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United States Education The Almighty Buck Your Rights Online

NEC Admits To Ripping Off Schools Through E-Rate Program 250

Posted by timothy from the infinite-takers-for-finite-pie dept.
MAurelius writes "The New York Times (regist. req'd) is reporting that NEC now admits to ripping off multiple low-income school districts by connecting them to the internet with equipment more advanced and expensive than necessary. Several orders of magnitude more expensive. All paid for by telephone rate-payers. That would be you."
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NEC Admits To Ripping Off Schools Through E-Rate Program More

NEC Admits To Ripping Off Schools Through E-Rate Program

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  • Reg Free (Score:4, Informative)

    by bendelo ( 737558 ) * on Sunday May 30, 2004 @07:39AM (#9289065)
    Here's a registration free link [nytimes.com] thanks to Google [google.com].

  • Sounds like a federal program (Score:3, Insightful)

    by Anonymous Coward on Sunday May 30, 2004 @07:40AM (#9289067)
    And you expected any less with a pseudo-govermental federally mandated tax? The federal goverment has no business doing this; it should be done by the states as needed.

    • Re:Sounds like a federal program (Score:5, Interesting)

      by Teun ( 17872 ) on Sunday May 30, 2004 @08:00AM (#9289120)
      Where do you get that State-politicians would be any better/worse than Federal politicians?

      Wake up!

      As a European I believe you'd better hve such a program run by independant beaurocrats than For Profit commercial interests.
      And than elect thrustworthy officials to contral the beaurocrats.
      But with so few going to the polls, who can complain about the politicians?

      • Re:Sounds like a federal program (Score:3, Insightful)

        by Anonymous Coward
        Well, see, we have an often ignored Constitution that says that powers not explicitly granted to the federal goverment (Education isn't mentioned in the constitution) are given to the state.
        But to answer your question, State politicians can be removed. Federal beaurecrats are immune to pressure. If you don't believe that, try to get one fired for negligence or failure to do their job.
        • Well, see, we have an often ignored Constitution that says that powers not explicitly granted to the federal goverment (Education isn't mentioned in the constitution) are given to the state.

          Yes, that's correct [ecs.org].
          Yet, the federal government has imposed a very large number of unfunded mandates(read: *the law of the land*) on the States through the No Child Left Behind Act [house.gov] (and other laws), leaving the States to pick up the slack.
          In most States, the federal government picks up only a relatively small amount [ed.gov] o

      • Re:Sounds like a federal program (Score:5, Interesting)

        by espo812 ( 261758 ) on Sunday May 30, 2004 @08:16AM (#9289163)
        Where do you get that State-politicians would be any better/worse than Federal politicians?
        If it's a school system it should probably be done by the local government, because locally elected officials are right next to the needs of a community. A politician 500 miles away dealing with politicians from thousands of miles away isn't in the best position to fix localy handled problems (school systems, roads, welfare, etc.)
        As a European I believe you'd better hve such a program run by independant beaurocrats than For Profit commercial interests.
        My expierence is that beaurocrats seek to expand their power - that means increasing budget at every opportunity. That isn't beneficial when what they do doesn't necessairly need to even exist (remember, once a program is created it is very hard to get rid of.) The write-up states the government didn't follow competetive bidding proceedures. If they had, the resulting for profit commercial interest selected should have been the most economically efficient company for the task. Granted, that isn't always the case but that's why competetive bid exists.
        But with so few going to the polls, who can complain about the politicians?
        I see this as an education problem. My peers don't vote and they certainly don't care about state and local elections. I don't understand why, since those officials probably affect them more than the President. I don't know how you get people to care about something important - it's a nobrainer to me.

        • Re:Sounds like a federal program (Score:5, Funny)

          by CondeZer0 ( 158969 ) on Sunday May 30, 2004 @09:17AM (#9289356) Homepage
          As Isaac Asimov put it (wording approximate):

          "If I must be ruledby larcenous bullies, I much prefer that they be located far away. Local bullies know far more about me and my doings than faraway bullies sitting in offices in Washington, and can oppress me far more effectively."

          Source Henry Spencer: http://groups.google.com/groups?selm=Htt7u5.E6n%40 spsystems.net

          • While we're quoting SF authors (or characters) (Score:4, Insightful)

            by Ungrounded Lightning ( 62228 ) on Sunday May 30, 2004 @11:46AM (#9289966) Journal
            "Every new law is a new opportunity for graft."

            One of Heinlein's. It seems appropriate here.

            Of COURSE collecting a big pot of tax money for "wiring the schools for internet" will attract those with the political connections to tap it. And of COURSE they will set their prices and install the equipment that gives them the entirety of that pot of money. Why the surprise?

            If you want it done at a decent price you don't say: "Here's X billion dollars per year. Who can wire the schools for that?". You say: "School districts: Get hooked up. We've raised your budget a bit, but meet at least Y level of service and if there's any left over you can use it for equipment, supplies, teachers, books, software, sporting goods, building repairs, or whatever else you need."

