******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) JAMES A. KAY, JR. ) WT DOCKET NO. 94-147 ) Licensee of One Hundred Fifty Two Part 90 ) Licenses in the Los Angeles, California Area ) Appearances Robert J. Keller and Aaron Shainis, on behalf of James A. Kay, Jr.; and William H. Knowles- Kellett and John J. Schauble, on behalf of the Wireless Telecommunications Bureau. INITIAL DECISION OF CHIEF ADMINISTRATIVE LAW JUDGE JOSEPH CHACHKIN Issued: September 7, 1999 Released: September 10, 1999 Preliminary Statement 1. James A. Kay, Jr. (Kay), is the licensee of 152 stations in the greater Los Angeles area. WTB Ex. 290. By Order to Show Cause, Hearing Designation Order, and Notice of Opportunity For Hearing for Forfeiture, 10 FCC Rcd 2062 (released December 13, 1994) (Show Cause Order), the Commission commenced the instant proceeding to determine ultimately whether the licenses for these stations should be revoked. 2. The Show Cause Order in this case designated eight issues, located at subparagraphs 10(a) through 10(h), for resolution by the Presiding Administrative Law Judge: (a) To determine whether James A. Kay, Jr. has violated Section 308(b) of the Act and/or Section 1.17 of the Commission's Rules, by failing to provide information requested in his responses to Commission inquiries; (b) To determine whether James A. Kay, Jr. has willfully or repeatedly operated a conventional station in the trunked mode in violation of Section 90.113 of the Commission's Rules; (c) To determine if Kay has willfully or repeatedly violated any of the Commission's construction and operation requirements in violation of Sections 90.115, 90.157, 90.313, 90.623, 90.627, 90.631, and 990.633 of the Commission's Rules; (d) To determine whether James A. Kay, Jr. has abused the Commission's processes by filing applications in multiple names in order to avoid compliance with the Commission's channel sharing and recovery provisions in violation of Sections 90.623 and 90.629; (e) To determine whether James A. Kay, Jr. willfully or maliciously interfered with the radio communications of other systems, in violation of Sections 333 of the Act; (f) To determine whether James A. Kay Jr. has abused the Commission's processes in order to obtain cancellation of other licenses; (g) To determine, in light of the evidence adduced pursuant to the foregoing issues, whether James a. Kay, Jr. is qualified to remain a Commission licensee; (h) To determine if any of James A. Kay, Jr.'s licenses have automatically cancelled as a result of violations listed in subparagraph (c) pursuant to Sections 90.155, 90.157, 90.631 or 90.633 of the Commission's rules; and [sic] 10 FCC Rcd at 2064-65. 3. On May 31, 1966, Judge Sippel, the Presiding Judge, issued a summary decision whereby he, inter alia, disqualified Kay and revoked all of his Title III authorizations. Summary Decision of Administrative Law Judge Richard L. Sippel, 11 FCC Rcd 6585 (1996). Kay appealed this ruling, and its effectiveness was automatically stayed pursuant to Section 1.276(d) of the Commission's Rules. 47 C.F.R.  1.276(d). In February 1997 the Commission reversed the summary decision and remanded the case for hearing. James A. Kay, Jr., 12 FCC Rcd 2898 (OGC 1997).. 4. By Memorandum Opinion and Order, FCC 98M-94 (released July 15, 1998), issues (b) and (f) were resolved in Kay's favor by summary decision. Similarly issue (d), with respect to Sections 90.629, and 90.627, was resolved in Kay's favor. Id. The order notes that the reference to Section 90.629 of the Commission's Rules should have been to 90.627. Id. (Section 90.627 of the Commission's Rules is still properly the subject of subparagraph 10(c)). 5. By Memorandum Opinion and Order, FCC 98M-15 (released February 2, 1998), the Presiding Judge added the following issues: To determine, based on the findings and conclusions of Initial Decision FCC 97D-13 reached in WT Docket No. 97-56 concerning James A. Kay, Jr.'s (Kay) participation in an unauthorized transfer of control, whether Kay is basically qualified to be a Commission licensee. To determine whether James A. Kay, Jr. misrepresented facts or lacked candor in presenting a Motion To Enlarge, Change, or Delete Issues that was filed by Kay on January 12, 1995, and January 25, 1995. To determine whether in light of the evidence adduced under the aforementioned added issues whether James A. Kay, Jr. is qualified to hold a Commission license. 6. By Order, FCC 98-274 (released October 19, 1998), the Commission ordered the appointment of a new Administrative Law Judge to preside over this case. By Order, FCC 98M-122 (released October 30, 1998), Chief Judge Joseph Chachkin appointed himself to preside over the proceeding. The evidentiary admissions session was held on November 30, 1998. Hearing sessions were held in Washington, D.C., on December 21, 22, 23, 28, 29, and 30, 1998; and January 11, 12, 13, 14, 19, and 20, 1999. The record in this proceeding was closed on January 20, 1999. Tr. 2565. Proposed findings were filed by the parties on May 10, 1999. Replies were filed on June 1, 1999. 7. In accordance with the requirements of Section 312 of the Communications Act of 1934, as amended, (the "Act") and paragraph 15 of the Show Cause Order, the Wireless Telecommunications Bureau (the "Bureau") has the burden of proceeding with the introduction of evidence and the burden of proof with respect to all issues. Findings of Fact General Background 8. Kay operates Part 90 land mobile radio facilities in the Los Angeles, California, area. He has been involved in the radio field since approximately 1972 or 1973. Tr. 859. He began providing two-way mobile service to others on a commercial basis in approximately 1982 to 1984. Tr. 859- 860. He is the President and sole shareholder of Buddy Corp., which operates under the fictitious business name of Southland Communications. Southland is engaged primarily in the sales, service, installation, and maintenance of mobile radios and two-way mobile radios systems. He also operates a sole proprietorship under the name of Lucky's Two-Way Radio. Lucky's sells repeater service, rents repeater site space, and provides technical consulting services. Tr. 861. 9. Lucky's provides repeater service, i.e., commercial mobile radio service to end users, and Southland does equipment sales, leasing, installation, and maintenance. Tr. 862. While many customers obtain their equipment from Southland and their repeater service from Lucky's, not all do. A customer might obtain radios from a source other than Southland, but obtain repeater service from Lucky's. Similarly, a customer might obtain radios from Southland, but use them with a repeater service obtained from a source other than Kay. Tr. 863. Both Lucky's and Southland are located in the same building, Kay's shop in Van Nuys. Tr. 2271. Section 308(b) Issue The Initial Section 308(b) Correspondence 10. By letter dated January 31, 1994, and directed to Kay, the Bureau requested various information pursuant to Section 308(b) of the Communications Act. WTB Ex. 1. This letter (hereinafter referred to as the "308(b) Request") stated: "The Commission has received complaints questioning the construction and operational status of a number of your licensed facilities.... The complaints allege that the licensed loading of your facilities does not realistically represent the actual loading of the facilities, thereby resulting in the warehousing of spectrum." WTB Ex. 1 at p. 1 (underlining in original). Neither the identity of the complainants nor the specifies of any alleged complaint was disclosed. Id. 11. The 308(b) Request directed Kay to produce a list of all Kay's customers, including "the user name, business address and phone number, and a contact person." WTB Ex. 1 at p. 2. It also sought complete details regarding the technical configuration of Kay's systems and the operations of Kay's customers, including the number of mobile units and control stations operated by each user and the number of units operated on each of Kay's stations. Id. In addition, the 308(b) Request asked for an alphabetical list of the call signs and licensee names for all facilities owned or operated by Kay or any companies through which he does business; annotated to show what facilities are located on U.S. Forest Service land; the original license grant date for each station and the date the facility was constructed and placed into operation; copies of all U.S. Forest Service permits; and an explanation for the lack of a U.S. Forest Service permit for any station located on U.S. Forest Service land. Id. at p. 1. 