US Government Accuses Sprint of Overcharging It $21M / €15M for Wiretaps


Sprint sued by the US government

The United States government has filed a lawsuit against Sprint, accusing the carrier that it has overcharged over $21 million (€15 million) for wiretapping between January 1, 2007 and July 31, 2010.

A copy of the complaint, obtained by Wired, shows that the US is now trying to “recover treble damages and civil penalties under the False Claims Act, 31 U.S.C. §§ 3729-33, and to recover damages and other monetary relief under the common law theories of unjust enrichment and payment by mistake.”

Authorities often ask carriers to facilitate wiretaps, and the installation of pen registers and trap devices. The telecoms companies can recover some of the costs, but the US government says Sprint has overcharged, adding costs that shouldn’t have been included.

According to the complaint, Sprint submitted false claims that included unallowable costs to various law enforcement agencies, including the FBI, the DEA, the Marshals Service, the ATF, and the ICE.

More precisely, the government alleges that Sprint inflated charges by 58%.

In May 2006, the Federal Communications Commission (FCC) ruled that carriers were prohibited from using intercept charges to cover the costs of modifying equipment, facilities or services needed to comply with the Communications Assistance in Law Enforcement Act (CALEA).

“Despite the FCC’s clear and unambiguous ruling, Sprint knowingly included in its intercept charges the costs of financing modifications to equipment, facilities, and services installed to comply with CALEA,” the complaint reveals.

“Because Sprint’s invoices for intercept charges did not identify the particular expenses for which it sought reimbursement, federal law enforcement agencies were unable to detect that Sprint was requesting reimbursement of these unallowable costs.”

But the government said that was precisely what Sprint did between 2007 and 2010.

Sprint spokesman John Taylor has told Wired that the government is required to reimburse the company “for its reasonable costs incurred when assisting law enforcement agencies with electronic surveillance.”

However, Taylor says the invoices submitted by the carrier are fully compliant with the law. The company is cooperating with the investigation into this case.

In June 2010, Sprint revised the cost model for intercepts. The model introduced at the time removed what the government now calls “unallowable costs.” However, the carrier has “failed or refused” to refund the overpayments made by law enforcement agencies until that date.

The government didn’t realize that it was overbilled because Spring did not disclose that the intercept charges included the costs of financing investment in CALEA equipment.

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