RUS rescinds stimulus award to TierOne Converged Networks

The Rural Utilities Service has rescinded a $19 million broadband stimulus award made on August 18 to TierOne Converged Networks, a Dallas-based Internet service provider. The move apparently was made after a news report questioned the award, noting that TierOne had been charged with alleged security violations in April. The award to TierOne was made as a combination of a loan and grant. It is unlikely that the company has actually been able to draw against any of those funds, as the award was made in the second funding round of the RUS broadband stimulus program. Organizations awarded funding more than six months ago in the first funding round only received authorization to draw against those funds within the last few weeks. Privately held TierOne has pursued an aggressive strategy of network expansion through acquisition. The suit filed against the company by the Securities and Exchange Commission alleges, among other things, that TierOne made certain misrepresentations in materials used to solicit potential investors. These included failing to disclose CEO Kevin Mark Weaver's disciplinary history with the Financial Industry Regulatory Authority or loans made to senior management.