12. Kay received the letter shortly after January 31, 1994, only two weeks after the Northridge earthquake that had done extensive damage to his business and his residence. Tr. 2340- 2341. He read it and he understood that it was asking him to provide the specified information. Tr. 865. Kay believed it would have been virtually impossible to have supplied the requested information at that time, partly because his business had been severely damaged by the Northridge earthquake that had occurred less than two weeks prior to the 308(b) Request, Tr. 2340-2341, and also because "[t]he request was so massive, it was impossible to deal with." Tr. 2342. Later, in response to discovery requests, Kay produced virtually all of the same information requested in the 308(b) Request. The task required more than three of his staff to devote almost three months to nothing but this project, and it also required 40 to 60 hours of his personal time to compile the information. And this was all done in 1995, after he had "more or less" put the company back together after the earthquake. Kay ultimately produced over 36,000 documents to the Bureau in discovery, and he estimates that only 2,000 to 4,000 documents less would have been required to comply with the 308(b) Request. Tr. 2355. Kay stated that during the weeks and months following the earthquake, it would have been literally impossible to have complied with the Section 308(b) Request, because he had no staff, no personal availability, and everything was in total disarray. Tr. 2355-2356. 13. When Kay received the Section 308(b) letter, he faxed it to his Washington, D.C. communications law firm, Brown & Schwaninger, to assist him in responding to the Section 308(b) letter. Brown & Schwaninger had represented Kay on FCC-related matters since the late 1980's and continued to do so until approximately mid-1995. Tr. 866, 2339. Kay instructed Brown to review and prepare a response to the letter. Tr. 2339. 14. The 308(b) Request was the first in a series of letters exchanged between the Bureau and Brown & Schwaninger. The initial 308(b) Request was in a letter, dated January 31, 1994, from the Bureau, addressed to Kay, and indicating delivery via both regular mail and certified mail -- return receipt requested. WTB Ex. 1. 15. Dennis C. Brown, a partner at Brown & Schwaninger, responded with a letter, dated February 16, 1994, in which he specifically sought "written assurance that any information which Kay submits... will be held in strictest confidence and will not be disclosed under any circumstances to any person who is not a Commission employee." WTB Ex. 348 at p. 1. Brown further requested that Kay be afforded immunity from any forfeiture action or criminal prosecution based on any information supplied, and asked that the running of the sixty day response period be tolled pending action on the requests set forth in the letter. Id. at p. 2. Kay received a copy of this letter on or shortly after February 16, 1994, but did not recall whether he saw an advance draft of it. Kay stated that upon receipt of the letter he would have read or scanned through it. Tr. 1027. Kay did not recall whether he was specifically aware that his attorneys were making the request for immunity, but "conclude[d] that my attorneys were acting in an abundance of caution on my behalf." Tr. 1028. 16. The Bureau responded with a letter, dated March 1, 1994, addressed to Brown. WTB Ex. 349. The Bureau stated that if Kay wished to have submitted material withheld from public inspection he would be required to submit such a request concurrently with the submission of the materials. The Bureau further stated that Brown's February 16, 1994, letter "is not considered a request that information submitted... be withheld from public scrutiny." Id. at p. 1. The request for immunity was summarily denied on the stated grounds that "Congress has not provided for immunity when responding to [Section 308(b)] requests." Id. The deadline for responding to the 308(b) Request was extended to April 14, 1994. Id. at p 2. Kay considered this letter to be essentially a denial of his request for confidentiality. Tr. 1029. 17. On April 7, 1994, Brown wrote two letters to the Bureau. In the first letter (WTB Ex. 2), Brown specifically requested confidential treatment pursuant to Section 0.459 of the Commission's Rules. Brown sought confidential treatment to prevent an unwarranted invasion of privacy in that Kay was submitting (via Brown's second April 7 letter) personal information. WTB Ex. 2 at pp. 1-2. Brown also requested confidentiality on competitive grounds. The letter specifically advised the Bureau as follows: Mr. Kay has learned that some of his competitors have obtained copies of the [308(b) Request] and have already made competitive use of the fact of the request to disparage his reputation in the radio communications service market. Affiliates of some of Mr. Kay's competitors have informed him that his competitors intend to obtain the information which he is submitting and distribute it in the Los Angeles area in an effort to disparage him among his customers. Mr. Kay is also reliably informed that some of his competitors intend to use the information to probe for weaknesses, if any, in his business strategy, and to solicit his current customers directly. WTB Ex. 2 at p. 2. 18. In the second letter dated April 7, 1994 (WTB Ex. 3), Brown addressed the substance of the 308(b) Request. He presented a number of legal objections and challenges to the scope of the request and the Bureau 's statutory right to seek the requested information. As to some of the requested information, Brown informed the Bureau that it already had the requested information or that Kay was not required to maintain the requested information. For example, the Bureau obviously already knew the call signs of the stations licensed to Kay as well as the dates the licenses were granted. WTB Ex. 3 at pp. 1-2. Brown challenged the Commission's jurisdiction to inquire into the status of Kay's U.S. Forest Service Permits, and he also explained that, under USFS procedures, the lack of permit as to a particular facility was not probative evidence of non-construction as the Bureau's Section 308(b) letter "presumed." Id. at pp. 3-4. 19. As to the specific requests for loading information, Brown stated that the request "is not sufficiently specific for [Kay] to supply the requested information." It was explained that the loading of Kay's systems fluctuates over time, from hour to hour, day to day, and season to season. Id. at p. 5. Brown also noted that Commission regulations in effect at the time did not require Kay to know the loading at a given point in time, but rather only when he made certain requests, e.g., requests to add channels or renew facilities where the issuance of the requested authorization is subject to a certain level of loading. Id. at p. 6. Brown further stated that Kay had already provided the Commission with the loading information for his 800 MHz stations after the complaints alluded to the 308(b) Request had been filed. Id. 20. Brown's second April 7 letter also expressed grave concerns about the scope of the 308(b) Request. Brown noted that the Bureau "essentially requests that Mr. Kay tell the Commission everything about everything." He went on to state that the "request is unduly and unreasonably burdensome in light of the local conditions of the Los Angeles market." In this connection he expressly advised the Bureau that "Kay is still spending a substantial part of each day recovering from the Northridge earthquake of earlier this year." Id. at p. 6. 