The FCC has identified hundreds of thousands of dollars in fraud connected to one of the broadband subsidy programs the government has put billions of dollars into, and says there may be more where that came from.

According to the FCC Office of Inspector General (OIG), some providers of Affordable Connectivity Program (ACP) services--it did not name names--have applied for money to serve multiple households simultaneously based on the same eligible user, which is not allowed under the program.

The $14.2 billion ACP program (https://www.nexttv.com/news/fcc-approves-rules-for-acp-broadband-subsidy) provides up to $30 per month toward broadband service (up to $75 for tribal communities) and up to $100 toward a broadband access device, excluding smart phones.

To be eligible, a household has to meet at least one of a number of criteria, including making 200% or less of the federal poverty level. For example, the poverty level for a family of four is $26,500, so any family of four making $53,000 or less would qualify for the benefit. Other criteria include Pell Grant recipients and those eligible for free and reduced lunch programs and Medicaid.

OIG said its analysis of the program "clearly show that a number of providers and their agents [a doze [benefit qualifying person]."

Also: FCC Approves ACP Rules

The FCC said the most egregious example was more than a thousand households in Oklahoma enrolled in the program based on the name and social security number of a single, 4 year old child who received Medicaid benefits, which is one of the qualifying triggers. Three different providers claimed more than $365,000 in total based on that 4-year-old.

The FCC says the example is not isolated and the practice appears to be growing, with about a dozen providers so far identified as claiming reimbursements for fraudulent enrollments.

The FCC said the dollar figure is relatively low, certain providers appear to be holding steady or ramping up the fraud.

The OIG issued an advisor to put all providers on notice, concluding that "Fraud, waste, and abuse remains a serious problem for Commission programs."

Also: FCC OIG Warns of Ongoing Lifeline Fraud

“For nearly two years now, I have been sounding the alarm on the potential for massive levels of fraud in the federal government’s broadband funding programs," said FCC Commissioner Brendan Carr. "And I have been pushing for additional oversight and safeguards to ensure that we not only prevent bad actors from illegally lining their pockets with federal dollars but that these funds reach the families that Congress intended to benefit."

He pointed out that the OIG last year warned of fraud in the FCC's COVID-19-related Emergency Broadband Benefit (EBB) program on what he called virtually a national scale.

“Whatever we are doing to deter this type of fraud is not working," he said. "More action is needed to safeguard these federal dollars and ensure that they deliver on the goals Congress has set out.” 

DoubleVerify said that over the past year it has uncovered multiple major connected TV fraud schemes that could have cost publishers more than $144 million annually.

CTV is attractive to schemers because the media attracts a CPM of $20, higher than most other forms of digital media.

DoubleVerify said that it discovered several schemes and they were blocked and neutralized, protecting its clients.

"CTV ad fraud doesn’t just impact advertiser ad spend, it also impacts publishers’ bottom lines,” said Mimi Wotring, senior VP of publisher sales and client services at DoubleVerify. “Schemes like MultiTerra and SneakyTerra siphon millions of dollars of revenue from high-quality CTV publishers without their knowledge. Through the incredible efforts of our Fraud Lab, DV helps preserve the monetization opportunity for these publishers who deserve a premium for their inventory and engaged audience access.”

DoubleVerify described some of those scheme:

MultiTerra: Uncovered in late 2020, the botnet was designed to create fraudulent inventory in CTV and mobile environments. MultiTerra undermines the monetization potential of legitimate CTV supply providers by artificially inflating inventory volume and directing media investment away from these platforms. This particular botnet generated more than three million fake impressions a day at its peak in CTV and mobile environments. At the time, the inventory value of the impression requests was on track for stealing over $1 million a month.

SneakyTerra: Uncovered in late 2020, this was the first server-side ad insertion (SSAI) scheme known to hijack real CTV device sessions. At its peak, the highly sophisticated scheme spoofed over 2 million devices each day, and may have cost more than $5 million per month.

LeoTerra/StreamScan: Uncovered in late 2020, “StreamScam” highlighted a very common approach to CTV fraud related to SSAI. In these types of schemes, fraudsters set up counterfeit SSAI servers and then manufacture CTV inventory across an unlimited number of apps, IPs and devices.

