- Associated Press - Monday, January 16, 2017

HONOLULU (AP) - A telecommunications provider in Hawaii is denying claims by the federal government that it received more than $26 million in overpayments of federal subsidies over a decade.

The Washington, D.C., law firm Venable LLP filed a petition this month on behalf of Sandwich Isles Communications Inc., reported The Honolulu Star-Advertiser (https://bit.ly/2jfLXFI ). The document asks the Federal Communications Commission to reconsider its findings, which were issued last month.

Sandwich Isles provides phone and telecommunications services to about 3,600 customers in Hawaii.

The FCC announced in December it would impose $76 million in penalties on Sandwich Isles for what it described as “egregious misconduct.” The agency said Sandwich Isle submitted improper data that allowed it to qualify for special high-cost federal subsidies, ultimately resulting in $26 million in overpayments.

In a separate order, the FCC found that Sandwich Isles owes an additional forfeiture penalty of nearly $50 million for submitting false data between 2010 and 2013.

The company has received more than $249 million in subsidies from the Universal Service Fund since 2001. The fund offers special subsidies to companies with “Category 1” lines that provide service to customers in isolated rural areas.

The FCC says Sandwich Isles extended lines to vacant houses and classified them as “Category 1” in reports to the federal government even though no customers were actually being served, allowing the company to falsely qualify for the Universal Service Fund money.

The FCC has given the company until Feb. 3 to explain why it should not be barred from receiving further support payments from the fund and has invited comments from interested stakeholders.

Venable has argued that a study by independent experts found the allegations of overpayments to Sandwich Isles to be “wildly overblown.”

Sandwich Isles founder Albert Hee is currently serving 46 months in federal prison for tax fraud convictions.


Information from: Honolulu Star-Advertiser, https://www.staradvertiser.com

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