21. Brown considered that Kay had discharged his statutory obligation under Section 308(b). Indeed, Brown expressly stated: By submission of the foregoing, Mr. Kay avers that he has fulfilled his obligation in accord with 47 C.F.R.308(b) by substantively responding to the Commission's letter of inquiry in all respects, including the exercise of his right to decline an invitation to provide information when the request is outside the scope of the law. Mr. Kay stands ready to cooperate with the Commission in all respects which are reasonable calculated to forward the legitimate exercise of the Commission's authority in the fulfillment of its statutory duties. Accordingly, nothing contained herein should be deemed to be a failure by Mr. Kay to comply with all requirements of law. WTB Ex. 3 at p. 6. 22. Kay received copies of and scanned through two letters sent by Brown & Schwaninger to the Bureau, both dated April 7, 1994 (WTB Exs. 2 & 3). Tr. 2341, 2343. He did not read them carefully, word for word, because he was, during that period, extremely busy dealing with the aftermath of the Northridge earthquake that had occurred on January 17, 1994. During this time Kay was devoting an inordinate amount of time to earthquake recovery, assisting customers, meeting his financial obligations--all while coping with the aftershocks that continued for some six months following the main earthquake. Tr. 2343-2344. Similarly, Kay did not review word for word, nor did he carefully analyze, the Bureau's May 20, 1994 letter to Brown (WTB Ex. 6). Tr. 2356-2357. As Kay explained, while he was in the midst of recovering from the devastating earthquake, he "had assigned the task to [his] attorneys to deal with the Commission, to explain to them the situation we were in, and they were responding to it." Tr. 2357. Kay's Concerns Regarding Confidentiality 23. Both Kay and his legal counsel had considered the Bureau's March 1, 1994, letter (WTB Ex. 349), a denial of Kay's request for confidentiality, Tr. 1028-1029; WTB Ex. 3 at p. 5. Although the Bureau held open the possibility that Kay could submit a formal request for confidentiality pursuant to Section 0.459 of the Rules, Kay understood that this request would have to be accompanied by the very materials he was seeking to keep confidential. Tr. 1029-1030. He was very much concerned about a process that required him to submit all the documents and then have the Bureau staff make an after-the-fact determination as to which documents would be publicly released. Tr. 1030-1031. Accordingly, both of the April 7, 1994, letters included copyright notices across the bottom of each page, stating as follows: "Entire contents copyright, James A. Kay, Jr. 1994. All right reserved. No portion of this document may be copied or reproduced by any means." WTB Exs. 2&3. 24. On May 11, 1994, a month after Brown's April 7 letters containing the copyright notice, the Bureau wrote a letter directly to Kay stating that information was required in response to the 308(b) Request before the Commission could process certain of Kay's pending applications. WTB Ex. 4. The Bureau stated: "Please be advised that if you claim copyright protection in your response, we require that you file 50 copies of your response...as well as a full justification of how the copyright laws apply, including statutory and case cites...." Id. When Kay received this letter he "was totally incredulous." Tr. 2344. He explained: I knew of no reason whatsoever why the Commission would ever want 50 copies of the most confidential information of my company for any other purpose but to distribute it. We had asked for confidentiality, they had refused. When we said we were going to copyright it, now they want 50 copies of it. I had dealt with the Commission before and requests of confidentiality had been routinely granted. It was customary, it was never a problem receiving confidentiality from the Commission. And, here they were denying it. Then we said, well, we have to get this somehow. We're going to copyright it and they want 50 copies. What could they possibly want 50 copies for, but to give it to exactly everybody I didn't want to have it? My competitors who are public and who knows who, anybody conceivably that asked for it. I just couldn't do that. I was flabbergasted and dismayed. Tr. 2344-2345. Just two days later, on May 13, 1994, the Bureau sent a virtually identical letter directly to Kay, making the same request in connection with another pending application and containing the same language requesting 50 copies if Kay sought copyright protection for his response. Kay Ex. 49. 25. Kay's interpretation of Bureau's initial reaction to his requests for confidentiality was colored in part by his past dealings with the Bureau regarding casual requests for confidential treatment. Kay explained as follows: I know from past experience with the Commission that with extremely sensitive material the Commission has permitted licensees to loan but not submit material to the Commission. Therefore, the material never becomes the property of the Commission and is then returned. I had past experience with the Commission of submitting confidential materials to them, including highly sensitive, competitive material, which was handled by the Commission on that basis and was returned to me. I knew how it was handled when it was handled properly. We requested confidentiality in basically the same fashion this time, my attorneys did, as was handled in, I think it was somewhere around mid-'93, when I requested confidentiality up front, and they said yes. And I said, okay, I'll submit it. You're free to read it for the record, and please return. And the material was marked copyright, proprietary, confidential, and its return was requested, and the material was returned by the Commission, and it worked fine about six months or seven months previous to the 308(b). So I have experience with that. This time they denied confidentiality, then they wanted 50 copies, then they quoted FOIA language to me. What do you want me to believe? Tr. 944-945. Kay was extremely concerned because the 308(b) Request was seeking "literally the entirety of the most confidential information of my company." Tr. 2342. 26. On May 17, 1994, Brown responded to the Bureau's May 11 and May 13, 1994, letters, WTB Ex. 5, and specifically challenged the Bureau on the request for 50 copies: We respectfully note that we have filed the number of copies of Mr. Kay response which are required to be filed by Section 1.51 of the Commission's Rules. However, you have requested 50 additional copies ... Since the Commission could not possibly require 50 copies for its own internal use, the only reasonable conclusion is that the Commission intends to make further circulation of Mr. Kay's response beyond the Commission. It was specifically to prevent such distribution that ... that Mr. Kay requested confidentiality for his response and provided the Commission with notice of his copyright. WTB Ex. 5 at p. 1. 27. In Brown's May 17, 1994, letter challenging the request for 50 copies (WTB Ex. 5), Brown reiterated some of the same legal objections to the 308(b) Request that he had set forth in his second April 7, 1994, letter (WTB Ex. 3). Brown further put forth arguments demonstrating that the information requested in the 308(b) Request was not relevant to the resolution of any of the specific pending applications addressed in the Bureau's May 11 and May 13, 1994, letters. WTB Ex. 5 at pp. 2-3. Brown suggested that progress could be made on the matter if the Bureau would request specific information concerning each of the specified applications rather than pursuing an open-ended request that essentially required Kay to produce virtually all of his business records without any guidance as to what the Bureau was seeking or what its specific concerns might be. Id. at p. 4. The record does not reflect that the Bureau ever acknowledged or answered Brown's May 17, 1994, letter. 28. The Bureau responded to Brown's April 7, 1994, letters (i.e., WTB Exs. 2&3) on May 20, 1994, WTB Ex. 6. The Bureau concluded that Brown's April 7 letter "is inadequate, evasive, and contrived to avoid full and candid disclosure to the Commission." The Bureau went on to call it "a studied effort to avoid producing any information." WTB Ex. 6 at p. 1. The Bureau stated that "[w]ith respect to Kay's request that information provided to the Commission in response to our inquiry be withheld from public inspection, we will not make those materials which are specifically listed under the provisions of [the Commission regulations implementing the Freedom of Information Act] routinely available for public inspection." Id. Kay viewed this not so much as a grant of confidentiality, but rather as the Bureau simply quoting the FOIA rules. Tr. 926. 