Colorado rescinds $103M from broadband firm for misuse of funds
The Colorado Broadband Office said Monday that it canceled numerous contracts totaling more than $100 million that had been awarded to Parker-based Maverix Broadband to build fiber internet to rural households. Officials called it a misuse of taxpayer funds and have referred the case to the Colorado Bureau of Investigation.
Maverix had six active state contracts to build fiber-internet service in small towns at the rural edges of the Front Range, including Kiowa, Livermore and Walsenburg. If built, high speed internet service of at least 100 megabits per second would have been available to more than 15,000 households and businesses.
But after a few complaints from vendors and an investigation, the state froze payments to the company, terminated active grants and canceled the $103 million awarded to Maverix under the federal Broadband Equity, Access, and Deployment, or BEAD, program to ensure every U.S. household has access to modern internet speeds.
However, two other programs totaling $27.38 million had been partly paid and are still in various stages of construction. The state broadband office estimated about $9.17 million was paid to Maverix before the freeze, Alison Terry, interim executive director of the Colorado Broadband Office, said during an interview Friday.
“What we ended up finding in the enhanced monitoring was that Maverix had done this for more than just one vendor,” Terry said. “They have about what we’re estimating right now is about $3.2 million in costs that went to Maverix for invoices that they subsequently canceled, or work that didn’t get performed, and then money that they kept and they didn’t give back to the state of Colorado as they’re required to do under the grant agreements.”
Lawyers for Maverix declined to comment Monday. Maverix cofounder David Lindauer did not respond to requests for comment.
But the situation gets way more complicated. Maverix, which had been in receivership since the beginning of the year, filed for Chapter 11 bankruptcy protection Aug. 31.
“We can’t ask for the money back without going through the courts,” Terry said.
Maverix’s track record
According to archived state Broadband Deployment Board records, Maverix applied for state broadband funding as early as 2021 but didn’t meet the minimum requirements.
The company tried again in 2023 and this time was awarded a High Cost Support Mechanism grant of $2.2 million to build fiber internet in the unincorporated Larimer County community of Livermore. The following year, Maverix picked up a $2.6 million HCSM grant for 559 locations in Walsenburg and a $832,103 grant for 76 addresses in East Kersey in unincorporated Weld County.
HCSM grants were funded from the 2.6% fee tacked on to landline and mobile telephone service nationwide to subsidize rural phone service. But with fewer people using landline service, such fees have been in decline for years. The broadband deployment board was sunsetted in September 2024 with the grant duties handed over to the Colorado Broadband Office.
The big win was BEAD, the federal program that Congress allocated $42.5 billion for 2021. Colorado’s share of the funding was more than $800 million. And while the process was far from smooth, the state broadband office awarded $420.6 million to more than two dozen internet providers willing to build in rocky crevices and the farthest corners of the state that private companies had neglected.
While Amazon’s new satellite internet service was hired to provide high-speed internet to 44% of the 96,000 eligible locations in Colorado, Maverix was granted the second-highest number of locations, at around 10,232. Maverix also won the largest subsidy, at $103 million, or nearly 25% of Colorado’s share.
BEAD projects are only now getting started with contracts and construction. A second round is also in the works. The state broadband office says it’s received permission from the National Telecommunications and Information Administration, which is overseeing BEAD, to put Maverix’s locations out for another bid.
Maverix also won three contracts in 2024 that were funded by federal dollars stemming from a law that also passed during the COVID-19 pandemic. The Capital Projects Fund, which was part of the American Rescue Plan Act, provided nearly $21.7 million to Maverix to build service for about 4,500 addresses in Boulder, Chaffee, Gilpin, Kiowa and Saguache counties.
“We visited Kiowa probably a year ago. That’s the one that’s almost complete. And interestingly, we saw quality workmanship. Customers are already hooked up,” Terry said Friday. “I would say we really truly believed them to be a fantastic grantee.”
The state doesn’t normally visit a site for inspection until fiber is in the ground, and Maverix’s five other projects were not at that stage, Terry said. Also, grantees must submit a progress report of financial activity so that payment requests match the receipts of purchases made or work completed.
