A Convicted Felon Collected $12 Million From the FCC. Including $859,393 While He Was in Federal Prison.
- $12M+Total Universal Service Fund subsidies paid to Roger Shoffstall's Summit Telephone over the past decade — for ~120 broadband customers.
- $859,393Paid to Summit Telephone in the year Shoffstall was re-incarcerated for a probation violation tied to his 2010 federal tax-evasion conviction.
- $1.5M/yrSummit Telephone's current annual USF rate — roughly $10,000 per customer per year, for service capped at 25 Mbps (one-fourth of the FCC's own broadband definition).
- $4.6BTotal federal USF subsidies paid to Alaska telecoms since 2016 — roughly $600+ per Alaska resident per year, the highest per-capita USF rate in the nation.
- $4.5B/yrAnnual FCC High-Cost Universal Service Fund spend (FY2024) — the program inside which Summit's subsidy sits, funded by a 37.6% hidden fee on interstate phone revenue.
- 6-3U.S. Supreme Court vote in FCC v. Consumers' Research (June 27, 2025) upholding the USF as constitutional — preserving the $9 billion annual program SpaceX has now asked Carr to sunset.
Roger Shoffstall is 75 years old. He runs Summit Telephone and Telegraph Company of Alaska out of a small office in Fairbanks. The company serves roughly 120 internet customers. For that handful of subscribers, the U.S. Federal Communications Commission pays him approximately $1.5 million a year — roughly $10,000 per customer, per year, for service the FCC's own definition no longer considers broadband. Over the past decade, Shoffstall's company has collected about $12 million from the federal Universal Service Fund.
In February 2010, a Fairbanks federal jury convicted Shoffstall of tax evasionafter a five-day trial. He had failed to pay approximately $133,000 in income tax over eight years (1996–2003). The U.S. District Court for the District of Alaska sentenced him to three years in federal prison. He was released in early 2013. In December 2013, he was re-incarcerated for a probation violation. That year, his company collected $859,393 in federal subsidies from the same FCC that licenses it. The FCC has not initiated any debarment, suspension, claw-back, or enforcement proceeding against Summit Telephone.
The reason the federal subsidies kept arriving has nothing to do with Shoffstall personally and everything to do with the design of the program. The ProPublica/Anchorage Daily News investigation published this week by reporter Kyle Hopkins names the structural choice that lets it happen: the FCC's Alaska Plan— a decade-long, $1.5 billion carveout shaped under political pressure from the late Sen. Ted Stevens (R-AK) when he ran the Senate Appropriations Committee — pays subsidies based on what gets built, not on what gets used. Once a recipient is in, the checks arrive whether or not anyone is online, and whether or not the owner is in prison.
Shoffstall's tax fraud was not a mystery to the people closest to it. Garry Hutchison, the certified public accountant who testified against him at trial, told ProPublica that he warned Shoffstall during the eight-year non-payment period that this was going to end badly. The relevant detail for the federal-spending story is what Hutchison said next: not whether Shoffstall would be convicted (Hutchison considered that inevitable) but whether the conviction would bring the company down with him. It didn't.
“I told him that he was going to get nailed, that's not a question. The only question is whether or not it would bring the company down.”
Garry Hutchison, CPA · Trial testimony · U.S. v. Shoffstall, D. Alaska, 2010
The answer to Hutchison's question turned out to be no. Summit Telephone kept its FCC license, kept its USF eligibility, kept its $1.5 million annual disbursement. By the time Hopkins tracked down some of Summit's actual customers in 2026, the most common reaction to learning the subsidy amount was a version of the one Lois Sannes — a Sunday-school teacher and longtime Summit subscriber — gave Hopkins:
“I’m horrified.”
Lois Sannes · Former Summit Telephone customer · ProPublica/ADN, May 19, 2026
Carol Mattey, former Deputy Chief of the FCC's Wireline Competition Bureau under the Obama administration, helped design the current Alaska Plan in 2016. Mattey, now retired and consulting, gave Hopkins the structural explanation on the record. The reason the rules look the way they do is not an engineering choice. It is a political one.
“It would be suicidal to do something to make the head of the Appropriations Committee angry at you. We tried so hard not to treat Alaska differently because our goal was to create defined deployment obligations for all companies, and we failed. The political pressure was too strong.”