            But IMHO, while the opportunity for graft is ALWAYS a factor in new laws (even if not intentionally), this one DID have an ulterior motive:

            By wiring the schools to the internet, the government added weight to the "protect the children" argument for passing regulations limiting what could be posted there.

            You will recall the figurehead of this push was Al Gore, during the period when the air was filled with internet-content-regulation and for-the-CHILDren trial balloons - shortly after his wife Tipper's attempt to regulate music content was slapped down. (I believe the quote that got mangled into "Al Gore claims to have invented the Internet." came from that very push.)

            The internet was created BY adults FOR adults - or at least the set of people that INCLUDES adults. It was intended to be a medium for transmitting ANY information, cheaply and without restriction. It's as much an adult world as the streets of a city. It has its universities, its industries, and its billboards. But it also has its red light districts, its radical political recruiters, and its underworld.

            Children who are below the maturity level to wander this world unharmed should no more be encouraged to go there unsupervised than they should be bussed to the local "adult enterprise zone" and left on their own. And attempts to turn it into a padded cell for kids are as misguided, as tyrannical, and as futile as attempts to do the same to the streets of the city.

      • Re:Sounds like a federal program (Score:5, Insightful)

        by That's Unpossible! ( 722232 ) * on Sunday May 30, 2004 @09:04AM (#9289307)
        As a European I believe you'd better hve such a program run by independant beaurocrats than For Profit commercial interests.

        As an American I think we'd have a better program if the school system wasn't controlled by the government.

        Do you think a for-profit private school would have wasted their budget money like this?

        But Unpossible, how will poor kids go to private schools? Through scholarship programs, through charity, through hard work. Those that have good parents and want to be educated will be educated.
        • Quit listening to the libertarians. Those people are regular neo-cons. Hell, the Republican party is more liberal than the libertarians.

          As an American I think we'd have a better program if the school system wasn't controlled by the government.

          Really? Well, keep in mind that there is already an extensive network of non-public schools that you could go to if you have the money. How exactly does it solve the problem?

          Do you think a for-profit private school would have wasted their budget money like th
          • A for-profit system would work but...
            1. You need to assure every kid with a drive to
            study of an opportunity, i.e. scholarship. Make
            a law, earmarking $5000 per year per kid and watch
            the number of private schools skyrocket. Some will
            be bad some good, give it ten years to shake out.
            2. Make sure (by law, hard enforcement, and stiff
            liabilities) that the only way a school accepting
            federal funding can avoid admitting a student is
            if he does not qualify academically, i.e. fails an
            entrance exam.
            3. Create a yearly nat

    • Re:Sounds like a federal program (Score:4, Insightful)

      by Alan Cox ( 27532 ) on Sunday May 30, 2004 @08:05AM (#9289131) Homepage
      Anyone can get ripped off at any level. The good thing is that someone at least *noticed* this one and is now beating restitution out of the victims.

      It can happen at any level in government or business (although its a government speciality since its not their money). State level, "Oracle v California" anyone ?

      • Re:Sounds like a federal program (Score:5, Funny)

        by Tony-A ( 29931 ) on Sunday May 30, 2004 @08:10AM (#9289139)
        Anyone can get ripped off at any level. The good thing is that someone at least *noticed* this one and is now beating restitution out of the victims. [Emphasis added]

        Typo?
        What worries me is that it's probably right as writ.

    • The ripoffs were conducted by bribing local school officials. These town politicians are guilty of a much more severe crime than suppliers like NEC: they protect the public trust; the corporations are bound by merely commercial ethics. The problem, as cited in the article, was that even though the FCC investigator caught on to the scams, they didn't have the staff to monitor the program.

      This tax was not pseudo in any way. It addressed the uneven distribution of needy schools, money to pay, and final desti

  • US-centric (Score:3, Insightful)

    by NightRain ( 144349 ) <<ua.di.noryc> <ta> <yar>> on Sunday May 30, 2004 @07:42AM (#9289069)
    All paid for by telephone rate-payers. That would be you.

    No, that would not be me, because I don't live in the US.

    • Re:US-centric (Score:2, Insightful)

      by WanderingGhost ( 535445 )
      No, that would not be me, because I don't live in the US.
      Yes, but how can you tell it doesn't happen in your country too?
    • Considering how many companies these days are part of a multinational corporation, chances are you do pay for it indirectly.
      The world is a becoming a village.
    • This would also not be me. I live in the US, but dumped the landline in favor of a prepaid cellphone about 3 years ago.

  • That's so stupid. (Score:5, Interesting)

    by pedantic bore ( 740196 ) on Sunday May 30, 2004 @07:46AM (#9289075)
    I can't decide whether I'm more surprised that NEC would do something this transparently stupid, or that it took so long for people to notice! It seems like school budgets are gone over with a fine-tooth comb around here; lots of people want to keep costs down because higher school budgets -> more taxes.

    Maybe this snuck through because it was done in a separate program funded a different way, but it still amazes me that they thought they wouldn't get caught.

