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Primer: Remember YOU, the taxpayer are subsidizing this program.
FNC/WSJ: The U.S. government spent about $2.2 billion last year to provide phones to low-income Americans, but a Wall Street Journal review of the program shows that a large number of those who received the phones haven’t proved they are eligible to receive them.
The Lifeline program—begun in 1984 to ensure that poor people aren’t cut off from jobs, families and emergency services—is funded by charges that appear on the monthly bills of every landline and wireless-phone customer. Payouts under the program have shot up from $819 million in 2008, as more wireless carriers have persuaded regulators to let them offer the service.
Federal regulators were instructed to keep a massive fraud investigation under wraps until a day after a controversial vote to expand a program that was allegedly used to bilk taxpayers of tens of millions of dollars, one those regulators claims.
The Federal Communications Commission on Friday announced that it would seek $51 million in damages from a cell phone company that allegedly defrauded the federal Lifeline program of nearly $10 million.
The commission’s five members unanimously backed the Notice of Apparent Liability (NAL), but Republican commissioner Ajit Pai parted from his colleagues in a partial dissent. According to Pai, he and other commissioners were told not to reveal the details of its investigation until April 1, a day after the FCC voted to expand the Lifeline program.
“Commissioners were told that the Notice of Apparent Liability could not be released or publicly discussed until April 1, 2016, conveniently one day after the Commission was scheduled to expand the Lifeline program to broadband,” Pai wrote. “That’s not right.”
Pai did not say who issued that directive. However, it had the effect of preventing public knowledge of widespread fraud in the Lifeline program ahead of a contentious vote on expanding it despite persisting concerns about a lack of internal safeguards.
FCC spokesman Will Wiquist insisted that the timing was completely coincidental. “The timing of the enforcement action was in no way related to the timing of the vote on the program modernization,” he said in an email.
Lifeline has faced controversy over enrollment requirements that its critics say are too lax and vulnerable to fraud. The service, which subsidizes cell phone plans for low-income Americans, allows beneficiaries to enroll using cards issued for the Supplemental Nutrition Assistance Program (SNAP), a welfare program that has also faced fraud allegations.
Critics of the Lifeline program began calling its subsidized cell phones “Obamaphones” early in the Obama administration in response to viral YouTube videos of beneficiaries thanking the president for their free phones. The program was actually created under President Ronald Reagan.
The FCC’s NAL last week accused cell phone provider Total Call Mobile, which provides Lifeline services in 19 states, of “systematic and egregious misconduct” and “widespread enrollment fraud.”
According to the commission, Total Call employees enrolled tens of thousands of duplicate Lifeline beneficiaries and pocketed the extra subsidies. The FCC caught onto the scheme when the company enrolled an undercover FCC investigator in the program without asking for any eligibility documentation.
“Since 2014, Total Call has requested and received an estimated $9.7 million dollars in improper payments from the Universal Service Fund for duplicate or ineligible consumers despite repeated and explicit warnings from its own employees, in some cases compliance specialists, that company sales agents were engaged in widespread enrollment fraud,” the FCC said in a news release.
A common means of fraudulent enrollment was the repeated use of a single SNAP identification card, according to the FCC. That drew the ire of Commissioner Michael O’Reilly, who said the use of SNAP cards as Lifeline verification mechanisms is woefully inadequate.
“I must once again lodge my extreme frustration that the Commission continues to rely on SNAP as an entry point in the Lifeline program, and has the gall to claim that it is a highly accountable program, when it is painfully obvious to anyone paying attention that SNAP is riddled with waste, fraud, and abuse,” he wrote in a partial dissent in the Total Call case.
Despite those ongoing concerns, the FCC recently voted to expand the Lifeline program to include subsidies for 3G wireless broadband service.
That vote followed a contentious debate over the scope of the expansion and its accompanying price tag. The commission approved the expansion by a narrow 3-2 vote on March 31, a day before the FCC announced its Total Call NAL.