29. Kay's confidentiality concerns did not arise in a vacuum. Shortly after Kay received the Section 308(b) letter, he became aware that his competitors had a copy of it and were showing it around the Los Angeles mobile radio community. Tr. 2498-2499. As the result of some FOIA litigation against the Commission, in the fall of 1994, Kay learned that the Bureau had, in fact, contemporaneously sent blind carbon copies of the Section 308(b) letter to at least six different individuals who were competitors, customers, and/or potential customers of Kay. Tr. 2497-2498; Kay Ex. 62. 30. Knowing that his competitors were already using the letter against him, and that they would certainly attempt to get their hands on any information Kay produced in response to it, Kay had asked that his response not be made available for public inspection. When the Bureau refused this request, Kay's attorneys then indicated that the responses would be copyrighted, and even placed a copyright notice across the bottom of their substantive communications with the Bureau on the subject. At that point the Bureau demanded 50 copies of the materials to be produced. Tr. 2344- 2345. 31. Competitive considerations were not the only basis for Kay's confidentiality concerns. In addition to seeking the identity and contacts for Kay's customers, the Bureau was also seeking information regarding the configuration of the customers' systems. Kay believed he had a duty to his customers, over and beyond his own self-interest, to hold such information in the strictest confidence. He testified as follows: The release of that information to the public would not only adversely affect my company, but my customers, as well. It is -- radio shops just do not release the system configuration of their customers' radio systems to the public. It's like releasing private citizens' cellular telephone numbers. It's just simply not done. The consequences to my company would be direct and economic. It would probably ruin my company. My customers expect me to maintain confidentiality of their records and their system configurations. I can't just release customers' information to the public. Can you imagine the liability of releasing an armored transport company's frequency codes to the public? All it takes is one robbery where the bad guys know the frequency information and there's big trouble The same goes with alarm response companies and armed guard companies. We just cannot release that information to the public under any circumstances. To do so would endanger lives and property of my customers, their employees, and the liability to my company would be incredible. Tr. 2342-2343. 32. In April 1994, before Kay's response to the 308(b) Request was due, an event occurred which increased Kay's suspicions and apprehension that the Bureau staff was acting in bad faith. At the time of the 308(b) Request, Kay had pending before the Commission a request pursuant to the Commission's "finder's preference" program in which he was seeking a dispositive preference for a frequency that had been abandoned by another licensee, Thompson Tree Service. The purpose of the finder's preference program was to promote efficient spectrum utilization by encouraging licensees to locate unused authorizations. Such "finders" were rewarded with dispositive preferences allowing them to apply for the abandoned channel without being subject to competing challenges. Tr. 2345- 2346. 33. Kay had previously written to the Bureau explaining that the Thompson Tree facility had been abandoned, and informally asking that the authorization be canceled in FCC's rules. He later filed the formal finder's preference request when the Bureau did not act on his informal request. In response to Bureau inquiries, Thompson Tree admitted that it had stopped using the station more than two years earlier, but expressed a desire to nonetheless retain the license in order to preserve the investment they had in the station. Kay thereupon contacted Gail Thompson of Thompson Tree and reached an accommodation with her whereby Thompson Tree would acquiesce in the cancellation of its license and Kay would provide it with repeater service so they would not lose their investment in their radio system. Tr. 2347. 34. About a week to ten days later, Gail Thompson called Kay to report that she had just received an unsolicited telephone call from Anne Marie Wypijewski, the Bureau staff person handling Kay's finder's preference request. Wypijewski advised her that the Bureau had no choice but to cancel the Thompson Tree authorization and would be doing so shortly, but that Thompson Tree could immediately reapply for the authorization. Wypijewski did not formally advise Kay of the denial of his finder's preference request until about a week after Wypijewski's telephone call to Gail Thompson. Tr. 2347, 2547. 35. Kay viewed Wypijewski's actions as a blatantly improper maneuver which destroyed any confidence he might otherwise have had that information he provided to the Bureau would be held in confidence or that the Bureau was acting in good faith. As he explained: This was equivalent to a judge - because Anne Marie is decision-making staff acting, in fact, as a judge, weighing our finder's preference, releasing what she's going to do, how she's going to rule, before she releases the ruling, to tell Mrs. Thompson how to beat the effect of the ruling, to literally take from me that which I had reported in good faith to the Commission and had filed as a finder's preference. It was, to me, a direct stab at me to take away that which I had worked for, that I had in accordance with the rules, properly filed and was, in fact, an invalid license. She was taking away from me that which I had worked for and was doing it without notifying me. I was thoroughly of the opinion it was highly improper if not what they call ex parte representation made. This wasn't Mrs. Thompson calling in to check on something. This was Anne Marie going out of her way to tell Mrs. Thompson how to beat James Kay on a perfectly legitimate finder's preference and a perfectly legitimate report that Mrs. Thompson's license is canceled automatically. It was a way of sticking me and to help Mrs. Thompson and it just plain was wrong.... I can't trust the Commission to play by the rules and maintain confidentiality, but going out of their way to make telephone calls to tip people off how to beat me, with pre-release of decision material, how can I trust them? Tr. 234-2350. 36. Apart from the communications by Wypijewski, Kay viewed the denial of his finder's preference request in and of itself as yet a further indication of the Bureau's bad faith. The Bureau denied the request on the stated ground that the station was already the subject of an investigation at the time it was filed. Tr. 2526. Kay was knowledgeable of the finder's preference procedures, having filed between eight and fifteen such requests during his career. Tr. 2547. He understood that the policy of denying a finder's preference request on the basis of an existing investigation is intended to prevent a licensee from taking advantage of investigatory and enforcement work already undertaken by the Commission. In other words, the rationale of the finder's preference program is to encourage licensees to seek out fallow channels and then reward them for their efforts--not to allow them to simply piggy back on somebody else's work. Tr. 2548-2549. But in this case the ostensible "existing investigation" was nothing more than the informal letter Kay himself had previously filed calling the matter to the Commission's intention. Tr. 2525, 2549-2550. Kay had never heard of a finder's preference being denied on the sole ground that the party requesting the preference had already informally brought the matter to the Commission's attention prior to formally submitting the request. In Kay's words: "It was unique. I think to this day it remains unique." Tr. 2550-2551. 