The Barack Obama administration has filed a civil lawsuit against US wireless operator Sprint, alleging that the carrier intentionally overcharged law enforcement agencies for services related to American government wiretapping programs.
Under current US law, telecommunications carriers are required to assist law enforcement with legally authorized surveillance operations. But they can also ask the government to pick up their costs associated with those operations, so long as they follow billing rules set by the Federal Communications Commission.
Between January 1, 2007 and July 31, 2010, Sprint submitted invoices worth a total of $37.7m, divided between the FBI; the Drug Enforcement Administration; the US Marshals Service; the Bureau of Alcohol, Tobacco, and Firearms; Immigrations and Customs Enforcement; and the Secret Service.
But according to the government's complaint, Sprint included in its calculations such items as the interest paid on loans it took out to buy surveillance-related equipment, costs related to stock offerings to fund the purchase of equipment, and associated taxes – all of which were prohibited under FCC rules.
As a result, the lawsuit says, law enforcement agencies were overcharged to the tune of $21m.
Furthermore, the government argues that by not disclosing the cost model used to calculate its invoices, Sprint was "knowingly" submitting false claims – meaning it either knew it was lying, or else it acted in either "deliberate ignorance" or "reckless disregard" of the facts.
That last part is the kicker. It means that the government can ask the court to award it treble damages, meaning the agencies involved could recover a total of $63m.
In addition, Sprint could be forced to pay punitive damages of between $5,500 and $11,000 for each time it is found to have billed improperly.
For its part, Sprint denies any wrongdoing. In an emailed statement, a company spokesman told Bloomberg that the invoices it has submitted to the government "fully comply with the law" and that the carrier has "fully cooperated with this investigation."
The Obama administration has asked the court for a jury trial in the case. ®