DV’s Fraud Lab performs ongoing detection and analysis of new types of ad fraud across channels in order to uncover the latest schemes as they occur. Through continuous analysis, scenario management and research, the Fraud Lab pinpoints the sites, apps and devices responsible for fraudulent activity and updates protection for DV clients in real-time. ■

John Rigas, the founder and former chairman and CEO of Adelphia Communications who was sentenced to 15 years in federal prison after a massive fraud scheme that afflicted the company over decades, died in Coudersport, Pennsylvania, on Sept. 30. He was 96 years old.

Rigas was the epitome of the bootstrapping cable executive, founding Adelphia in 1952 with his brother, Gus, with a $300 loan and eventually growing the company to the sixth-largest cable operator in the country with 5.5 million subscribers.

Rigas reveled in his rags-to-riches story and he often spoke of growing up in an apartment over his Greek immigrant parents’ diner (Texas Hot) in Wells, N.Y., and how he often slept in the Coudersport movie theater that was his first business venture. While he grew Adelphia mainly by acquisition — he famously paid the highest multiple ever (at the time) for a cable company, Daniels & Associates‘ Carlsbad, California, system in the early days — his empire came crashing down in 2004, when federal prosecutors claimed he and his family took from publicly traded Adelphia billions of dollars for their own personal use. 

Cable's Rock of Ages: Coudersport's Rigases

John Rigas was convicted of 18 counts of fraud and conspiracy in July 2004 and sentenced to 15 years in prison. His son, Adelphia chief financial officer Timothy Rigas, was convicted on 18 counts of fraud and conspiracy and sentenced to 20 years. John Rigas was released from federal prison in 2016 after serving nearly 10 years, when a judge ordered his compassionate early release after it was thought he had about six months to live. Rigas had earlier been diagnosed with Stage IV bladder cancer.

Timothy Rigas was released in 2019 after serving about 12 years of a 17-year sentence (reduced from 20 years in 2008), part of the federal First Step Act which allows for the early release of inmates convicted of nonviolent crimes who have served two-thirds of their sentence and are over the age of 60. Tim Rigas was scheduled to serve the remaining two years of his sentence in home confinement.

A third son, former Adelphia chief operating officer Michael Rigas, was granted a mistrial after jurors could not reach a verdict regarding 15 counts of securities fraud and two counts of bank fraud. He pleaded to a lesser charge of signing false documents and served a two-year sentence under house arrest.

A fourth executive, assistant treasurer Michael Mulcahy, was found not guilty. 

Fall of the House of Rigas: An Adelphia Time Line

The scandal erased more than 50 years of good will the Rigas family built up as it assembled its cable empire and rocked the industry as a whole. Coming at a time when the business world was swept up in off-balance sheet debt issues after the Enron and WorldCom scandals, some major figures, including cable legend John Malone, have said the Rigas family was unfairly treated. Others believed the family reaped what it sowed.

John Rigas continued to maintain his innocence until the day he died. In an interview with USA Today in 2007, he claimed that he could have cut a deal with the federal government by pleading to lesser charges and avoiding jail time, but he refused to plead guilty to something he believed he didn’t do. 

“My legacy is to my grandchildren, and you have to stand up — as difficult as it is — for something. And that is not something to be compromised or amended," Rigas told USA Today in 2007. 

The Rigases were accused of pillaging the company over a span of decades, siphoning money from operations and putting the company on the hook for about $2.3 billion in  off-balance sheet loans. In court documents, prosecutors accused the family of using Adelphia as its “personal piggy bank” and “personal ATM” financing a golf course, luxury condominiums and items as mundane as a $6,000 to fly two Christmas trees from Coudersport to daughter Ellen’s home in New York,  and John Rigas’ Columbia House record club subscription.

Adelphia’s fall began in March 2002 after company executives, during a conference call discussing Q1 results, couldn’t answer questions regarding $2.3 billion in off-balance sheet debt. It was later determined that the Rigases used those loans to buy Adelphia stock, which was used aggressively to buy other cable systems. 

Adelphia was sold in 2006 to Comcast and Time Warner Cable for $17.6 billion in cash and stock. 

Rigas is survived by his sons Timothy, Michael and James (CEO of Zito Media), his daughter Ellen and several grandchildren. His wife Doris predeceased him in 2014. 

Fraud in the fast-growing world of CTV advertising dropped during the second quarter from the first quarter, but the platform remained the most problematic in terms of invalid ad requests, according to a new report from Kubient.