The existence of a massive ongoing Lifeline fraud investigation might’ve affected public perception of that vote, if not the vote itself, leading Pai to call the muzzling of commissioners on the Total Call investigation “conveniently” timed.
Pai also objected to commission delays that he said prevented it from sanctioning Total Call for the full scale of its apparent misconduct.
“Even though [the FCC] identified 32,498 intra-company duplicates, we pursue only 2,587. Even though we have evidence that Total Call Mobile bypassed federal safeguards to enroll 99.8% of its subscribers, we hold the company liable for only 16%,” Pai wrote.
“Under these circumstances, our precedent suggests that a forfeiture of at least $84,295,910 would have been appropriate. Yet the Commission settles for something much less.”
Even as the FCC was investigating this pattern of alleged fraud, Total Call was pouring money into its new Washington lobbying operation. According to disclosure forms, it hired lobbyists with the firm ML Strategies in June of last year, a month after the FCC subpoenaed the company.
ML Strategies has reported collecting $120,000 in fees from Total Call to lobby Congress and the FCC on “general issues related to the Lifeline program.”
The FCC’s investigation is not Total Call’s first time running afoul of federal regulators: the commission issued a $12,000 NAL in 2010 accusing the company of failing to abide by regulations on hearing aid compatibility.
Its sister companies have faced far larger fines for more egregious offenses.
Total Call Mobile is wholly owned by prepaid phone card company Total Call International, which is wholly owned by Japanese telecommunications giant KDDI. KDDI is also the sole shareholder of Locus Telecommunications.
The FCC has targeted Locus in numerous enforcement actions over the past decade, and sought fines reaching into the eight figures.
The FCC levied a $5 million penalty against the company in October “for deceptively marketing its prepaid telephone calling cards.” Previous Notices of Apparently Liability sought fines from the company of $5 million, $330,000, $25,000, $23,000, and $12,000.
BostonGlobe: New Balance is renewing its opposition to the far-reaching Pacific Rim trade deal, saying the Obama administration reneged on a promise to give the sneaker maker a fair shot at military business if it stopped bad-mouthing the agreement.
John Tlumacki/Globe Staff/File
New Balance has several Northeast factories, including in Lawrence.
After several years of resistance to the Trans-Pacific Partnership, a pact aimed at making it easier to conduct trade among the United States and 11 other countries, the Boston company had gone quiet last year. New Balance officials say one big reason is that they were told the Department of Defense would give them serious consideration for a contract to outfit recruits with athletic shoes.
But no order has been placed, and New Balance officials say the Pentagon is intentionally delaying any purchase.
New Balance is reviving its fight against the trade deal, which would, in part, gradually phase out tariffs on shoes made in Vietnam. A loss of those tariffs, the company says, would make imports cheaper and jeopardize its factory jobs in New England.
The administration has made the pact a priority. It could be voted on by Congress later this year, though possibly not until after the November elections.
“We swallowed the poison pill that is TPP so we could have a chance to bid on these contracts,” said Matt LeBretton, New Balance’s vice president of public affairs. “We were assured this would be a top-down approach at the Department of Defense if we agreed to either support or remain neutral on TPP. [But] the chances of the Department of Defense buying shoes that are made in the USA are slim to none while Obama is president.”
The administration says the issues of foreign tariffs and of whether the Pentagon should be required to buy shoes made domestically are entirely separate.
New Balance disagrees. Though most of the company’s shoes are made overseas, domestic manufacturing is a big priority for owner Jim Davis, a longtime Republican donor.
In this video, it is a beautiful propaganda bridge.
BBC: A Russian contract for building a bridge to Crimea has gone to a company majority-owned by a friend of Vladimir Putin who is under Western sanctions.
The $3bn (£2bn) contract was awarded to the SGM Group, owned by Arkady Rotenberg, a childhood friend and judo partner of the Russian president.
The bridge will join Russia directly to the peninsula it annexed from Ukraine in March after a disputed referendum.
It will be pipeline specialist SGM’s first bridge, Reuters news agency says.
