This Period.............................................................................................................. 8

Significant Activities ......................................................................................................................... 9

Office of Inspector General Hotline................................................................................................ 27

OFFICE OF AUDITS ..................................................................................................................... 28

Operations, Financial, and Information Technology Division...........................................28

Completed OFID Projects ............................................................................................................... 29

In-Process OFID Audits and Other Projects ................................................................................... 31

Universal Service Fund Division .................................................................................................... 32

In-Process USFD Audits and Other Projects .................................................................................. 32

REPORTING REQUIREMENTS .................................................................................................. 33 

APPENDIX A 

Peer Review Results ....................................................................................................................... 39 

APPENDIX B 

Reports Issued in Prior Periods for Which Management Decision is Pending........................40
FCC OIG—Semiannual Report to Congress 3 October 1, 2021 – March 31, 2022

INTRODUCTION 

The Federal Communications Commission (FCC or the Commission) is an independent 

regulatory agency, established by Congress to regulate interstate and foreign communications by 

radio, television, wire, satellite and cable. The FCC’s jurisdiction covers the fifty states, the 

District of Columbia, the Commonwealth of Puerto Rico and all U.S. territories.

The Commission is typically composed of five (5) members who are appointed by the President 

and subject to confirmation by the Senate. Normally, one Commissioner is appointed or 

reappointed each year, for a term of five (5) years. One of the members of the Commission is 

designated by the President to serve as Chair, or chief executive officer of the Commission. 

Jessica Rosenworcel currently serves as Chairwoman. Brendan Carr, Geoffrey Starks and 

Nathan Simington currently serve as Commissioners. Most of the FCC's employees are located 

at the FCC’s Headquarters at 45 L Street NE, Washington, DC. Field offices and resident agents 

are located throughout the United States.

The Office of Inspector General (OIG) is dedicated to ensuring compliance with the 

requirements of the Inspector General Act of 1978, 5 U.S.C. App., as amended (IG Act), and 

assisting the Commission in its continuing efforts to improve operational and program 

effectiveness and efficiency. Management matters are coordinated with the Chairwoman’s 

office. In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 

2010, the Inspector General (IG), David L. Hunt, reports directly to the full Commission. The 

principal assistants to the Inspector General are Assistant Inspectors General (AIG) and they are: 

Johnny Drake, AIG for Management

Sharon R. Diskin, AIG for Investigations and Counsel to the IG

Robert McGriff, AIG for Audits

In this semiannual report, we discuss both the major accomplishments and activities of OIG 

from October 1, 2021 through March 31, 2022, as well as its goals and future plans.
FCC OIG—Semiannual Report to Congress 4 October 1, 2021 – March 31, 2022

OFFICE OF MANAGEMENT

Office Staffing 

Currently our office consists of 46 experienced professional and administrative staff including 

auditors, investigators, investigative attorneys, administrative management specialists, program 

and management analysts, a paralegal, an industry economist, an IT specialist, a computer 

forensics investigator, a budget officer, a data analyst, and a writer/editor. Due to retirements and 

routine staff turnover, we have initiated a recruiting process, with an emphasis on more junior 

positions. This will help the office budgetarily, allow us to grow from within, and provide newer 

hires the benefit of the depth of our staff’s knowledge and experience. Further, this approach 

will help to ensure our staff has a career path to follow that offer opportunities for growth and 

advancement

Continuous training and education increase the expertise of all staff and satisfy the training 

requirements mandated by various professional organizations. Toward that end, staff attended 

and completed courses sponsored by government agencies, including the Government 

Accountability Office, Council of Inspectors General on Integrity and Efficiency (CIGIE), the 

National Defense University, and the Federal Law Enforcement Training Center (FLETC); and 

professional organizations and other training vendors, such as the American Institute of Certified 

Public Accountants, Institute of Internal Auditors, Association of Governmental Accountants, 

Association of Certified Fraud Examiners, Information Systems Audit and Control Association, 

Management Concepts, National Association of State Auditors, Controllers and Treasurers, and 

the Graduate School USA.

Process Improvement 

The COVID-19 pandemic has dramatically changed processes across the board within OIG. 

Because all staff have been working remotely full-time for more than two years, new 

technological solutions now facilitate remote meetings, investigations, audits, an external peer 

review of another OIG, staff recruitment and hiring, data reporting, training, and overall office 

management in a remote environment. 
FCC OIG—Semiannual Report to Congress 5 October 1, 2021 – March 31, 2022

Procedural changes, coupled with the logistics associated with the FCC’s relocation to a new 

facility, have presented significant challenges. While we have successfully met these challenges, 

we learned lessons and made adjustments. Throughout, the staff exhibited professionalism, 

dedication, and commitment to the agency’s mission and to serving the public interest.

Secure Office Space for OIG

Because of the COVID-19 pandemic OIG was hampered in viewing the new office 

accommodations before the build-out. Now that there is better access to the new facility, we are 

working with FCC Management to assist us in solving various concerns. One concern of note is 

the lack of more secure space for OIG given that we work on criminal investigations and have 

access to confidential Grand Jury material. OIG requires this secure space to prevent the release 

of critical OIG-only data. Under the current layout, several OIG staff who work on critical law 

enforcement data are assigned open cubicles to carry out this most sensitive work. Secure office 

space is, obviously, common for any Inspector General office in the Federal Government. 

Legislative and Policy Matters 

Pursuant to section 4(a)(2) of the IG Act, OIG monitors and reviews existing and proposed 

legislation and regulatory proposals for their potential impact on OIG and the FCC’s programs 

and operations. We perform this activity to evaluate legislative potential for encouraging 

economy and efficiency, while helping to reduce fraud, waste, abuse, and mismanagement.

Further, during the reporting period, we continued to share updated recommendations to prevent 

and detect fraud, waste, and abuse in Universal Service programs with Commission and 

Universal Service Administrative Company (USAC) staff. See infra pp. 10-14.

As a result of the COVID-19 pandemic, Congress enacted several statutes directly impacting the 

FCC’s subsidy programs. Tasked with supporting efforts to prevent and detect fraud, waste, 

abuse, and mismanagement and to mitigate major risks that cut across program and agency 

boundaries, OIG is committed to promoting transparency and conducting aggressive oversight of 

the more than $10 billion in FCC pandemic response funding included in the American Rescue 

Plan Act (ARPA), the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and other 

pandemic response legislation to ensure taxpayer dollars are used effectively and for their 
FCC OIG—Semiannual Report to Congress 6 October 1, 2021 – March 31, 2022

intended purposes in response to this public health and economic crisis. Further, Congress 

significantly expanded broadband subsidies in the Infrastructure Investment and Jobs Act.

We have been actively involved in monitoring the Commission’s activities in furtherance of 

these statutes and, as discussed infra, we have worked with the agency to ensure that any new 

regulations implementing the programs guard against fraud, waste and abuse. 
FCC OIG—Semiannual Report to Congress 7 October 1, 2021 – March 31, 2022

OFFICE OF INVESTIGATIONS 

OIG Office of Investigations (OI) covers a wide range of topics touching on myriad aspects of 

the FCC’s mission and programs. Most significantly, our investigations often address allegations 

of criminal misconduct or civil fraud in the Commission’s telecommunications subsidy 

programs. We deal with complex investigations, large criminal conspiracies, and matters 

involving complex financial transactions throughout the United States and its territories. These 

difficult and wide-ranging cases often require substantial investigative expertise and resources, 

including personnel on the ground across several states, or high-grade forensic tools and the 

expertise to use them. In these cases, we have always received, and are grateful for, the 

assistance of other agencies, especially the Offices of Inspector General of other federal 

agencies, the Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI).

OI receives and investigates complaints regarding the manner in which the FCC executes its 

programs, how it handles its operations administratively, and how the FCC conducts its oversight 

responsibilities. Allegations come from a variety of sources including FCC managers and 

employees, contractors, program stakeholders, Congress and the public at large. Whistleblower 

requests for anonymity are honored, except when identification is needed for law enforcement 

purposes. Allegations may also be referred by OIG auditors.