Kubient said that the fraud rate for CTV fell 3% in the second quarter. But Kubient’s fraud score for CTV, at 33% for video in the second quarter, was well above desktop at 15% and mobile at 13%.

“Looking at the data, we can infer that the leaders in the ecosystem are prioritizing fraud detection industry wide. However, we still see fraud rates in the double digits, which shows this is a significant issue across the landscape and impacting campaign performances,” Kubient said.

Even when buying premium inventory, CTV fraud is a problem with fraud rates at close to 30% of buy requests. 

“With brand marketing budgets being reviewed with a fine tooth comb, no CMO or brand marketing lead wants a dollar of their spend wasted on fraudulent traffic,” Kubient chief product officer Leon Zemel said. “Industry leaders have come a long way when it comes to investing in combating ad fraud, but as the data shows, there are still bad actors in the space that are wasting marketing budgets daily. For the rest of 2021, marketers should hold their sell side partners and resellers accountable, ensuring that all traffic they purchase are legitimate platforms, and not allocating funds to fraudulent traffic, because this is preventable.”

Kubient offers an anti-fraud tool that detects fraud in the pre-bid phase of programmatic buys. 

Kubient Artificial Intelligence helps stop fraud before it happens through pattern recognition and device scoring, the company said. The algorithm is trained to analyze the behavior, consistency and quality to determine audience credibility, accurately flagging fraud within the 300-millisecond time frame of a programmatic advertising auction. 

With pandemic restrictions easing, companies in the travel business are advertising again, but they’re encountering fraud when buying digital advertising, DoubleVerify reports.

DoubleVerify found that for travel and hospitality advertisers, the post-bid fraud rate was 20% higher compared to other major industries.

Also Read: DoubleVerify Stops Ad Fraud Schemes Linked Under OctoBot

Video is a particularly important medium for travel and hospitality advertisers, DoubleVerify said, citing a study that showed 65% of consumers rely on video when booking a trip. To improve performance, travel and hospitality advertisers need to be sure they’re targeting quality inventory that is brand suitable, viewable and free of fraud, DoubleVerify said.

Many travel marketers also have stringent brand safety and suitability rules for their advertising, particularly if they target families. DoubleVerify found that the rate at which travel advertisers' suitability requirements were violated was 82% higher than brands in other categories. 

Read Also: Viant Aims To Prevent Fraud With DoubleVerify Integration

Travel advertisers’ ads also had 7% lower video viewability rates than other businesses.

“As we look ahead to a brighter future where travel and hospitality are once again commonplace, it’s important to take proper measures to maximize media effectiveness,” said Julie Eddleman, executive VP and chief commercial officer at DoubleVerify. “Just as all travelers will expect higher standards to ensure their well-being, digital advertisers will demand clarity and confidence in their digital investments. Setting a clear, informed strategy to address the issues of fraud, viewability, brand safety and suitability, and consumer privacy, will help ensure advertisers — and their audiences — have a smooth journey ahead.”

PubMatic, a sell-side platform announced a fraud-free program for premium connected TV and OTT inventory that offers a money-back guarantee for buyers if fraud is verified on the platform.

As CTV has boomed, generating prices higher than other digital ad inventory schemers have moved in with elaborate scams designed to fool automated systems into believing that ads have run on real devices and seen by real viewers.

That has made some advertisers wary. The PubMatic program is designed to give brands more confidence in over-the-top advertising.

“We see tremendous upside potential in the transition from linear TV to connected TV, but fraud concerns have prevented some buyers from fully benefiting. We are confident in the quality of inventory on the PubMatic platform, and our fraud-free program should give buyers confidence to bid on quality CTV inventory at scale,” said Paulina Klimenko, chief growth officer at PubMatic.

“Publishers are creating a wealth of new premium TV content and we are attempting to remove the major challenges and risks. PubMatic is helping DSPs, agencies, and advertisers take advantage of the dramatic increase in opportunities to engage the huge numbers of viewers shifting to CTV,” Klimenko said. 

PubMatic said it employs a rigorous inventory review process for publishers across all platforms and formats. PubMatic vets publishers prior to onboarding and implements pre-bid and post-bid protections to detect and filter out invalid traffic and other nefarious activity.