It is still unclear where on the Kerch Strait the structure will be erected, meaning the span could be anything from 4km to 15km (2.5 to 9 miles).
Announcing the contract in a statement, Russia’s transport ministry said the bridge should be finished by the end of 2018.
Currently, Crimea is connected to Russia by sea and by air, while land routes through Ukraine have been affected by the conflict in its eastern provinces.
Rotenberg’s legacy?
The annexation of the peninsula sparked sanctions on Russia by the EU, US and their allies and Mr Rotenberg was one of the first Russian businessmen to be put under Western visa bans and asset freezes.
In an interview with Russian daily Kommersant, Arkady Rotenberg welcomed the contract but said it would probably be his last project.
“At 63 I think more about what should be left behind, what will be the results of life,” he said.
Image caption Arkady Rotenberg (left) with Vladimir Putin practising judo
“Moreover, I long planned to gradually stop running businesses… But the bridge project came along and I decided it was very important to carry it out. It is important for the country.”
According to the US Treasury, Arkady Rotenberg and his brother Boris provided “support to Putin’s pet projects” by receiving and executing approximately $7bn (£4.7bn) of contracts for the Sochi Olympic Games and state-controlled energy giant Gazprom, through which their personal wealth increased by $2.5bn (£1.6bn).
The brothers deny getting help from the Russian leader for their businesses.
Reuters:Panama’s attorney general late on Tuesday raided the offices of the Mossack Fonseca law firm to search for any evidence of illegal activities, authorities said in a statement.
The Panama-based law firm is at the center of the “Panama Papers” leaks scandal that has embarrassed several world leaders and shone a spotlight on the shadowy world of offshore companies.
The national police, in an earlier statement, said they were searching for documentation that “would establish the possible use of the firm for illicit activities.” The firm has been accused of tax evasion and fraud.
Police offers and patrol cars began gathering around the company’s building in the afternoon under the command of prosecutor Javier Caravallo, who specializes in organized crime and money laundering.
Mossack Fonseca, which specializes in setting up offshore companies, did not respond to requests for comment on Tuesday.
Earlier, founding partner Ramon Fonseca said the company had broken no laws, destroyed no documents, and all its operations were legal.
Governments across the world have begun investigating possible financial wrongdoing by the rich and powerful after the leak of more than 11.5 million documents, dubbed the Panama Papers, from the law firm that span four decades.
The papers have revealed financial arrangements of prominent figures, including friends of Russian President Vladimir Putin, relatives of the prime ministers of Britain and Pakistan and of China’s President Xi Jinping, and the president of Ukraine.
The Süddeutsche Zeitungsaid on Monday that senior intelligence officials from Rwanda and Colombia are listed as Mossack Fonseca customers, but did not report the names of the individuals. It did, however, single out the late Sheikh Kamal Adham, who was director of Saudi Arabia’s General Intelligence Directorate in the 1960s and 1970s. During his 14-year directorship of the GID, the agency became a leading intermediary between the CIA and Arab intelligence agencies, notably those of Egypt and Iraq. Sheikh Adham was also a personal friend of CIA Director George Bush, who was later elected US president.
According to the Süddeutsche Zeitung, Sheikh Adham is one of many individuals with close CIA links whose names appear in the Panama Papers. Another is Farhad Azima, an Iranian-born American businessman, who is rumored to have leased aircraft to the CIA in the 1980s. The American intelligence agency is said to have used the aircraft, which belonged to Azima’s Kansas City, Missouri-headquartered Global International Airways, to transport weapons to Iran. The secret transfers were part of what later became known as the Iran-Contra scandal, in which US officials secretly sold weapons to Iran in return for the release of American hostages held by Iran-linked groups in the Middle East. The funds acquired from these weapons sales were then secretly funneled to the Contras, a medley of anti-communist paramilitary groups fighting the Sandinista-led government of Nicaragua.
At issue here is why stop with declassifying these 28 pages, why no declassify the complicity of Iran and a few of the 9/11 attackers? One thing leads to another.
