Illinois VAR Pleads Guilty To Conspiracy To Defraud E-Rate Program

Tyrone Pipkin, described by the government as a former co-owner of Global Networking Technologies, based in Gurnee, Ill., pleaded guilty in U.S. District Court in New Orleans for providing bribes and kickbacks to school officials in multiple states in exchange for receiving the E-Rate contracts, according to the Department of Justice.

He faces up to five years in prison and a $250,000 fine on the conspiracy charge.

According to the government, Pipkin bribed school officials and employees responsible for procuring Internet access services in Arkansas, Illinois and Louisiana between December 2001 and September 2005. In return, he received control of the E-Rate competitive bidding process along with an unnamed co-conspirator, allowing him to ensure the E-Rate contracts were awarded to their companies, according to the complaint.

Pipkin acted on his own behalf and on behalf of Global Networking Technologies and Computer Training Associates, according to a statement from the Department of Justice. Schools and school districts that participated in the conspiracy are the Gould and Holly Grove public school districts in Arkansas, the Antioch Center, Fairfield Center, Ingleside Center, St. Mary’s Center, Waukegan Center, Zion Center and Niles Terrace Center districts in Illinois and All Saints School, St. Augustine High School, St. David School and St. Monica School in Louisiana.

According to the complaint filed in the U.S. District Court in November 2010, Pipkin and the co-conspirator took in more than $2.5 million in revenue generated through the fraudulent E-Rate deals from the Universal Service Administrative Company and Schools and Libraries Division, non-profit organizations that oversee the E-Rate program. Kickbacks to school employees reached at least $20,000 in one instance, according to the court document.

An individual who identified himself as "Tyrone" answered a phone number found for Global Networking Technologies, but hung up after being asked if the company had a statement regarding the guilty plea.

The E-Rate program was created by Congress in the Telecommunications Act of 1996 and serves to provide federal subsidies to economically disadvantaged schools and libraries to get Internet access and other IT equipment. It's also been a program that has attracted criminal behavior.

To date, seven companies and 22 individuals have pleaded guilty, been convicted at trial or entered civil settlements as a result of investigations into fraud and anticompetitive conduct, according to the Justice department.

Fifteen individuals have been sentenced to prison and companies and individuals have been fined more than $40 million.