In addition to investigations regarding Commission programs, OI investigates allegations of 

improper employee and contractor activity implicating federal statutes or regulations establishing 

standards of conduct and procedure. While we have made recent additions to our staff, OI, like 

most government offices, has an ever-increasing volume of work and limited resources. Thus, 

matters having the potential to significantly impact federal funds, important FCC missions or 

programs, or the basic integrity and workings of the agency receive the highest priority for 

investigation and assignment of resources.

Statutory Law Enforcement Authority

The Inspector General Act of 1978, 5 U.S.C. app. 3, established criminal investigative 

jurisdiction for the offices of presidentially appointed Inspectors General. The enforcement 

powers and responsibilities of presidentially appointed Inspectors General were enhanced to 

provide firearms, arrest, and search warrant authorities to investigators with the enactment of 
FCC OIG—Semiannual Report to Congress 8 October 1, 2021 – March 31, 2022

section 812 of the Homeland Security Act of 2002. FCC OIG—Semiannual Report to Congress 

April 1, 2020 – September 30, 2020. 

Pursuant to the guidelines, OI planned to send two investigative attorneys to the Basic Criminal 

Investigator Training Program at FLETC in Glynco, Georgia. The course in which OI intended 

to place our two attorneys was cancelled as a result of the COVID-19 pandemic. With the reopening of Federal buildings due to the current waning of the pandemic, OI now intends for this 

training to go forward as soon as possible. The IG is working with both the Chairwoman and the 

General Counsel to secure this training. Although the position of Criminal Investigator was 

posted before by the FCC, and OI did not find a suitable candidate for our specific needs, the 

current administration is in the process evaluating the entire process. OIG hopes and expects the 

process to be completed soon, helping OI to further utilize OIG’s law enforcement authority to 

further its already robust work in the prevention and deterrence of fraud, waste, and abuse of 

FCC programs. 

Activity During This Period 

Cases pending as of October 1, 2021................... 42

New Cases....................................................4

Cases Closed...................................................5

Cases pending as of March 31, 2022..................... 41

These numbers do not include preliminary reviews of allegations, from the Hotline or other 

sources, or matters involving minimal analysis of the allegations or evidence.
FCC OIG—Semiannual Report to Congress 9 October 1, 2021 – March 31, 2022

Significant Activities 

Several of the Office’s significant activities are described below. However, we discuss 

investigations only when and if information may be made public without negative impact on law 

enforcement activities, including criminal prosecutions, and without divulging investigative 

techniques. Thus, many matters could not be considered for inclusion in this summary. During 

this reporting period, we have been working on numerous investigations upon which we cannot 

report, including matters before a Grand Jury and sealed qui tams. 

Investigations into Fraud in FCC Subsidy Programs 

The Universal Service Fund (USF), administered by USAC on behalf of the FCC, provides 

support through four programs: High Cost, Schools and Libraries (E-Rate), Lifeline, and Rural 

Health Care.

The High Cost Fund provides support to certain qualifying telecommunications carriers serving 

high-cost (primarily rural) areas. Telecommunications carriers receiving support must offer 

services to rural area consumers at rates reasonably comparable to the rates for services offered 

in urban areas. The Connect American Fund (CAF) was designed to transition the program away 

from its predecessor the High Cost Fund, which provided voice-only telephone service, to 

providing multi-purpose networks capable of offering broadband Internet access. Disbursements 

for the High Cost Program, including legacy High Cost Program and CAF support, totaled $5.1

billion in calendar year 2021.

The Schools and Libraries Program, also known as “E-Rate,” provides support to eligible 

schools and libraries in every U.S. state and territory to help fund telecommunication services, 

Internet access, and internal connections. In E-rate funding year (FY) 2021, USAC received 

over 35,000 applications from schools and libraries seeking over $3.1 billion in E-rate support to 

over 125,000 schools and libraries. In calendar year 2021, USAC authorized disbursement of 

over $2.156 billion in E-rate support. 

As part of the American Rescue Plan Act of 2021, Congress authorized the Emergency 

Connectivity Fund (ECF), a $7.17 billion program to help schools and libraries provide the tools 

and services their communities need for remote learning during the COVID-19 emergency 
FCC OIG—Semiannual Report to Congress 10 October 1, 2021 – March 31, 2022

period. For eligible schools and libraries, the ECF Program will cover reasonable costs of laptop 

and tablet computers, Wi-Fi hotspots, modems, routers, and broadband connectivity purchases 

for off-campus use by students, school staff, and library patrons. Since its June 2021 launch, the 

Commission has committed nearly $4.69 billion in funding connection over 12.5 million students 

with broadband connections and equipment. The ECF Program is administered by USAC. 

The Lifeline Program provides support to eligible telecommunications carriers that, in turn, offer 

discounts on telecommunications services to eligible consumers. In 2021, Lifeline support was 

approved for disbursement totaling more than $723 million.

The Consolidated Appropriations Act of 2021 established the Emergency Broadband Benefit 

(EBB) Fund, which consisted of $3.2 billion to the FCC to help low-income households pay for 

broadband service and connected internet devices, as part of a response to the COVID-19 

emergency. The EBB Program provided a discount of up to $50 per month for broadband 

service for eligible customers. The EBB Program was intended to be a temporary response to 

the pandemic emergency. However, in the Infrastructure Investment and Jobs Act, Congress 

appropriated money for a long-term program subsidy program known as the Affordable 

Connectivity Program (ACP). The ACP is a $14 billion benefit program intended to ensure 

households can afford the broadband they need for work, school, healthcare and more. This 

program provides a discount of up to $30 per month toward internet service for eligible 

households and up to $75 per month for households on qualifying Tribal lands. 

The Rural Health Care (RHC) Program provides support to eligible rural health care providers 

that qualify for reduced rates for telecommunications and broadband services. This support 

subsidizes their access to these services, making telehealth services affordable in rural areas. 

Demand for RHC Program funding has risen over the past three years. In 2021, the FCC 

announced unused funds from prior years would be carried forward, resulting in a $621 million 

cap in total available funds to eligible health care providers for FY 2021. RHC Program 

approved disbursements totaled more than $556 million with over 11,100 participating health 

care providers receiving commitments in 2021. 

The COVID-19 Telehealth Program provides funding to eligible health care providers 

responding to the COVID-19 pandemic to support telecommunications services, information 

services, and connected devices needed to provide critical connected care. This program was 
FCC OIG—Semiannual Report to Congress 11 October 1, 2021 – March 31, 2022

established in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, providing 

$200 million in funding. The Consolidated Appropriations Act (CAA) provided an additional 

$249.95 million to fund a second round of the COVID-19 Telehealth Program.

OIG is also responsible for oversight of USF receipts collected from telecommunications 

providers offering international and interstate telecommunications services. Those 

telecommunications providers are collectively referred to as contributors. Over 3,300

contributors submitted total USF contributions of approximately $9.1 billion in 2021. 

The bulk of OI’s work involves investigating and supporting civil and criminal investigations 

and prosecutions of fraud in the FCC subsidy programs. The Assistant Inspector General for 

Investigation (AIGI) and investigations staff routinely work with other state, local and federal 

agencies on these matters. These coordinated investigatory and prosecutorial efforts, especially 

those involving DOJ, the Department of Education (DOE) and its OIG, and various U.S. 

Attorneys, have resulted in many successes, including civil settlements and criminal convictions.

Most of our ongoing investigations are not known to the public and even some closed 

investigations cannot be disclosed because of sensitivities that could impact related ongoing 

matters. Specifically, the OI is engaged in multiple, ongoing, large-scale investigations, as well 

as Qui Tams under seal, seeking damages pursuant to the Federal False Claims Act (FCA). We 

hope to share details about these matters in the near future. We have, however, begun to 

disseminate information that can be made publicly available more widely, with the expectation 

that details of our work will serve as a deterrence against future fraud. In addition to posting 

news releases on the FCC OIG’s webpage and on our social media sites, in response to OI’s 

request, USAC has also been posting OI headlines, such as press releases and other significant 

items, to USAC’s website.

