FCC OIG—Semiannual Report to Congress 04/01/22 – 09/30/22

Federal Communications Commission

Office of Inspector General

Semiannual Report to Congress

April 1, 2022 — September 30, 2022
FCC OIG—Semiannual Report to Congress 04/01/22 – 09/30/22

THE FEDERAL COMMUNICATIONS COMMISSION

Left to Right

Chairwoman Jessica Rosenworcel, 

Commissioner Brendan Carr, Commissioner Geoffrey Starks, and 

Commissioner Nathan Simington 
FCC OIG—Semiannual Report to Congress 1 04/01/22 – 09/30/22

FROM THE INSPECTOR GENERAL

I am pleased to present the FCC Office of the Inspector General’s (OIG) Semiannual 

Report to Congress for the six months ending September 30, 2022. In accordance with 

Section 5 of the Inspector General Act, as amended, 5 U.S.C. App. 3 § 5, this report 

summarizes the activities and accomplishments of the OIG. 

This report describes audits and investigations we have 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 

and are posted to the OIG website. 

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 of 2021 (ARPA), the Coronavirus Aid, Relief, and Economic Security 

(CARES) Act, other pandemic response legislation, as well as the Infrastructure 

Investment and Jobs Act, to ensure taxpayer dollars are used effectively and for their 

intended purposes in response to this public health and economic crisis. The OIG 

continues ensuring that (1) funds for assistance are timely, effectively distributed, and 

used appropriately; (2) adequate and proper internal control procedures are in place; (3) 

program participants meet eligibility guidelines and comply with program requirements; 

and (4) offices establish effective compliance operations. 

We thank the Offices of Inspector General of other federal agencies, the Department of 

Justice (DOJ), the Federal Bureau of Investigation (FBI), senior officials throughout the 

Commission, and members of Congress and their staffs for their support of our work 

and for their receptiveness to our recommendations to improve OIG programs and 

operations. OIG remains committed to maintaining the highest possible standards of 

professionalism and quality in its audits, investigations, inspections, and consultations. 

We welcome your comments, suggestions, and questions. 

David L. Hunt

Inspector General
FCC OIG—Semiannual Report to Congress 2 04/01/22 – 09/30/22

TABLE OF CONTENTS

FROM THE INSPECTOR GENERAL ......................................................................................... 1

ABBREVIATIONS & ACRONYMS .............................................................................................. 3

INTRODUCTION ............................................................................................................................ 5

OFFICE OF MANAGEMENT........................................................................................................ 6

Office Staffing.................................................................................................................................. 6

Legislative and Policy Matters ...................................................................................................... 7

OFFICE OF INVESTIGATIONS ................................................................................................... 8

OFFICE OF AUDIT ...................................................................................................................... 22

Operations, Financial, and Information Technology Division ................................................. 22

Completed OFID Projects ........................................................................................................... 23

In-Process OFID Audits and Other Projects ............................................................................ 24

Universal Service Fund Division ................................................................................................ 25

In-Process USFD Audits and Other Projects ........................................................................... 26

REPORTING REQUIREMENTS................................................................................................ 27

APPENDIX A................................................................................................................................. 32

APPENDIX B................................................................................................................................. 33
FCC OIG—Semiannual Report to Congress 3 04/01/22 – 09/30/22

ABBREVIATIONS & ACRONYMS

ACP Affordable Connectivity Program

ARPA American Rescue Plan Act 

AIG Assistant Inspector General 

BQP Benefit Qualifying Person 

CAF Connect America Fund 

CAA Consolidated Appropriations Act

CARES Coronavirus Aid, Relief, and Economic Security

CGB Consumer & Governmental Affairs Bureau

CIGIE Council of the Inspectors General on Integrity and Efficiency 

DOE Department of Education 

DOJ Department of Justice

E-rate Schools and Libraries Program

ETC Eligible Telecommunications Carriers 

EBB Emergency Broadband Benefit 

ECF Emergency Connectivity Fund

FBI Federal Bureau of Investigation

FCA Federal False Claims Act

FCC Federal Communications Commission 

FISMA Federal Information Security Modernization Act of 2014 

FLETC Federal Law Enforcement Training Center 

FY Funding Year 

IPA Independent Public Accountant 

IG Inspector General 

IP-CTS Internet Protocol Captioned Telephone Service

IT Information Technology 

Kearney Kearney and Company, P.C. 

