Feds Sue Sprint for $21M Overcharge for Wiretaps

Feds allege that Sprint overcharged them 58% for help with wiretaps between 2007 and 2010
Feds allege that Sprint overcharged them for help with wiretaps between 2007 and 2010.

The U.S. Department of Justice has filed suit against Sprint Corp. for charging the government $21 million more than it was entitled to for helping federal agents tap the phones of Sprint customers.

Between 2007 and 2010, Sprint cooperated with warrants from federal law-enforcement agencies, but charged 58 percent more for its help than it was allowed to, according to a lawsuit filed March 3 in San Francisco by the U.S. Attorney’s office, according to Wired, which picked up the story.

The suit has little or nothing to do with recent scandals over National Security Agency (NSA) eavesdropping scandals, or the Patriot Act and USA Freedom Act that allegedly gave that agency permission for large-scale collections of metadata of the phone calls made by U.S. citizens.

The suit focuses on work Sprint did in accordance with the Communications Assistance in Law Enforcement Act of 1994, which requires that telcos be capable of wiretapping calls on their networks so federal agents with warrants would be able to record the actual content of calls. The Act also allows carriers to bill law enforcement agencies for “reasonable expenses” to recoup the cost of complying with court-ordered intercepts, but not for changes in their equipment or services required to make the intercepts possible.

Carriers can still recoup those charges, but not by billing the FBI, DEA or other law-enforcement agencies. Instead, under rules the FCC issued in 2006 – which Sprint helped to develop – bills for the cost of modifying “equipment, facilities or services” have to go directly to the U.S. Attorney General’s office, which was responsible for whittling down the cost of network updates to the minimum allowable under the law.

Instead of billing agencies for the intercepts and the AG’s office for network or service updates, Sprint allegedly billed the agencies for the whole cost and hoped no one would notice. “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,” according to the suit, the full text of which is available here.

“Under the law, the government is required to reimburse Sprint for its reasonable costs incurred when assisting law enforcement agencies with electronic surveillance,” Wired quoted Sprint spokesperson John Taylor as saying. “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.”

Sprint reduced the amount it charged for intercepts after July 2010, which it “removed the costs of financing its investment in CALEA equipment, including the cost of debt, cost of equity, and associated taxes,” but has refused to repay the difference in fees from the previous three-and-a-half years, according to the suit.

In the text of its complaint, the U.S. Attorney’s office also calls the FCC guidelines “clear and unambiguous,” making clear it is unlikely to accept any effort by Sprint to argue that it was confused about where to send which bill.

“Sprint over billed law enforcement agencies for carrying out court-ordered intercepts, causing a significant loss to the government’s limited resources,” U.S. Attorney Melinda Haag told Wired.

Image:Shutterstock.com/ Susan Law Cain

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