Highlighted below are a few matters that have had public developments during the reporting 

period:
FCC OIG—Semiannual Report to Congress 12 October 1, 2021 – March 31, 2022

Lifeline, Emergency Broadband Benefit Program and Affordable Connectivity Program

Proactive work

EBB/Community Eligibility Provision Advisory

On November 22, 2021, OIG issued an advisory letter to alert EBB program providers, 

beneficiaries, and the public to improper and fraudulent EBB program enrollments made in 

connection with the USDA’s National School Lunch Program’s Community Eligibility Provision 

(CEP). Specifically, the advisory warned that providers’ sales agents were enrolling households 

in the EBB Program by falsely claiming those households included a dependent child who 

attended a CEP school.

The CEP allows high-poverty schools and school districts (CEP schools) to provide breakfast 

and lunch at no charge to all students, regardless of income status. Households do not apply for 

CEP school lunch benefits, and government agencies do not maintain databases that list all of the 

households with a dependent child who attends a CEP school. Under EBB program rules, if a 

dependent child of a household attended a CEP school on the Food Research & Action Center 

list of CEP Schools, the household qualified for EBB support.

USAC verified household eligibility to participate in the EBB Program using the National 

Verifier. Households which participate in other qualifying programs like SNAP and Medicaid 

are registered in centralized databases, and the Verifier confirmed their EBB eligibility by 

matching consumer information in the SNAP and Medicaid databases. The Verifier could not 

confirm CEP household participation by querying a CEP database as no such database exists. 

Instead, prior to OI’s advisory, the National Verifier required the applicant (or the assisting sales 

agent) to identify the CEP school the child attended by selecting from a dropdown list of CEP 

schools in the database. Applicants and sales agents could select any CEP school or school 

district on the database list without furnishing evidence that the applicant’s child attended the 

CEP school selected. The National Verifier required the consumer or sales agent to enter 

information about the dependent child who attended the CEP school. 

OI determined sales agents working for EBB providers learned they could bypass program 

eligibility safeguards merely by indicating an applicant had a child who attended a CEP school 
FCC OIG—Semiannual Report to Congress 13 October 1, 2021 – March 31, 2022

and then selecting a CEP school from the National Verifier dropdown list. Many sales agents 

used the same schools over and over again to complete fraudulent enrollments. As a result, OI’s 

analysis of EBB program data revealed that many more households claimed they had a 

dependent child at specific CEP schools than the number of students who were actually enrolled 

in those schools. 

The advisory discussed a number of examples where schools were used as the basis to enroll 

more households in the ACP than the schools had students enrolled. One Florida CEP school 

was used to enroll more than 1,800 households in the EBB Program even though only 200 

students attended the school. Another Florida CEP school with 152 students was used as the 

basis to enroll more than 1,000 households in the EBB Program. OI found similar patterns in 

other states including Alaska, Arizona, California, Colorado and New York.

The advisory also revealed other indicia of fraud among the CEP-based EBB enrollments. 

• More than 80% of CEP-based enrollments failed to identify the dependent child who 

attended the CEP school as required by the National Verifier.

• Repetitive use of provider retail addresses as the purported home address for dozens of 

households. [OI later determined sales agents used various provider retail addresses as 

the purported home addresses for over 1,800 CEP-based EBB enrollments.]

• Unreasonable distances between the address of EBB households and their purported CEP 

school. For example, the advisory noted that more than 2,000 EBB households lived 

more than 50 miles from their designated CEP school. 

The providers responsible for these improper enrollments paid sales agents commissions for each 

successful EBB enrollment. OI determined sales agents were incentivized to engage in this 

fraudulent conduct to maximize the commissions they earned. 

The FCC took a number of steps to remediate the fraud uncovered in OI’s advisory. First, the 

Commission changed the National Verifier application process to require households seeking to 

qualify for the EBB Program based on CEP participation to provide additional information to the 

National Verifier about the student who attended a CEP school and to provide official school 

documentation demonstrating that the household had a child enrolled at the designated CEP 

school. 
FCC OIG—Semiannual Report to Congress 14 October 1, 2021 – March 31, 2022

Second, the Commission directed USAC to reverify the eligibility of households enrolled in EBB 

based on the CEP. USAC recently completed the reverification. Of the 185,844 households who 

enrolled in EBB based on CEP participation, only 9,843 (5.3%) households requalified while 

176,002 households were de-enrolled from the program. While a number of factors may 

influence the outcome of reverification efforts, we are confident our advisory has saved the 

program millions of dollars each month in wasteful disbursements. The Commission also 

announced it would take other remedial measures including recouping improperly disbursed 

funds. 

In addition to issuing the advisory, OI recommended that USAC lock out 36 sales agents who 

participated in the fraudulent conduct. USAC completed the recommended lockouts in 

December 2021 and locked out an additional 40 sales agents engaged in similar conduct on its 

own initiative in March 2022. OI and USAC continue to consider evidence for additional sales 

agent lockouts. 

OI Recommendations to Mitigate Fraud, Waste and Abuse in the Affordable Connectivity 

Program

On November 15, 2021, the President signed the Infrastructure Investment and Jobs Act which 

modified and extended the EBB Program into a longer-term broadband subsidy program, the 

ACP. As we reported in our October 1, 2020 – March 31, 2021 SAR, OI previously made a 

number of recommendations to mitigate fraud, waste and abuse in the EBB Program when the 

Commission was drafting EBB program rules, many of which were adopted. Thus, after the 

Commission sought comment on the implementation of the ACP, OI provided to the FCC a set 

of detailed recommendations on ways to reduce fraud, waste and abuse in the new program. OI 

made recommendations regarding provider participation, provider responsibility, sales agents, 

household eligibility, enrollment, recertification and de-enrollment, usage, provider certifications 

and reimbursement, consumer protection, document retention, and enforcement. The 

Commission adopted many of our recommendations.

• Prohibiting Providers from Paying Commission-Based Compensation to Sales Agents: 

OI investigations have repeatedly demonstrated that sales agent enrollment of subscribers 

is the biggest entry point of fraud in the Lifeline Program and programs based on 

Lifeline. While the Commission declined to adopt our recommendation for prohibiting 

commissions paid to sales agents involved in EBB enrollments when it issued the EBB 
FCC OIG—Semiannual Report to Congress 15 October 1, 2021 – March 31, 2022

program rules, OI presented additional evidence of improper sales agent conduct, 

including OI’s CEP advisory, to convince the Commission to prohibit the payment of 

commissions to sales agents by providers under ACP rules. Nevertheless, OI is aware of 

attempts by providers and other provider-linked entities to convince the Commission to 

limit the scope of the prohibition in ways that may harm program integrity. OI will 

remain watchful of developments related to the compensation of sales agents who market 

ACP service. 

• Intra-Provider Duplicates: The Commission adopted our recommendation to require ACP 

providers to check their internal records for duplicates before enrolling a household in the 

ACP. Not only does the Lifeline Program already require providers to complete this step 

prior to enrollment, OI shared the results of our preliminary analysis which showed more 

than 13,000 duplicate accounts were enrolled in the EBB Program by early December. 

The duplicates OI found consisted solely of individual consumers who had two or more 

concurrent services, including one consumer who had 10 active EBB accounts. 

Moreover, OI observed that many of the duplicate accounts were enrolled by a single 

provider. Providers are best equipped to check their own records before providing a 

consumer with ACP service. [OI also shared our analysis with USAC, which led to 

improvements in the duplicate-detection capabilities of NLAD.]

• Provider Certifications: OI recommended a number of certifications accompany various 

filings made by providers including reimbursement requests. In addition, the 

Commission included a number of recommendations related to provider responsibility 

and liability in the annual certification providers are required to execute. 

• Various Document & Record Retention Requirements: The Commission adopted many 

of OI’s recommendations related to document and record retention requirements to 

facilitate OIG investigations and audits. 

Despite adopting many important OI recommendations, the Commission declined to implement 

other recommendations we continue to believe are important for program integrity:

• Last Four Digits of Consumer’s Social Security Number (L4SSN): OI recommended the 

Commission require consumers provide their L4SSN as is already required for Lifeline 

enrollments. The National Verifier and NLAD use the L4SSN to complete the ThirdParty Identity Verification (TPIV) check during enrollment. The TPIV check serves four 

interrelated goals: 1) preventing the enrollment of non-existent, fictitious, and fabricated 

identities; 2) preventing the enrollment of deceased people; 3) confirming that the 
FCC OIG—Semiannual Report to Congress 16 October 1, 2021 – March 31, 2022

essential PII (name, DOB, and L4SSN)—as submitted by the provider (or the 

customer)—are reasonably accurate and rejects those that are inaccurate; and (4) helping 

USAC systems identify and block duplicative enrollments. The Commission’s failure to 

adopt this recommendation makes those processes less robust. 