Kroft/CBS: In 10 days, President Obama will visit Saudi Arabia at a time of deep mistrust between the two allies, and lingering doubts about the Saudi commitment to fighting violent Islamic extremism.
It also comes at a time when the White House and intelligence officials are reviewing whether to declassify one of the country’s most sensitive documents — known as the “28 pages.” They have to do with 9/11 and the possible existence of a Saudi support network for the hijackers while they were in the U.S.
For 13 years, the 28 pages have been locked away in a secret vault. Only a small group of people have ever seen them. Tonight, you will hear from some of the people who have read them and believe, along with the families of 9/11 victims that they should be declassified.
Bob Graham: I think it is implausible to believe that 19 people, most of whom didn’t speak English, most of whom had never been in the United States before, many of whom didn’t have a high school education– could’ve carried out such a complicated task without some support from within the United States.
Steve Kroft: And you believe that the 28 pages are crucial to this? Understand…
Bob Graham: I think they are a key part.
Former U.S. Senator Bob Graham has been trying to get the 28 pages released since the day they were classified back in 2003, when he played a major role in the first government investigation into 9/11.
Bob Graham: I remain deeply disturbed by the amount of material that has been censored from this report.
At the time, Graham was chairman of the Senate Select Committee on Intelligence and co-chair of the bipartisan joint congressional inquiry into intelligence failures surrounding the attacks. The Joint Inquiry reviewed a half a million documents, interviewed hundreds of witnesses and produced an 838 page report — minus the final chapter which was blanked out — excised by the Bush administration for reasons of national security.
“I remain deeply disturbed by the amount of material that has been censored from this report.”
Bob Graham won’t discuss the classified information in the 28 pages, he will say only that they outline a network of people that he believes supported the hijackers while they were in the U.S.
Steve Kroft: You believe that support came from Saudi Arabia?
Bob Graham: Substantially.
Steve Kroft: And when we say, “The Saudis,” you mean the government, the–
Bob Graham: I mean–
Steve Kroft: –rich people in the country? Charities–
Bob Graham: All of the above.
Graham and others believe the Saudi role has been soft-pedaled to protect a delicate relationship with a complicated kingdom where the rulers, royalty, riches and religion are all deeply intertwined in its institutions.
Bob Graham
CBS News
Porter Goss, who was Graham’s Republican co-chairman on the House side of the Joint Inquiry, and later director of the CIA, also felt strongly that an uncensored version of the 28 pages should be included in the final report. The two men made their case to the FBI and its then–director Robert Mueller in a face-to-face meeting.
Porter Goss: And they pushed back very hard on the 28 pages and they said, “No, that cannot be unclassified at this time.”
Steve Kroft: Did you happen to ask the FBI director why it was classified?
Porter Goss: We did, in a general way, and the answer was because, “We said so and it needs to be classified.”
Goss says he knew of no reason then and knows of no reason now why the pages need to be classified. They are locked away under the capital in guarded vaults called Sensitive Compartmented Information Facilities, or SCIFs in government jargon. This is as close as we could get with our cameras — a highly restricted area where members of Congress with the proper clearances can read the documents under close supervision. No note-taking allowed.
Tim Roemer: It’s all gotta go up here, Steve.
Tim Roemer, a former Democratic congressman and U.S. ambassador to India, has read the 28 pages multiple times. First as a member of the Joint Inquiry and later as a member of the blue-ribbon 9/11 Commission which picked up where Congress’ investigation left off.
Steve Kroft: How hard is it to actually read these 28 pages?
Tim Roemer: Very hard. These are tough documents to get your eyes on.
Roemer and others who have actually read the 28 pages, describe them as a working draft similar to a grand jury or police report that includes provocative evidence — some verified, and some not. They lay out the possibility of official Saudi assistance for two of the hijackers who settled in Southern California. That information from the 28-pages was turned over to the 9/11 Commission for further investigation. Some of the questions raised were answered in the commission’s final report. Others were not.
Steve Kroft: Is there information in the 28 pages that, if they were declassified, would surprise people?
