Indiana authorities find more evidence of fraudulent applications for Lifeline

Reginald Strode, a former YourTel sales agent in suburban St. Louis, says he was told to forge prospective customers’ signatures on Lifeline applications. / Scripps News photo by Matt Anzur

Reginald Strode, a former YourTel sales agent in suburban St. Louis, says he was told to forge prospective customers’ signatures on Lifeline applications. / Scripps News photo by Matt Anzur

Indiana authorities have found more evidence of fraudulent applications for Lifeline, the federal phone subsidy for low-income families.

In testimony filed last week, state investigators charged that their review of troubled phone company TerraCom’s Lifeline business revealed application signatures that didn’t match the names on forms. Also, said Pamela Taber of the Indiana Utility Regulatory Commission, TerraCom approved applications from people claiming to live in homes that -- upon inspection -- turned out to be vacant or abandoned.

“Based on my review, I believe that improvement can be made to identify and prevent the use of vacant addresses in an effort to fraudulently obtain Lifeline service,” said Taber, who directs the state commission’s communications division.

TerraCom Chief Operating Officer Dale Schmick declined to respond to the new allegations.

The revelations underscore the findings of a Scripps News investigation into Oklahoma-City based TerraCom and affiliate YourTel America Inc. In September, Scripps reported that 50 individuals listed on TerraCom applications said they'd neither seen nor signed those forms. Former TerraCom sales agents said they, not applicants, fabricated and signed application records.

For each approved customer, TerraCom collects at least $9.25 a month from the federal government for providing Lifeline service. Last year, TerraCom and its affiliate received nearly $90 million in disbursements -- part of Lifeline’s overall $2.2 billion price tag for the year.

Reacting to Scripps’ reporting, several members of Congress called on the U.S. Department of Justice to launch a criminal investigation of the two phone companies, and one lawmaker called for TerraCom to be expelled from Lifeline.

The Justice Department declined comment, as did the Federal Communications Commission, which oversees Lifeline.

The new Indiana findings come as part of an investigation into how TerraCom acquired more than 30,000 customers in the Hoosier state in less than a year -- especially considering it had no full time employees in the state. While Taber, of the state utility commission, raised new questions about suspicious signatures and home addresses, she also said TerraCom promised to work with state regulators to improve safeguards against fraud and abuse.

Taber recommended that TerraCom stop accepting new customers for 90 days, while regulators work with the company to review its books, including purging those who list vacant homes or are otherwise ineligible for Lifeline.

She recommended that if TerraCom conducts such a review, the Indiana utility commission should close its investigation into the company.

Schmick, the TerraCom official, said he saw this as a vote of confidence. “We look forward to continuing to work with the IURC to ensure qualified Hoosiers have access to affordable communication services,” Schmick said.

The Indiana utility commission will meet Dec. 16 to hear witness statements and then will consider how to proceed.

(Email reporter Isaac Wolf at

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