• Enrollment/Transfer Verification Recommendation: To address the numerous complaints 

that have been filed with the Commission and USAC concerning nonconsensual EBB 

service transfers and enrollments, leading to fraud and waste, OI recommended that the 

Commission require households to independently verify their new enrollment and 

transfer requests through an affirmative response to a text or email. OI investigations 

show that too many consumers were enrolled in Lifeline and EBB without their 

knowledge or consent and too many consumers who were enrolled never receive the 

service. Moreover, the consumer email and phone contact information furnished by 

providers during the enrollment process is frequently invalid calling into question the 

sufficiency of the enrollment processes. Requiring consumers to confirm enrollment in 

these programs using the contact information furnished during the application process 

would remediate many of these concerns. 

• Usage Records: After repeated failures of providers to adequately measure usage and deenroll customers for non-usage in the Lifeline Program, OI recommended that the 

Commission require providers to report customer data usage when seeking monthly 

reimbursement for ACP service. The Commission has a usage requirement to prevent 

large-scale program waste—to ensure federal funds are not paid out for a service the 

consumer is not using. Providers already must analyze consumer usage to comply with 

the ACP usage requirements. The burden of sharing the results of their analysis would be 

minimal compared to the many benefits of having that data available for policymakers 

and law enforcement. Our investigative experience in the months since we first made 

this recommendation only deepens our concern that some providers are seeking 

reimbursement for services that are not being used by consumers. 

In addition to the recommendations we shared with the Commission in early December 2021, we 

also alerted the Commission to anomalies we detected in EBB enrollment data related to the 

Representative Accountability Database (RAD) and recommended the Commission enhance its 

RAD requirements. Specifically, we determined that a number of providers, including large 

providers, 1) failed to register their agents in RAD; and 2) failed to furnish information regarding 

sales agent involvement in National Verifier and NLAD transactions. 
FCC OIG—Semiannual Report to Congress 17 October 1, 2021 – March 31, 2022

As we pointed out in our recommendations at the time, the RAD, like other databases, is only as 

useful as the information collected and recorded. Unless providers register all of their agents and 

furnish complete information regarding agent involvement in enrollment transactions, the 

Commission cannot fully leverage the potential of the RAD to reduce fraud, waste, and abuse in 

the program. 

Collaboration With State Law Enforcement Uncovers 3,600 Fraudulent Lifeline and EBB 

Accounts 

As result of information exchanged between OI and state law enforcement personnel between 

September and December 2021, OI identified over 3,000 Lifeline accounts and over 600 EBB 

accounts that were enrolled using fraudulent state benefits to qualify for Lifeline and EBB 

benefits. 

In March 2022, OI sent a memo to FCC Office of Managing Director and FCC Wireline 

Competition Bureau (WCB) recommending they either de-enroll or re-verify the 3,600 accounts 

we identified as having been enrolled based upon fraudulently created state public benefits 

accounts. We also recommended the agents responsible for creating the 3,600 enrollments be 

locked out from further activity in these programs. Finally, we recommended the Commission 

consider enhancing the process by which agents register with the RAD to make it more difficult 

for agents to register using stolen identity information. 

ACP Deceptive Enrollment Practices Advisory

OIG issued an advisory on March 11, 2022, to alert ACP providers, beneficiaries, and the public 

about deceptive and improper enrollment practices used by several providers in their online 

enrollment processes for Lifeline and ACP services. OI observed that during the online 

application process, in contravention of the FCC’s rules, consumers seeking only Lifeline service 

could be misled into enrolling in ACP service. Specifically, the providers’ application process 

forced consumers who apply for Lifeline service to agree either to apply for new unwanted ACP 

service or to transfer their existing ACP service as a condition of successfully completing their 

Lifeline application. 
FCC OIG—Semiannual Report to Congress 18 October 1, 2021 – March 31, 2022

Lifeline provides monthly support to carriers of up to $9.25 per eligible subscriber while a claim 

for an ACP subscriber is, separately, up to an additional $30 per month; even more money is at 

issue in Tribal or a high cost area. In at least one instance, the provider required the consumer to 

transfer their current ACP service even after the consumer indicated they only sought Lifeline 

service from that provider. The application even pre-populated the subscriber’s initials to 

continue with an enrollment which included ACP service. In addition to issuing the advisory, OI 

referred specific information regarding several providers to the FCC Enforcement Bureau for 

investigation. 

In response to OI’s findings, WCB announced supplemental program integrity measures, 

including requiring USAC to conduct program integrity reviews of the enrollment and 

onboarding practices of ACP providers.

USAC Modifies its Website Following OI Recommendation 

At OI’s recommendation, USAC modified its Lifeline website which had directed Lifeline 

subscribers to file reports with the FCC’s Lifeline Fraud Tip Line when reporting matters such as 

identity theft, duplicate accounts or unqualified subscribers who were receiving Lifeline service. 

These directions contributed to the volume of reports the Tip Line received, including complaints 

about a Lifeline company’s poor performance, which were more appropriately addressed to the 

FCC’s Consumer Complaint Center rather than the Fraud Tip Line. The website now directs 

Lifeline subscribers and the general public to file such reports with USAC directly or the FCC’s 

Consumer Complaint Center. 

The Fraud Tip Line, as administered by the FCC’s Enforcement Bureau, is designed to receive 

reports of fraudulent activity by companies and agents, rather than to capture reports about a 

Lifeline subscriber having more than one account, fraudulent enrollments by unqualified 

individuals, or to provide assistance with consumer complaints or identity theft resulting in 

fraudulent enrollments. As a practical matter, the public was disserved when it was directed to 

file these reports on the Fraud Tip Line because they were not addressed by the Enforcement 

Bureau. Moreover, USAC was unknowingly disbursing Lifeline funds to some Lifeline 

providers for duplicate accounts and for individuals who were not qualified to receive Lifeline 

service. 
FCC OIG—Semiannual Report to Congress 19 October 1, 2021 – March 31, 2022

USAC, rather than the Commission, can now efficiently resolve these matters because it can 

investigate reports about subscriber eligibility, duplicate accounts and stolen identities directly 

using NLAD and the National Verifier. And, subscribers will now be directed to file an informal 

complaint with the FCC’s Consumer Complaint Center to resolve complaints about their Lifeline 

provider’s performance.

Ongoing Investigations

TracFone Wireless, Inc. Settles a False Claim with the Department of Justice and the FCC 

On March 29, 2022, the U.S. District Court for the Middle District of Florida approved a civil 

settlement between DOJ, the FCC and TracFone Wireless, Inc. (TracFone), a 

telecommunications carrier based in Miami, Florida. In addition to the funds TracFone already 

returned to USAC, TracFone agreed to pay $2.5 million as part of a civil settlement to resolve 

allegations it violated the FCA by enrolling more than 175,000 ineligible subscribers in the 

Lifeline Program. A detailed investigation by our office and the Justice Department revealed 

that between 2012 and 2015 TracFone did not have adequate internal controls and other Lifeline 

compliance measures in place, including adequate personnel to monitor the enrollment process. 

All of the subscribers improperly claimed were located in Florida and the majority of these 

subscribers who were enrolled were ineligible veterans or Medicare beneficiaries. TracFone 

hired marketing companies, including Elite Promotional Marketing, Inc. (Elite), to conduct inperson “street team” marketing. Elite and other marketing companies then retained individuals, 

typically through commission-based payments, to act as independent sales agents. Sales agents 

working on the TracFone marketing campaign in Florida, particularly at Elite, learned that 

TracFone’s computer software contained a glitch that allowed any person to enroll in Lifeline if 

certain steps were followed and targeted these and other individuals who otherwise would not 

qualify. The Florida agents exploited this loophole to increase their consumer enrollments and 

commission payments and focused on specific populations, such as veterans. 

