A federal grand jury alleges a local man transferred $20 million for his own use, defrauding a program that helps low-income Americans gain basic phone service.
U.S. Attorney Sanford C. Coats announced Tuesday that Wesley Yui Chew, of Edmond, and Oscar Enrique Perez-Zumaeta, of Cancun, Mexico, have been charged with crimes involving more than $25 million in alleged fraudulent claims against the federal Lifeline telephone program.
These charges are merely accusations and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.
“Although this program was designed to help low-income Americans have basic access to phone service, these individuals and their companies allegedly exploited the system to line their own pockets,” Coats said via a news release. “All of us must be concerned when programs like this are abused and defrauded.”
Federal Communications Commission Chairman Tom Wheeler said the FCC’s adoption of tough, enforceable rules in 2012 to combat waste, fraud and abuse in Lifeline is paying off.
“Lifeline provides a link to jobs, family and emergency services for Americans who cannot afford phone service,” Wheeler said.
Chew has been charged with money laundering for his alleged transfer of $20.5 million on April 9, 2013, from an account of his company Icon Telecom to a personal account, according to court records.
Icon Telecom, owned exclusively by Chew, participated in the wireless Lifeline Program from July 2011 until September 2013, according to court records.
It is alleged that in September 2011, Icon Telecom reported fewer than 2,200 wireless customers who qualified for the Lifeline Program, according to court records. By November 2012, that number had grown to 135,364.
It is alleged Icon Telecom always claimed subsidies at the “Tribal Lands” rate of $34.25 per customer per month, according to court records. Although it had fewer than 10 full-time employees, it is alleged Icon Telecom received $58.3 million through the Lifeline Program from 2011-13.
It is alleged that to recruit new customers Icon Telecom relied almost exclusively on PSPS Sales LLC, which Perez-Zumaeta owned and operated, according to court records. Icon Telecom paid PSPS Sales $7-$15 for each new customer. From December 2011 through April 2013, Icon Telecom paid more than $1 million to PSPS Sales.
If convicted, Chew faces up to 10 years in prison and a fine of $250,000 or twice the amount of the criminally derived property involved in the transfer, whichever is greater.
Icon Telecom is charged with making a false statement to USAC. If convicted, Icon Telecom faces up to five years of probation, a fine of up to $500,000, and mandatory restitution.
Perez-Zumaeta has been charged in a 10-count indictment.
The indictment alleges Perez-Zumaeta directed PSPS Sales personnel to use phone books to come up with names and addresses for bogus Lifeline customers and to dispose of telephones registered to fake customers by selling them on the street for about $5 each.
The indictment alleges Perez-Zumaeta told PSPS Sales personnel to fabricate signatures of fictitious customers on about 40,000 recertification forms and to cover them up by using different pens, different hand-writing styles and different formats for dates.
If convicted, Perez-Zumaeta could be imprisoned for 20 years on individual conspiracy and wire-fraud counts and 10 years on each money-laundering count. He also would face a fine of up to $250,000 on each count and mandatory restitution.
Furthermore, the indictment seeks forfeiture of all proceeds of the alleged fraud and all property involved in the money-laundering transactions.
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