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Court Upholds Conviction in $60M E-Rate Scheme

(CN) - A woman who defrauded E-Rate out of $60 million was correctly convicted and sentenced to more than seven years in prison because despite her good intentions to help underfunded schools, she was still the "mastermind of a massive fraudulent scheme," the 9th Circuit ruled.

Judy Green was convicted on 22 counts of wire fraud, bid rigging and conspiracy for orchestrating a scheme that defrauded E-Rate, a Federal Communications Commission program designed to fund technology projects at poor schools and libraries.

Green argued to the San Francisco-based appeals panel that what she did was not a crime and that she "is guilty of nothing more than helping schools maximize their federal funding by exploiting loopholes in the E-Rate rules and regulations."

The 9th Circuit disagreed.

The E-Rate program pays for part of the cost it to put Internet and other technologies in disadvantaged schools. The school must then cover the remaining costs.

In 1998, Green started a consulting business to help guide schools through E-Rate's complicated application process. She marketed her services to the poorest schools, almost all of which were eligible for the maximum 90 percent E-Rate subsidy.

Green rigged bids, edited the schools' approved equipment funding applications and falsified budget records so the schools would not have to pay their percentage of the project. That remaining cost was bypassed through the contractor and ultimately transferred to the program.

Green committed fraud by misrepresenting the facts to the federal government, which did not need to site a violation of any specific regulation to prove fraud, the circuit ruled.

"We fail to see any 'innocent' explanation,'" for Green's actions, Judge Wallace Tashima wrote before affirming that fraud includes any type of concealment from the federal government in an attempt to induce funding.

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