The government also alleged that, in addition to the glitch itself, TracFone failed to adequately 

review the applications and did not properly investigate reports of ineligible subscribers who 

were successfully enrolled in the program via this loophole. TracFone OA learned of the 
FCC OIG—Semiannual Report to Congress 20 October 1, 2021 – March 31, 2022

software glitch through issues raised by Public Service Commission of Florida, in August 2015. 

TracFone then repaid more than $10.9 million to the Lifeline Program.

Contemporaneous with the civil settlement, TracFone agreed to enter into a corporate 

compliance plan with the FCC. The compliance agreement requires TracFone to designate a 

compliance officer, establish a compliance oversight team comprised of senior executives, train 

TracFone employees and its marketing agents on both the Lifeline Program and the ACP, require 

background checks for TracFone employees and marketing agents, and maintain comprehensive 

monitoring and reporting requirements. Violation of the compliance agreement will subject 

TracFone to significant remedies. 

The settlement with TracFone resolves a lawsuit filed under the whistleblower provisions of the 

FCA, which permits private parties to file suit on behalf of the United States for false claims and 

share in a portion of the government’s recovery. The civil lawsuit was filed in September 2015 

by a former Lifeline sales representative at Elite who alleged that he and other agents in Florida 

were trained by Elite to enroll veterans by choosing non-applicable qualifying Lifeline programs. 

Elite previously settled with the United States for $95,000 based on ability to pay. 

OI staff began reviewing data in the $3.1 billion program to identify potential fraud and has 

begun work developing potential cases in this area. OI anticipates issuing advisory letters and 

opening new cases in the next reporting period based on its findings. 

While the EBB Program will transition to the ACP at the close of this reporting period, OI 

anticipates continuing investigative work into EBB Program fraud.

 

E-Rate and Emergency Connectivity Fund Programs

Proactive Work 

Creation of an Online Competitive Bid Repository within EPC 

The Commission released its Notice of Proposed Rulemaking which would seek comments on 

establishing a competitive bid repository. OI will continue to monitor the filings in this 
FCC OIG—Semiannual Report to Congress 21 October 1, 2021 – March 31, 2022

proceeding as well as FCC and USAC efforts to create a competitive bidding portal for the E-rate 

program and offer suggestions where appropriate. 

Outreach to State Departments of Education 

In order to facilitate cooperation between the FCC OIG and state DOEs, we sent a letter to each 

state’s DOE requesting they reach out to us and report instances of fraud, waste, abuse or other 

suspicious activity occurring in their state related to the E-rate and ECF programs. The FCC 

OIG views state DOEs as important partners in detecting serious problems and misconduct 

related to these programs as we recognize they are closer to the institutions receiving federal 

support and the frontlines of fielding complaints than we are in Washington D.C. We identified 

certain information our office would find valuable, including: 

➢ Patterns of E-rate or ECF Program complaints which suggest misconduct, fraud or 

a violation of FCC rules. 

➢ State DOE investigations of schools and libraries receiving federal E-rate or ECF 

support where the investigations involve telecommunications equipment or 

services, even if tangentially. 

➢ State investigations of individual employees of a school or library that receives 

subsidies even if the allegations do not directly implicate telecommunications. 

➢ Information shared with state regulators about the E-rate or ECF Programs in your 

state. 

➢ Whistleblower allegations relating to fraud, waste or abuse of the E-rate or ECF 

Program by service providers, schools, libraries or program consultants. 

➢ Other violations of federal laws or regulations that may also involve the E-rate or 

ECF Program. 

Suspension and Debarment Recommendation 

As noted in previous SARs, OI has been tracking Commission efforts to expand the 

Commission’s suspension and debarment criteria to cover additional circumstances not yet 

addressed. Currently, suspension and debarment actions at the Commission are extremely 

limited and only occur in instances where a criminal conviction or civil judgment arising out of 

activities associated with or related to the USF has occurred. The limited nature of this criteria 

hamstrings both OI and the Commission’s efforts to protect the USF from non-responsible 

persons and entities. 
FCC OIG—Semiannual Report to Congress 22 October 1, 2021 – March 31, 2022

The Commission issued a “Modernizing Suspension and Debarment Rules” Notice of Proposed 

Rulemaking in November 2019 and the Notice was published in the Federal Register on January 

14, 2020. The Commission collected comments and reply comments on its proposed Suspension 

and Debarment rules through March 16, 2020. As requested by the Commission, in September 

2020, OI provided additional information to the Commission following the close of the comment 

period. OI recently became aware of progress on the Suspension and Debarment rulemaking and 

expects the Commission to issue rules and regulations in the next reporting period. 

As noted in the last reporting periods, on April 30, 2019, OI become aware of Commission 

activity granting multiple appeals filed by two schools in the E-rate Program, seeking additional 

time to respond to USAC requests for information. Individuals associated with these two 

schools have either been found guilty of federal program fraud or work for an E-rate consultant 

who is currently under indictment for E-rate Program fraud. If a robust suspension and 

debarment program existed at the Commission, it may have prevented these schools from 

receiving funding from the Program. 

Additionally, with new programs at FCC, including for example, the EBB Program, the ACP and 

the ECF, the Commission is unable to take swift and effective steps to protect itself from actors 

who would seek to take advantage of new funding sources. It is imperative that the Commission 

join much of the rest of the government and adopt robust and effective suspension and 

debarment rules. 

Notification Process for Cancelled FCC Forms 470 

As noted in the last reporting period, OI became aware that USAC does not employ a mechanism 

to notify service providers when an applicant seeks to or has cancelled its FCC Form 470. OI 

informed the FCC WCB of this recommendation on April 1, 2019 and was informed in 

December 2019 that FCC staff have started the process of looking into the feasibility of adding a 

status filed for the FCC Form 470 when it has been cancelled. OI is unaware of Commission 

progress on this recommendation. 
FCC OIG—Semiannual Report to Congress 23 October 1, 2021 – March 31, 2022

Ongoing Investigations 

OI’s E-Rate Investigations team continues its work on ongoing investigations of E-rate and ECF 

service providers, recipients and consultants. OI has continued to open new investigations and 

has been assisting the Justice Department and United States Attorney’s Offices around the 

country to pursue civil and criminal fraud cases in these programs. 

New York Based Service Providers, Consultants and School Officials 

The sentencings of Peretz Klein, Susan Klein, Ben Klein, Sholem Steinberg, Simon Goldbrener, 

Mosche Schwartz, and Aron Melber originally scheduled for May and June 2020 were adjourned 

when the federal Courthouse closed. A new date has not yet been scheduled. 

Former Kentucky Based Vendors 

On February 9, 2022, Charles A. “Chuck” Jones of Murray, Kentucky pled guilty to one count of 

conspiracy to commit wire fraud pursuant to a plea agreement. Jones’s trial had been scheduled 

to commence on February 7, 2022 in Memphis, Tennessee on wire fraud and conspiracy charges. 

Jones pled guilty to a decade-long scheme and conspiracy to defraud the E-rate Program. Jones 

paid kickbacks to a Tennessee-based E-rate consultant, which corrupted the required fair and 

open competitive bidding process. Additionally, in furtherance of the conspiracy, Jones and his 

co-conspirators made false statements and submitted false documents to the E-rate Program to 

make it appear that all rules and requirements had been met, for example, submitting false 

documentation to make it appear the required co-payments had been invoiced to schools in 

Missouri and Tennessee. Jones’s conspiracy caused a loss to the program of approximately $6.9 

million. Jones’s sentencing is scheduled for June 1, 2022 and the charge to which he pled carries 

a maximum possible term of imprisonment of 20 years. The sentencing of one of Jones’s coconspirators, Mark J. Whitaker also of Murray, Kentucky, is rescheduled to a later date. 

Whitaker pled guilty in federal court in Memphis, TN in February 2020 to concealing the 

decade-long E-rate Program wire fraud scheme (18 U.S.C. § 4) and admitted to actively 

concealing a scheme by his co-conspirator, Jones, to defraud the E-rate Program. 
FCC OIG—Semiannual Report to Congress 24 October 1, 2021 – March 31, 2022

Referrals to Enforcement Bureau and USAC 

OI continues to track the progress made by the Enforcement Bureau and USAC concerning the 

various referrals OI provided for possible enforcement action. The majority of matters referred 

to the Enforcement Bureau and USAC are still pending. OI anticipated sending additional 

referrals during the current reporting period, but difficulties accessing USAC’s data and limited 

data analytics staffing at FCC OIG prevented the creation of additional referrals. 

