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FYI: A federal program designed to get computers into cash-strapped schools is rampant with fraud, according to a recent Federal Communications Commission audit, and the process of rooting it out is starting in New York City. The e-rate fund program, which uses consumer taxes to pay for discounts of up to 90 percent on Internet and telecommunications services for schools and libraries, has subsidized web technology for 86 percent of the nation’s schools and 65 percent of its libraries. It’s also become prime territory for service providers seeking scams. The FCC is investigating at least 26 major fraud cases, and filed its first charges last week against a New York company. The company allegedly gave schools around town free equipment and services, thus convincing them to get much more expensive products than they would have bought if they paid the 10 percent required by law. It was thus able to collect far greater federal subsidy payments than it would have under the rules. [1/16/03]

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