By extending its fraud-free program to CTV and OTT inventory, PubMatic aims to give buyers the confidence to transact on high-quality, transparent CTV inventory at scale. 

Premion, Tegna’s connected TV and over-the-top ad platform, said it had been certified for its efforts to prevent fraud by the Trustworthy Accountability Group.

Premion said it was the first local OTT platform to receive the TAG seal.

According to a recent report from Pixalate, over-the-top and connected TV ad spend rose 70% between the first quarter of 2020 and the third quarter. Ad fraud has been running at about 20% throughout the year, the report said.

TAG was created by the American Association of Advertising Agencies, the Association of National Advertisers and the Interactive Advertising Bureau.

“Brand safety and performance outcomes are at the forefront of advertiser priorities and we’ve invested in our capabilities to combat ad fraud since it first emerged in the OTT ecosystem,” said Tom Cox, president of Premion. “This recognition validates what we’ve been doing from the onset — directly sourcing inventory from premium, known publishers and using cutting-edge technology to detect and filter for fraud. We’ve taken proactive steps early and remain committed to providing our advertisers with the highest level of accountability as the trusted and secure OTT advertising platform.”

Premion was certified for complying with TAG Standard including sourcing inventory from premium OTT content providers in a direct, “server to server” relationship with partners and through invitation-only private marketplaces. 

“As more ad dollars move to follow the rapid growth in streaming TV audiences, ad fraud is a growing reality and challenge in the OTT ecosystem,” said Mike Zaneis, CEO of TAG. “Our 2020 Fraud Benchmark Study has shown TAG Certified Channels which include multiple TAG-certified companies have 90% less fraud than the industry average. We commend Premion for its dedication to treating ad fraud as a strategic business priority and achieving the TAG Certified Against Fraud Seal.”

Fraud has been a concern as media buyers and their clients look to connect with the growing number of consumer streaming video content.

“Fraud prevention is so important in the OTT space and it is excellent that Premion continues to advance their offering,” said Nicole Torres, senior VP, managing director, local investments of Havas Media.

FCC commissioner Ajit Pai has sent letters to four state public utility commissions (PUCs) looking to compare notes on waste, fraud and abuse in the FCC's Lifeline program, which subsidizes advanced telecommunications to economically challenged areas.

In the letters -- to PUCs in Texas, Vermont, California and Oregon -- Pai said he was seeking their aid for a program riddled with waste, fraud and abuse ever since wireless service resellers were allowed in. Those are states that run their own lifeline accountability databases.

Related:House E&C Investigating Lifeline Reform | Lifeline Subsidy-Blocking Bill Defeated

The FCC does not subsidize more than one Lifeline subscription per household, but Pai noted that safeguards to prevent multiple subscriptions in the FCC's own lifeline accountability database have not been working, citing for one the FCC's proposed $51 million forfeiture against Total Call Mobile for registering more than 32,000 duplicates.

He said he wanted to alert the states to the abuses the FCC has seen and get input from their experiences combatting abuses.

To that end, he asked questions including how the states account for addresses not easily verified and what they does to remedy an abuse once identified.

He requested that they get back to him by Aug. 2.

In a split decision, with the Republicans strongly dissenting, the FCC in March voted on Lifeline reforms -- including migrating the program to broadband -- that Pai thought did not sufficiently address the issues of waste, fraud and abuse.

Pai was particularly unhappy that a compromise struck between the two Republicans and Democrat Mignon Clyburn fell apart at the last minute. It would have capped the fund, something Republicans argue is a key step in controlling abuses.

Federal Judge Kimba Wood on Friday ordered the release of former Adelphia Communications chairman John Rigas from federal prison, a move that would allow the 91-year-old former cable executive to die at his home.

Rigas and his son Timothy – Adelphia’s former chief financial officer – were tried and convicted on several charges of fraud and conspiracy in 2004. The two were accused of using the company as the Rigas family’s personal piggy bank. Another son, Michael Rigas, also was tried at that time but the jury could not reach a verdict; he later pleaded guilty to lesser charges and sentenced to two years' probation.

The Rigases were accused of using hundreds of millions of dollars of Adelphia funds for their own personal use and for taking out $2.3 billion in loans — for which the MSO was liable — to buy Adelphia stock.

