Oklahoma Company Makes Millions Off Government Cell Phones Despite Red Flags

For the past year our 9 Investigates team has peeled back the layers of the government-subsidized cell phone program called Lifeline, exposing huge amounts of fraud and waste in Oklahoma, at your expense. If you pay a phone bill, you pay a fee that funds this billion-dollar program. Oklahoma companies are making millions off the program with, still, very little oversight.

Earlier this year, we showed you how cell phone companies are using the homeless to increase their government subsidies, exposing how one man was able to collect duffle bags full of cell phones to sell on the black market.

2/11/2013 Related Story: Despite Reforms, Federal Cell Phone Program Still Plagued By Fraud

We even took you undercover as we got our own free phone without showing any proof we qualified for one.

Federal regulators responded to our reports, pointing to recent reforms, promising change and millions of dollars in savings. But months later, we found another company is under investigation.

Icon Telecom or Icon Wireless is based out of an unassuming building in Oklahoma City. According to federal documents, Icon began offering government subsidized cell phone service just two years ago.

In it's first full year, Icon received a whopping $36 million in subsidies and is on track to hit $45 million this year.

But federal regulators don't require companies like Icon to prove their customers qualify for the program or that their customers even exist. In fact, the Federal Communications Commission has disbursed billions of dollars to cell phone companies based on the honor system.

Those regulators can audit companies, but confirmed they've never audited Icon. The FCC just keeps writing the company checks. That's despite red flags on the forms Icon turned in to the FCC last year. In one case, Icon left an entire section of one form blank. When we pressed him on it, an FCC spokesman admitted Icon should have filled it out.

In the FCC's own words, this information is required and "an important step in addressing potential waste, fraud, and abuse in the program."

We went to Icon's headquarters to get an explanation, but a man who identified himself as Icon's compliance officer said he couldn't talk to us and Icon's owner was out of town.

The owner of Icon is Wes Chew, of Edmond. We tracked him down on the phone.

Wes Chew: "How did you get my phone number?"

Jennifer Loren, 9 Investigates: "Public record."

Chew: "Oh... from public records. I'm actually at the airport right now, so I really don't have time to talk to you."

Loren: "Okay, can we set up a time when you come back?"

Wes: "No probably not."

It turns out, Icon is under investigation by state regulators.

We obtained a legal document where Chairwoman Patrice Douglas says, "As an elected official my duty to Oklahomans requires that I use available legal avenues to stop fraud and abuse. In the wake of the problems Icon clearly and undisputedly has in obeying this commission's rules I would revoke its certificate at this time."

That hasn't happened and Oklahoma Corporation Commissioners won't comment on the case, as it's an ongoing investigation.

10/25/2012 Related Story: Oklahoma Is Ground Zero For Government Cell Phone Fraud

No matter what the state's investigation finds, regulators here say they have very little authority to penalize cell phone companies and that it's really up to the feds to take action, which is extremely rare.

The feds continue to tell us they're developing a database that should prevent fraud and abuse, but that database won't be up and running until the end of the year or later.

Senator Tom Coburn recently cited two of 9 Investigates' reports on Capitol Hill, as he pushed for change in the Lifeline program. His efforts failed.

11/23/2012 Related Story: Citizen Group Starts Petition To End Lifeline Program