MAN WHO PARTICIPATED IN FEDERAL E-RATE PROGRAM FRAUD SCHEME PLEADS GUILTY

Kevin J. O'Connor, United States Attorney for the District of Connecticut, announced that THOMAS J. KENNEDY, III, age 49, of Spring Hill, Florida, formerly of Monroe, Connecticut, waived his right to indictment and pleaded guilty today before United States Magistrate Judge Donna F. Martinez in Hartford to federal charges related to his participation in a scheme to defraud Southwestern Bell Communications ("SBC") and the Federal Communications Commission ("FCC") in connection with the E-Rate program.

The federal E-Rate program provides funding to qualifying school districts nationwide to upgrade their internet access capabilities. To fund the program, the FCC mandates that telecommunication companies throughout the country add surcharges to the bills of their customers, that, after collected, are forwarded to the FCC. Applications by school districts are reviewed and awards to school districts are made by Universal Services Administrative Company ("USAC"), the FCC designated administrator of the program.

In Connecticut, the Hartford, New London, New Haven and Bridgeport school districts received E-Rate funding. Each school district selected SBC/Southern New England Telephone ("SNET") as the prime contractor to perform its internet upgrades.

In the years 2001 through 2004, KENNEDY was an account manager for a company that had a partnership arrangement with SBC in the area of information technology. KENNEDY and three SBC employees, including SBC account managers Richard E. Brown and Keith J. Madeiros, decided that engineers would be hired for certain E-Rate funded school district projects, the costs for which would be billed first to SBC/SNET, and later an SBC/SNET subcontractor. KENNEDY arranged for the hiring of engineers, and also arranged for the billings to SBC/SNET and to the subcontractor for their services. However, those billings, which SBC/SNET paid and then invoiced to the FCC, were inflated by approximately $503,000. That money was split primarily among KENNEDY, Brown and Madeiros, with KENNEDY receiving $249,525 and Brown and Madeiros receiving $78,136 and $129,571, respectively.

In addition to pleading guilty to one count of mail fraud related to this scheme, KENNEDY also pleaded guilty to one count of subscribing a false tax return for not reporting the money he received from his share of the scheme or his 2003 tax return.

KENNEDY is scheduled to be sentenced by Chief United States District Judge Robert N. Chatigny on November 8, 2007, at which time KENNEDY faces a maximum term of imprisonment of 23 years and a fine of up to $350,000.

Brown and Madeiros each pleaded guilty in February 2007 to charges related to their involvement in this fraud scheme. They await sentencing.

The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation Division. The case is being prosecuted by Assistant United States Attorney Calvin B. Kurimai.

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