OA Office of Audit 

OGC Office of General Counsel

OIG Office of Inspector General 

OI Office of Investigation 

OMB Office of Management and Budget 

OFID Operations, Financial, and Information Technology Division 

NLAD National Lifeline Accountability Database

PBGC Pension Benefits Guaranty Corporation 

PIIA Payment Integrity Information Act 

PQAD Policy and Quality Assurance Division 

RHC Rural Health Care 

SAR Semiannual Report to Congress 

TRS Telecommunications Relay Services 

TPIV Third-Party Identity Verification

USAC Universal Service Administrative Company 

USF Universal Service Fund
FCC OIG—Semiannual Report to Congress 4 04/01/22 – 09/30/22

USFD Universal Service Fund Division 

WCB Wireline Competition Bureau
FCC OIG—Semiannual Report to Congress 5 04/01/22 – 09/30/22

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 Audit

In this Semiannual Report to Congress (SAR), we discuss accomplishments and 

activities of OIG from April 1, 2022 through September 30, 2022, as well as its goals 

and future plans.
FCC OIG—Semiannual Report to Congress 6 04/01/22 – 09/30/22

OFFICE OF MANAGEMENT 

Office Staffing 

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 information 

technology (IT) specialist, a computer forensics investigator, a budget officer, a data 

analyst, and a writer/editor. 

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

training requirements mandated by various professional organizations. The 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.

Changes and Improvements 

Remote Work Environment 

Staff have been working remotely full-time for more than two years. Technological 

solutions facilitate remote meetings, investigations, audits, an external peer review of 

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

management. 

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

new facility, have presented 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

The COVID-19 pandemic impeded access to the new facility. We are working with FCC 

Management to assist us in solving various concerns, such as the lack of more secure 

space for criminal investigations and access to confidential Grand Jury material. OIG 

requires this secure space to prevent the release of critical OIG-only data. Under the 
FCC OIG—Semiannual Report to Congress 7 04/01/22 – 09/30/22

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.

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 

pp. 9-15.

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 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 are involved in monitoring the Commission’s activities in furtherance of these 

statutes and as discussed below, 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 8 04/01/22 – 09/30/22

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 section 812 of the Homeland Security Act of 2002. 

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

Criminal Investigator Training Program. However, the course was cancelled as a result 

of the COVID-19 pandemic. OI still intends to arrange for this training, however our 

ability to even post positions for qualified criminal investigators still has not been 

approved by the FCC. The IG has been working with the FCC’s Chairperson as well as 
FCC OIG—Semiannual Report to Congress 9 04/01/22 – 09/30/22

the General Counsel of the FCC for an extensive period of time as mentioned in our 

prior SAR. This delay is having a negative impact on OI’s ability to support DOJ and the 

FBI in law enforcement investigations. 

The IG Office is trying to work through whatever complications are before us to hire 

criminal investigators. Most other Federal IG Offices, many of whom are involved with 

monetary sums below our own matters, have retained such investigators. After 

ensuring compliance with the IG Act and the Attorney General’s guidelines, OI plans to 

utilize its statutory law enforcement authority to further its already robust work in the 

prevention and deterrence of fraud, waste, and abuse of FCC programs. 

In addition to this issue, other OI’s actions have been delayed because OI has been 

unable to close various investigative files in a timely manner that involve DOJ. This 

appears to be primarily due to OGC’s failure to act. OI has concerns that OGC’s delays 

could stall negotiations and impede resolution of open investigations. Moreover, this 

situation has been noticed by the Department of Justice and we are concerned as to 

whether it caused the FCC and OIG reputational risk.

Activity During This Period 

Cases pending as of April 1, 2022...................... 41

New Cases......................................................8

Cases Closed....................................................1

Cases pending as of September 30, 2022............. 48

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.

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 a number of programs.
FCC OIG—Semiannual Report to Congress 10 04/01/22 – 09/30/22

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 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 period. For eligible schools and libraries, the ECF Program covers 

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 $5.9 

billion in funding to support approximately 10,000 schools, 900 libraries, and 100 

consortia, and providing nearly 12 million connected devices and over 7 million 

broadband connections. 

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. More than 10 million 

households have enrolled in the ACP. 
FCC OIG—Semiannual Report to Congress 11 04/01/22 – 09/30/22

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

providers who 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 funding year 2021. The 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 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. Between August 26, 2021 and January 26, 2022, the Commission 

has committed $256 million in funding to 447 awardees. 

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. More than 

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 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 
FCC OIG—Semiannual Report to Congress 12 04/01/22 – 09/30/22

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:

Lifeline, Emergency Broadband Benefit Program and Affordable 

Connectivity Program

Proactive work

OIG Advisory Regarding Duplicate BQPs

On September 8, 2022, OI issued an alert regarding a troubling fraud scheme 

perpetrated by several ACP providers. Most households are eligible for ACP support 

based on the subscriber’s own participation in a qualifying federal program like the 

Supplemental Nutrition Assistance Program or Medicaid. However, many other 

subscribers are eligible through a Benefit Qualifying Person (BQP)—another household 

member, such as a child or dependent, who meets one of the ACP eligibility 

requirements.