37. Brown confronted the Bureau a second time regarding the request for 50 copies. In a letter dated May 26, 1994, Brown again asserted that the "request that [Kay] submit 50 copies...clearly indicates [an] intent to disclose information to a substantial number of members of the public, even though Kay has not received notice ... that any person had requested the information." WTB Ex. 9 at pp. 2-3. Brown went on to explain that Kay was asked to provide the names, addresses, phone numbers, and contacts of his business customers, in addition to the operating particulars of their accounts. Brown expressly advised the Bureau that "Kay has no confidence that the Commission would not disclose such crucial information to other persons, whether routinely or non-routinely." Brown expressly and specifically asked for comment and clarification as to this point. Id. at p. 3. The next day, on May 27, 1994, the Bureau, wrote a response to Brown. WTB Ex. 10. While addressing various other points raised in Brown's May 26 letter, the Bureau neither acknowledged nor answered Brown's pointed and explicit expression of concern and request for clarification as to the demand for 50 copies of Kay's responsive materials. Id. Efforts to Clarify and Narrow the Scope of the 308(b) Request 38. Brown again wrote to the Bureau on May 25, 1994, this time seeking clarification of the 308(b) Request. WTB Ex. 7. Brown wrote: In your letter dated May 20, 1994 ..., you indicated the Commission would be willing to clarify its request .... Your letter to Mr. Kay dated January 31, 1994, had not indicated that any clarification might either be required or provided. However, your letter dated May 20 indicates that clarification might be possible. Accordingly, we respectfully request clarification of certain portions of the Commission's request. Id. at p. 1. 39. Brown first sought clarification as to which specific facilities were the subject of the Bureau's concern. The 308(b) Request, he reasoned, stated that it was prompted by complaints--the details of which the Bureau had thus far refused to disclose to Kay--that must reference specific facilities and particular alleged violations. "However, rather than requesting information concerning those facilities about which it had reportedly received complaints, the Commission has requested essentially all of the information which Mr. Kay might have concerning all of the stations which he operates." Id. Thus, Brown asked that the Bureau clarify the 308(b) Request "such that it specif[y] the facilities about which complaints are being held and such that it request[] information only about the specific stations and only such information as would allow the Commission to ascertain the veracity of the complaints." Id. at pp. 1-2. Brown explained that the clarification would "allow Mr. Kay to confront directly the exact accusations which have reportedly been made against him." Id. at p. 2. 40. On the next day, May 26, 1994, the Bureau issued a terse letter summarily rejecting the request for clarification, stating: The Commission's request asks for basic information that Mr. Kay would have readily available if he is indeed providing communication services to customers. In fact, such information would be a necessity in order to even issue monthly bills to users of the many systems for which he is apparently licensed. WTB Ex. 8 at p. 1. Confronted with this refusal to disclose the particular substance of the alleged complaints against Kay, Brown immediately wrote to the Bureau on May 26, 1998, seeking more specific clarification of each of the items contained in the 308(b) Request and asking that the Bureau reconsider its May 26 letter. WTB Ex 9. The Bureau similarly rejected this request in a letter dated May 27, 1994. WTB Ex. 10. The Substantive Response to thr 308(b) Request 41. The 308(b) Request, dated January 31, 1994, initially called for a response within 60 days, i.e., by Friday, April 1, 1994. WTB Ex. 1 at p. 2. By letter dated March 1, 1994, the Bureau had extended the deadline thirteen days to April 14, 1994. WTB Ex.. WTB Ex. 349 at p. 2. On May 20, 1994, the Bureau effectively extended the response date to June 3, 1994. WTB Ex. 6 at pp. 1&3. Brown repeatedly thereafter sought a further extension of the deadline, citing among other things pending FOIA litigation in which Kay was attempting to secure production of the alleged complaints against him, WTB Exs. 7&9, but the Bureau consistently refused to extend the response date beyond June 3, 1994, WTB Exs. 8 & 10. 42. On June 2 1994, Brown submitted a substantive response to the 308(b) Request. WTB Ex. 11. It was accompanied by a declaration in which Kay verified the accuracy of the factual assertions contained in the letter. WTB Ex. 11 at p. 7. Kay testified: "I could only certify to the factual information that would be within the scope of my knowledge...contained in there, and I would have not have signed the declaration if I detected any errors." Tr. 932. Brown's June 2 letter first explained that Kay had an interest in two closely held corporations, Buddy Corp. and Oat Trunking Group, Inc., and that Kay "does not operate any station of which either he or the two above named corporations is not the licensee." Id. at p. 1. The letter further explained that Kay did not hold any license which the Commission would not already have in its own record. Id. at p. 2. 43. Brown renewed his various legal objections to the Bureau's request for information regarding Kay's U.S. Forest Service permits, including relevancy and the Bureau's refusal to disclose the particulars of the alleged complaints against Kay. Id. at pp. 2-3 & 4. Regarding the request that Kay provide the Bureau with the original grant date and the construction completion date of each of his licenses, Brown responded that there is no requirement that Kay maintain records of license grant dates, that the Commission already had the license grant dates in its own records, and, to the extent Commission rules required Kay to report construction completion dates, he had already done so at the appropriate times. Id. at pp. 3-4. 44. In response to the Bureau's request for Kay's loading numbers, technical configurations, etc., Brown clarified that Kay's combined systems served a grand total of 7,000 units, Id. at p. 4, but he asserted that providing specific loading information as of January 31, 1994 (as the Bureau had requested) could not possibly provide information that would prove or disprove any complaint the Bureau may have received, because the systems are in continual churn with customers being added and deleted all the time. Id. at p. 5. Brown further noted that the loading was not a factor as to any of the specific pending applications which the Bureau was claiming could not be processed absent a response to the 308(b) Request. Id. at p. 5. 45. Brown once again noted the exacerbation of Kay's confidentiality concerns by the Bureau's unexplained request for 50 copies of his response: The Commission's ... demand that Mr. Kay supply ... 50 copies ... calls into serious doubt for Mr. Kay the Commission's intent to honor his request for confidentiality. Because the confidentiality of the information which the Commission has requested concerning the identity of Mr. Kay's customers is crucial to his business, Mr. Kay respectfully submits that his declining to submit such information to an agency which refuses to promise to keep such information confidential is entirely reasonable, and that in the absence of such a promise ... the Commission's request for such information is not a reasonable exercise of its authority. Id. at p. 6. Brown submitted only the number of copies of his June 2, 1994, letter required by Section 1.51 of the Commission's Rules. Id. at p. 7. He also included the copyright notice across the bottom of each page. 46. Brown asserted the following extensive legal objection to the Section 308(b) Request: To date, the Commission has refused to disclose to Mr. Kay the complaints on which it reportedly based [the 30(b) Request], and has refused to postpone the date for him to respond to the Commission's request until such time as the courts can determine, in currently pending [FOIA] litigation, his right to have disclosure of the complaints on which the Commission's request was reportedly based. Mr. Kay is aware that the Commission has, from time to