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U.S. Representative Cory Gardner (R-CO) refers to an ad from a Colorado-based group called the Thanks Obamacare campaign, as he questions Health and Human Services (HHS) Secretary Kathleen Sebelius during a House Energy and Commerce Committee hearing about issues and complications with the Affordable Care Act enrolment website, on Capitol Hill in Washington, Oct. 30, 2013. (REUTERS/Jonathan Ernst) U.S. Representative Cory Gardner (R-CO) refers to an ad from a Colorado-based group called the Thanks Obamacare campaign, as he questions Health and Human Services (HHS) Secretary Kathleen Sebelius during a House Energy and Commerce Committee hearing about issues and complications with the Affordable Care Act enrolment website, on Capitol Hill in Washington, Oct. 30, 2013. (REUTERS/Jonathan Ernst)  

Troubled company acquires $100 million of stimulus-funded infrastructure for $8 million

Greg Campbell
Contributor

A troubled broadband provider already under fire for squandering $100 million in federal stimulus money faces new scrutiny after entering into a financial arrangement with another distressed company.

EAGLE-Net, a quasi-governmental entity tasked with connecting rural and mountain school districts to the Internet, blew through the cash without providing services to at least half of the needy districts in Colorado. It was the subject of a congressional hearing as well as a an investigation by the Colorado Legislative Audit Committee.

Now, EAGLE-Net has partnered with new company Affiniti Inc., which the Denver Post reports is “essentially the refurbished version of Trillion Partners, the troubled Austin, Texas-based company that faced serious allegations involving its K-12 school contracts in multiple states.”

The company has been accused of colluding with competitors in violation of antitrust laws and rigging bids in Colorado, Georgia, Arizona, Indiana and New Mexico. But one of its vice presidents told the Post that it had cleaned up its act, even though he admitted that the new company is composed of the “same people” working under a new name.

Affiniti invested a reported $8 million in EAGLE-Net, a steal considering that it comes with $100 million worth of taxpayer funded broadband infrastructure.

“In essence,” former EAGLE-Net board member Rick Smith told the Post, “what they got was a $100 million product for an $8 million investment. All of that fiber is at their use.”

On Tuesday, Colorado Republican Rep. Cory Gardner, who has long been a critic of EAGLE-Net and how it has spent the stimulus funds, asked for the National Telecommunications and Information Administration to look into the deal.

“As a steward of the taxpayer dollar, it is my duty to ensure that the $100.6 million is managed in a responsible way,” he wrote in a letter to the agency. “Should the money or the acquisition of the entity that was originally responsible for spending the money fall into the hands of a company that is financially unsound or unwilling to work with incumbent providers, it would be a grave mismanagement of over 100 million taxpayer dollars.”

Many have argued that EAGLE-Net already badly mismanaged the money.

Its stimulus-fund program was suspended for four months and a federal audit ordered when it was discovered that the company over-wired some schools (the company built the third broadband connection at a rural schoolhouse with only 11 students) while totally ignoring others. The trouble came to light after EAGLE-Net requested additional funds to finish its work, even though it hadn’t even connected half of the districts it had promised.

“We are concerned that the recent agreement between [EAGLE-Net] and Affiniti may merely continue or enhance the current problems experienced by [EAGLE-Net],” Gardner wrote. “As such, we would like some clear answers about the company’s sustainability and Trillion Partners history of legal problems.”

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