Tim Roemer: Sure, you’re gonna be surprised by it. And, you’re going to be surprised by some of the answers that are sitting there today in the 9/11 Commission report about what happened in San Diego, and what happened in Los Angeles. And what was the Saudi involvement.
Much of that surprising information is buried in footnotes and appendices of the 9/11 report — part of the official public record, but most of it unknown to the general public. These are some, but not all of the facts:
In January of 2000, the first of the hijackers landed in Los Angeles after attending an al Qaeda summit in Kuala Lumpur, Malaysia. The two Saudi nationals, Nawaf al-Hazmi and Khalid al-Mihdhar, arrived with extremely limited language skills and no experience with Western culture. Yet, through an incredible series of circumstances, they managed to get everything they needed, from housing to flight lessons.
Tim Roemer: L.A., San Diego, that’s really you know, the hornet’s nest. That’s really the one that I continue to think about almost on a daily basis.
During their first days in L.A., witnesses place the two future hijackers at the King Fahd mosque in the company of Fahad al-Thumairy, a diplomat at the Saudi consulate known to hold extremist views. Later, 9/11 investigators would find him deceptive and suspicious and in 2003, he would be denied reentry to the United States for having suspected ties to terrorist activity.
Tim Roemer: This is a very interesting person in the whole 9/11 episode of who might’ve helped whom– in Los Angeles and San Diego, with two terrorists who didn’t know their way around.
Phone records show that Thumairy was also in regular contact with this man: Omar al-Bayoumi, a mysterious Saudi who became the hijackers biggest benefactor. He was a ghost employee with a no-show job at a Saudi aviation contractor outside Los Angeles while drawing a paycheck from the Saudi government.
Steve Kroft: You believe Bayoumi was a Saudi agent?
Bob Graham: Yes, and–
Steve Kroft: What makes you believe that?
Bob Graham: –well, for one thing, he’d been listed even before 9/11 in FBI files as being a Saudi agent.
On the morning of February 1, 2000, Bayoumi went to the office of the Saudi consulate where Thumairy worked. He then proceeded to have lunch at a Middle Eastern restaurant on Venice Boulevard where he later claimed he just happened to make the acquaintance of the two future hijackers.
Tim Roemer: Hazmi and Mihdhar magically run into Bayoumi in a restaurant that Bayoumi claims is a coincidence and in one of the biggest cities in the United States.
Steve Kroft: And he decides to befriend them.
Tim Roemer: He decides to not only befriend them but then to help them move to San Diego and get residence.
In San Diego, Bayoumi found them a place to live in his own apartment complex, advanced them the security deposit and cosigned the lease. He even threw them a party and introduced them to other Muslims who would help the hijackers obtain government IDs and enroll in English classes and flight schools. There’s no evidence that Bayoumi or Thumairy knew what the future hijackers were up to, and it is possible that they were just trying to help fellow Muslims.
The very day Bayoumi welcomed the hijackers to San Diego, there were four calls between his cell phone and the imam at a San Diego mosque, Anwar al-Awlaki, a name that should sound familiar.
The American-born Awlaki would be infamous a decade later as al Qaeda’s chief propagandist and top operative in Yemen until he was taken out by a CIA drone. But in January 2001, a year after becoming the hijackers’ spiritual adviser, he left San Diego for Falls Church, Virginia. Months later Hazmi, Mihdhar and three more hijackers would join him there.
Tim Roemer: Those are a lot of coincidences, and that’s a lot of smoke. Is that enough to make you squirm and uncomfortable, and dig harder– and declassify these 28 pages? Absolutely.
Perhaps, no one is more interested in reading the 28 pages than attorneys Jim Kreindler and Sean Carter who represent family members of the 9/11 victims in their lawsuit against the kingdom. Alleging that its’ institutions provided money to al Qaeda knowing that it was waging war against the United States.
Jim Kreindler: What we’re doing in court is developing the story that has to come out. But it’s been difficult for us because for many years, we weren’t getting the kind of openness and cooperation that we think our government owes to the American people, particularly the families of people who were murdered.