time, received allegations that Mr. Kay had engaged in serious criminal activity. Not only has the Commission refused to allow Mr. Kay to inspect the complaints which reportedly formed the basis for its request, but the Commission has refused to provide Mr. Kay with immunity from criminal prosecution based on the information which it has requested. The Commission has threatened to impose sanctions on Mr. Kay for failing to comply with the Commission's request for information, including an express intent to sanction him by subjecting him to the cost and loss of time involved in undergoing a hearing before the Commission. With the Commission in the posture of refusing to disclose to Mr. Kay the alleged facts of the complaints which reportedly formed the stated basis for the Commission's request, refusing him a reasonable opportunity to ascertain the specific facts of the reported complaints, refusing to permit him an opportunity to confront his accusers and their accusations, and refusing to provide Mr. Kay with immunity from criminal prosecution, all the while threatening to impose sanctions on Mr. Kay, including the intended abuse of the Commission's hearing process, itself, as a sanction, Mr. Kay respectfully submits that the [308(b) Request] is entirely unjustified and unreasonable, and constitutes a violation of Mr. Kay's right to due process of law, as well as a violation of other rights to which Mr. Kay is entitled under the United States Constitution. Id. at p. 6. 47. The Bureau sent Brown a responsive letter on June 10, 1994, WTB Ex. 12. The Bureau labeled the response "woefully inadequate" and threatened that it "places Mr. Kay in jeopardy of Commission sanctions which include revocation of licenses, monetary forfeiture, or both." Id. Having heretofore ignored each of Brown's previous objections to the demand for 50 copies, the Bureau now for the first time, in the June 10 letter, modified that "information submitted will be kept confidential...and only 1 original and 1 copy of the information need be filed." Id. The Bureau apparently considered that as "[h]aving removed the basis for Mr. Kay's objections," id., but it did not otherwise substantively address or respond to any of the extensive legal objections put forth in Brown's June 2 letter. The Bureau simply demanded the submission of the information by July 1, 1994, id., and further "warn[ed] ... that your continued posture in this matter places all of Mr. Kay's licenses in jeopardy of revocation." Id. at p. 2. 48. On June 17, 1994, Brown wrote to the Bureau to advise it of a Federal District Court ruling earlier that day whereby the Commission had been directed to provide Kay with a "Vaughn Index" of documents that were being withheld notwithstanding Kay's FOIA requests. WTB Ex. 13. Brown explained that "[t]o date, the Commission has not disclosed to Mr. Kay the complaint(s) which reportedly formed the basis for its" 308(b) Request. Id. at p. 2. Brown asked for an extension of time to respond to the Bureau's January 31, 1994 letter (WTB Ex. 12) until after final resolution of the FOIA litigation. He reasoned that this would "give Mr. Kay a fair opportunity to be informed as to the factual basis, if any, of the [complaints] before the Commission demands that he attempt to submit information responsive to those complaints." Id. at p. 2. 49. On June 22, 1994, the Bureau responded to Brown and denied the request for extension. WTB Ex. 14. The Bureau interpreted "the numerous requests for extension of time, copyright notices and [FOIA] requests...[as] dilatory tactics meant to discourage the Commission from carrying out its statutory responsibility in this matter." Id. at p. 1. The Bureau repeated the threat that Kay's "continued posture in this matter places all of its licenses in jeopardy of revocation." Id. at p. 2. On June 30, 1994, Brown responded. WTB Ex. 15. As to each of the specific items in the 308(b) Request, Brown referred the Bureau to earlier responses filed on behalf of Kay. Id. at pp. 1-2. Brown renewed, clarified, and expanded his legal objection on the ground that the specifics of the alleged complaints had not ben disclosed to Kay. Id. at pp. 203. Mr. Kay understood that, as of June 30, 1994, he was continuing to refuse to provide the Bureau with some of the information sought in the 308(b) Request, but he indicated that this was because his "attorneys took legal positions in answer to [the 308(b) Request] which are clearly elaborated upon in a series of letters to the Commission." Tr. 1035. The Northridge Earthquake 50. The Northridge earthquake occurred on January 17, 1994, at 4:31 AM, Pacific Standard Time. Tr. 1416, 1684, 2206, 2270-2271, 2283. This was less than two weeks prior to the Bureau's 308(b) Request. 51. The epicenter of the Northridge earthquake was only 3.5 miles from Kay's business offices and shop in the Van Nuys section of Los Angeles. WTB Ex. 17 at p. 3; Tr. 2211. The earthquake did substantial damage to Kay's business. Randolph French, a bench technician who has worked for Southland for nearly seven years, described the damage as follows: "Well, ceiling tiles broken down, light fixtures from the ceiling falling, steel shelving units dominoed over. Computers smashed, all kinds of parts inventory was, had fallen all over the place." Tr. 2272 (emphasis added). 52. Anthony Marshall, who has been a Southland employee continuously for the past 14 years and on and off for four years prior to that, Tr. 2307, was one of the first of Kay's employees to arrive at Southland shortly after the earthquake on the morning of January 17, 1994. Tr. 2311. Here is how he described what he found upon his arrival. Jim was there already, and the place was demolished. ... Nothing is where it would have normally have been. The dropped ceiling tiles, the light fixtures on the dropped ceiling, anything at the ceiling levels was on the ground. All the office cubicles were basically busted apart and all over the place. The desks were -- anything that was on top of a desk was on the ground. Computers, typewriters, everything was a complete shambles and a mess. It looked like a tornado had literally gone through the inside of the building. Tr. 2311-2312. 53. Deborah Kay Marshall (Anthony Marshall's spouse, Tr. 2307), also a Southland employee for the past 14 years, described the damage as follows: Everything. Cubicles were smashed and caved in on top of one another, on top of computer systems or telephones. Our stock room had shelves, racks that we had built in there, where the radios were all kept. They were all caved in on top of one another. We couldn't even enter that room. The sales floor, where we kept all the radios in showcases, the showcases were all smashed and broken and radios were pretty much on the ground, with everything on top of them. When we went back into the Tech Rooms, we found the same thing. The tech benches were all knocked over, the equipment all knocked over. Things were broken I mean, it was a disaster. We even looked at cracks in the walls, cracks in the floor. Tr. 2283-2284. 54. Kay himself gave the following picture of the damage: Basically, the buildings looked liked they'd been picked up, shaken violently up and down and sideways, and then placed back down. Nothing was where it belonged. Bookcases fell over. The floors were strewn with books and papers. My desk collapsed, spewing hundreds of files all over the floor. Credenzas collapsed, spewing files everywhere. The primary computer was damaged at my shop. Water pipes, the water heaters were fractured, spewing water all over everything. Electricity was out. Basically, the place was a disaster. Huge racks that we had radios on in our storage room had teepeed. They'd fallen over, dumping all their contents on the floor, till there was nothing but a pile of radios three feet tall. Some areas were almost impossible to get into, because doors were blocked. You had to use alternative routes to even get in the various parts of the shop. It was basically like a horde of vandals had descended for a number of hours, with the intent of doing nothing but wrecking the place. Tr. 2340-2341. 