    • Re:That's so stupid. (Score:4, Insightful)

      by Billly Gates ( 198444 ) on Sunday May 30, 2004 @07:54AM (#9289101) Journal
      Thank our campaign laws and legal bribery.

      I am sure it was bought and paid for by lobbiest from NEC who convinced the politicans to buy this for kickbacks in return.

    • Re:That's so stupid. (Score:5, Insightful)

      by NJVil ( 154697 ) on Sunday May 30, 2004 @07:58AM (#9289114)
      Having seen school budgets and taken coursework on school budgets and having had a hand in compiling a departmental school budget, I can state with some certainty that if a small group of influential people wants to hide something, they will hide it.

      Granted, there are some amounts of money that can't be hidden, but this particular scam involved getting districts to buy too much unnecessary equiment (1 network server per classroom in one case) and overcharging for it because the districts didn't follow competitive-bidding procedures.

      I guess the point I'm trying to make is that even though the budget process is "public," a lot of the particulars are obfuscated by those few who control the budget pen. There's always a fair amount of pork in any budget (schools included), but this particular scheme involved defrauding the federal government (as opposed to defrauding the citizens of a town), which is what is landing them in hot water.

    • Re:That's so stupid. (Score:4, Interesting)

      by archen ( 447353 ) on Sunday May 30, 2004 @09:20AM (#9289367)
      Actually this doesn't surprise me at all. I know a guy who used to work for a major ISP in the Northeast. Their company would fight tooth and nail to get into schools because of the funding they could get. They would offer to get the school wired, and would offer to do the rather complex paperwork to get grants from the state (or maybe federal, I can't recall). They then would wire schools with rather pricey equipment. Not obscenely out of line equipment, but certainly more expensive than needed. From what I understand, everyone is so concerned about getting schools wired so kids can surf the net instead of learning, that no one is looking at the price tag.

      • Re:That's so stupid. (Score:2, Insightful)

        by Tablizer ( 95088 )
        [a particular company] would offer to get the school wired, and would offer to do the rather complex paperwork to get grants from the state (or maybe federal, I can't recall). They then would wire schools with rather pricey equipment. Not obscenely out of line equipment, but certainly more expensive than needed.

        Maybe there was a "gentleman's agreement" that equipment would be jacked up a bit if the supplier did such paperwork for them. Dealing with gvmt paperwork can be costly itself. It may not be the
    • The money isn't really part of the school's budget in the sense that it's money that could have gone towards anything else. It's more like giving the schools a rich uncle that says "If you want to get yourself a network, tell me how much it costs & I'll send you the money". This is why nobody in the schools really cares ho wmuch they're spending.

  • at least... (Score:4, Interesting)

    by Anonymous Coward on Sunday May 30, 2004 @07:47AM (#9289082)
    NEC, the computer giant, agreed to plead guilty to two federal felony counts.
    At least they pleaded guilty. It's marvellous that big companies can overcome their pride and say that they were wrong without putting up a big fuss.

    Justice has been served.

    • Re:at least... (Score:4, Interesting)

      by phoenix.bam! ( 642635 ) on Sunday May 30, 2004 @08:16AM (#9289165)
      The question is, will someone go to jail for this? Or will the company just have to give the money back?

      • Re:at least... (Score:5, Insightful)

        by SillyNickName4me ( 760022 ) <dotslash@bartsplace.net> on Sunday May 30, 2004 @09:06AM (#9289315) Homepage
        Actually.. those who were responsible should have to pay them back at least 3 times, and from their personal account.

        That a company takes the damage when things go wrong is understandable, but when people have intentionally screwed things up, they should be held personally accountable.

        It amazes me that it seems acceptable to politicians that individual citizens can be put out of their life savings by an organisation like the RIAA over possibly endangering their income, while big corporations can rip of the citizens and the responsible people just walk away.
      • The question is, will someone go to jail for this? Or will the company just have to give the money back?

        They plead guilty and are paying back double the amount in fines and restitution, just like any individual would. A record of a felony conviction isn't as much of a problem for a corporation as it is for a person, though. That's really the only difference.

        • Re:at least... (Score:3, Insightful)

          by GSloop ( 165220 )
          If an individual pleaded guilty to a *felony* stealing/fraud/etc then they would most likely get a significant prison sentence.

          Not only that, but the individual would give up their right to vote and thus their influence over gvmt. Not so the corp.

          IMHO, CEO's and executive officers ought to be responsible, *personally* for the acts of their companies - both civil and criminal. Unless the Executive can show that it would have been completely unreasonable for them to have known about the malfeasence.

          Cheers,
    • ...with a smaller fine and less legal bills than they otherwise would have faced. The evidence was there, and against them. "Big companies" will generally do what is in their best interest and have remarkably little "pride". Pleading guilty in this case was in their best interest.

    • Re:at least... (Score:4, Informative)

      by crem_d_genes ( 726860 ) * on Sunday May 30, 2004 @10:15AM (#9289572)
      It has absolutely nothing to do with pride. It is sheer and simple pragmatism.