Subscribers who apply for ACP support based on a BQP’s eligibility are required to 

furnish certain information about the BQP to the National Verifier and the National 

Lifeline Accountability Database (NLAD) as part of the ACP verification and enrollment 

processes. OIG’s analyses of the BQP personally identifiable information furnished by 

applicants during the verification and enrollment processes clearly show that a number 

of providers and their agents have enrolled many households into the ACP based on 

the eligibility of a single BQP. A single BQP cannot be used to qualify multiple 

households for ACP support simultaneously.

The Advisory discusses 12 BQPs who were used by providers and their agents to enroll 

between 135 and 1,042 ACP households each. Providers collected more than $1.4 

million in connection with those enrollments alone. The Advisory also notes many more 

BQPs were used to make dozens of household enrollments and that these fraud 

schemes are ongoing.

In response to the advisory, the FCC and USAC have undertaken the following actions:

1. Developed the National Verifier system to strengthen and improve the detection 

of instances where multiple households attempt to enroll using the same BQP.

2. Increased program integrity reviews related to enrollments based on a BQP.

3. Held payments to limit the amount of potentially improper payments disbursed.

4. Identified and de-enrolled multiple households enrolled on the basis of a single 

BQP. 
FCC OIG—Semiannual Report to Congress 13 04/01/22 – 09/30/22

The FCC issued a Public Notice to announce these measures and to remind providers 

of their obligation to implement policies and procedures for ensuring that their ACP 

households are eligible to receive the ACP benefit, including checking for intracompany 

duplicates. 

OIG Recommendations to Mitigate Fraud in ACP Outreach Grant Program

On July 14, 2022, the Commission established the Affordable Connectivity Outreach 

Grant Program (Grant Program) to provide eligible partners with grant funds to conduct 

outreach to identify households eligible for ACP support. The Commission previously 

allocated up to $100 million of this budget for outreach, including an outreach grant 

program and outreach activities by the Commission’s Consumer and Governmental 

Affairs Bureau (CGB) as authorized in the Infrastructure Act, to be spent over five years.

The Wireline Competition Bureau (WCB) provided OIG an opportunity to review the 

draft Order. Following is a description of OIG’s concerns and the Commission’s 

responses. 

1. The initial draft Order did not promulgate a set of FCC Rules governing the Grant 

Program. In the final Order, the Commission codified program rules governing 

the prohibitions contained in the Order. 

2. Relatedly, when reviewing the draft rules, OIG recommended strengthening 

program prohibitions to prevent providers from a) providing funding to grantees to 

purchase gifts or incentives to encourage eligible households to learn more about 

the ACP; and b) providing additional funding for grantee outreach funded by a 

Grant Program award. OIG was concerned such funding by providers and other 

industry groups would create a conflict of interest and offering gifts and 

incentives to consumers and eligible households would lure consumers and 

cause enrollments which would not happen otherwise. The Commission adopted 

our recommendations.

3. OIG was concerned the delegation of authority to CGB to develop performance 

metrics and data collection requirements in the future was potentially 

problematic. OIG explained that clearly defined performance metrics and robust 

data collection are critical to OIG’s ability to monitor the use of grant funds. 

Although the delegation of authority to CGB remained in the final Order, OIG 

continues to seek a role in discussions regarding the development of 

performance metrics and data collection.

4. OIG identified the risk of dissemination of misinformation in the promotional 

materials paid for by the Grant Program. This concern was not addressed in the 

final order.
FCC OIG—Semiannual Report to Congress 14 04/01/22 – 09/30/22

Ongoing Investigations

American Broadband Settlement and Telecommunications Resolved False Claims Act 

Liability in Settlement with the FCC and the DOJ

On June 3, 2022, American Broadband, based in Toledo, Ohio, and its Chief Executive 

Officer and owner Jeffrey S. Ansted (Ansted), agreed to pay nearly $1.5 million as part 

of a global settlement with the FCC and the DOJ to resolve allegations that the 

company violated the False Claims Act. OI investigators determined the company failed 

to enforce adequate compliance measures and sought reimbursement from the FCC’s 

Lifeline Program after learning the company’s sales agents enrolled ineligible 

customers. American Broadband also entered into a five-year compliance agreement 

covering the company’s Lifeline and ACP operations to ensure corporate integrity. 

American Broadband and Ansted previously repaid more than $15 million to the 

Universal Service Fund upon learning of OI’s investigation. 

The settlement amount will be paid over five years and was based on American 

Broadband’s and Ansted’s ability to pay a settlement. Ansted was required to sell a 

Ferrari and pay $67,050 as part of the settlement. The payment also resolved an 

enforcement action and investigation conducted by the FCC. The FCC entered into a 

separate consent decree with American Broadband as part of the global settlement.