Emergency Connectivity Fund 

OI has finally obtained the necessary ECF data after multiple months of working with WCB and 

USAC. Using this data, OI identified a suspicious vendor associated with millions in ECF 

requests and commitments. In addition to opening an investigation, OI notified USAC of the 

multiple red flags associated with the suspicious vendor. During the current reporting period, OI 

plans to utilize a newly hired contractor to analyze ECF data to identify potential fraud, waste, 

and abuse. OI intends to devote significant resources to ensure the funds are utilized 

appropriately by the intended beneficiaries. OI expects it will commence conducting in-person 

inspections of ECF recipients in the next reporting period as the COVID-19 pandemic is 

beginning to subside and travel for OI staff is now again feasible. 

OI has been tracking additional legislation which would add $4 billion to this Program (in 

addition to the $7 billion already authorized). Given the near doubling of overall funds OI is 

responsible for overseeing, additional staffing including both attorneys and law enforcement 

officers would be useful to assist us in furthering our mission. 

Rural Health Care Program 

OI has continued to see an increase in the number of referrals for potential RHC fraud from the 

RHC program administrator. 

COVID-19 Telehealth Program 

OI continues to monitor this program. 
FCC OIG—Semiannual Report to Congress 25 October 1, 2021 – March 31, 2022

Contributions

OI staff have continued to review data from service provider contributions to the USF and have 

developed concerns related to the failure of certain entities to provide their required contributions 

into the Fund. OI devoted significant resources to investigating these matters during the current 

reporting period.

Connect America Fund Phase II

OI staff have begun reviewing data and investigating service provider compliance with Connect 

America Fund Phase II (CAF II) requirements. In addition, OI investigated specific allegations 

concerning the failure to properly meet CAF II requirements during the current reporting period.

OI Data Analytics Efforts 

OI’s data team continues to proactively pursue potential fraud, waste, and abuse of the USF as 

well as the Congressionally appropriated subsidy programs. In addition to the ongoing efforts to 

identify data indicative of fraudulent behavior in the E-rate, ECF, Lifeline, EBB, and ACP 

programs, OI’s data team began working with datasets pertaining to TRS and IP-CTS service 

providers during the current reporting period.

OI’s data team has also continued to develop automated processes to streamline data loading and 

reporting, particularly those related to the regularly refreshed data OI receives from USAC. In 

early 2022, the data team gained access to regularly refreshed ECF program data. 

During this reporting period OI hired a contractor to conduct proactive analysis of potential 

fraud, waste, and abuse of ECF program disbursements and has expects to add another full-time 

data analyst to the team early in the next reporting period. 

Internal Affairs

The IG is authorized by the IG Act, as amended, to investigate allegations of fraud, waste and 

abuse occurring in FCC operations. Matters of possible wrongdoing are referred to OIG in the 

form of allegations or complaints from a variety of sources, including FCC employees, 
FCC OIG—Semiannual Report to Congress 26 October 1, 2021 – March 31, 2022

contractors, other government agencies and the general public. OI investigators are currently 

engaged in completing an investigative referral from CIGIE alleging IG misconduct.
FCC OIG—Semiannual Report to Congress 27 October 1, 2021 – March 31, 2022

Office of Inspector General Hotline 

OIG maintains a Hotline to facilitate the reporting of allegations of fraud, waste, abuse, 

mismanagement or misconduct in FCC programs or operations. Commission employees and 

concerned citizens may report such allegations to the Hotline at (202) 418-0473 or toll free at 

(888) 863-2244 or by e-mail at hotline@fcc.gov. OIG’s Hotline is available 24 hours a day, 

seven days a week via a recorded messaging system.

Many of the allegations received by the Hotline raise issues that do not fall within the 

jurisdiction of the FCC or the OIG, and many do not rise to the level of devoting investigative or 

audit resources to the claim. Upon receipt of a specific claim of fraud, waste, abuse, or 

mismanagement, OIG may, where appropriate, take any one of the following actions:

1. Open an OIG investigation or audit.

2. Refer the matter to an FCC Bureau or Office for appropriate review and action. 

3. Refer the allegation to another Federal agency. For example, complaints about fraudulent 

sweepstakes are referred to Federal Trade Commission (FTC).

Consumers who have general questions, consumer complaints, or issues not related to fraud, 

waste and abuse, should contact the FCC’s Consumer & Governmental Affairs Bureau (CGB) at 

www.fcc.gov/cgb, or contact the FCC’s Consumer Center by calling 1-888-CALL-FCC (1-888-

225-5322) voice or 1-888-TELL-FCC (1-888-835-5322). CGB develops and implements the 

Commission’s consumer policies, including disability access. The FCC Consumer Center 

processes public inquiries, informal complaints, and questions regarding cable, radio, satellite, 

telephone, television and wireless services. The goal of this process is to foster a mutually 

satisfactory resolution of the complaint between the service provider and its customer. 

During the current reporting period, OIG received:

1. 9,186 Hotline contacts. Of these, none were referred to OIG for possible case opening.

2. 77 were referred to FCC Consumer Center or other FCC Bureaus.

3. 484 were referred to other agencies.
FCC OIG—Semiannual Report to Congress 28 October 1, 2021 – March 31, 2022

OFFICE OF AUDITS 

Under the authority of the IG Act of 1978, as amended, the Office of Audits (OA) conducts or 

contracts for independent and objective audits, inspections, evaluations, and other related 

projects. These projects promote economy, effectiveness, and efficiency in FCC programs and 

operations, and detect and deter fraud, waste, and abuse. OA projects are conducted in 

accordance with relevant professional standards, including Generally Accepted Government 

Auditing Standards (also known as Government Auditing Standards or the Yellow Book) and 

Council of the Inspectors General on Integrity and Efficiency Quality Standards for Inspection 

and Evaluation.

OA is organized into three divisions: 

• the Operations, Financial, and Information Technology Division (OFID),

• the Universal Service Fund Division (USFD), and

• the Policy and Quality Assurance Division (PQAD).

OFID and USFD perform audits, evaluations, inspections, and other projects. PQAD develops 

OA policies and procedures, performs internal quality assurance reviews to ensure OA 

compliance with applicable professional standards, coordinates external peer reviews of the FCC 

OIG by other OIGs, and leads external peer reviews of other OIGs in accordance with CIGIE 

guidance. 

Highlights of the work contracted for and performed by OA during the current reporting period 

are provided below. External peer reviews are discussed in Appendix A.

Operations, Financial, and Information Technology Division

OFID conducts mandatory and discretionary audits, inspections, and evaluations of FCC 

programs and operations. OFID’s annual mandatory projects include the annual Financial 

Statement audit, the Federal Information Security Management Act (FISMA) evaluation, and the 

Payment Integrity Information Act (PIIA) audit. OFID is also responsible for other periodic 
FCC OIG—Semiannual Report to Congress 29 October 1, 2021 – March 31, 2022

mandated projects such as those related to the COVID-19 pandemic response, the Commission’s 

privacy and data protection initiatives, the Digital Accountability and Transparency Act, and the 

government charge card program. 

OA contracts with Independent Public Accountant (IPA) firms for many of the mandatory 

projects. OFID uses a risk-based approach to select discretionary projects and, depending on 

available staffing and other resources, may complete the projects in-house or contract the 

projects to IPA firms. OFID oversees and monitors all contracted services. 

OFID completed three projects during this reporting period. Five OFID projects are in process 

and will be summarized in a future report. 

Completed OFID Projects 

Federal Communication Commission’s FY 2021 Implementation of the Digital 

Accountability and Transparency Act of 2014 (Report No. 21-AUD-06-02)

In accordance with the Digital Accountability and Transparency Act (DATA Act) of 2014 and 

Office of Management and Budget (OMB) Bulletin 15-12, Increasing Transparency of Federal 

Spending by Making Federal Spending Data Accessible, Searchable, and Reliable, dated May 8, 

2014, Federal agencies are required to report financial and spending information to the public 

through USAspending.gov. OA contracted with Kearney & Company (Kearney), an 

Independent Public Accounting firm, to audit the FCC’s fiscal year (FY) 2021 first quarter (Q1) 

financial and award data submitted to the Department of Treasury for publication on 

USAspending.gov. Kearney’s audit report, dated November 8, 2021, included five findings and 

made nine recommendations, to which FCC management concurred. 

