Five companies were fined for fraud of the ObamaPhone, which is actually a program called Lifeline. "Congress first enacted the Lifeline program in 1985, during the Reagan administration. In 2005, under President George W. Bush, the FCC expanded the program to cover cellphone service." [source] Lifeline was a way for low-income to still have dial-tone for 911 and medical reasons. It has been sprinkled with fraud -- like almost any government program, including USF and the ARRA.
"According to the FCC, TracFone Wireless, Icon Telecom, Assist Wireless, Easy Wireless and UTPhone all abused the system by collecting duplicate subsidies for "thousands" of accounts, something the FCC says the companies should have been aware of. The companies are not only facing $14.4 million in fines, but they'll need to repay all the duplicate monies taken from the program." [DSLReports]
I just noticed that Lifeline is a USAC program. Maybe USAC doesn't spend enough time auditing the billions that it administers.
"The Lifeline program offers participating carriers a subsidy of up to $10 per month per subscriber, and the program is part of the $9 billion Universal Service Fund, which the FCC is in the process of reforming," per Fierce.
Tracfone is owned by Mexican billionaire Carlos Slim and is one of the largest MVNOs in the US. According to Engadget, TracFone responded with a statement that their fine "involves less than $8,000 and fewer than 850 people -- a drop in the 4 million person Lifeline-customer bucket."