To be eligible for the Lifeline Program, a consumer must have income that is at or below 

135% of the Federal Poverty Guidelines or participate in one of a number of specified 

federal, state, or Tribal assistance programs. Eligible Telecommunications Carriers 

(ETC), such as American Broadband, receive monthly federal payments for providing 

discounted phone services to qualified consumers. As a condition of payment, an ETC 

must comply with FCC regulations, which, among other things, require the 

implementation of policies and procedures to ensure that enrolled subscribers are 

indeed eligible for the program and that households do not receive more than one 

Lifeline phone benefit. ETCs must certify their compliance with Lifeline rules with each 

monthly request for payment.

American Broadband relied primarily on contract sales agents to engage in face-to-face 

marketing of mobile Lifeline services. Sales agents were expected to enter a 

consumer’s personal information and capture images of the consumer’s proof of 

identification and proof of eligibility for the Lifeline Program (e.g., Medicaid card, food 

stamp card) into American Broadband’s electronic systems. 

OI investigators found evidence that, between 2014 and 2016, American Broadband 

failed to implement effective policies and procedures to ensure subscriber eligibility and 

failed to adequately screen, train, or supervise the sales agents the company used to 
FCC OIG—Semiannual Report to Congress 15 04/01/22 – 09/30/22

enroll Lifeline subscribers. Moreover, the company failed to effectively review the 

applications submitted by these under-trained, under-supervised sales agents who were 

paid commissions by the company based on the number of subscribers enrolled. As a 

result, investigators found evidence the company impermissibly enrolled and claimed 

monthly Lifeline subsidies for many ineligible subscribers, including nearly 23,000 

deceased individuals and 20,000 subscribers who were provided multiple Lifeline 

benefits by the company. Evidence shows that company executives were aware of this 

misconduct, and failed to adequately address it, while it certified compliance with FCC 

rules and continued to seek Lifeline reimbursements each month. 

The compliance agreement American Broadband agreed to as part of the global 

settlement requires the company to designate a senior corporate manager to serve as a 

compliance officer and report directly to American Broadband’s President and CEO. In 

addition, the company is required to develop a compliance plan, operating procedures, 

and a compliance manual to ensure the company’s compliance with Lifeline and ACP 

rules. The agreement requires American Broadband to conduct compliance training, 

actively monitor and investigate potential Lifeline program and ACP fraud and 

noncompliance, and make reports to the FCC at specified intervals. Violation of the 

agreement will result in significance penalties for the company, including suspension of 

funding. 

The settlement was the result of a coordinated effort among the U.S. Attorney’s Office 

for the Northern District of Ohio, the DOJ Civil Division’s Commercial Litigation Branch, 

the FCC and the FCC Office of Inspector General.

The FCC chose not to actively publicize either the settlement or the FCC consent 

decree. Moreover, the FCC discouraged DOJ from publicizing the settlement. The FCC 

missed an excellent opportunity 1) to foster further awareness of the risk of fraud and 

abuse in both the Lifeline program and the ACP; and 2) to deter providers from 

engaging in conduct similar to American Broadband’s. As described above, OIG 

investigators found clear evidence that American Broadband engaged in serious 

violations of FCC rules and the False Claims Act, including the enrollment of thousands 

of deceased individuals. The settlement also resulted in a significant recovery for the 

government, limited only by the company’s ability to pay. The FCC’s failure to publicize 

the settlement stands in contrast to the Commission’s fulsome press releases 

concerning other FCA settlements, including other recent settlements that resulted in 

smaller recoveries. 

 

Beyond the recovery of more than $16.5 million, OIG’s investigation of American 

Broadband resulted in findings that we translated into significant recommendations to 

the Commission and to USAC on ways to improve program integrity and to combat 

fraud, waste, and abuse. For example, the discovery that American Broadband enrolled 

thousands of deceased individuals led to discoveries regarding other providers. Based 

on these findings, we advised the Commission and USAC to perform a “death check” of 
FCC OIG—Semiannual Report to Congress 16 04/01/22 – 09/30/22

potential Lifeline subscribers as part of its third-party identity verification (TPIV) prior to 

enrollment. The death check has prevented program enrollments of thousands of 

deceased individuals. This is just one example. Many of OIG’s recommendations to 

improve the integrity of the Lifeline program and the ACP have their roots in OIG’s 

investigation of American Broadband. 

Compliance Plan Amendments 

In this reporting period, another Lifeline carrier has amended their compliance plan to 

modify several operating procedures without seeking Commission approval. OI has 

reported in prior SARs, starting in 2021, that this troubling carrier practice of attempting 

to avoid required approval may undermine the Commission’s efforts to prevent fraud, 

waste, and abuse in the program. We do so again here.

