Free phone company collecting millions of dollars while CEO faces a fraud lawsuit


by Chris Nagus / News 4 Investigates

Posted on April 26, 2012 at 10:00 PM

Updated Wednesday, Oct 30 at 6:41 AM

ST. LOUIS (News 4 Investigates) -- The ads for free cell phones are plastered in print and on television. In reality those free phones are paid for by the government. The phones are funded by the Universal Service Fund administered by the Federal Communications Commission.  

In December News 4 camera exposed big problems with the program. Cell phones were being handed out on street corners to people who openly admitted they had multiple "free" phones. The Federal Communications Commission told News 4 they were aware of duplicates within the program, and they were working to correct the problem. The FCC is working on a central database that will track who's getting the phones, but it won't be operational until 2013.
After the story aired St. Louis residents began receiving a mailer from a company called Cintex Wireless. The mailer said "you have been selected to receive a special offer for a free wireless phone and free wireless minutes at no cost to you." The envelope lists a return PO Box Address in Maryland. The Missouri Public Service Commission authorized Cintex Wireless to participate in the low income assistance program in December 2011.
News 4 learned the mailers were also sent to people who don't qualify as low income. Rick Dorsey, a St. Charles County attorney says he received one at his law practice, along with his sister his law partner. "The fact of the matter when they are sending lawyers an opportunity to get a free phone makes you wonder how well they're screening," said Dorsey.
KMOV reporter Ray Preston also received the offer, along with the owner of Above All Personal in St. Louis County. Sue Huber said, "I'm a very successful business person and they're offering me a free cell phone." Huber told us she received a second offer from the company at her lake house.
In December, Senator Claire McCaskill raised concern over direct mailers offering free phones funded by the Universal Service fund. McCaskill who makes a senate salary of 176 thousand dollars a year received an offer from Safelink Wireless at her Washington D.C. condo building.
The mailers from Cintex wireless say you must provide proof that you are low income in order to receive the phone, and state you can't sign up if you're already receiving a government funded phone. The Missouri Public Service Commission is investigating Cintex based on the mailers. According to Chairman Kevin Gunn the marketing should be directed at low income consumers, and sending mass mailers to those who don't qualify might be a violation of Missouri rules.
The owner of Cintex Wireless is Paul V. Greene of North Bethesda Maryland. Greene is currently facing a lawsuit from the Securities Exchange Commission. The SEC alleges Greene participated in a multimillion dollar fraud deal while acting as president of an unrelated wireless company. Maryland Court Documents show Greene also faced tax liens, one for nearly 120 grand. Records show those liens were satisfied in December of 2011, a few months after his company began collecting money from the "free" phone program. According to the FCC, Cintex has collected nearly 8 million dollars since August of 2011 in just five states excluding Missouri.
News 4 traveled to Maryland to find Greene, but discovered his place of business had moved. Greene's former property manager is suing him alleging fraud, and is asking for nearly 155 thousand dollars in unpaid rent. Greene's business is now operating inside an old furniture store in the suburbs of Washington D.C. On the day our cameras arrived, company employees said Greene was in Boston on Spring Break.
Greene has not responded directly to any of these allegations. News 4 sent one of Greene's attorneys an email asking if Greene disputes any of the claims made in this story. The email was sent on April 17th, as of April 26th KMOV has received no response. In previous conversations with Greene's attorney KMOV was informed Cintex has an attorney on staff, and they properly follow all rules and procedures involving the government funded phone program.
According to Cintex's website they have 17 thousand customers.
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