      On a federal count, to not plead guilty, and then be found guilty adds to the number of points the judge uses in setting the sentencing. When you know you're guilty in a federal case, it is very foolish to plead innocent when the evidence is amassed against you.

  • Why is no one going to jail? (Score:5, Insightful)

    by MrRTFM ( 740877 ) * on Sunday May 30, 2004 @07:51AM (#9289090) Journal
    NEC then sent a bill to the E-Rate administrators, a quasi-governmental agency for tens of millions of dollars more than the actual cost of the equipment.

    If someone robs a bank overnight (no people harmed) and takes 10 million dollars the shit would hit the fan.

    But a corporation? ....
    and to pay $20.7 million in fines and restitution.

    Oh, I suppose theres no harm trying is there - if they get caught, they only pay double what they could have scammed.

    • Re:Why is no one going to jail? (Score:4, Interesting)

      by Timesprout ( 579035 ) on Sunday May 30, 2004 @08:06AM (#9289133)
      You raise a good point. Executives are able to steal, lie and embezzle pretty much with impunity. They might just get a slap on the wrist if you get caught. I am still outraged over the CitiBank-Enron collusion that joe bloggs had to foot the bill for. Some of the high profile 'white collar' criminals need to spend a few years in a confined with large (in more ways than one) powerful gentlemen of ambivalent sexuality who are being fed tripple doses of viagra in their meals. It might not bring the money back but the revenge factor will be priceless.

      • Re:Why is no one going to jail? (Score:5, Insightful)

        by Vlad_the_Inhaler ( 32958 ) on Sunday May 30, 2004 @09:02AM (#9289300)
        You raise another point.
        This need to spend a few years in a confined with large (in more ways than one) powerful gentlemen of ambivalent sexuality who are being fed tripple (sic) doses of viagra in their meals attitude is plugged a lot on /. and seems to be popular in the US nowadays.

        Examples - all 9.11 related - off the top of my head are:
        • There was a general trawl of Pakistanis in NY state after 9.11, one prison warder was suspended for the serious violence they were subjected to before they were either released without charges being pressed, or deported as illegal immigrants.
        • In a recent exercise, an american donned the orange overalls and was put into the Guantanamo Bay facility. Serious violence was apparently used on him, it ceased when he managed to show them the uniform he was wearing underneath. Of the 5 (?) british muslims who landed up there before being released without charge, one also came back as a torture victim and all of them reported being asked the same idiotic questions day after day by people who did not have a clue.
        • A lot of the people in those Iraqi jails who were simply in the wrong place at the wrong time, ended up being beaten up, abused or killed.

        Bottom line is: people who are locked up for often spurious reasons are considered prey. Is that what the US now stands for?

        Someone at NEC needs to be prosecuted over this, and then (if found guilty) imprisoned or fined. No rape, no abuse, nothing. Is that what the US now stands for?
        • Yes, it is. Actually, let me clarify, it's what half of the U.S. stands for...
        • In all such cases that you make the persons were being abused for reasons entirely beyond their control. What a lot of these CEOs do is literally intentionally hurting a lot of people.

          If its money that they love so much than take that away. We need an interesting punishment. Never allow them to make more that $18,000 a year or accept handouts from anyone or have any accumulated value worth more than say $30,000. Any of his buddies found to be helping him cheat can have the same punishment (cause you know t
          • whoever bribed that guy should be put away for a similar length of time.

            a large fine for others involved.

            confiscation of property.

            exposure to boy groups all day (now I'm starting with cruel and unusual punishments!)

            In the UK you can be declared 'unfit to be a director of a company', although that does not really fit the craahm in this particular case - the article does not say at which level within NEC this behaviour was initiated.
        • I think you miss the point. The 'large powerful gentlemen of ambivalent sexuality' are the other prisoners. It's well known that rich white-collar criminals seldom get put in the same prisons as poor people. If they not only had to face prison time but also knew that they wouldn't get put up in a 'club fed' that's probably a nicer place to live than where most criminals ever lived, it might have some sort of effect.

          And what's with a German getting all self-rightous about unreasonable prison conditions?

          • Re:Why is no one going to jail? (Score:4, Insightful)

            by Vlad_the_Inhaler ( 32958 ) on Sunday May 30, 2004 @02:46PM (#9291109)
            • Ah am not German, I just live here.
            • Yup, I know that the other prisoners are meant with the 'large powerful gentlemen of ambivalent sexuality'. It is the assumption that homosexual rape should be part of a prison sentence that I find obnoxious, especially coming from the country which imprisons the highest percentage of it's citizens of any developed country. That England/English (I forget which) woman's boyfriend had already attracted attention for abuse of prisoners in a prison at home.
            • I can handle those guys doing time at a 'club fed', although they should not have the Diana Ross option - they should actually have to be there.
            • As to the point behind the point, living here and knowing Germany's history makes me rather sensitive when other countries start behaving in a similar fashion. An essential part of the Nazi behaviour was the assumption that their victims were subhuman. That assumption is the same one we are seeing now.
              Even if I were German, that would have been a pathetic cheap shot. I would have to be about 71 years old now to have been involved in Hitler's bid for world domination.
              'Old Europe' remember horrors that others seem to want to repeat. I shudder to think how people like Ashcroft/Rumsfeld would be behaving if the US did not have a 200 year democratic tradition.
      • Executives are able to steal, lie and embezzle pretty much with impunity.