The indictments and convictions rocked the cable industry, coming at a time of overall hysteria over so-called “off-balance sheet debt” a major factor in the fall of energy giant Enron. Throughout the trial the Rigases were shown to have used company funds for items as small as John Rigas’ subscription to the Columbia House record club, to larger expenditures for condos and to build a golf course in their headquarters town of Coudersport, Pa. One expenditure in particular made headlines – the $6,000 the company spent to fly two Christmas trees to Rigas’ daughter Ellen’s New York apartment.

Adelphia’s revelation on a 2002 earnings conference call that it had $2.3 billion in off-balance sheet debt touched off a firestorm that ultimately ended in the bankruptcy and sale of the company as well as the indictment of its executives. Adelphia was sold to Comcast and Time Warner Cable in 2006 for $17.6 billion.  

In all four Adelphia executives were indicted – John Rigas, Tim Rigas, Adelphia chief operating officer Michael Rigas and assistant treasurer Michael Mulcahey. Mulcahey was found not guilty  and Michael Rigas was sentenced to two years probation after pleading guilty to a lesser charge of signing false documents after his trial on securities and wire fraud ended in mistrial.

Rigas had been diagnosed with bladder cancer before he was sentenced in 2005 – it was one of the reasons he wanted to be sent to a federal facility in Minnesota, near the Mayo Clinic where he had received treatment in the past.  That request was denied and Rigas and his son were sent to a federal facility in North Carolina to serve out their terms.

Rigas’ condition has since been changed to terminal – reports say he has Stage IV bladder cancer that has metastasized to his lungs and that he has six month or less to live

RELATED:Fall of the House of Rigas: a Timeline.

Rigas had been serving a 12-year sentence (it was originally 15 years but was reduced after some federal charges were dropped) but Wood reduced it to time served. In a statement, John Rigas's attorney Lawrence McMichael confirmed reports he will be released.

"Last night a federal judge in NYC signed an order shortening John's sentence to time served," McMichael said in a statement. "His release has been ordered. I can't say exactly when he will go home but it should be in the next couple of days. Tim remains in custody. He is at the prison camp in Waymart, PA."

Last week’s sentencing of former Adelphia Communications Corp. founder, chairman and CEO John Rigas to 15 years in prison for securities and bank fraud and of his son, Timothy, the former chief financial officer, to 20 years was another milestone in a case that began innocuously enough with a fumbled answer during a routine quarterly conference call with analysts. A log of key dates follows:

March 27, 2002: In its first-quarter conference call with analysts, Adelphia reveals it could be liable for $2.3 billion in co-borrowing debt with Rigas family entities. On the call, CFO Tim Rigas assures analysts that the family has enough resources to back up the debt, but is unconvincing.

March 28, 2002: Adelphia continues to nosedive, falling another $1.80 per share to $14.90, after dropping $4 to $16.70 on March 27.

May 14, 2002: NASDAQ suspends trading in Adelphia, which last traded at $6.13.

May 15, 2002: Adelphia and subsidiaries miss $44.7 million in interest payments on senior and convertible notes.

May 17, 2002: Adelphia reveals it is the subject of grand jury investigations in New York and Pennsylvania.

May 18, 2002: Adelphia proposes selling systems in Los Angeles, Florida, Virginia, the Carolinas and Georgia to raise money to pay down debt.

May 19, 2002: Adelphia announces that James Brown, vice president of finance, has resigned.

May 23, 2002: John, Michael, James and Timothy Rigas resign from Adelphia’s board of directors and as officers of the company. The Rigases agree all company stock held by the family will be placed in a trust. Adelphia increases the amount of co-borrowing debt to $2.5 billion. Adelphia board member Erland Kailbourne becomes interim chairman.

June 11, 2002: Peter Venetis, John Rigas’s son-in-law, resigns from Adelphia board.

June 25, 2002: Adelphia files for Chapter 11 bankruptcy protection.

July 24, 2002: John, Tim and Michael Rigas are arrested by U.S. Postal Inspectors in New York; Brown and Michael Mulcahey (former assistant treasurer) are also arrested, in Williamsport, Pa. Additionally, the Rigases are named in civil lawsuits filed by Adelphia and the Securities and Exchange Commission.

Aug. 23, 2002: Adelphia’s $1.5 billion debtor-in-possession financing is approved.

