False Claims Act Lawsuit Ensnarls NECA Member Companies


A False Claims Act lawsuit, also known as a qui tam action, has been filed on behalf of the United States Government against NECA member companies in the U.S. District Court for the District of New Jersey.  A private individual alleges that certain NECA member companies violated the Civil False Claims Act for failing to correctly report income related to their ownership of stock in the Rural Telephone Bank, and their use of unapproved “mass asset” depreciation accounting methods.  The “whistleblower” alleges that both violations have allowed the companies to fraudulently draw inflated universal service fund support.  The case was initiated over six years ago, but remained under seal for a lengthy period of time while the allegations were investigated.  It was reopened in February 2014.  In January 2014, the U.S. Government notified the court that it has elected not to intervene in the case.

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