        IIRC these kind of crooks make off with more money a year than all the muggers, burglars, shoplifters, "till dippers", etc put together.

        They might just get a slap on the wrist if you get caught.

        Assuming they do get caught, since most law enforcement dosn't appear that interested.

        I am still outraged over the CitiBank-Enron collusion that joe bloggs had to foot the bill for.

        Have those responsible have any punisment what so ever

      • Re:Why is no one going to jail? (Score:5, Insightful)

        by Monkelectric ( 546685 ) <slashdot AT monkelectric DOT com> on Sunday May 30, 2004 @11:36AM (#9289917)
        That's because in the US we have a double standard for corporations vs. individuals.

        If I wrote a trojan horse that installed itself unknowingly, stole personal information, and broke your computer in the proces I would go to jail right? if Claria does it, thats "business."

        If I took near nude, hightly sexualized pictures of the 17 year old girl next door the police would nail my ass? But when esquire takes near nude pics of a 17 year old Britney Spears [britneyspears.org] thats "business." I know a lawyer who defended a guy the government tried to convict as a SEX OFFENDER because he took a piss on the side of a highway (and thus exposed himself, and thus is a sex offender, logically). The guy would have had to register as a sex offender for the REST OF HIS LIFE for peeing on the side of the road?

        Law enforcement in this country is out of control. They let corporations/government get away with murder, and they prosecute little crimes beyond reason.

    • One employee of the school district (who was bribed as part of the scam, although not directly by NEC) did go to jail. I don't know why no-one from NEC is going to jail though, for their part in the fraud.

      Corporations are legally persons only when it benefits them, I guess - imagine the concept of 'sending NEC to jail'.
    • I'm sorry, but we are talking about a company here.

      It's pointless to anthropomorphise companies and suggest that they have in any way behaved in an underhand manner - they are just a name.

      You want to really understand what has motivated the company staff to rip off your government, and it will probably come down to the greed of one or two people. The guys involved were probably on a performance related bonus scheme, so had an incentive to increase their sales. Lot's of the people working on this project w
      • That's not the point. The fact is, a serious crime has been committed, and those responsible have got off with a slap on the wrist. If I committed that sort of fraud, even of several orders of magnitude smaller than this, I'd be locked away.

        $10 million of fraud doesn't just happen on it's own. Somebody is responsible - maybe the guy in charge of the project, maybe one of his subordinates, or maybe it was a direct order from the CEO. The job of law enforcement should be to find that somebody and punish hi
        • That's not the point. The fact is, a serious crime has been committed, and those responsible have got off with a slap on the wrist. If I committed that sort of fraud, even of several orders of magnitude smaller than this, I'd be locked away.

          It's quite possible that if you committed the same level of fraud you'd be ok. The chances of going to jail are possibly inversely related to the amount of money involved.

          $10 million of fraud doesn't just happen on it's own. Somebody is responsible - maybe the guy in
        • Unfortunately, in a corporate buerocracy, it's easy enough to pin the blame on some underling of the person really responsible.
      • You want to really understand what has motivated the company staff to rip off your government, and it will probably come down to the greed of one or two people. The guys involved were probably on a performance related bonus scheme, so had an incentive to increase their sales. Lot's of the people working on this project were probably unaware of the markup, unaware of what the requirements were, they were just doing what they had been told to do.

        So? If a few of my co-workers and I go rob a bank and we're ca

    • Re:Why is no one going to jail? (Score:5, Insightful)

      by t_allardyce ( 48447 ) on Sunday May 30, 2004 @08:37AM (#9289240) Journal
      Its like people who drive how they like - speeding, running lights, parking offences etc because they can easily affort the fine, to them the fine isnt so much a punishment/deterrent but the price of a license to do whatever they want. This is exactly the same with big corporations - infact more so. Accounting is done to take into consideration fines and lawsuits, they wernt kidding in Fight-Club when they said the motor company would only issue a recall of defective cars if the estimated cost of lawsuits was bigger than the cost of the recall! Its all just another figure to stick in the spreadsheet. Some might go a little further and factor in "public relations" ie how bad something would be to their image (in money value ofcourse). For example clubbing baby seals might create a bad image but the lost sales due to that would be less than the profit made (well whatever profit you can make from clubbing baby seals). Just remember this is the capitalist system - supply and demand, money = freedom. Continuing my rant off-topic now :\ the system (when done to the full fundamentalist extreme) works so well its almost beautiful like nature itself, consider:

      Drug companies rely on illness, anti-virus companies rely on security flaws, weapons manufacturers rely on war and unrest, oil companies rely on an outdated method of fuel-energy conversion, electric companies rely on people _not_ turning off their lights when they leave the room. Even the president and government have real corporate ties that ensure they have an agenda for or against something for their own benifit. Now stop complaining about the unfairness of the system and get out there and exploit someone.. i hear afew schools might be needing network equipment, now i wonder if we can sell them that 100TB/s router?
      • Its like people who drive how they like - speeding, running lights, parking offences etc because they can easily affort the fine, to them the fine isnt so much a punishment/deterrent but the price of a license to do whatever they want.