Carol Mattey · Former Deputy Chief, FCC Wireline Competition Bureau · ProPublica/ADN, May 19, 2026
Mattey's second on-record explanation is the design flaw that makes Shoffstall's subsidy possible:
“The rules of the program say nothing about making sure the lines that a subsidy recipient builds actually get used — only that they get built.”
Carol Mattey · ProPublica/ADN, May 19, 2026
Daniel Lyons, a Boston College Law School professor and former Verizon and AT&T attorney now widely cited in communications-law debates, drew the cleanest conclusion: the structural problem isn't that recipients gamed the program. It's that the agency that runs the program doesn't actually audit it.
“It's not proven how successful it is, because the FCC is not very good at auditing its program. If the goal is to make sure everybody gets online, you try to find the families that can't afford service at market rates and you give subsidies to them directly.”
Daniel Lyons · Boston College Law School · ProPublica/ADN, May 19, 2026
On July 23, 2024, the U.S. Government Accountability Office released GAO-24-106967— an audit requested by Sen. Ted Cruz (R-TX), then ranking member and now Chairman of the Senate Commerce Committee. The report covers the $8 billion-a-year USF as a whole. Two findings carry the editorial weight here. First: the operating expenditures of the Universal Service Administrative Company — the private non-profit the FCC contracts with to actually disburse the program — grew 27.5 percentfrom 2018 to 2023, against no comparable growth in program oversight. Second: FCC oversight of USAC was not consistently aligned with the agency's own requirements. Or in plain English: the agency that wrote the rules does not, in practice, check whether the rules are being followed.
Senate Commerce held its first FCC oversight hearing of the second Trump term in December 2025. FCC Chair Brendan Carr (R), Commissioner Anna Gomez (D) (the lone Democrat on the Commission), and Commissioner Olivia Trusty (R) testified. Cruz used the hearing to put USF reform legislation on the agenda. He had previewed the bill on X eight months earlier:
Last year, I released a Blueprint for Universal Service Fund Reform to rein in the FCC's unchecked spending and hidden taxes. As the Supreme Court weighs a decision in FCC v. Consumers' Research, Congress stands ready to act. My team is already drafting legislation to fix USF.
Ranking member Sen. Maria Cantwell (D-WA) used the same hearing to register the Democratic position: BEAD is being rewritten by Commerce Secretary Howard Lutnick (R) without sufficient congressional process, and the underlying USF program remains under-audited. The disagreement between Cruz and Cantwell is real and substantive. The agreement between them — that USF needs significant statutory reform — is the part that does not yet show up in a floor vote.
Build America Agenda — the FCC will not tolerate paying federal subsidies to recipients failing to deliver service or, frankly, to recipients on the wrong side of the law. The 1996 Act presupposes good-faith performance.
Substance cross-referenced via Broadband Breakfast reporting on Carr's recent oversight statements; embedded here as a hand-rolled card for transparency rather than a direct post-ID embed.
On June 27, 2025, the Supreme Court issued FCC v. Consumers' Research — a 6-3 opinion by Justice Elena Kagan upholding the constitutionality of the Universal Service Fund, reversing a Fifth Circuit decision that had threatened to dismantle the program on non-delegation grounds. The holding preserves the $9 billion annual USF mechanism. It does not address whether the program is well-run.
The Supreme Court answered one question: is the program constitutional?The answer was yes. The court did not answer the other question, which is the one Hopkins's investigation surfaces: does the program actually do what it's supposed to do?
That second question now sits in two different rooms. Inside the FCC, Chairman Carr opened a High-Cost Notice of Proposed Rulemakingon the same day RCI republished the Shoffstall story — seeking comment on three alternative paths: modernize the legacy mechanism, replace it, or sunset it entirely. Outside the FCC, a bipartisan Senate working group co-chaired by Sens. Deb Fischer (R-NE) and Ben Ray Luján (D-NM) has been drafting reform legislation since June 2025.
Neither room has produced a bill that became law. Until one does, Summit Telephone keeps cashing the check.
The political signal that the second Trump administration does not consider the existing broadband-subsidy architecture sacrosanct arrived early, by Truth Social, on May 8, 2025. The target was the sister program to the USF — the $2.75 billion Digital Equity Act created by the 2021 Infrastructure Investment and Jobs Act. The post is the executive-branch tell.
