Obamaphone massive fraud & abuse: GAO finds 36% with Obamaphones are not eligible

The Federal Communications Commission (FCC) has a welfare program called Lifeline, popularly known as Obamaphones, which provides discounts to eligible low-income households for home or wireless telephone and, as of December 2016, broadband service. Administered by the not-for-profit Universal Service Administrative Company (USAC), Lifeline disbursed about $1.5 billion in subsidies to 12.3 million households in 2016.

The subsidies are paid for by all of us via a fee charged on our telephone bills. 

While the Lifeline program predates the Obama administration, having been created in the 1980s, it was vastly expanded under Obama.

Now, an investigation by the Government Accountability Office (GAO) found that as many as 36% — more than one in three — of those supposed low-income households given Obamaphones are actually of dubious qualification.

On June 29, 2017, the GAO released an 89-page report on its findings, titled Telecommunications: Additional Action Needed to Address Significant Risks in FCC’s Lifeline Program. Here are some highlights:

(1) To begin, although the GAO recommended that the FCC conduct an evaluation of its Lifeline program more than two years ago in March 2015, the FCC has not done that. In a July 2016 Order, the FCC finally announced its plan for an independent third party to evaluate Lifeline’s design, function, and administration by December 2020.

(2) The Lifeline welfare program depends on a flawed system of over 2,000 phone companies, called Eligible Telecommunication Carriers, to (a) provide the discounts for the phone and broadband services, which Lifeline then reimburses; and (b) verify subscriber eligibility. But the GAO notes that “This complex internal control environment is susceptible to risk of fraud, waste, and abuse as companies may have financial incentives to enroll as many customers as possible.” The FCC says it will create a third-party national eligibility verifier by 2019 to determine subscriber eligibility.

(3) Given the Eligible Telecommunications Carriers’ self-interested, financial incentives to enroll as many customers as possible, it should not be surprising that the GAO investigation discovered that as many as 1.2 million — 36% or more than 1 in 3 — Lifeline recipients are not qualified for the Obamaphones. In the words of the GAO report:

“Based on its matching of subscriber to benefit data, GAO was unable to confirm to whether about 1.2 million individuals of the 3.5 million it reviewed, or 36 percent, participated in a qualifying benefit program, such as Medicaid, as stated on their Lifeline enrollment application.

(4) Although all Americans with phone service are paying for the Lifeline program, strangely the Lifeline funds of more than $9 billion in net assets (as of September 2016) are in a private, non-government (i.e., outside of the Department of Treasury) bank account called Universal Service Fund (USF). The GAO points out at least two problems with this arrangement:

  • Federal government funds outside the Treasury do not have the same rigorous management practices and regulatory safeguards as other federal programs.
  • If the Lifeline funds are in the Treasury, some of the $9+billion in net assets could be used to offset federal debts, not to mention help reduce the crushing $20 trillion national debt.
  • Although the GAO had recommended in 2005 to the FCC to move Lifeline’s Universal Service Fund to the Department of Treasury, it was only this March 2017, some 12 years later, that the FCC finally developed a preliminary plan to move the fund to the Treasury. The GAO report warns that “Until FCC finalizes and implements its plan and actually moves the USF funds, the risks that FCC identified will persist and the benefits of having the funds in the Treasury will not be realized.”

~Eowyn

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18 responses to “Obamaphone massive fraud & abuse: GAO finds 36% with Obamaphones are not eligible

  1. traildustfotm

    As early as the mid 1970s, a friend of mine who worked as an ER (emergency room) nurse at a local hospital was telling me about the fraud she watched daily by black women. They would show up at the ER for free treatment for their welfare kids. The women would be wearing expensive clothes and jewelry, and arriving in expensive German cars. These are the black women who have given a bad name to every other black woman out there. We want our government to have institutions of mercy. It is the fraud that ruins it.