        Then the better option is removal of their licence to drive on the public roads. If they drive on a suspended licence then put them in jail. The have the daft situation currently that it can be easier for someone to lose their licence for something unconnected with driving.
    • "If someone robs a bank overnight (no people harmed) and takes 10 million dollars the shit would hit the fan.

      But a corporation? ....
      and to pay $20.7 million in fines and restitution."

      Its a close and decent point but not a perfect one. They didn't take a school's budget and steal the money by transferring it over to their bank account. They scammed them. Just as car mechanics and other people who overcharge do everyday. Its not quite stealing just highly unethical.
    • NEC then sent a bill to the E-Rate administrators, a quasi-governmental agency for tens of millions of dollars more than the actual cost of the equipment.

      If someone robs a bank overnight (no people harmed) and takes 10 million dollars the shit would hit the fan.

      You're comparing apples and oranges. Inflated billing isn't "robbery". It's fraud. If someone sent an excessive bill to a bank, it'd be fraud as well and, if they plead guilty and paid double the amount in fines and restitution, they'd get away w

      • You're comparing apples and oranges. Inflated billing isn't "robbery". It's fraud. If someone sent an excessive bill to a bank, it'd be fraud as well and, if they plead guilty and paid double the amount in fines and restitution, they'd get away without jail time also. NEC didn't send people to break into schools to steal money.

        Actually stealing things from a building is "theft". Since "robbery" requires that force be threatened against a human being.

        NEC is getting what any individual person would for th
      • Uhh... no.

        You see, NEC was convicted of a felony. The distinction between a felony & a misdemenor is that a felony implies an extended prison term & loss of various rights (voting, firearm ownership, some cases of free assembly).

        At least this is how it works for people. If I had been convicted of this level of fraud, as a private person, I'd be sitting in prison. I guess the trick is to commit fraud while working for a large corporation & then embezzling the money from them by way of a 2nd
    • > Oh, I suppose theres no harm trying is there - if they get caught, they only pay double what they could have scammed.

      Well also I'm going to bet they don't get any more shots at government contracts. Depending on how many they usually do (I have no idea), that could easily be more expensive for NEC than the $20mil.
    • I didn't see this post before I posted, but below I talk about something in the article where the head of Janitorial services has been sentanced to 21 months in prison for accepting a bribe from NEC. Ironic that no one in NEC will ever get a prison sentance for committing the bribe, nor for plotting the conspiracy to defraud the school system or the American taxpayers. It's shameful, actually.
    • NEC then sent a bill to the E-Rate administrators, a quasi-governmental agency for tens of millions of dollars more than the actual cost of the equipment.

      If someone robs a bank overnight (no people harmed) and takes 10 million dollars the shit would hit the fan.

      Since when do for-PROFIT companies sell at COST? If they did that they'd get sued by their shareholders, and rightly so.

      If that should have been "tens of million dollars more than their LIST PRICE" or "... their CONTRACTED PRICE" or "for tens
    • I wonder about this myself. The company that masterminded the entire thing gets the $20.7 million fine for antitrust and wire fraud, big deal, pay it out of the company coffer. But according to the same article...

      That employee, Desmond McQuoid, was the custodial supervisor of the district. He pleaded guilty to mail fraud last year and was sentenced to 21 months in prison

      The guy at one of the schools who just took the bribe (to skip getting competitive bids), also pleading guilty of wire fraud, gets jail

  • That Much? (Score:4, Interesting)

    by lachlan76 ( 770870 ) on Sunday May 30, 2004 @07:57AM (#9289110)
    Multimillions for a school lan? The school that I was at up until 2 years ago seemed like i could have bought all the IT equipment for a couple of hundred dollars. If that.
    It must have been all the computers running Win98 and the IT guy wishing he hadn't moved to Win2000 on his main computer. And servers that don't run Linux!!! NT Server 4? Since I left, apparently they ended up having to install software on every second computer, with the costs and all.
    That's M$ for you. Not that this is the case this time, except for the servers. The CAL idea though, the servers would have been expensive though...

    Cough...oversight...cough
  • NEC (do|used to) make some amazing laptops.

    I have a 3 year old one that I brought from NEC corporate that looks almost as good as a powerbook. It's been reliable, has a great screen, and best of all has firewire+usb+floppy+cdrom+serial+parallel connectors - hard to get on a laptop.

    It even manages 3 hours per battery, which is totally amazing, especially after 3 years of use. The one bad point is the modem not working in Linux (winmodems suck). It even has a nice trackpad.