Generally, to receive federal universal service support, a carrier must provide the 

eligible services using their own facilities, or a combination of their own and resold 

facilities. However, since 2012, the Commission waived that requirement for carriers 

claiming Lifeline funding if they file a compliance plan that is approved by the Wireline 

Competition Bureau (WCB). Nearly all ETCs making Lifeline claims now rely on that 

waiver. Each carrier’s compliance plan must provide specific information regarding the 

carrier’s service offerings and outline the measures the carrier will take to implement the 

obligations contained in the 2012 Lifeline Order as well as further safeguards against 

waste, fraud and abuse WCB may deem necessary. 

ETCs should seek WCB approval, rather than simply provide notice, before 

implementing changes to essential processes. This is particularly so when the 

processes concern fraud, waste and abuse prevention. We first advised WCB of our 

concern in September 2020. No steps have yet been taken to address this concern.

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 has been monitoring the 

filings in this proceeding and they were generally against the proposed bid repository. 

However, on August 16, 2022, the DOJ Antitrust Division filed an ex parte comment in 

the proceeding, recommending the Commission adopt the proposal. In part, the 

Antitrust Division stated that to best protect the E-rate program’s competitive process, 

real-time, centralized, electronic collection of pre-award bids and bid selections should 

occur, which would allow for more robust enforcement of the laws designed to protect 

the E-rate program’s public procurement process and enhance the program’s integrity, 
FCC OIG—Semiannual Report to Congress 17 04/01/22 – 09/30/22

including the investigation and prosecution of antitrust and related crimes related to Erate procurements. OI will continue to monitor FCC and USAC efforts to create a 

competitive bidding portal for the E-rate program and offer suggestions where 

appropriate. 

Suspension and Debarment Recommendation 

In numerous previous SARs, OI has explained the importance of the FCC establishing a 

more robust suspension and debarment program similar to those in most other federal 

agencies. 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.

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 

understands there has been progress on the Suspension and Debarment rulemaking, 

yet we are concerned that no order has yet been circulated to the Commission, two and 

a half years after the close of the comment period. 

Notification Process for Cancelled FCC Form 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 their 

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. 

Ongoing Investigations 

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

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

investigations and has been assisting the DOJ and United States Attorney’s Offices 

around the country to pursue civil and criminal fraud cases in the E-Rate program. The 

E-rate Investigations team has expanded its area of responsibility to include 

investigations in the Rural Health Care Program, Emergency Connectivity Fund 

Contributions, and the Emergency Broadband Benefit Programs.
FCC OIG—Semiannual Report to Congress 18 04/01/22 – 09/30/22

New York Based Service Providers, Consultants, and School Officials

Peretz Klein Susan Klein, and Mosche Schwartz were sentenced in June 2022, 

following their guilty pleas to one count of conspiracy to commit wire fraud entered in 

February 2020. The sentencings were originally scheduled in 2020, but were continued 

when the Federal Courthouse closed due to the pandemic. 

The Kleins held themselves out as vendors to schools participating in the E-rate 

program. In their guilty plea, the Kleins admitted the companies they controlled did not 

in fact provide much of the equipment for which they billed the federal government. The 

Court sentenced Peretz Klein to four years in prison and two years of supervised 

release and Susan Klein to one year of supervised release. The Court also ordered the 

Kleins to pay $1.14 million in restitution, jointly and severally. 

Schwartz held himself out as a consultant, supposedly helping schools to participate in 

the E-rate program by, among other things, holding a fair and open bidding process to 

select cost-effective vendors. Schwartz admitted he was paid hundreds of thousands of 

dollars by vendors to complete and file false E-rate documents that circumvented the 

bidding process and resulted in the payment of millions of dollars to those vendors. The 

Court sentenced Schwartz to 27 months in prison and two years of supervised release. 

The Court also ordered Schwartz to pay $275,160 in restitution. Sentencing hearings for 

Ben Klein, Sholem Steinberg, Simon Goldbrener, and Aron Melber are scheduled for 

October 2022.

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’ 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, they submitted false 

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

schools in Missouri and Tennessee. Jones’ conspiracy caused a loss to the program of 

approximately $6.9 million. Jones’ sentencing is now scheduled for January 6, 2023, 

and the charge to which he pled carries a maximum possible term of imprisonment of 

20 years. The sentencing of one of Jones’ co-conspirators, Mark J. Whitaker, also of 

Murray, Kentucky, originally set for November 15, 2022, is now awaiting rescheduling. 

Whitaker pled guilty in federal court in Memphis, Tennessee, in February 2020 to 

concealing the decade-long E-rate program wire fraud scheme (18 U.S.C. § 4) and 
FCC OIG—Semiannual Report to Congress 19 04/01/22 – 09/30/22

admitted to actively concealing a scheme by his co-conspirator, Jones, to defraud the Erate program. 

