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AT&T disputes fraud claim

| Wednesday, Nov. 14, 2012, 12:02 a.m.

A federal judge should dismiss a lawsuit claiming AT&T defrauded the government of millions of dollars because the money wasn't really government money, a lawyer for the communications giant argued on Tuesday in Pittsburgh federal court.

David Carpenter, an AT&T lawyer, argued that the government and the former employee who started the lawsuit can't show that the company knew it was seeking reimbursements for calls that didn't qualify for a government program intended to help people with hearing or speech disabilities.

“There may well be grounds for an FCC complaint, but this is not a False Claims Act complaint,” he told U.S. Magistrate Judge Robert Mitchell.

Mitchell held a hearing on AT&T's motion to dismiss the case. He took the arguments under advisement.

Constance Lyttle of Mercer, a former AT&T Internet Protocol Relay operator, sued the company in 2010 under the False Claims Act, which allows private citizens to seek the recovery of fraudulently obtained government money. If she succeeds, she'll get part of the money.

The IP Relay services allow someone to make a phone call with a computer by typing in messages. The operator reads those messages to the person on the other end of the call and types in that person's responses so the caller can read them.

A fee on all customers' long-distance service pays for the service. The Federal Communications Commission uses a private company to administer the fund.

Carpenter argued that because the money never reaches the federal Treasury, it's not federal money and therefore the company can't be sued under the False Claims Act.

Jonathan Phillips, a Justice Department lawyer, said the law doesn't require the money to end up in the Treasury to be considered federal money.

The Postal Service and the Federal Housing Administration's home loan guarantee program use money that never reach the Treasury but have been the subject of successful litigation under the False Claim Act, he said.

Rebecca Lyttle, Constance Lyttle's sister and her lawyer, argued that AT&T knew that up to 95 percent of the calls being made through the service were coming from international criminals, mostly Nigerians, who used the service to disguise where the call was coming from while using stolen credit card numbers to make purchases.

The company patented software as early as 2003 that could tell when a call was coming from a computer overseas, but it kept allowing the calls so it could get the government subsidy, she said.

Phillips said the company chose not to implement an electronic registration system, which would have revealed where the caller lived, for the same reason.

“They took these measures to increase their revenues,” he said.

Brian Bowling is a staff writer for Trib Total Media. He can be reached at 412-325-4301 or bbowling@tribweb.com.

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