Consumer Fraud

Texas businessman accused of defrauding federal school program settles whistleblower lawsuit

osha whistle Texas businessman accused of defrauding federal school program settles whistleblower lawsuitA Texas businessman who supplied digital equipment and services to the Houston Independent School District (HISD) with funds provided by the federal government, has agreed to pay $400,000 for defrauding the Federal Communications Commission’s E-rate program, a successful program that helps connect every U.S. library and school to the Internet.

According to the U.S. Justice Department, Larry Lehmann of Giddings, Texas, functioned as the CEO and managing partner of Acclaim Professional Services, which partnered with other companies to provide E-rate funded equipment and services to HISD from 2004 through 2006.

Created by Congress in the Telecommunications Act of 1996, the E-Rate program subsidizes eligible equipment and services to make Internet access and internal networking more affordable for public schools and libraries. The Houston Independent School District (HISD) was one of the applicants that successfully sought and received E-rate subsidies.

The Justice Department says Lehmann violated competitive bidding requirements and HISD rules by providing gifts and loans to some district employees, including tickets to sporting events and two loans totaling nearly $67,000 to an HISD worker who helped administer the projects.

The U.S. also alleged that Lehmann helped devise a scheme in which HISD outsourced some of its employees to Acclaim, which allowed them to continue to work for HISD while passing the cost on to the E-rate Program.  With Lehmann’s approval, Acclaim hid the cost of these employees in its E-rate Program invoices by rolling them into the cost of eligible goods and services.

The government’s investigation of Lehmann and Acclaim was triggered by a whistleblower lawsuit filed under the False Claims Act by Dave Richardson and Dave Gillis, whose prior experience with bidding for HISD and Dallas Independent School District contracts prompted them to investigate potential wrongdoing within the HISD.

The False Claims Act allows private individuals to sue on behalf of the United States and share in the government’s recovery. In some cases, the U.S. government intervenes in the whistleblower’s lawsuit, as it did in this case, effectively taking it over.

“The E-rate Program provides vital support for our nation’s students and schools,” said Stuart F. Delery, Assistant Attorney General for the Civil Division of the Department of Justice.  “We are committed to protecting the integrity of this important program, which helps our children connect to the digital world.”


U.S. Department of Justice