“Our grant managers compare it to what they’re asking for and they can’t pay it if it doesn’t match,” Terry said.
How’d it get so bad?
State officials said they didn’t find out about Maverix’s financial challenges until April, when the company notified the office that it had been in receivership since January because contractors weren’t getting paid.
“They had defaulted on one of their loans to one of their creditors so the receiver took control,” Terry said. “We were working with them to make sure the projects could keep moving. And then in May, we got two whistleblower complaints.”
One of the complaints, she said, was from a contractor who alleged that Maverix had asked them to submit an invoice for work that hadn’t been completed, which the contractor complied with but then never got paid.
In early June, the state broadband office put the investigation into high gear with something called “enhanced monitoring,” which included visits to the sites to find out if potential fraud was more widespread. It was about “holding ISPs accountable with our tax dollars,” said Brandy Reitter, who was the office’s executive director at the time and has since left for unrelated personal reasons.
That report is what just dropped. The broadband office has referred the case to the Colorado Bureau of Investigation, as well as the U.S. Department of the Treasury’s Office of the Inspector General.
There is a chance Maverix will disagree with the findings and provide evidence that the work was done, said Sarah Tuneberg, executive director of the Colorado Office of Information Technology, which oversees the broadband office. Or, she pointed out, the company could have “a secret garage somewhere that’s filled with all the equipment and material that you couldn’t find on-site,” Tuneberg said.
But because the company is in receivership, even OIT is limited to getting the case resolved quickly to benefit the communities that had been hoping to get fiber internet by now.
“The state’s goal, OIT’s goal, the Colorado Broadband Office’s goal is to get all of these communities connected, and we’re going to work our tails off to make it so,” Tuneberg said. “How we do it, when we do it, TBD.”
Now what?
Three years after Maverix was picked to provide the community of Livermore with fiber internet service, resident Tom Laupa began wondering what was taking so long.
“We were not even aware that a grant opportunity had been there,” said Laupa, who retired in January so he felt he had time to investigate the issue for his community. “We were only informed when Maverix received the grant and then started advertising to us.”
Laupa reached out to the state broadband office and by June, found himself on a tour with officials to see what work had been done. It didn’t look good.
Miles of the colorful polyethylene pipes were buried, creating protective tunnels for fiber-optic cables that would someday link houses to higher internet speeds. But Laupa didn’t spot any fiber. Some ends of the plastic conduit stuck out of the ground.
“When it snows, it’ll get torn up pretty good,” Laupa said. “He (the contractor) said, ‘Well, if it gets torn up, too bad. You’ll have 20 miles of mice tunnels.’ I thought that was funny. But yeah, the fact that they (broadband office) are not taking care of the asset will allow the asset to deteriorate.”
Work was halted by the state broadband office. While Laupa understands how the bankruptcy has complicated the roll out of funding, he had hoped the contractor could just complete the job. Most likely, the state will have to start over in Livermore. He doesn’t want to wait another three years.
“When this started in 2022, Starlink was a fledgling idea,” he said. “Now everybody’s got Starlink.”
Coincidentally, the BEAD program is ongoing. The state will put out for bid again the sites that Maverix won. Those earlier projects in Gilpin, Boulder, Chaffee, Saguache, Walsenberg and Kersey weren’t previously eligible because that would be considered double dipping. But now, those locations will be resubmitted for funding support from BEAD.
“Fundamentally at the Colorado Broadband Office, our job is to get people connected and we’re going to get people connected,” Terry said. “Any locations that remain unserved can go back on our state map. And we’re hoping that those locations may be able to go back on the federal map as well.”
So far, no other grantees are suspected of misusing public funds, Terry said. While the state’s compliance program is intended to catch those early, there’s also a fraud hotline (and phone number at 303-764-7558) to report abuse.
“I feel good about the system that we have in place to be able to catch things,” Terry said. “I mean, $1 is too much.”
This is a developing story and may be updated.
