The Federal Government developed a e-rate program through a tax attached to telephone services, was intended to bring internet, network and telecommunication services into poverty or low income schools and areas. The amount of e-rate reimbursement for each school district is dependent upon the number of students in the district qualifying for free and reduced lunches under the federal guidelines. The total Federal cost for the program in 2011 was $2,203,339,671. According to program administrators, “Funding may be provided only for eligible products or services that will be used for educational purposes. See 47 C.F.R. §§ 54.500(b), 54.502, and 52.504.” www.usac.org
Gilbert Public Schools recently purchased new website hosting through the e-rate reimbursement program from Schoolwires, Inc.
According to the e-rate program, Gilbert Public Schools has received approximately $3,265,996 in reimbursements since 2007. In 2007, Gilbert voters approved a technology override to spend an additional $58,000,000 to bring technology to the classroom.
Many Federal programs do not have adequate oversight to manage the fraud, waste and abuse and e-rate program is no exception. Since inception, there has been a large number of cases involving fraud and abuse, prompting the program to halt or suspend funding several times.
In 2009, Nancy Bonnell from the Arizona Attorney Generals Office Antitrust Investigations Unit, filed charges in Superior Court against Tucson Unified School District, Trillion (Promethean smart board vendor), E-Rate Consulting LLC, Logical Choice Technologies, and various school district staff members for violations of antitrust laws, procurement code, conflict of interest, bid rigging, conspiracy and collusion. The case outlined a variety of allegations against TUSD administrators including awarding of contracts to vendors without any competition at all or before competitive purchasing processes were completed, authorizing contractors to begin work before purchase orders were issued, dividing or sequencing purchases so as to avoid the limits and requirements of procurement rules, regulations and policies; and participating in extensive and improper communications with prospective and current vendors. TUSD, Promethean dba Trillion and/or Level 3 Audio Visual, Logical Choice Technologies and district staff settled the charges out of court and paid fines. A judgment against E-Rate Consulting Services LLC, was issued for $302,151 and remains unpaid to the State of Arizona according to court records.
It appears that E-Rate Consulting Services LLC, out of Montgomery, Alabama after being issued an injunction to halt antitrust, fraud and deceptive practices in Arizona starting in 2009 for 3 years, resurfaced as eRate 360 and is conducting business with Arizona school districts.
The AG Antitrust unit investigation documented that these vendors engaged in antitrust practices of providing lavish gifts, meals, gift cards, donations, entertainment, etc. to district employees, including teachers that promoted the products or services; Promethean smart boards, and e-rate consulting. Much of the gift exchange investigated by the Attorney General’s Office took place at a technology conference sponsored by the Promethean vendors and held at the J.W Marriott Starr Pass Resort as well as various district school sites. According to the AG complaint, the focus of these conferences and trainings were on the benefits of educational technology and the uses of Promethean products in the classroom.
The Attorney General asserts that there may be other school districts engaging in bidding and consulting with these vendors. However since the specific complaint was limited to TUSD, the AG Antitrust Office limited the scope of the investigation to the Tucson Unified School District and its procurement practices only.
In November 2009, Emily Gersema of the Arizona Republic published an article regarding Barb VeNard and her involvement in a possible conflict of interest with a sizeable technology deal. Her husband Jim VeNard, was previously employed with the HP vendor that won the contract with GPS and it is alleged an exchange of emails occurred with her husband around the deal. Read more: http://www.azcentral.com/news/articles/2009/11/10/20091110gr-techdeal1110-ON.html
According to a December 2009 article, GPS board member EJ Andersen worked with Barb Dwyer of the VNET (volunteer network) and parent Julie Toombs to build volunteers for the district. “The parent, teacher and student organizations raised thousands of dollars to purchase Promethean Interactive electronic whiteboards for every classroom.” Read more: http://www.azcentral.com/community/gilbert/articles/2009/12/10/20091210gr-parentsstepup1212.html#ixzz1xUM7u3wk
In 2010, Gilbert Public Schools employee, Julia Lott, along with other school district employees from across the state put together another Technology in Education Conference, with Level 3 Audio Visual (same company named in 2009 AG case) as a gold level and eRate 360 as a silver level sponsors. The conference information can be found here; http://search.yahoo.com/r/_ylt=A0oGklIChdRP4jUAisVXNyoA;_ylu=X3oDMTE2ZTNxZHJpBHNlYwNzcgRwb3MDMjMEY29sbwNzazEEdnRpZANNU1kwMTRfMTMw/SIG=12fl0pgko/EXP=1339356546/**http%3a//www.aztea.org/files/aztea/tnt10/TnT_Program_2010.pdf
Currently a Florida school administrator, Bob Hansen, is involved in an FBI investigation alleging that he accepted kickbacks from two separate vendors, Crosspointe LLC (a software company) and Promethean (smartboards) also linked to the Arizona scandal. The involvement of Bob Hansen accepting kickbacks was brought to the attention of the FBI by spouse of a joint partner of Crosspointe LLC. Gilbert Public School district has done business with both Crosspointe LLC and purchased Promethean smart boards from its subsidiary vendors. Should we be concerned?
Gilbert Public Schools secured a commitment of 58M in override funding from voters and another $3.3M in e-rate reimbursement from federal telephone taxes, what happened to this $1700 per student for technology? That calculates to $42,500 per classroom for a class of 25 students and does not include the money volunteers raised to purchase smartboards for every classroom.