    So, I'd be hard pushed not to get

    • So, I'd be hard pushed not to get another, even with their ethics problems. Guess I'm a lazy consumer and part of the problem :\

      Guess this is the mind set of most people. Once they've had a good product from company X, it makes sense they'll buy from company X again. Buying from unknown company Y would be a bigger risk, even if company X has the habit of raping weaker social classes. (Nike anyone?)
      The whole issue is that those people who're abused by company X are just an abstract piece of information f

  • Reminds me of that old horror story (Score:3, Funny)

    by toupsie ( 88295 ) on Sunday May 30, 2004 @08:34AM (#9289228) Homepage
    "Hi, I'm from the Government. I'm here to help you!"

  • There is something else wrong here (Score:5, Insightful)

    by bdsesq ( 515351 ) on Sunday May 30, 2004 @08:34AM (#9289229)
    NEC then sent a bill to the E-Rate administrators, a quasi-governmental agency for tens of millions of dollars more than the actual cost of the equipment.

    If they over charged tens of millions of dollars and are only paying back 20 million this seems like NEC still made money on the deal.

    What every happened to triple damages?

    So far as NEC is concerned crime still pays!

  • Happens everywhere (Score:5, Insightful)

    by AirLace ( 86148 ) on Sunday May 30, 2004 @08:49AM (#9289270)
    My school in North London had a server room full of expensive optical hardware, several firewalls and servers, bought at a cost to students of around a million pounds. I once managed to get my hands on a bandwidth usage chart, and found that a Linksys router, around 100 at the time, and three 20-port switches, each around 100 could easily cope with the usage patterns.

    It's telling that the IT administrators who installed the million pound system where an equivalent solution under 500 could have worked just fine, all left that year. The school is left with a completely irrelevant infrastructure that costs thousands of pounds a year to maintain and support.

    All of this happens because, when a school installs a system, it's not their money that's being spent, but that of the students (or sometimes the taxpayer). Big hardware firms love to wine and dine school purchasing directors in a bid to convince them that they really need this fancy kit. It's in all of their interests to squander the money, and nothing is happening to change that.

    • Re:Happens everywhere (Score:3, Informative)

      by AirLace ( 86148 )
      Looks like slashdot is stripping currency symbols. All values are in pound sterling (GBP).

  • Comment removed (Score:5, Informative)

    by account_deleted ( 4530225 ) on Sunday May 30, 2004 @08:50AM (#9289274)
    Comment removed based on user account deletion

  • The Public Largesse (Score:3, Insightful)

    by charteux ( 777673 ) on Sunday May 30, 2004 @08:53AM (#9289280)
    Any time the public largesse is expanded there will be those that abuse it. There are always people that will see this public generosity as an opportunity for a free lunch

  • reminds me of a little company called ibm (Score:2, Interesting)

    by Anonymous Coward
    I worked for a company contracted to ibm to write the content management software for a 10 million$ project to provide ohio public schools with "video on demand". as i understand it, ohio public schools aren't doing so hot. i'm sure all that money will make a big difference, since the kids won't have to wait for the teacher to stick the tape in the vcr...

    the best part is, they were very concerned about having very good DRM to prevent all those teachers from warezing reading rainbow or something i guess.

    a

  • Worried for a minute there... (Score:4, Insightful)

    by 770291 ( 770291 ) on Sunday May 30, 2004 @09:08AM (#9289333)
    Then I realized it was just poor people who were getting ripped off. Whew! I mean, if NEC doesn't do it, some payday loan place or another scam artist will anyway.
    • Mod parent up, and be reminded that while there are lots of middle class people getting screwed today because of management, corporations, and governments, the low income underclass find this as nothing new -- and probably completely expected.

      Not advocating the "culture of poverty" argument, just saying this is a sad fact of life.

  • Atlanta city schools wasted 73 Million dollars (Score:5, Interesting)

    by Shivetya ( 243324 ) on Sunday May 30, 2004 @09:10AM (#9289337) Homepage Journal
    http://www.joannejacobs.com/mtarchives/014084.html
    http://www.parentadvocates.org/index.cfm?fuseact io n=article&articleID=2893

    What NEC did is bad, but don't forget a lot of school boards are just as responsible if not more so. They don't have accountability until after they do something wrong. The problem in Atlanta is really horrid as the per pupil expenditure for education in Atlanta is one of the highest yet produces some of the worst results (we are in the 12k per student range)

  • Money for education (Score:5, Insightful)

