By Jonathan Stempel and Sinead Carew
Nov 7 (Reuters) - AT&T Inc will pay $3.5 million tosettle federal charges that it had overbilled a U.S. governmentfund meant to help customers with hearing and speechimpairments, an activity that officials said enabled people inNigeria and other countries to pursue credit card fraud.
AT&T was not implicated in the frauds.
Thursday's settlement resolves allegations concerning theTelecommunications Relay Services Fund, which is intended tocompensate carriers for the extra costs of placing calls onbehalf of people who have difficulty hearing and speaking.
The U.S. Department of Justice said that from December 2009to December 2011, as many as 80 percent of calls for which AT&Tsought reimbursement were ineligible because the callers werenot impaired, or because the calls were placed outside thecountry.
Investigators said it was common knowledge among AT&Tcommunication assistants that many callers were from Nigeria andother foreign countries, and that these callers used the systemto defraud U.S. merchants by ordering goods with stolen creditcards and counterfeit checks.
AT&T, the largest U.S. phone company, in May had agreed topay $18.25 million to settle related charges by the FederalCommunications Commission.
The additional $3.5 million settles claims from a case underthe federal False Claims Act that Constance Lyttle, aPennsylvania whistleblower, first brought in 2010. Lyttle willreceive $525,000, or 15 percent, of the settlement amount.
"While we continue to deny the allegations, we concludedthat the most productive course was to resolve what was left ofthe litigation," an AT&T spokesman said.
Dallas-based AT&T no longer offers the service that was thesubject of the lawsuit.
The company's shares were down 0.9 percent at $35.50 inmidday trading.
The case is U.S. ex rel. Lyttle v. AT&T Corp, U.S. DistrictCourt, Western District of Pennsylvania, No. 10-01376.
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