Phone Company 'Outraged' By Fraud, Abuse In 'Obamaphone' Program

DENVER (CBS4) - A nationwide cellphone company distributing phones and cellphone plans in Denver as part of a massive government program says it is "outraged by the unacceptable actions" uncovered by a CBS4 undercover investigation.

The response from Total Call Mobile comes nearly three months after an undercover CBS4 investigation revealed multiple examples of fraud and cheating in the phone distribution program.

The Lifeline program is aimed at providing free cellphone service to the poor and needy. It handed out more than 13 million free cellphone plans in the first six months of 2014. In Colorado, the program handed out more than 117,000 free cellphone plans in the first half of 2014 or about 20,000 cellphones every month.

If you own a cellphone, you pay for the free phones and their wireless plans via a monthly tax on your cellphone called the Universal Service Tax. Although the Lifeline wireless program has been around since 2005 and started under President George W. Bush, it ballooned under President Obama and the phones are often referred to as Obamaphones.

To qualify for one of the cellphone plans, you have to be low income -- on food stamps, Medicaid, housing assistance or some other government program.

But multiple times a CBS4 producer and reporter found phone agents in Denver circumventing strict government rules to ensure that only the truly needy get the free phones. Vendors, like Total Call, receive massive government subsidies to hand out the phones and the accompanying monthly plans.

RELATED: Government's Free Phone Program Riddled With Abuse, Fraud

In one case a Total Call agent used someone else's food stamp card to provide eligibility for a CBS4 producer. On another occasion another Total Call agent said it would be perfectly fine to use a friend's food stamp card to establish eligibility and obtain a free phone.

In a letter to CBS4, Total Call has now responded saying, "Total Call Mobile is outraged by the unacceptable actions shown in the broadcast. The broadcast depicted both agents and applicants seeking to improperly participate in the Lifeline program. They were both engaged in fraudulent activity … to enroll in the Lifeline program among other improper actions."

The company said based on the CBS4 report it would be providing evidence of wrongdoing to "the appropriate governmental authorities. Regarding the incorrect or improper statements by agents that were brought to our attention in your broadcast, all of the agents that were distributing for Total Call Mobile have been identified and their access to our system has been permanently blocked."

The cellphone company said following the revelations in the CBS4 report it would implement new protocols to eliminate the fraud and abuse uncovered by CBS4. One of those new steps is a Total Call Mobile Fraud Tip Hotline, 1-800-589-6316.

The company is asking the public to let it know of any improper activity with regard to Lifeline applications submitted to Total Call.

CBS4 Investigator Brian Maass has been with the station more than 30 years uncovering waste, fraud and corruption. Follow him on Twitter @Briancbs4.