In the first finding, Kearney reported that the FCC submitted its Q1 FY 2021 spending data in 

advance of the Government-wide reporting deadline. However, the FCC’s submission was 

incomplete. Specifically, the FCC did not submit transaction-level component spending data for 

one of its funds, the TRS fund. In the remaining four findings, the auditors reported that the USF 

sampled spending data contained a high number of completeness, accuracy, and timeless errors 

in one or more data elements and did not meet the quality requirements outlined by OMB. 
FCC OIG—Semiannual Report to Congress 30 October 1, 2021 – March 31, 2022

Federal Communication Commission's FY 2021 Consolidated Financial Statements Audit 

(Report No. 21-AUD-06-01)

Federal law requires the FCC to prepare annual consolidated financial statements and the OIG to 

audit those statements. Under the oversight of OA, Kearney performed an audit of the FCC’s FY 

2021 consolidated financial statements. Kearney’s audit resulted in the issuance of three reports 

dated November 15, 2021. 

In the Independent Auditor’s Report on the Financial Statements Kearney expressed an 

unmodified opinion. Kearney did not report any instances of noncompliance in the Report on 

Compliance and Other Matters. In the Report on Internal Controls over Financial Reporting, 

Kearney reported two significant deficiencies. The first significant deficiency was related to 

information technology (IT) controls for FCC and USF, which was a repeat issue from fiscal 

year 2020 and prior year audit reports. The second deficiency resulted from a material erroneous 

financial transaction for civil money penalty (CMP) receivables and custodial revenues that was 

not detected by the FCC’s internal controls 

Kearney made 13 recommendations to improve the effectiveness of the FCC and Universal 

Service Administrative Company’s IT controls. The details of the IT findings and 

recommendations were included in the separate FISMA evaluation report. In addition, Kearney 

made three new audit recommendations to strengthen the processes and controls over CMP 

receivables and custodial revenues. FCC management concurred with all the findings and 

recommendations cited in the audit report. 

Federal Communications Commission’s FY 2021 Federal Information Security 

Modernization Act Evaluation (Report No. 21-EVAL-06-01)

The FISMA legislation requires federal agencies, to develop, document, and implement an 

agency-wide program to provide information security for the information and information 

systems supporting the operations and assets of the agency. FISMA also requires agency IGs to 

conduct or contract for an independent evaluation of the agency’s information security program 

annually. Under the oversight of OIG, Kearney performed the FY 2021 FISMA evaluation and 

based on their results, the OIG submitted the completed FY 2021 DHS IG FISMA Metrics 

questionnaire, for government-wide reporting to Congress, on October 29, 2021. Subsequently, 
FCC OIG—Semiannual Report to Congress 31 October 1, 2021 – March 31, 2022

on December 15, 2021, the OIG issued both public and non-public versions of the FY 2021 

FISMA Evaluation Report. 

Kearney concluded that the FCC’s information security program was effective and in compliance 

with FISMA legislation, OMB memoranda, and other applicable guidance. This is the first year 

that the agency’s information security program has been in compliance, which is a significant 

accomplishment. Kearney found security deficiencies and instances of noncompliance in four of 

eight FISMA IG metric domains. The draft evaluation report includes seven findings and 13 

recommendations intended to improve the effectiveness of the FCC’s information security 

program controls. Of the seven findings, one (Identity and Access Management) is considered a 

significant deficiency, which requires the immediate attention of agency leadership. 

Additionally, six of the seven findings address security weaknesses repeated or updated from 

prior years. Management concurred with the report findings and recommendations.

In-Process OFID Audits and Other Projects 

Federal Communication Commission's FY 2022 Consolidated Financial Statement Audit 

(Project No. 22-AUD-06-01) 

Federal Communications Commission’s FY 2022 Federal Information Security 

Modernization Act Evaluation (Project No. 22-EVAL-06-01)

Audit of FCC’s Compliance with the Emergency Broadband Benefit Program (COVID-19 

Pandemic Response) Requirements (Project No, 21-AUD-10-01)

Privacy and Data Protection Inspection (Project No. 21-INSP-10-01)

FY 2021 Audit of the Federal Communication Commission’s Compliance with the Payment 

Integrity Information Act of 2019 (Report No. 22-AUD-01-01) 
FCC OIG—Semiannual Report to Congress 32 October 1, 2021 – March 31, 2022

Universal Service Fund Division

The USFD audits and inspects USF program service providers and beneficiaries and is organized 

into three functional audit directorates:

• Contributors and Lifeline

• High Cost

• E-rate and Rural Healthcare

USFD projects are designed to detect and prevent fraud, waste, and abuse, and to promote 

economy, effectiveness, and efficiency in USF programs. USFD performs random and targeted 

audits and inspections of USF program providers and beneficiaries based on our assessments of 

program risks. Our risk-based approach helps us focus our limited resources on the areas with 

the highest risk, in the most cost-effective manner. When planning and performing audits, 

USFD communicates with USAC’s Internal Audit Division, and shares information such as 

emerging program risks, prior audit results, data sources and testing tools, and new USF program 

developments and initiatives. 

Two USFD projects are in process and will be summarized in a future reporting period. 

In-Process USFD Audits and Other Projects 

Audit of Head Start Telecom, Inc. (Lifeline Program) (Project No. 18-AUD-01-01)

Audit of Spruce Knob Seneca Rocks Telephone Company (High Cost Program) 

(Project No. 18-AUD-08-07)
FCC OIG—Semiannual Report to Congress 33 October 1, 2021 – March 31, 2022

REPORTING REQUIREMENTS 

The following are OIG’s responses to the 22 specific reporting requirements in Section 5(a) of 

the Inspector General Act of 1978, as amended. 

1. A description of significant problems, abuses, and deficiencies relating to the administration of 

programs and operations of such establishment disclosed by such activities during the reporting 

period. 

Please refer to the sections of this report titled “Office of Audits” and “Office of Investigations.”

2. A description of the recommendations for corrective action made by the Office during the 

reporting period with respect to significant problems, abuse, or deficiencies identified pursuant to 

paragraph (1). 

Please refer to the sections of this report titled “Office of Audits” and “Office of 

Investigations.”

3. An identification of each significant recommendation described in previous semiannual 

reports on which corrective action has not yet been completed. 

Information technology (IT) security recommendations represent the most significant 

recommendations from previous semiannual reports for which corrective actions have not yet 

been completed. Currently there are 13 open IT security recommendations that were identified 

in prior FISMA and other IT audits and evaluations. Those recommendations address identity 

and access management, information security continuous monitoring, risk management, and 

configuration management. We consider the FISMA recommendations for improving the FCC’s 

identity and access management to be the most significant. FCC needs to prioritize corrective 

actions to resolve open, prior year IT security recommendations to limit risk of unauthorized 

access to FCC data and focus its attention on recommendations older than three years. 

Except for the public version of the FISMA report, all of OIG’s IT-related reports contain 

sensitive, non-public information regarding the FCC’s information security program and 

infrastructure. Accordingly, the reports are not released to the public. 
FCC OIG—Semiannual Report to Congress 34 October 1, 2021 – March 31, 2022

Please also refer to the E-rate and Lifeline matters, discussed in the section of this report titled 

“Office of Investigations.”

4. A summary of matters referred to authorities, and the prosecutions and convictions which have 

resulted. 

Please refer to the section of this report titled “Office of Investigations.”

5. A summary of each report made to the head of the establishment under section 6(b)(2) during 

the reporting period. 

During this reporting period, no report was made to the Chairwoman of the FCC under section 

6(b)(2) of the Inspector General Act of 1978, as amended. 

6. A listing, subdivided according to subject matter, of each audit report, inspection report, and 

evaluation report issued by the Office during the reporting period, and for each audit report, 

where applicable, the total dollar value of questioned costs (including a separate category for the 

dollar value of unsupported costs) and the dollar value of recommendations that funds be put to 

better use. 

