GWI sues Maine Fiber, alleges misuse of federal funds intended for statewide broadband expansion

Great Works Internet, commonly referred to as GWI, filed a lawsuit on Monday, Jan. 13, against Maine Fiber Co. over allegations the company misused federal stimulus funds intended to expand rural broadband Internet access. Fletcher Kittredge (center), CEO of GWI, announced the lawsuit at a press conference that same day in Portland. He is joined by Eric Samp (left), GWI's general counsel, and Laurie Boxer-Macomber, an attorney at Kelly, Remmel & Zimmerman representing GWI.
Great Works Internet, commonly referred to as GWI, filed a lawsuit on Monday, Jan. 13, against Maine Fiber Co. over allegations the company misused federal stimulus funds intended to expand rural broadband Internet access. Fletcher Kittredge (center), CEO of GWI, announced the lawsuit at a press conference that same day in Portland. He is joined by Eric Samp (left), GWI's general counsel, and Laurie Boxer-Macomber, an attorney at Kelly, Remmel & Zimmerman representing GWI. Buy Photo
Posted Jan. 13, 2014, at 5:41 p.m.

PORTLAND, Maine — Great Works Internet, commonly known as GWI, filed a lawsuit on Monday accusing Maine Fiber Co., its CEO Dwight Allison and investor Robert Monks Jr. of misusing federal stimulus funds intended to expand high-speed broadband access in rural Maine.

At issue is what’s known as the Three Ring Binder project, a statewide fiber-optic backbone that Maine Fiber built with the help of $25.6 million in federal stimulus funds. It announced the completion of the network, which extends from Aroostook County to Boston, in September 2012.

Maine Fiber Co. has not followed through — to the extent laid out in the federal grant application — on its promise to use those funds to expand broadband access in rural Maine, Fletcher Kittredge, CEO of Biddeford-based GWI, said at a news conference Monday afternoon.

Kittredge said the lawsuit filed in Maine Superior Court was “the last and worst option” to settle the dispute, but that discussion with Maine Fiber and mediation had been unsuccessful.

“If this were a simple business dispute … I certainly would not call a press conference,” Kittredge said. “This is something bigger because it involves federal grant money, the purpose of which is to increase access to broadband service in the state of Maine. The public interest is at stake.”

While the misuse of federal funds is a serious allegation, Kittredge said that as far as he knows, no federal agency is currently investigating Maine Fiber Co. GWI’s lawsuit is a civil case to settle a contractual dispute.

GWI was the original applicant for the $25.6 million in federal stimulus funds, which were awarded in December 2009 and required a private match of $6.2 million. However, one of the stipulations in the grant application was that the resulting fiber network would be carrier-neutral, meaning it would not be controlled by one company. So GWI signed over the grant funds in January 2010 to the newly created Maine Fiber Co. to complete and manage the project.

The project has “gone off the track” since its transfer to Maine Fiber, Kittredge said.

Among the changes to the project Kittredge takes issue with is that it was expanded south to Boston, which he said cost money that should have been spent helping connect rural communities to the network.

“The purpose of the Three Ring Binder project is to help Maine people. No part of the project’s focus was intended to benefit financial firms in New York City to the detriment of Maine people,” Kittredge said. “Certainly it was not part of GWI’s application to the federal government, but that is what I believe happened.”

The original contract that allowed GWI to turn over the stimulus funds to Maine Fiber said that the latter would “complete the project or turn it back over to GWI for completion,” according to the lawsuit. Kittredge said he wants Maine Fiber to follow through and complete the project so it meets the original vision of expanding broadband access to the state as laid out in GWI’s federal grant application, or sell it back to GWI for the amount of private money that had been invested in the network.

Allison, Maine Fiber’s CEO, told the Bangor Daily News on Monday afternoon that he was “surprised” to learn that morning of GWI’s lawsuit.

“This is all news to us as of a few hours ago,” he said.

Allison said he and the company “vehemently” denied the allegations laid out by GWI in the lawsuit.

“We went where we were supposed to go,” he said. “We covered 1,100 miles of fiber across the state of Maine, so to say we did not go to rural communities is simply inaccurate.”

He said the expansion to Boston was paid for by private funds, as well as funds left over after the completion of the Maine portion of the project. Allison said Maine Fiber received federal approval to use some of those leftover funds to expand the network to Boston, which it wanted to do to help its Maine customers who were having problems finding an affordable connection to the city.

Allison said Maine Fiber has been having payment problems with GWI for the last 18 months. GWI is contracted to pay Maine Fiber for the ability to lease fiber on the Three Ring Binder network. Kittredge said those payments are tied to whether the project is complete, which he argues it isn’t.

The dispute is over whether the project is “substantially complete,” according to Lauri Boxer-Macomber, an attorney at Kelly, Remmel and Zimmerman who is representing GWI.

While Maine Fiber claims it is, Kittredge claims it is not because it did not provide enough access points along its network where regional companies would be able to tap into the fiber backbone and connect rural communities.

The two companies have been in mediation over the payment issue, Allison said. He said the next mediation meeting is scheduled in two weeks. He would not comment on whether that meeting would go forward.

“Maine Fiber Co. and its employees are incredibly proud of the network we built and what it’s been able to do for the state of Maine and it’s unfortunate we find ourselves in this dispute with GWI, detracting from what otherwise is a phenomenal project,” Allison said.

Monks, who is also named in the lawsuit, is an investor in Maine Fiber Co. and on its board of directors, but has no day-to-day involvement in operations at the company, Allison said.

Maine Fiber Co. and the other defendants have 20 days after being served with the lawsuit to respond, according to Boxer-Macomber.

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