Obama administration busts three in massive Obama Phone fraud

Obama Phone fraud is one of our pet peeves. Longtime readers of FreeGovernmentCellPhones.net may think we rant and rave about the subject too often, but we firmly believe that fraud must be rooted out of Lifeline Assistance is the program is to survive and continue to help cash-strapped Americans.

With that in mind, we applaud the announcement that the United States Department of Justice has busted three men for defrauding the free government cell phone program of a mind- boggling $32 million.

According to politico.com, Florida residents Thomas Biddix, Kevin Brian Cox and Leonard Solt have been charged with one count of conspiracy to commit wire fraud. But that’s just the beginning of their problems. They were also charged with another 15 counts of wire fraud, false claims and money laundering in a scam that defrauded the free government cell phone program.

Three government entities — the Federal Bureau of Investigation (FBI), the Internal Revenue Service (IRS) and the Federal Communications Commission (FCC) — worked together on the investigation and to bring the charges against the three men.

“Lifeline helps ensure that all Americans can afford phone service, providing connections to jobs, family and 9-1-1,” FCC Chairman Tom Wheeler commented. “But we will not tolerate abuse of this program and are gratified to see the results of our hard work to battle fraud.”

Here’s how the government says alleged scam worked: Biddix, Cox and Solt knowingly submitted wildly inflated claims to Lifeline during an 18-month period from September 2009 to March 2011. In total, $32 million in fraudulent claims were submitted on behalf of a company named Associated Telecommunications Management Services. According to the indictment, Biddix also serves as the chairman of ATMS.

The indictment accuses the three men of using the fraudulently-obtained funds, and we quote, to “finance their personal business ventures and lavish lifestyles, including personal living expenses, luxury automobiles, yachts and private jet airplanes.”

This is just the latest step the government has taken to reign in fraud and abuse in the free government cell phone program. Last year the FCC began a series of sweeping reforms that include:

  • Creation of a national databases to track consumers’ Lifeline eligibility
  • Changing the one-phone-per-household rule to permit separate low-income families who reside in the same house or apartment to participate in the program
  • Setting specific methods of measuring the program’s performance and effectiveness

As a result of these changes the FCC says Lifeline slahed $200 million in fraud and abuse last year and hopes to save as much as $3 billion in just three years.

Lifeline, which is also known as the Obama Phone or simply the free government cell phone program got off the ground during the Reagan administration in the 1980s. It was conceived as a program to help low-income Americans pay for their home landline telephones. President Bush expanded the program in 2005 to cover cell phones, too.

Despite the clear history of the program, and the involvement of Presidents Reagan and Bush, the program has become known as the Obama Phone. Who knows? Perhaps that’s the reason the Obama administration seems so intent on cleaning up the program.

Whatever the reason, we heartily endorse any and all efforts to keep the free government cell phone program as fraud-free as possible.


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  1. gerard gaudin says

    When will they reign in the Telco’s whom are “charging” for both in-going and out-going usage? If a call is pre-paid, why should the Free Phone have to double pay??

  2. James Cannon says

    I have seen the fraud in Illinois and it is horrendous! You need to gather input from lifelong social activists like myself to get at the root of the fraud!

  3. kentuckywoman2 says

    P.S. FYI, it was Ronald Reagan who implemented the Lifeline Program (in 1985).

    And technically, you should be calling these free government cell phones “Bushphones”, because it was G.W. Bush (in 2005) who expanded the Lifeline Program to include cell phones – NOT Barack Obama.

    I kinda like the sound of “Bushphones.”


  4. kentuckywoman2 says

    Well, they need to investigate Assurance Wireless. They also have a scam going. They provide cheap, discontinued cell phones that don’t work. Dropped calls and calls of such poor quality that even their own customer service dept. must request one to call back on a different phone!

    Then they offer to send a replacement phone. They provide an envelope to return the defective phone. And that’s where they hook you. Once you return the replacement phone, after a couple of weeks they say they never got the phone and about a week later, they suspend your service.

    When you investigate, you find that Assurance Wireless is supposed to give you a number to write on the envelope when you mail in your phone. Why don’t they just write the number on the envelope they send you, themselves? Good question.

    Assurance Wireless doesn’t give you the number. What happens is that when you mail the phone back, it goes to a “clearing house” warehouse called Ingram Mobility, located in Plainfield, Indiana. They are a clearing house for several other cell phone companies, in addition to Assurance Wireless.

    They say that if a phone comes in without a “number” written on the envelope to identify what company it goes to, they have no way of knowing who the phone belongs to or what cell phone provider it goes to. So what happens to those phones? Good question. Why not just open the envelope and look at the serial number on the phone and enter it into a database? Good question.

    Assurance Wireless provides two ways to restore phone service. 1. You have to pay for the phone. Their phones are old and discontinued, and go for as little as 77 cents on Amazon.com. However, Assurance Wireless wants $19.99 for the phone. Sometimes they even want $9.99 to resume service.

    2. You can wait 30-60 days, until they discontinue your service and close you account for good. Then you can reapply. Since most people on these programs can’t afford to pay $20-$30 to restore service – and why should they, when they’ve followed directions and returned the phones! – they will wait and reapply.

    Here’s the kicker. These cell phone companies are paid A FULL YEAR IN ADVANCE. So when they suspend your service, they’ve already been paid…for an entire year, to provide you with phone service.

    And when the customer opts to have their service cancelled and reapply – the cell phone company gets paid ANOTHER FULL YEAR for that same customer – even if it’s only been a couple of months since they were paid A FULL YEAR for the SAME customer!

    A cell phone company can do this several times a year…and get paid as many as 4-6 times for providing service to the same customer.

    Assurance Wireless has done this to me twice, now. If you go to Ripoff Report.com you will see many complaints about Assurance Wireless for this same situation. I don’t know if they have some kind of racket going with Ingram Mobility – where ARE all those cell phones GOING? – or if they just know they can get away with it.

    Assurance Wireless should be investigated. They’ve done this to me twice now, once in 2012 and again just recently. To me, that’s a pattern.

  5. Orville Clare says

    I am a US Army Vet that has some medical issues, so the phone is very helpful as it needs to be controled for those who really need it.
    I am asking if the pilot program for low-income broadband (Seniors) will become a reality. I cannot get to a libray as I once could and am hoping that compaines like Comcast or AT&T will stepup with help for others like they did for families with school age children.
    Is it fair to petion the Gov to make this happen. I always need internet service but, cannot afford cost.

    Thanks In Advance….