I have spoken with my wonderful Secretary of Commerce, Howard Lutnick, and we agree that the Biden/Harris so-called 'Digital Equity Act' is totally UNCONSTITUTIONAL. No more woke handouts based on race! The Digital Equity Program is a RACIST and ILLEGAL $2.5 BILLION DOLLAR giveaway. I am ending this IMMEDIATELY, and saving Taxpayers BILLIONS OF DOLLARS!
Verbatim text confirmed across Akin Gump, PBS NewsHour, NDIA, StateScoop, and PolitiFact coverage of the post. Post itself remains live on Truth Social; rendered here in a static editorial card rather than an embedded iframe.
The Department ripped out the Biden Administration's pointless requirements and is revamping the BEAD program to take a tech-neutral approach that is rigorously driven by outcomes, so states can provide internet access for the lowest cost.
Paraphrased commentary · not a verbatim post
Lutnick statement on the BEAD overhaul, sourced to NTIA's March 2025 press release on rewriting the $42.45 billion BEAD program. Reproduced here for completeness as the broader administration broadband-reform posture; rendered as a static QuoteCard.
The Trump-Lutnick reset of the $42.45 billion BEAD program and the cancellation of the $2.75 billion Digital Equity Act are the two reforms that have actually moved. The USF High-Cost program at the center of the Shoffstall story is structurally larger ($4.5 billion a year) and has, so far, avoided the same political pressure — in part because the Alaska delegation, both senators of which are Republicans, defends it loudly.
On May 13, 2026, SpaceX submitted a letter to FCC Chair Brendan Carr arguing the simplest possible reform: end the High-Cost program entirely. The argument: Starlink's commercial availability across rural Alaska, rural Hawaii, and the contiguous-48 rural-population regions where Summit and similar carriers operate makes a $4.5-billion-a-year terrestrial-broadband subsidy obsolete. The political read is more complicated than the technology read — SpaceX is also the largest unannounced beneficiary of any USF sunset — but the letter is now part of the public High-Cost NPRM docket, and Carr opened that docket the same day RCI republished Hopkins's investigation. The two sides of the rural-broadband debate are now in front of the FCC at the same time.
The Shoffstall case is editorially useful because it is extreme: a publicly convicted tax-evader collecting federal money while in prison, with the agency that licenses him declining to comment. The structural finding is broader. Hopkins documents the same pattern across multiple Alaska carriers — Adak Eagle Enterprises collects more than $350,000 a year in USF subsidies for an island of roughly 80 people. GCI Communications, the largest Alaska telecom, paid $40.2 million in May 2023 to settle False Claims Act allegations tied to the FCC's Rural Health Care Program; within two years of the settlement, GCI had received an additional $466 millionin federal subsidies. The FCC's last comparable enforcement action against a tax-convicted telecom owner came against Albert Hee of Sandwich Isles Communications in Hawaii — a$49.6M fine, a $27M repayment order. That precedent has not been applied to Summit.
Per-capita, Alaska receives more federal USF money than any state — roughly $600 per resident per year — on top of the broader BEAD allocation. The case for generous rural-Alaska broadband is real. The case for paying a convicted felon $1.5 million a year to serve 120 customers with obsolete DSL is harder to make on any rigorous-audit standard. The Hopkins investigation surfaces both.
One convicted felon.Tax evasion 1996–2003; federal trial Fairbanks, AK, February 2010; three-year prison sentence; re-incarcerated December 2013 for probation violation.
One federal program.The FCC's Universal Service Fund High-Cost mechanism, $4.5 billion a year, funded by a 37.6 percent hidden fee on interstate phone revenue, with structural rules that pay for deployment regardless of use.
Twelve million dollars in subsidies, including $859,393 in a single year of incarceration, with no FCC enforcement action ever filed against the recipient.
The watchdog already wrote the report — GAO-24-106967, requested by Senator Cruz, filed July 2024. The Supreme Court already preserved the underlying program — FCC v. Consumers' Research, June 2025. The FCC has now opened the reform docket. SpaceX has asked Carr to sunset the entire High-Cost program. A bipartisan Senate working group is drafting USF reform legislation.
None of that has yet stopped the next $1.5 million check from clearing.