Sprint has agreed to pay $15.5 million to settle charges it “defrauded federal law enforcement agencies when recovering its costs of carrying out court-ordered wiretaps, pen registers and trap devices,” according to the U.S. attorney in San Francisco.
A statement from the U.S. attorney’s office said that between 2007 and 2010, Sprint included in its bill to federal agencies “the costs of making certain upgrades to its system” in addition to its costs for the intercept charges.
It said federal law required telecommunications companies such as Overland Park-based Sprint to upgrade their systems to handle law enforcement requests, but the law barred them from passing along those costs.
The statement said Sprint neither admitted nor denied any wrongdoing or liability.
In an emailed statement, the company said it “provides these services to the government at a below-cost price and does not agree with the allegations that the government discounts should have been greater. We believe the government’s application of the regulation at issue is in error. However, our company reached an agreement to settle this matter to avoid further expense and distraction of this litigation.”
Sprint gave a similar cost-and-distraction reason for its decision last week to settle an investor class action lawsuit that stemmed from its merger with Nextel Communications.
One analyst at the time suggested that the investor settlement was a move by chief executive Marcelo Claure to clear the decks of old issues. Claure became chief executive last August, long after the time period covered in the federal complaint and the investor case.
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