Oklahoma Based Vendor

On September 8, 2022, Omega Technology Center, Inc. and its owners, Todd and 

Kristie Greenway, agreed to pay $54,000 to settle civil claims related to their 

participation in the E-rate program. These claims arose from allegations that Omega 

and the Greenways submitted false claims to the federal government via invoicing the 

E-rate program administrator, USAC, for goods and services that were never provided 

to the Fort Towson School District in Fort Towson, Oklahoma. These goods and 

services were to have been provided in the 2010 and 2012 E-rate funding years. In 

addition to paying $54,000 to the Universal Service Fund, Omega and the Greenways 

also agreed to not participate in any FCC programs for at least three years. Omega and 

the Greenways did not admit liability as part of the settlement. 

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. 

Emergency Connectivity Fund

After obtaining the long-sought Emergency Connectivity Fund data from USAC, OI 

began the task of analyzing that information utilizing a contractor and a newly hired fulltime employee. This analysis has identified potential risk factors for fraud, waste, and 

abuse. OI plans to conduct additional work to verify the initial findings in the data. 

Additionally, OI has completed the task of selecting a contractor to assist OI staff with 

on-site inspections of ECF recipients. OI expects that its staff, along with the contracted 

staff, will continue in-person inspections of ECF recipients in the next reporting periods. 

OI intends to devote significant resources in the next reporting periods to ensuring the 

funds are utilized appropriately by the intended beneficiaries. 

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. 
FCC OIG—Semiannual Report to Congress 20 04/01/22 – 09/30/22

Rural Health Care Program

OI staff are devoting substantial amounts of time and resources on matters involving the 

Rural Health Care program. OI anticipates it can report on the results of this work in the 

next reporting period.

COVID-19 Telehealth Program

OI continues to monitor this program.

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.

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. OI’s data team 

improved its data loading and reporting processes and began development of 

automated reporting and data summarization, particularly those related to the regularly 

refreshed data OI receives from USAC. In July and August, OI’s data team conducted 

testing of ACP data that, among other things, resulted in findings announced in OI’s 

September 8, 2022, advisory titled “Advisory Regarding Provider Enrollments of Multiple 

ACP Households Based on the Same Child/Dependent.”

During this reporting period OI conducted proactive analysis of ECF data identifying 

potentially high-risk recipients based on predetermined factors. OI has begun to utilize 

the results of this analysis to initiate investigations and plans to rely in large part on the 

information generated to guide future ECF investigations. 

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, contractors, other government agencies, and the general 

public. OI investigators completed an investigative referral from CIGIE alleging IG 

misconduct.
FCC OIG—Semiannual Report to Congress 21 04/01/22 – 09/30/22

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. 13,607 Hotline contacts. Of these, none were referred to OIG for possible case 

opening.

2. 165 were referred to FCC Consumer Center or other FCC Bureaus.

3. 209 were referred to other agencies.
FCC OIG—Semiannual Report to Congress 22 04/01/22 – 09/30/22

OFFICE OF AUDIT 

Under the authority of the IG Act of 1978, as amended, the Office of Audit (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 CIGIE 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 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 performs other 

periodic mandated projects such as those related to the COVID-19 pandemic response, 

the Commission’s privacy and data protection initiatives, 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 inhouse or contract the work to IPA firms. OFID oversees and monitors contracted 

services. 

OFID completed two projects during this reporting period. Three OFID projects are in 

process and will be summarized in a future report. 
FCC OIG—Semiannual Report to Congress 23 04/01/22 – 09/30/22

Completed OFID Projects 

Fiscal Year 2021 Emergency Broadband Benefit Program Performance Audit (Report 

No. 21-AUD-10-01)

In accordance with Section 904 of the 2021 Appropriations Act, the FCC established the 

Emergency Broadband Benefit Program (EBBP) to reimburse participating providers for 

emergency broadband benefits, or emergency broadband benefits and connected 

devices, provided to eligible households during the Coronavirus Disease 2019 

emergency. The EBBP emergency period began on December 27, 2020. The program 

was transitioned to the ACP beginning December 31, 2021. 

OA contracted with an IPA firm to audit the EBBP, as required by Section 904 Division 

N of the Consolidated Appropriations Act of 2021. The overall objective of this 

performance audit was to determine whether the FCC and its service providers used 

EBBP funds to benefit eligible households and pay for eligible program expenses in the 

appropriate amounts during the emergency period. 

The audit report included one finding and two recommendations. The audit found that 

the FCC did not have effective controls in place to ensure the verification of household 

eligibility when manual review was required. The audit also found that the FCC did not 

have effective controls to: 

• ensure that payments made to eligible providers were for eligible expenses, 

• reduce improper payments, and 

• prevent fraud, waste, and abuse in the EBBP. 

