Armstrong’s Main Street headquarters. The company was founded in 1946 in Kittanning by Jud Sedwick but is headquartered in Butler. Eagle file photo

This story was updated Sunday, July 14 to add comments from Armstrong.

Following claims brought by a former employee and whistleblower, Armstrong Group will pay $6.5 million to settle allegations that the family-owned company filed false cost reports between 2008 and 2023, knowingly violating Federal Communications Commission rules, the U.S. Department of Justice announced Friday, July 12.

The Butler County-based internet company is accused of submitting false cost reports to the federal Universal Service Fund to increase subsidy payments.

The Universal Service Fund provides federal funds for broadband expansion in rural and underserved areas.

Between 2008 and 2023, five local exchange carriers owned by Armstrong Group in Maryland, New York, Pennsylvania, West Virginia and the company’s Northern Division allegedly failed to comply with regulations that governed what costs they were allowed to report for purposes of claiming subsidy payments from the government.

“When providers like the Armstrong Group fail to follow federal law and FCC regulations, they jeopardize not only critical government programs but also consumers’ ability to access a modern lifeline — rapid, reliable, and efficient telecommunications services,” said U.S. Attorney Eric G. Olshan for the Western District of Pennsylvania. “Today’s settlement demonstrates our office’s dedication to ensuring the business community plays fairly, particularly with respect to public funds, and further assures our rural neighbors throughout the district that we will work vigorously to protect their access to essential services that many people take for granted.”

The lawsuit was filed by former Armstrong controller and director of regulatory compliance James Ranko. Ranko will receive $1,267,500 as his share of the recovery under whistleblower provisions set forth by the False Claims Act.

The company has entered into a robust corporate compliance agreement with the Federal Communications Commission, requiring Armstrong to adopt changes in the company’s internal controls and implement comprehensive oversight and monitoring mechanisms, according to the Department of Justice.

“After 7 years of investigation, with which we cooperated fully, there has been no finding of liability on the part of the Armstrong Group of Companies with respect to the FCC subsidy programs,” the company said in a statement to the Eagle. “At no time was there any allegation of an adverse impact or any increased costs to customers. We are looking forward to putting this distraction behind us and continuing to serve our customers, communities and employees.”