Mexican National Pleads Guilty to Money Laundering in Connection with Federal Wireless Telephone Subsidy Program
OKLAHOMA CITY, OK—OSCAR ENRIQUE PEREZ-ZUMAETA, of Cancun, Mexico, pled guilty today to laundering the proceeds of a scheme to defraud the Federal Communications Commission, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma. Perez-Zumaeta’s guilty plea comes five months after ICON Telecom, Inc., and its owner, Wes Yui Chew, entered guilty pleas in the same investigation and agreed to forfeit more than $27 million taken illegally from the FCC’s Lifeline Program.
“Unfortunately, people decide to defraud well-intentioned government programs for personal benefit,” said Coats. “The FCC Lifeline program is intended to help low-income Americans have access to telephone services, and this individual exploited the program for his own, significant financial gain. I applaud the FCC-Inspector General, FBI and IRS Criminal Investigation for their exemplary work in this case, and urge the public to report fraud relating to all government programs.”
FCC Chairman Tom Wheeler said, “I applaud the efforts of the United States Attorney’s Office to bring to justice the criminals guilty of defrauding the Lifeline program designed to assist low-income Americans to afford basic phone services. Today’s action could not be accomplished without the work of the FCC’s Office of Inspector General. Waste, fraud, and abuse of the program is simply unacceptable. The Commission will remain vigilant in our work to root out abuses and continue to work with our partners in the U.S. Attorney’s Office, IRS and the FBI.”
The current Lifeline Program, which was created in 1985, furthers the FCC’s mission to provide all Americans with access to a basic level of telephone service. Since 2005, Lifeline has provided subsidies to participating telephone companies not only for landline service, but also for wireless service for qualifying low-income customers. The Universal Service Administrative Company (“USAC”) administers the Lifeline Program on behalf of the FCC and under detailed federal regulations. To pay for the program, USAC collects fees from telephone companies, which often pass the fees on to customers as “universal service charges” on monthly telephone bills.
Most participating wireless telephone companies receive a subsidy of $9.25 per month for each qualifying low-income customer. If a qualifying customer lives on “tribal lands,” however, the company receives $34.25 per customer. Much of Oklahoma includes tribal lands that qualify for the higher monthly subsidy.
Before receiving reimbursement, participating telephone companies file forms with the FCC that report the number of Lifeline eligible customers they have served. Companies must also file annual reports by January 31 to certify that customers who received Lifeline service at an earlier date remain eligible for the program.
ICON Telecom, owned exclusively by Chew, participated in the wireless Lifeline Program from July 2011 until September 2013. In November 2011, ICON reported fewer than 12,000 wireless customers who qualified for the Lifeline program. By November 2012, that number had grown to 135,364. Although it had fewer than ten full-time employees, ICON received a total of $58,283,329 through the Lifeline Program during 2011, 2012, and 2013.
An indictment filed against Perez-Zumaeta on June 3, 2014, alleges that he owned and managed PSPS Sales LLC, a California entity that recruited low-income individuals to apply for Lifeline service through ICON. According to the indictment, ICON paid over one million dollars to PSPS Sales from December 2011 through April 2013. Perez-Zumaeta is charged with directing PSPS Sales workers to enroll fictitious customers for ICON by using phone book listings and forging Lifeline application forms. He also allegedly directed workers in Mexico to falsify approximately 40,000 Lifeline recertification forms for use in ICON’s fraudulent scheme.
Perez-Zumaeta has been in federal custody since April 25, 2014, when he was arrested at the San Francisco airport. On May 16, a federal magistrate judge ordered him detained based on a risk of flight.
Today he pled guilty to laundering $52,390.00 from ICON’s scheme by depositing a check in that amount from ICON into a bank account of PSPS Sales on December 7, 2012. He admitted that when he made that deposit, he knew that more than $10,000.00 of those funds was the result of criminal fraud against the FCC. As a result of this guilty plea, he faces up to ten years in prison, a fine of up to $250,000, and up to three years of supervised release.
This case is the result of an investigation by the Office of Inspector General for the Federal Communications Commission; the Federal Bureau of Investigation; and the Internal Revenue Service, Criminal Investigations Division. It is being prosecuted by Assistant U.S. Attorneys Chris M. Stephens and Scott E. Williams.
Reference is made to the indictment and other public filings for further information.