FCC partially concurred with the finding and recommendations. FCC agreed that 

internal controls for the EBBP could be strengthened but did not agree that the program 

lacked adequate controls to prevent ineligible payments. The final audit report was 

issued on June 21, 2022. 

Fiscal Year 2021 Payment Integrity Information Act of 2019 Performance Audit (Report 

No. 22-AUD-01-01)

The Payment Integrity Information Act (PIIA) of 2019 directs federal agencies and 

departments to undertake activities designed to reduce and recover improper payments. 

OA contracted with an IPA firm for an audit of the FCC’s compliance with PIIA for Fiscal

Year 2021. The audit report was issued on June 28, 2022. 

The audit found that the FCC was compliant in 8 of its 10 programs that were 

susceptible to significant improper payments. The Universal Service Fund (USF)-
FCC OIG—Semiannual Report to Congress 24 04/01/22 – 09/30/22

Lifeline (LL) program and the USF-High Cost (HC) program were non-compliant with at 

least one PIIA criteria. 

The USF-LL program did not comply with the PIIA because 1.) FCC reported an 

improper payment error rate of 15.87%, which exceeded the statutory improper 

payment error rate threshold of 10%, 2.) the program administrator did not demonstrate 

improvements to its payment integrity as required by PIIA, and 3.) the FCC did not 

accurately report USF-LL program improper payments in a prior year. 

The USF-HC program was non-compliant because management’s risk assessments did 

not adequately conclude whether the USF-HC program is likely to make improper 

payments and unknown payments above or below the statutory threshold. 

An additional five programs had deficiencies regarding risk assessments and efforts to 

reduce estimated improper payment and unknown payment rates. These deficiencies 

did not constitute non-compliance with PIIA but are reported as recommendations for 

improvement. The five programs are: 

• FCC Operating Expenses, 

• Coronavirus Disease 2019 (COVID-19) Telehealth program, 

• TV Broadcaster Relocation, 

• Telecommunications Relay Services Fund, and 

• USF Schools and Libraries programs. 

The audit report presents six findings and 17 recommendations to address the audit 

findings. Management concurred with one finding, partially concurred with one finding, 

and did not concur with the remaining four. 

In-Process OFID Audits and Other Projects 

Three OFID projects are in process and will be summarized in a future reporting period. 

Federal Communication Commission's FY 2022 Consolidated Financial Statement Audit 

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

As required by the Accountability of Tax Dollars Act of 2002 (Pub. L. 107-289), the OIG 

engaged a contractor to audit its consolidated financial statements of the FFCC, which 

comprise the consolidated balance sheets as of September 30, 2022 and 2021, the 

related consolidated statements of net cost and changes in net position, the 

consolidated statement of custodial activity and the combined statements of budgetary 

resources (hereinafter referred to as the “financial statements”) for the years then 

ended, and the related notes to the financial statements. The audit is required to be 

conducted in accordance with generally accepted government auditing standards. 
FCC OIG—Semiannual Report to Congress 25 04/01/22 – 09/30/22

Federal Communications Commission’s FY 2022 Federal Information Security 

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

The FCC OIG engaged a contractor to evaluate the FCC’s progress in complying with 

the requirements of FISMA. The evaluation also assessed FCC’s compliance with 

Department of Homeland Security reporting requirements, and applicable OMB and 

National Institute of Standards and Technology guidance for a representative subset of 

FCC’s information systems.

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

The objective of this inspection is to determine whether the FCC has implemented 

effective privacy and data protection policies and procedures in accordance with federal 

laws, regulations, and policies, with a focus on FCC’s implementation of the nine 

requirements identified in 42 U.S.C. § 2000ee-2 Privacy and Data Protection Policies 

and Procedures. The inspection includes a review of how effectively the FCC has 

implemented its data protection and privacy program during the period October 1, 2020, 

to September 30, 2021.

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 costeffective 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. 
FCC OIG—Semiannual Report to Congress 26 04/01/22 – 09/30/22

In-Process USFD Audits and Other Projects 

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

The objectives of the audit are to determine if Head Start Telecom, Inc. (1) complied 

with Title 47 of the Code of Federal Regulations, 47 C.F.R. 54.400 - 54.422, and related 

orders regarding the Lifeline program, and (2) has adequate and effective controls to 

ensure USF funds were safeguarded and used for the intended purposes. The audit 

includes Study Area Code (SAC) 349044, Oklahoma.

