AT&T Corp. subsidiary AT&T Communications-East, Inc. paid the United States nearly $3 million to resolve a False Claims Act lawsuit alleging that it defrauded federal agencies by overcharging them for telephone service from December 1998 through December 2001. AT&T provided telephone services to the government as part of the FTS2000 contract administered by the General Services Administration. AT&T was alleged to have charged agencies more than the actual costs and fees AT&T paid to local telephone companies for access to their phone lines.