Hewlett-Packard has agreed to settle a government investigation of fraud in the education-related E-rate program, and paid Uncle Sam $16.25 million.  After receiving information given by a few whistle blowers, the Justice Department and Federal Communications Commission investigated claims that HP contractors gave gifts and special incentives to schools in Dallas and Huston to allegedly attempt and improve their chances to win contracts. These included $17M worth of HP equipment, as this all presumably occurred 5 years ago.

“The activities at the center of this investigation occurred more than five years ago, the partner relationships have been terminated and the employees involved are no longer with the company,” McCool said. “HP fully cooperated with the authorities and the matter is now resolved.”

Minimizing damages is always a good tactic, but in addition to a potential stain in Hewlett-Packard’s reputation, this settlement is a warning sign for other tech companies and entities marketing and contributing to various educational programs. One example of this is Facebook CEO Mark Zuckerberg, who recently donated a handsome figure of $100M to Newark schools and of course Google. The education sector is a very rich market for new users, testers, and customers etc., as these corporations are very eager to increase the popularity of its cloud products in particular,, as that includes NYU and other institutions where Google is a heavily involved partner.  Microsoft is edging its way into this space as well.