Monday, January, 25, 2010
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Court Upholds Convictions in $60 Million Fraud Scheme
By STEVEN M. ELLIS, Staff Writer
A charge of wire fraud does not require proof that the defendant’s conduct violated a separate law or regulation, the Ninth U.S. Circuit Court of Appeals ruled Friday.
A three-judge panel upheld wire fraud, bid-rigging and conspiracy charges against a former public schoolteacher-turned-consultant who masterminded a scheme to help fund technology projects at impoverished schools that bilked the federal government out of almost $60 million.
Judy Green maintained that she was guilty of nothing more than helping schools maximize their funding by exploiting loopholes in the rules and regulations governing E-Rate, a Federal Communications Commission program that funds technology projects at schools and libraries.
E-Rate serves low-income, rural, high-cost and other underserved communities by allocating $2.25 billion to subsidize technology projects. Using a sliding scale, the program funds between 20 and 90 percent of the costs of specific equipment and services.
Green, after spending more than 30 years as a public schoolteacher in New York City and Los Angeles, set up a consulting business to help guide impoverished schools through the E-Rate application process. Almost all of her clients were eligible for the maximum subsidy, and Green allegedly promised not only that the schools’ 10 percent co-pay would be forgiven, but that contractors would donate other equipment ineligible for E-Rate funds.
At the same time, prosecutors claim, Green assembled a team of contractors, decided what services and equipment they would supply, and dictated which “bonus” items they would provide at no charge to the school. Green collected bids the contractors had inflated to cover the added costs, and then submitted FCC forms seeking funds to the Schools and Libraries Division of the Universal Service Administrative Company, which distributes E-Rate’s annual budget.
Green also allegedly ran interference between the Schools and Libraries Division and her clients, writing equipment lists to hide the fact that potentially ineligible equipment was included within the projects’ scopes; instructing school districts to tell the division that they planned on paying their share of project costs, even though they did not; and altering school budget information to show that the schools could afford their co-pays.
When the division discovered Green’s scheme, she was charged with 20 wire fraud and bid-rigging counts in connection with 11 school districts across the country, and two conspiracy counts based on uncompleted projects at another 15 districts.
A jury found her guilty of all charges and U.S. District Court Judge William H. Alsup of the Northern District of California sentenced Green to 90 months in prison.
Green appealed, arguing that her actions were not fraudulent because they were not prohibited by the rules and regulations governing the E-Rate program. However, the Ninth Circuit rejected the contention in an opinion by Senior Judge A. Wallace Tashima, who wrote that Green’s actions amounted to fraud on the federal government.
Noting that wire fraud has only three elements—a scheme to defraud, use of the wires in furtherance of the scheme, and a specific intent to deceive or defraud—the judge said the scheme to defraud must only include an affirmative material misrepresentation.
“A defendant’s conduct need not otherwise be illegal in the sense that the government must also prove that the defendant’s conduct violated a specific statute or regulation…,” he wrote. “That Green’s E-Rate scheme involved millions of dollars in federal funds was sufficient to bring it squarely within the heartland of the federal fraud statutes.”
Tashima—joined by Judge Pamela Ann Rymer and U.S. District Judge Lynn S. Adelman of the Eastern District of Wisconsin, sitting by designation—also rejected Green’s challenges that her convictions were not supported by sufficient evidence, as well as her challenge to her 90-month sentence.
The case is United States v. Green, 08-10149.
Copyright 2010, Metropolitan News Company