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Kansas businessman gets prison for E-Rate fraud

A former owner of three Kansas computer service companies has been sentenced to 57 months in prison for his role in a conspiracy to defraud the federal E-Rate program, which provides broadband funding for schools and libraries in poor areas, and for making a false statement to the U.S. Department of Housing and Urban Development (HUD).

Leonard Douglas LaDuron, former owner and president of Serious ISP, Myco Technologies and Elephantine, was also ordered by Judge Kathryn Vratil in U.S. District Court for the District of Kansas to pay US$238,607 in restitution, the U.S. Department of Justice announced late Wednesday.

LaDuron pleaded guilty on June 29 to one count of conspiracy and one count of making a false statement.

LaDuron and co-conspirators, Benjamin Rowner and Jay Soled, who are former owners of DeltaNet, steered E-Rate contracts to their companies and devised a scheme to defraud the E-Rate program by submitting false statements to the Universal Service Administrative Co., a nonprofit corporation that runs the E-Rate program, the DOJ said.

The conspiracy, which began in 1999 and ran at least until 2003, affected at least 10 schools located across the country, the DOJ said.

In addition, in July 2003, LaDuron knowingly submitted a false statement to the Lawrence-Douglas County Housing Authority, HUDs local administrator of the Housing Choice Voucher Program in Lawrence, Kansas, when he forged an employees signature and submitted an inaccurate employment verification form, the DOJ said.

The E-Rate program was created by the U.S. Congress in the Telecommunications Act of 1996 and provides subsidies to economically disadvantaged schools and libraries. Depending on the financial needs of the applicants, the program pays 10 to 90 percent of the cost for Internet access and telecommunications services, as well as internal computer and communications networks.

Rowner and Soled, pleaded guilty to their role in the conspiracy on July 10, 2008, and are scheduled to be sentenced Feb. 4. Mary Jo LaDuron, LaDurons mother, pleaded guilty to making a false statement to the U.S. Federal Bureau of Investigation and was sentenced on Oct. 13 to pay a $3,743 fine.

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