theadanews.com - Ada, Oklahoma

June 5, 2014

2 charged in $25 million defrauding scheme


The Ada News

Oklahoma City — Two men have been charged with defrauding the government of more than $25 million in an alleged scheme involving the federal Lifeline telephone program, federal prosecutors in Oklahoma announced Wednesday.

Prosecutors said Icon Telecom Inc. used Oscar Enrique Perez-Zumaeta's PSPS Sales personnel to create bogus Lifeline customers so Icon could receive subsidies for qualifying low-income customers who live on tribal lands. The Lifeline program provides all Americans with a basic level of telephone service. Most participating telephone companies receive a subsidy of $9.25 per month for each low-income customer or $34.25 for each qualifying customer who lives on tribal land.

"Although this program was designed to help low-income Americans have basic access to phone service, these individuals, and their companies, allegedly exploited the system to line their own pockets," Sanford Coats, U.S. attorney for the Western District of Oklahoma, said in a statement.

Wesley Yui Chew of Edmond, the owner of Icon, was charged with money laundering for allegedly transferring more than $20 million from an Icon account to a personal account. If convicted, he faces up to 10 years in prison and a fine of $250,000 or twice the amount of the criminally derived property. The company also has been charged with making false statements for allegedly fabricating customer signatures and submitting fictitious forms.

Chew's lawyer, Dan Webber, said in a statement that Chew has refunded more than $5.7 million to the Lifeline program, has been cooperating with the investigation for almost a year and wants to make "appropriate amends."

Perez-Zumaeta, of Cancun, Mexico, has been charged with 10 counts, including wire fraud and money laundering. His lawyer did not immediately return a phone call seeking comment

Coats said that Icon had fewer than 2,200 customers who qualified for the Lifeline program in September 2011. By November 2012, prosecutors said that number jumped to 135,364. From 2011 to 2013, Icon received more than $58 million through the Lifeline program, Coats said.

To recruit new customers, Icon relied on PSPS Sales to use phone books to come up with names and addresses for fake Lifeline customers, Coats said. Icon paid PSPS Sales $7 to $15 for each new customer, totaling more than $ 1 million between December 2011 and April 2013.