55. Kay's personal residence was also damaged in the earthquake and was in total disarray. Tr. 2340, 2516. The damage to Kay's residence currently stands at about $150,000 to $200,000 and is still climbing. To this day he is still doing repairs and still finding damage. Tr. 2516-2517. Kay obtained SBA Disaster Loan Assistance, both personally and for his business, which reimbursed only a fraction of the total damages he incurred. Kay Ex. 11. The Effect of the Earthquake on Kay's State of Mind 56. Jeffrey L. Cohen is a California attorney who began doing legal work for Kay in about 1991. Tr. 2204-2205. During 1992, Cohen communicated with Kay on a weekly basis. Tr. 2205- 2206. During 1993, Cohen communicated with Kay at least three times a week and, during the later part of the year, almost on a daily basis. In addition to telephone conversations, Cohen also frequently met with Kay approximately once every two weeks during the first three quarters of 1993, and then about twice a week during the fourth quarter of 1993. Tr. 2206. 57. Cohen testified that there was a remarkable change in Kay's demeanor and personality as well as in his professional and personal habits after the Northridge earthquake. According to Cohen, prior to the earthquake: [Kay] was a fairly easy client to work with. He was very focused on his business. He understood general basic legal issues. In my dealings with him, basically he would consult with me regarding sometimes general business problems, also the litigation I was representing him with. He would talk about general options and other matters dealing with that, and he would basically listen to what was being presented, discuss the options, and then make the decision based on those matters. He was attentive, demanding, but basically fair to deal with. Tr. 2207-2208. Kay was almost always responsive to Cohen's requests. Tr. 2208. After the earthquake, however, he changed quite a bit both physically and emotionally. Cohen noticed that Kay did not look healthy, that his skin pallor was different, that he appeared not to be sleeping well, and that his eating habits became atrocious. Tr. 2208. Kay also seemed not to be attending to his personal appearance. Cohen noted that he was not getting his hair cut as often and that he often wore the same clothes and they were much more rumpled. Tr. 2209-2210. 58. Cohen further explained the change in Kay as follows: His ability to focus on matters was changed considerably. Prior to that time, we had almost established a pattern of how we dealt with any type of legal issue or problem that arose and basically what I would do is give him my view of what we thought was the legal issue and what I thought his goal was, and then I'd give him the various options and we'd discuss the ramifications. Tr. 2208-2209. Cohen also participated in some conference calls during 1994 with Kay and Brown & Schwaninger, Kay's Washington, D.C. communications attorneys at the time. During these calls, Cohen observed that Kay "was having difficulty understanding the legal ramifications of what was occurring." Tr. 2216. Cohen attributed this to Kay's inability to stay focused. Id. 59. Cohen believed that Kay was depressed as a result of the devastation to his business from the earthquake. Tr. 2210. This opinion was based not solely on his familiarity with Kay, but also on his own personal understanding of the earthquake as a Los Angeles resident who lived through it and was affected by it. Tr. 2207. As Cohen observed, "people who weren't there don't understand the devastation to business that occurred." Tr. 2210. Cohen's law firm continued to represent Kay for approximately two more years after the Northridge earthquake. During this period, he observed a gradual recovery and improvement in Kay's business acumen and ability to concentrate. As Cohen put it: "The farther he got away from the earthquake, the better he was." Tr. 2212. But up until the time Cohen's firm stopped representing Kay, in late 1995 or early 1996, Kay "was never back to what he was prior to the earthquake." Id. 60. Cohen's impressions were corroborated by those who worked with Kay. Randolph Scott French has worked as a bench technician for Southland Communications since May 1992, i.e., for nearly seven years. Tr. 2270. In the course of his duties, French had contact with Kay several times a week. Tr. 2275. He found Kay to be more irritable after the earthquake. Tr. 2276. Deborah Marshall, who has known and worked with Kay on a daily basis for 14 years, testified that Kay was much more impatient after the earthquake and seemed preoccupied. Tr. 2294-2295. Anthony Marshall, who has also known and worked closely with Kay for some 14 years, characterized Kay's behavior after the earthquake as follows: He was very short and quick to temper on the exact same items that before he would have very patiently explained it to you in detail. Where, after the earthquake, it was like, I don't have time to deal with this. I've got other things on my mind. You know your job, do it and get it done. Tr. 2313-2314. Kay's Computer System 61. Kay acquired a computer system in approximately 1988 to 1989 that was based on the Xenix operating system, a system similar to Unix. Tr. 1037. Craig Sobel, who has both computer and accounting expertise, Tr. 1390-1391, has provided consulting services to Kay for the past ten years. Tr. 1392. Craig Sobel had no role in maintaining Kay's Xenix computer system. His duties were limited to programs he wrote for Kay to run on the Xenix system. Tr. 1397. He does, however, maintain Kay's DOS-based system which later replaced the Xenix system. Tr. 1398. Sobel developed a custom billing program for the Xenix system. Tr. 1394-1395. The billing software was designed to cover the repeater services provided by Lucky's; it did not cover Southland's equipment and service operations. Tr. 1395. Craig Sobel made many changes and modifications over the custom billing package over the years. Tr. 1037-1038, 1395. 62. The user interface for the custom billing package designed by Craig Sobel was the "customer maintenance screen". Tr. 1399. Kay's staff used these screens to enter and modify customer data, and they could also bring up and view these screens on a computer monitor. Tr. 1036. The billing software package was never intended as a means of maintaining system loading records for licensing purposes. The primary purpose of the program was to generate customer bills. Tr. 1038. The program was modified in 1992 to allow inclusion of information regarding the number of mobiles a customer might have at a given site. Tr. 1395. Information on the number of mobiles was included primarily as a convenience to Kay and his staff, but it was not audited and was not necessarily accurate or up to date. Id. The program design parameters did not require that the number of mobiles even be entered into a customer maintenance screen. Tr. 1422, 1432-1433. 63. Kay was using this Xenix-based custom billing program in January 1994. Tr. 1038. The Xenix system was damaged in the Northridge Earthquake, resulting in frequent crashes and the eventual failure of the system. Tr. 1038, 1416. The Xenix system was replaced in approximately April 1994 with a DOS-based computer system. Tr. 1039. Craig Sobel was retained to convert the billing system from the Xenix to the DOS system. Tr. 1417. During the process of converting from the Xenix to the DOS system, Craig Sobel discovered that several files had corrupt data and had to be removed. There was no hope of reconstructing the corrupted files. Tr. 1418. The damaged files were removed entirely from the database file, and it would also have been necessary to remove all records dating prior to the date of the damaged records in order to preserve the accounting integrity of the billing program, i.e., to keep it "in balance". Tr. 1428-1431. Craig Sobel testified that the corruption could have resulted from damage to the data files caused by a power shut down or a hardware failure. tr. 1449. There were power outages at Kay's shop for weeks and months following the January 17, 1994, Northridge earthquake. Tr. 1684, 1688, 2344. Kay and his staff salvaged what data they could from the Xenix system, transferred it to the DOS system, and then set about the task of re-entering the lost data manually from information contained in paper files. It took Kay's staff at least two to three months to re-enter the customer data into the DOS system. Tr. 1039-1040, 1682- 1683, 2285. 