The U.S. government has even backed the Saudi position in court–that it can’t be sued because it enjoys sovereign immunity. The 9/11 Commission report says that Saudi Arabia has long been considered the primary source of al Qaeda funding through its’ wealthy citizens and charities with significant government sponsorship. But the sentence that got the most attention when the report came out is this:
“We have found no evidence that the Saudi government as an institution or senior Saudi officials individually funded the organization.”
Attorney Sean carter says it’s the most carefully crafted line in the 9/11 Commission report and the most misunderstood.
Sean Carter: When they say they found no evidence that senior Saudi officials individually funded al Qaeda, they conspicuously leave open the potential that they found evidence that people who were officials that they did not regard as senior officials had done so. That is the essence of the families’ lawsuit. That elements of the government and lower level officials sympathetic to bin Laden’s cause helped al Qaeda carry out the attacks and help sustain the al Qaeda network.
Yet, for more than a decade, the kingdom has maintained that that one sentence exonerated it of any responsibility for 9/11 regardless of what might be in the 28 pages.
Bob Kerrey: It’s not an exoneration. What we said–we did not, with this report, exonerate the Saudis.
Former U.S. Senator Bob Kerrey is another of the 10-member 9/11 Commission who has read the 28 pages and believes they should be declassified. He filed an affidavit in support of the 9/11 families’ lawsuit.
Bob Kerrey: You can’t provide the money for terrorists and then say, “I don’t have anything to do with what they’re doing.”
Steve Kroft: Do you believe that all of the leads that were developed in the 28 pages were answered in the 9/11 report? All the questions?
Bob Kerrey: No. No. In general, the 9/11 Commission did not get every single detail of the conspiracy. We didn’t. We didn’t have the time, we didn’t have the resources. We certainly didn’t pursue the entire line of inquiry in regard to Saudi Arabia.
Steve Kroft: Do you think all of these things in San Diego can be explained as coincidence?
John Lehman: I don’t believe in coincidences.
John Lehman, who was secretary of the Navy in the Reagan administration, says that he and the others make up a solid majority of former 9/11 commissioners who think the 28 pages should be made public.
John Lehman: We’re not a bunch of rubes that rode into Washington for this commission. I mean, we, you know, we’ve seen fire and we’ve seen rain and the politics of national security. We all have dealt for our careers in highly classified and compartmentalized in every aspect of security. We know when something shouldn’t be declassified. An the, this, those 28 pages in no way fall into that category.
Lehman has no doubt that some high Saudi officials knew that assistance was being provided to al Qaeda, but he doesn’t think it was ever official policy. He also doesn’t think that it absolves the Saudis of responsibility.
John Lehman: It was no accident that 15 of the 19 hijackers were Saudis. They all went to Saudi schools. They learned from the time they were first able to go to school of this intolerant brand of Islam.
Lehman is talking about Wahhabism, the ultra conservative, puritanical form of Islam that is rooted here and permeates every facet of society. There is no separation of church and state. After, oil, Wahhabism is one of the kingdom’s biggest exports. Saudi clerics, entrusted with Islam’s holiest shrines have immense power and billions of dollars to spread the faith. Building mosques and religious schools all over the world that have become recruiting grounds for violent extremists. 9/11 Commissioner John Lehman says all of this comes across in the 28 pages.
John Lehman: This is not going to be a smoking gun that is going to cause a huge furor. But it does give a very compact illustration of the kinds of things that went on that would really help the American people to understand why, what, how, how is it that these people are springing up all over the world to go to jihad?
Tim Roemer: Look, the Saudis have even said they’re for declassifying it. We should declassify it. Is it sensitive, Steve? Might it involve opening– a bit, a can of worms, or some snakes crawling out of there? Yes. But I think we need a relationship with the Saudis where both countries are working together to fight against terrorism. And that’s not always been the case.
Tom Wheeler / AP
John Tlumacki/Globe Staff/File