During this reporting period, no reports were issued with questioned costs or recommendations 

that funds be put to better use. 

7. A summary of each particularly significant report.

Each significant audit and investigative report issued during the reporting period is summarized 

within the “Office of Audits” and “Office of Investigations” sections of this report.

8. Statistical tables showing the total number of audit reports, inspection reports, and evaluation 

reports and the total dollar value of questioned costs (including a separate category for the dollar 

value of unsupported costs), for reports— (A) for which no management decision had been made 

by the commencement of the reporting period; (B) which were issued during the reporting 

period; (C) for which a management decision was made during the reporting period, including- 
FCC OIG—Semiannual Report to Congress 35 October 1, 2021 – March 31, 2022

(i) the dollar value of disallowed costs; and (ii) the dollar value of costs not disallowed; and (D) 

for which no management decision has been made by the end of the reporting period. 

During this reporting period, no reports were issued with questioned costs. 

9. Statistical tables showing the total number of audit reports, inspection reports, and evaluation 

reports and the dollar value of recommendations that funds be put to better use by management, 

for reports: (A) for which no management decision had been made by the commencement of the 

reporting period; (B) which were issued during the reporting period; (C) for which a 

management decision was made during the reporting period, including— (i) the dollar value of 

recommendations that were agreed to by management; and (ii) the dollar value of 

recommendations that were not agreed to by management; and (D) for which no management 

decision has been made by the end of the reporting period. 

During this reporting period, no reports were issued with recommendations identifying funds put 

to better use. 

10. A summary of each audit report, inspection report, and evaluation report issued before the 

commencement of the reporting period for which no management decision has been made by the 

end of the reporting period: (A) for which no management decision had been made by the end of 

the reporting period (including the date and title of each such report), an explanation of the 

reasons why such a management decision has not been made, and a statement concerning the 

desired timetable for achieving a management decision on each such report; and (B) for which 

no establishment comment was returned within 60 days of providing the report to establishment; 

and (C) for which there are any outstanding unimplemented recommendations, including the 

aggregate potential cost savings of those recommendations. 

See Appendix B: Reports Issued in Prior Periods for which a Management Decision is Pending

as of March 31, 2022. 

11. A description and explanation of the reasons for any significant revised management decision 

made during the reporting period. 

No management decision falls within this category. 
FCC OIG—Semiannual Report to Congress 36 October 1, 2021 – March 31, 2022

12. Information concerning any significant management decision with which the Inspector 

General is in disagreement. 

No management decision falls within this category. 

13. The information described under section 804(b) of the Federal Financial Management 

Improvement Act of 1996. 

No report required by 804(b) of the Federal Financial Management Improvement Act of 1996 

was issued during this reporting period. 

14. An appendix containing the results of any peer review conducted by another Office of 

Inspector General. If no peer review was conducted within the reporting period, a statement 

identifying the date of the last peer review conducted by another Office of Inspector General. 

The FCC OIG did not perform a peer review of another OIG during the reporting period. See 

Appendix A: Peer Review Results.

15. A list of any outstanding recommendations from any peer review conducted by another 

Office of Inspector General that have not been fully implemented, including a statement 

describing the status of the implementation and why implementation is not complete. 

No recommendation from a prior peer review conducted by another Office of Inspector General 

remains partially implemented. See Appendix A: Peer Review Results.

16. A list of any peer reviews conducted by the Inspector General of another Office of the 

Inspector General during the reporting period, including a list of any outstanding 

recommendations made from any previous peer review (including any peer review conducted 

before the reporting period) that remain outstanding or have not been fully implemented.

The FCC OIG did not conduct any peer reviews of another Office of Inspector General during 

this period.
FCC OIG—Semiannual Report to Congress 37 October 1, 2021 – March 31, 2022

17. Statistical tables showing— (A) the total number of investigative reports issued during the 

reporting period; (B) the total number of persons referred to the Department of Justice for 

criminal prosecution during the reporting period; (C) the total number of persons referred to 

State and local prosecuting authorities for criminal prosecution during the reporting period; and 

(D) the total number of indictments and criminal information during the reporting period that 

resulted from any prior referral to prosecuting authorities.

The “Office of Investigations” section contains the total number of investigation reports during 

the reporting period. In this reporting period, we referred two individuals to the Department of 

Justice for criminal prosecution. No person was referred to state or local prosecuting 

authorities for criminal prosecution, and no indictments or informations were filed during the 

reporting period. 

18. A description of the metrics used for developing the data for the statistical tables under 

paragraph (17). (Section 5 (a)(17) of the Inspector General Act of 1978, as amended). 

The Office of Investigations issues Reports of Investigation to either (1) close an investigation or 

(2) refer a matter for administrative action or for pursuit of civil or criminal fraud. We do not 

close a referred matter until it is finally resolved, that is, until action is taken by the Commission 

in an administrative referral, or until the civil or criminal referral is (a) declined or (b) resolved 

by the court. 

19. A report on each investigation conducted by the Office involving a senior Government 

employee where allegations of misconduct were substantiated, including a detailed description 

of: (A) the facts and circumstances of the investigation; and (B) the status and disposition of the 

matter, including - (i) if the matter was referred to the Department of Justice, the date of the 

referral; and (ii) if the Department of Justice declined the referral, the date of the declination. 

No investigation involving a senior government employee where allegations of misconduct were 

substantiated was conducted by the Office. 

20. A detailed description of any instance of whistleblower retaliation, including information 

about the official found to have engaged in retaliation and what, if any, consequences the 

establishment imposed to hold that official accountable. 
FCC OIG—Semiannual Report to Congress 38 October 1, 2021 – March 31, 2022

No findings of whistleblower retaliation were made during this reporting period. 

21. A detailed description of any attempt by the establishment to interfere with the independence 

of the Office, including: (A) with budget constraints designed to limit the capabilities of the 

Office; and (B) incidents where the establishment has resisted or objected to oversight activities 

of the Office or restricted or significantly delayed access to information, including the 

justification of the establishment for such action. 

OIG did not experience any attempt by FCC management to interfere with the independence of 

the Office. 

22. Detailed descriptions of the particular circumstances of each: (A) inspection, evaluation, and 

audit conducted by the Office that is closed and was not disclosed to the public; and (B) 

investigation conducted by the Office involving a senior Government employee that is closed 

and was not disclosed to the public. 

During this reporting period, no reports were closed and not disclosed to the public.
FCC OIG—Semiannual Report to Congress 39 October 1, 2021 – March 31, 2022

APPENDIX A

Peer Review Results

The Inspector General Act of 1978, as amended, requires Office of Inspectors General (OIGs) to 

report the results of peer reviews of their operations conducted by other OIGs, including the date 

of the last peer review, outstanding recommendations from prior peer reviews, and peer reviews 

of other OIGs conducted during the semiannual period. Peer reviews are conducted by member 

organizations of the Council of Inspectors General for Integrity and Efficiency (CIGIE). 

Office of Audits peer review results 

On October 31, 2019, the Small Business Administration Office of Inspector General (SBA 

OIG) issued a report on the results of its peer review of the FCC OIG’s system of quality control 

for its audit operations. The SBA OIG determined that OA’s system of quality control in effect 

for the year ending March 30, 2019, was suitably designed to provide reasonable assurance that 

OA is performing audits and reporting the audit results in conformity with applicable 

professional standards in all material respects. OA received a peer review rating of “Pass.”

Office of Audits Peer Reviews of Other OI 

The FCC OIG did not perform a peer review of another OIG during the reporting period. 
FCC OIG—Semiannual Report to Congress 40 October 1, 2021 – March 31, 2022

APPENDIX B

Reports Issued in Prior Periods for which a Management Decision is Pending 

As of March 31, 2022 

Report Number Project Title Report Date Comments 

12-AUD-12-20 

Audit of the FCC Compliance 

with OMB Circular No. A-130 

Revised 

3/12/2014 

Management did not meet the 

target date (December 31, 

2020) outlined in its corrective 

action plan and had not 

demonstrated sufficient 

progress in implementing one 

open recommendation. The 

revised target implementation 

date is February 28, 2023. 
FCC OIG—Semiannual Report to Congress 41 October 1, 2021 – March 31, 2022

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