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

(Project No. 18-AUD-08-07)

The objectives of this performance audit are to determine whether the Company 

complied with applicable FCC rules and related High Cost program requirements and to 

assess the accuracy of the underlying data used for the calculation of USF High Cost 

program support. We will also review the Company’s internal controls applicable to the 

procedures tested and determine if those controls were adequate and effective for 

safeguarding the USF payments to the Company.
FCC OIG—Semiannual Report to Congress 27 04/01/22 – 09/30/22

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 Audit 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 Audit 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 security (IT) recommendations represent the most significant 

recommendations from previous semiannual reports for which corrective actions have 

not yet been completed. There are 14 open IT security recommendations that were 

identified in prior FISMA and other IT audits and evaluations. These 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, which includes implementing longstanding HSPD-12 PIV card 

requirements, to be the most significant open recommendations. FCC needs to prioritize 

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

unauthorized access to FCC data and to provide consistent governance over related 

controls. Except for the public version of the FISMA report, all OIG 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. 

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. 
FCC OIG—Semiannual Report to Congress 28 04/01/22 – 09/30/22

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. 

No report was made during this reporting period to the Chairwoman of the FCC for 

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 Audit 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- (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. 
FCC OIG—Semiannual Report to Congress 29 04/01/22 – 09/30/22

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 significant revised management decisions were made during the reporting period. 

12. Information concerning any significant management decision with which the 

Inspector General is in disagreement. 

There are no significant management decision(s) with which the Inspector General 

disagreed. 

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

Management Improvement Act of 1996. 

There were no required report disclosures for 804(b) of the Federal Financial 

Management Improvement Act of 1996 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. 

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 
FCC OIG—Semiannual Report to Congress 30 04/01/22 – 09/30/22

statement describing the status of the implementation and why implementation is not 

complete. 

All prior peer review recommendations issued by another Office of Inspector General 

are closed. 

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. 

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, no person was referred 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 information 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 
FCC OIG—Semiannual Report to Congress 31 04/01/22 – 09/30/22

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. 

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. 

The Office of Audit does not have any projects that were closed and not disclosed to the 

public. 
FCC OIG—Semiannual Report to Congress 32 04/01/22 – 09/30/22

APPENDIX A

Peer Review Results

The Inspector General Act of 1978, as amended, requires the 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 Audit Peer Review Results 

On September 1, 2022, the Pension Benefits Guaranty Corporation Office of Inspector 

General (PBGC OIG) issued a modified peer review1 of the FCC OIG’s system of quality 

control for its audit operations. PBGC OIG determined that OA’s system of quality 

control in effect for the year ending March 31, 2022, was not current and consistent with 

applicable professional standards. Specifically, the peer review found that the FCC OIG 

Audit Manual was not updated to reflect the current version of Government Audit 

Standards. On September 1, 2022, the FCC OIG issued an updated version of its Audit 

Manual, consistent with GAS 2018 Revision and Technical Update April 2021, and 

CIGIE Quality Standards for Inspection and Evaluation dated December 2020. No 

recommendations from the PBGC OIG or prior peer reviews remain outstanding. 

Office of Audit Peer Reviews of Other Office of Inspector General 

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

1 CIGIE requires a Modified Peer Review for OIGs that do not perform GAGAS engagements, but that 

may have maintained audit policies and procedures in anticipation of performing such work.
FCC OIG—Semiannual Report to Congress 33 04/01/22 – 09/30/22

APPENDIX B

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

as of September 30, 2022 

Report 

Number 

Project Title 

(Recommendation No.) Report Date Comments 

12-AUD-12-20

Audit of the FCC 

Compliance with OMB 

Circular No. A-130, 

Revised 

(Rec. No. 4.1) 

3/12/2014 

Management did not meet the target 

date (December 31, 2020) for one 

outlined in its corrective action plan. 

Management revised the target date 

to February 28 2023, but has not 

demonstrated sufficient progress 

toward implementing the open 

recommendation. This audit report 

contains nonpublic information and 

is not posted on the OIG webpage. 

13-AUD-12-29

Performance Audit of the 

Federal Communications 

Commission Wireline 

Competition Bureau

(Rec. No. 4.1) 

07/31/2015

FCC management did not meet the 

target dates detailed in their 

corrective action plans and has not 

made significant progress towards 

implementing one recommendation. 

Management informed OIG that it 

would seek approval from Office of 

the Chairman to close the 

recommendation without 

implementing the recommended 

corrective actions. OIG requested 

that management provide additional 

justification for closing the 

recommendation, including any 

consideration given to the risks 

associated with closure without 

action.

15-AUD-10-09

Performance Audit of 

Universal Service 

Administrative Company 

National Lifeline 

Accountability Database

(Rec No. 2.2 and 2.4) 

3/26/2018 

Two recommendations remain open 

from this audit report. After granting 

several extensions for the target 

completion date, management has 

not demonstrated significant 

progress towards implementing the 

recommendations. FCC 

management and OIG are 

reevaluating the corrective action 

plan. 
FCC OIG—Semiannual Report to Congress 34 04/01/22 – 09/30/22

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