Sept. 23, 2002: The Rigases, Brown and Mulcahey are indicted on 23 federal counts of fraud and conspiracy.

Nov. 14, 2002: Brown, hoping to receive a more lenient sentence, pleads guilty to conspiracy, securities fraud and wire fraud, and agrees to testify for the prosecution.

Jan. 17, 2003: Adelphia names former AT&T Broadband executives William Schleyer and Ron Cooper as chairman and CEO and president and COO, respectively.

March 28, 2003: The bankruptcy court approves Adelphia’s plan to move headquarters from Coudersport, Pa., to Denver.

Feb. 23, 2004: Jury selection in the federal fraud trial of the Rigases and Mulcahey begins.

Feb. 25, 2004: Adelphia receives $8.8 billion exit-financing commitment from four banks and files reorganization plan in bankruptcy court.

March 1, 2004: Trial begins in Manhattan.

April 22, 2004: Adelphia, pressed by creditors, agrees to pursue a dual-track strategy of emerging from bankruptcy as a whole entity while also exploring a sale of its assets.

April 29, 2004: Brown, the government’s star witness, begins the first of 14 days of testimony.

June 2, 2004: Mulcahey, the only defendant who will take the witness stand, begins seven days of testimony.

June 28, 2004: Jury deliberations begin.

July 8, 2004: Jury finds John and Tim Rigas each guilty on 18 counts of conspiracy and securities and bank fraud, but not guilty on five counts of wire fraud. Michael Rigas is found not guilty on one count of conspiracy and five counts of wire fraud, but the jury remains undecided on 17 counts of securities and bank fraud. Mulcahey is found not guilty on all counts.

July 9, 2004: A mistrial is declared in the case of Michael Rigas on the 17 counts of securities and bank fraud.

July 14, 2004: Adelphia hires UBS Investment Bank and Allen & Co. as advisors for a possible sale.

August 20, 2004: Adelphia files papers with the U.S. Bankruptcy Court in Manhattan asserting that the Rigas family owes the MSO more than $3.2 billion; a hearing is scheduled for October 22.

Sept. 21, 2004: Adelphia splits itself into seven separate clusters, making it easier for potential bidders to make offers for parts of the company.

Oct. 26, 2004: U.S. District Court Judge Leonard Sand agrees to drop the bank-fraud charges against Michael Rigas.

Oct. 31, 2004: Deadline for preliminary bids. More than 50 interested parties submit bids, including a joint bid from Time Warner Inc. and Comcast Corp.

Nov. 1, 2004: U.S. District Court Judge Leonard Sand approves a retrial for Michael Rigas on the securities-fraud charges.

Dec. 14, 2004: The Justice Department asks a judge at the U.S. District Court for the Southern District of New York to enter a $2.53 billion judgment against John and Tim Rigas.

January 5, 2005: John and Tim Rigas are scheduled to be sentenced, but sentencing is postponed. It will continue to be postponed numerous times between January and June.

Jan. 31, 2005: Final bids on Adelphia systems due.

March 21, 2005: Time Warner finalizes a $300 million settlement with the U.S. Securities and Exchange Commission concerning accounting irregularities at its America Online unit. The move will allow Time Warner to issue stock again.

March 24, 2005: Adelphia proposes settling claims by SEC and DOJ for $725 million.

April 5, 2005: Cablevision Systems Corp. reportedly lobs in a $16.5 billion all-cash offer for Adelphia’s cable systems.

April 8, 2005: Adelphia reaches agreement in principle with Time Warner Inc. and Comcast to sell its 5.2 million cable subscribers for between $17.6 billion and $18 billion in cash and stock.

April 25, 2005: Adelphia settles fraud charges with the SEC and DOJ, agreeing to pay $715 million in cash. The move clears the way for the MSO’s pending sale to Time Warner and Comcast, and removes the threat of prosecution. As part of the agreement, the Rigas family has agrees to surrender about $1.5 billion in assets to Adelphia, including its interests in various cable properties.

June 20, 2005: Judge Sand sentences John Rigas to 15 years and his son Tim Rigas to 20 years for their part in what the judge called “one of the greatest frauds in corporate history.”

Sept. 19, 2005: John and Tim Rigas are to report to begin their prison sentences.

October 15, 2005: The retrial of Michael Rigas on 15 counts of securities fraud is scheduled to begin.

Source:Multichannel News research