    by DarkOx ( 621550 ) on Sunday May 30, 2004 @09:42AM (#9289437) Journal
    This gets back to my rant on providing more money for education. There IS NO LACK OF FUNDS for Education in the United States, there is a TOTAL lack of of responsibility for those funds. I vote down (and will continue to do so) every school levey and politian that would increase school taxes. I think public schools are one of the most important institution we have in this country though. The issue is I have been to school recently as a 20 something I can tell you that most of their budget is waste. Why in heavens name do we need video on demand huge writing labs of computers fast one with P4s for word processing? Not to mention new uniforms for the band every year or half of the other eqipment they buy and never use. The huge mulitmedia room my HS built that I saw when I went back to visit cost close to a million dollars and according to my younger sister has been used all of about once in two years. Its all over kill, schools are run by a bunch of know nothing administrators that think technology is going to solve all their education problems. Instead of spending money on hightech schools should spend money on text books, teachers, and the building(a confortable enviorment is importand for learning). This is not to say they should not have a well outfited computer lab to teach things like computer science . I won't support any money for schools untill I see it being spent on what matters though, teachers and books. In MN Ventera cut the budget drasticly at first school admins tried all sorts of scare tactics like claiming they could only afford to run schools four days a week and would have to cut every after school program and riddiculous claims like that. What really happend though is Jessy pushed the budget through and schools had to start to be responsible with the money, I don't see as much flasy new toys but overall the schools have not suffered. They simply buy books and teachers and maintain the buildings. It works good. Now idealy we could not cut school budgets and pay teachers more, that might result in better teachers, and again as a recent grad I learned more from teachers then and multimedia presentation tought me. A good lecurer with a chalk and a blackboard is far more valuable then some hack with power point.

    • Having spent my recently-ended high school career at a top private school, I can honestly say that you don't even need to pay teachers that much more. Hire more teachers, build more classrooms, and give them things like paper and Xerox machines.

      My school pays teachers thousands less than what they would be getting at the public school next door. Yet, teachers still flock to my school. The head of their english department took a job as a bottom rung english teacher at my school. Why? Cause the environm

  • Vindicated (Score:4, Informative)

    by lone_marauder ( 642787 ) on Sunday May 30, 2004 @10:08AM (#9289545)
    I worked on an E-rate project years ago and saw this scam take place first hand. We were putting carrier class switches and high end file servers in schools connecting perhaps 20 computers.

    When I mentioned something about it at the time, it was decided by /. moderators that I was trolling.
  • a) 1996 - Gore/Clinton tax *your* phone bill to "put internet on every school"

    b) Any school can spend whatever money and get the ERATE fund to reimburse the school

    The waste and subsequent abuse happened because this tax should not even have existed to begin with. If school districts had to spend their own money, based on *local* taxation , this sort of careless purchasing would not happen.

    You vote for politicians who introduce taxes, you bring this upon yourself.

  • E-Rate never was about wiring schools (Score:3, Interesting)

    by stankulp ( 69949 ) on Sunday May 30, 2004 @11:08AM (#9289781) Homepage
    It was about paying off Al Gore's supporters in Silicon Valley. NEC was doing exactly what it was supposed to do.
    • Do you have any evidence that supports this... I have been suspect about your assertion for a while.

      A school district that I HAD worked with - that was ALL Mac BEFORE and is now all PC because of this.
      • [It was all about paying off Clinton/Gore's contributors in Silicon Valley.]

        Do you have any evidence that supports this... I have been suspect about your assertion for a while.

        What hardcopy evidence could exist?

        - Al Gore and/or Bill Clinton visit Silicon Valley about every other week (TOTALLY tying up traffic due to security - trust me, I was there) for face-to-face talks with executives.

        - Executives contribute money (from their corporate coffers or laundered through their executives' salaries).

        - Cl

  • Someone mentioned that no one is going to jail... (Score:5, Informative)

    by Vthornheart ( 745224 ) on Sunday May 30, 2004 @11:21AM (#9289845)
    But that should be corrected. Someone is going to jail, but it's no one at NEC (the people who actually COMMITTED the conspiracy to defraud). Nope, it's the head of janitorial services that they supposedly bribed:


    "That employee, Desmond McQuoid, was the custodial supervisor of the district. He pleaded guilty to mail fraud last year and was sentenced to 21 months in prison, according to Mr. Havian, the lawyer for the school district. Mr. Havian said the suit against Video Network Communications was still pending."


    Pretty brutal, eh? NEC gets away with a fine, while the person that they duped and intentionally threw money at gets sent to prison. And that, my friends, is what's wrong with our justice system. Not that he shouldn't have gone to jail, but I'd like to see some NEC people get sent up the river for this too... after all, the other guy was just duped by money. NEC and this other company they speak of actually planned the fraud and intentionally sought to take taxpayer money by the millions.


    I mean, I could see a scenario here where the fellow might not have even realized the scope of what was about to happen. They bribed him so that no other competitive bids would come in: a person who was easily duped might have just assumed that they wanted the business, not that they were planning on bending the school district over if you know what I mean.

  • IBM and Others also Investigated (Score:3, Interesting)

    by JLester ( 9518 ) on Sunday May 30, 2004 @11:40AM (#9289933)
    IBM is being investigated for something similar right now. Many school systems with large IBM projects had their funding frozen for the investigation. There are several other vendors as well.

    More Info [fundsforlearning.com]

    Jason

  • ..they were constantly laying off people at a plant near Sacramento. I think that they might have even shut it down by now.
    They were always citing the economy and financial hardships.

  • If they are really sorry, they'll give back the money.

    Somehow I doubt that will happen.
  • Get the government involved and the cost of doing something mysteriously doubles. A simple DSL line, with a bunch of LTSP terminals should be enough.

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