DOJ: Sprint overcharged government $21M for facilitating wiretaps

The U.S. government accused Sprint (NYSE:S) for over-charging by as much as 50 percent for court-ordered wiretaps the carrier provided to the Federal Bureau of Investigation, the Drug Enforcement Administration and other law-enforcement agencies.

In all, according to a lawsuit filed Monday by the U.S. Justice Department, the federal government overpaid Sprint by $21 million over a period of three and a half years.

According to the lawsuit, Sprint allegedly increased bills it submitted to federal law-enforcement agencies for wiretaps and other surveillance in order to cover capital expenditures necessary to respond to the requests. The lawsuit argues that doing so is illegal and against FCC rules. The suit also alleges that Sprint covered up the extra charges that were included in the bills paid by the FBI and others by billing them as regular surveillance costs.

"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," the Justice Department said in the lawsuit.

Sprint said it did not break the law and would fight the lawsuit. "Under the law, the government is required to reimburse Sprint for its reasonable costs incurred when assisting law enforcement agencies with electronic surveillance," Sprint spokesman John Taylor said in a statement distributed to multiple news outlets. "The invoices Sprint has submitted to the government fully comply with the law. We have fully cooperated with this investigation and intend to defend this matter vigorously."

Carriers as part of wiretaps often set up so-called "pen registers," which record data about incoming and outgoing calls but not the content of the calls. As part of the process, carriers can charge law enforcement agencies for the cost of setting up the wiretap, but they need to go through a separate process to recover some of the costs.

The lawsuit was filed under the False Claims Act, which allows courts to award up to three times the amount overpaid by the government. As the Wall Street Journal notes, in 2006 the FCC ruled that carriers can't pass on the cost of complying with requirements. Sprint changed how much it charged at the time, the government alleges, but didn't cut its rates enough.

In 2010, Sprint changed its rates again to remove the allegedly inappropriate extra costs, the government claims. Sprint's Taylor said the change in fees came after a "periodic routine review of rates."

For more:
- see this WSJ article (sub. req.)
- see this Reuters article
- see this CNET article
- see this ArsTechnica article

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NSA confirms pilot program that tried to track cell phone location data

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