    Liked by 4 people

    • TD . . . I certainly do agree that this very kind of behavior on the part of some black women sheds a horrible label on the part of all black women. The only thing I might disagree with is . . . . . “We want our government to have institutions of mercy.” When our government was first instituted, I rather doubt that it was created to do more than ensure our safety wherein we might have troops to provide for our safety as a nation, create a money for the use of our citizens, and a few other items that legitimately fall on the shoulders of a government. I do not believe that Washington, Jefferson, Adams, etc. etc. ever thought that the government was responsible for the welfare of single mother’s and their burgeoning families of fatherless children. That whole plan came into creation during the administration of Lyndon Johnson, and the installation of his “Great Society.” The scheme was to provide an ever growing number of voters who would vote for Democrats. My understand is that Johnson was heard to say, “I’ll have them N I g _ _ _ s voting Democrat for the next two hundred years.” (I apologize for using the “N” word, please do not take offense, I am only offering this quote to show how truly vile Lyndon Johnson was,) He saddled our country with this scheme, which has helped to create the massage indebtedness under which we labor. I think it would be greater wisdom since we do have this system of rewarding “illegitimate mothers,” that for each child she becomes pregnant with, there be a deduction from her family allotment by the dollar amount of one person. Thereby, penalizing her for every time she falls pregnant with yet another mouth for Uncle Sam to feed. It was a better system when churches and charities had the responsibility for doling out charitable amounts.

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  2. Mustafa Obama didnt have a pot to………… when he got elected. He left the White House a millionaire. I apologize for the unladylike words.

    Liked by 2 people

    • Alma . . . God Bless you for “telling it like it is.” I just saw that the Obummers purchased the rental house they moved into after leaving the White House. To the tune of 8.1 million. It’s rather magical that he went from not having a “pot to _____ in” to being able to afford this kind of luxury.

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  3. What incentive do the poor have to lift themselves out of poverty? NONE. That is exactly how the government wants it to be. Take away the phones. We got along without them for years. They are a luxury not a necessity.

    Liked by 2 people

    • brackenkaren . . . Exactly, when the incentive to work harder in order to be able to afford the luxury of a phone is taken away, how stupid does a person have to be to REFUSE a phone that is free. I would bet that if we looked back at the instigation of the “free phone” scam, we would find that this piece of legislation was purposed by a Democrat. The fact that the money that is stolen from you and I is being put into a private holding concern is doubly troubling. You just have to wonder about those who come up with these kinds of schemes . . . . did they really think about what they were creating, or did they even care?

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  4. Shocker, not.

    Liked by 2 people

  5. Universal Service Fund? That would be Global Service Fund on steroids. What is next, Universal Reserve Bank? These days, one does not have to be asleep to have nightmares.

    Liked by 2 people

  6. fraud on us all

    my neighbor has a 4 bedroom home on 5 acres, shops, outbuildings, 6 cars, travel trailer,$200. a month cable bill and an Obama phone !!!

    Liked by 3 people

    • The man who now has everything.

      Liked by 2 people

    • The government needs to set up a “tip line” where people can call in and report this kind of fraud. When and if fraud is established, these fraudsters needs to be fined an amount of 10 times what the phpne service would be on the open market. It’s stories like this that make my blood boil . . . I cannot even begin to imagine how you feel having to live right next door, and having to have your nose rubbed in it each and every day!

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  7. “Hey ya’ll. Where my phone? I gots ta call my crack deala”. Why can’t I have a free phone? Oh, I forgot, wrong skin color.

    Liked by 1 person

  8. Same Ole Criminals

    Names, names, shhh dont mention any names.

    So who got the contract? Mexican billionaire Calos Slim.

    http://www.dailymail.co.uk/news/article-2215966/Mexican-billionaire-making-millions-American-government-program-gives-poor-free-cell-phones.html

    And then who did Slim funnel millions back to? The Clinton Foundation.

    https://www.google.com/amp/freebeacon.com/politics/clinton-foundation-quietly-revises-mexican-billionaires-donation/amp/

    See how much more valuable an article becomes when you out the criminals.

    Liked by 2 people

  9. Surprise!!!! NOT 😦

    Liked by 1 person

  10. 2020 is way too long to have to wait to stop this debacle. Freeze all funds going to the phone companies and take it on a one on one need basis. Their social services should be looked over closely.
    I too, witnessed people with dozens in those phones in their purses.
    There has to be limits set and personnel income checked. If they have lots of jewelry, fancy nails, and hairdos, above average car, and tons of junk food in the cabinets, good health but not looking for a job, tats, it is time to reassess the need.
    They have the phones like Tracphones and others so limited calls for low prices and also the life alert button that could be used instead.

    Liked by 1 person

  11. ObamaPhones Investigation | Project Veritas

    http://projectveritas.com/obamaphones-investigation/

    Liked by 3 people

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