64. During discovery, Kay produced copies of each customer print screen available in his system as of March 1995, totaling more than 850 pages. WTB Ex. 347. Craig Sobel was retained to modify Kay's system to make it possible to print the screens and to assist Kay's staff in responding to the Bureau's discovery requests. Tr. 1036, 1399. Prior to Craig Sobel's modifications, in order to have generated WTB Ex. No. 347, Kay's staff would have been required to bring up each screen, one at a time, hit the "print screen" button on the terminal keyboard, then walk over to the printer and hit the form feed, and repeat this process more than 800 times. Tr. 1400. This manual procedure would not have been possible, however, under the Xenix system used by Kay prior to April 1994. Tr. 1403. In a good faith effort to comply with discovery demands, Kay had Craig Sobel write a program in March 1995 that could be executed on the DOS system to run this process automatically, and that is how WTB Ex. 347 was generated. Tr. 1400-1401. 65. In November 1995 Kay supplemented his discovery responses by providing the Bureau with so-called "Loading Reports." WTB Ex. 19. WTB Ex. 19 was generated in response to Bureau Interrogatory No. 4 which requested: "With respect to each of the call signs listed in Appendix A [of the HDO], identify each and every 'end-user' (i.e., customer) and the number of mobile units of each 'end-user' (i.e., customer) since January 1, 1991." WTB Ex. 19 at p. 1. Providing information entirely responsive to this request was problematic because, as previously explained, (a) Kay neither maintained nor organized his billing records by call sign, and (b) Kay's billing system was not designed to maintain historical tracking of outdated customer configurations. 66. Kay once again enlisted the assistance of Craig Sobel to prepare the supplemental response that is set forth in WTB Ex. 19. In order to generate this report Kay used a "loading report" feature built into the billing software. Craig Sobel was not sure when this capability was added to the program and did not know whether it was available in the Xenix system that had been in use prior to April 1994. Tr. 1412, 1416. The loading report capability did exist, however, on the DOS system as of November 1995, but it only generated current customer information. Craig Sobel assisted Kay's staff in generating and printing loading reports that included, to the extent possible, historical data. Tr. 1411-1412. Mr. Sobel explained the procedure as follows: There was quite a number of customers on Mr. Kay's datafile, customer datafile that had been deleted over the years. ... We had to remove the delete flag from each of these records, store the fact that they were deleted someplace else, calculate these reports, and then redelete them when we were all done. Tr. 1412. Craig Sobel also facilitated the printing of the reports by creating a routine that allowed the reports to be calculated and printed as a batch, rather than requiring Kay's staff to generate the reports one-by-one sequentially typing in each frequency and site. Tr. 1413. 67. Even with all of these modifications to his system in an effort to respond to the Bureau's discovery request, it was still not possible for Kay to provide a complete and accurate account of historical loading. In the custom billing package designed by Craig Sobel and used by Kay, when data was changed in a particular field, the old data was gone. For example, if a customer record were modified to indicate a change from one frequency to another, or reflect an increase or decrease in the number of mobiles, the old information would be overwritten with the new information and the system would maintain no record of the change. Tr. 1433. Kay did not specifically ask that the billing system be designed in this way. It is simply the way Craig Sobel designed it, and he had seen other systems designed in this manner. Tr. 1437. Accordingly, while WTB Ex. 19 included existing and deleted accounts dating back to September 1993, it included those accounts only in their most recent configuration in the database. Any previous information was no longer reflected. Tr. 1433- 1435. 68. James P. Hanno, who testified as an expert witness, has over twenty years experience in the land mobile industry as a licensee, an equipment vendor, and as a consultant. Kay Ex. 63 at  1-4. Hanno examined Kay's billing system and opined as follows: It is not possible, using Mr. Kay's billing system, to reconstruct a "snapshot" of system loading for a particular past date. There are at least two reasons for this. First, the system is not designed primarily for system maintenance and loading, but rather for billing. Second, each time a customer record is edited (e.g., when a customer adds or decreases units, modifies service options, etc.) the old information is overwritten and thus lost. In this regard, Mr. Kay's custom system is typical of the off-the-shelf software packages designed for small SMR operators. Id. at  8. 69. In Kay's normal business practice, he did not maintain and organize his records by call sign. Tr. 987. James Hanno observed: Mr. Kay stores customer information in his billing system by frequency and repeater location rather than by call sign. In my experience, this is not uncommon in the SMR industry, particularly when there are multiple sites covered by a given call sign, multiple call signs at a particular repeater site, and sometimes even multiple calls signs for a single repeater. It is much simpler and more meaningful to the operator to keep the information by site location and frequency. Id. at  9. After Kay's staff, with Craig Sobel's assistance, had generated the November 1995, "loading report," Kay went through it and cross-referenced the repeater locations and frequencies against his paper records and manually wrote the corresponding call signs on each sheet. Tr. 986. This process required Kay to manually parse through the records for more than 150 call signs in order to comply with the Bureau's request. Tr. 987, 1160-1161. 70. In producing the November 1995 leading report, Kay expressly qualified it as follows: These reports are generated as of November 9, 1995, and represent each customer's current repeater system configuration. ... No customer who discontinued service prior to September 1993 is included, and prior usage by customers of other frequencies, addition of sites, deletion of sites, additions of frequencies, deletion of frequencies, increases in mobiles, decreases in mobiles, and changes in frequency from prior system configurations are not reflected in the attached Loading Reports. Note: records were not kept "by call sign." Information is kept by repeater customer name in current configuration only. Also, Kay's records do not reflect Kay's own shop use, nor records of other users in other shops who used radios at no charge, and these records do not include rentals, demos and loaners, because none of these records resulted in customer billing for repeater services, even though use of the repeaters did occur. WTB Ex. 19 at pp. 1-2. 71. The data in Kay's computerized billing system is stored in files known as "DBF" files, i.e., in a standard database format. Tr. 1088-1089, 1420-1422. Concerns for confidentiality of customer data aside, the idea of producing the underlying DBF files from the billing system in response to the Bureau's January 31, 1994, 308(b) Request was simply something that never occurred to Kay at the time, or even later during discovery. Kay was not intimately familiar with the internal workings of the billing system. Tr. 1088-1089. Kay had never before and has never since, produced any information to the government on magnetic media. Tr. 1044, 1095. The computer system was designed to generate customer bills, not to store and retrieve system loading data. Thus, even if Kay had been able to provide uncorrupted DBF files in January 1994, they would have been neither complete nor responsive to the 308(b) Request. The mobile loading data was maintained in the system solely for internal convenience, not as a legal record, and the data was not audited for accuracy or completeness. Tr. 1045. 72. As previously explained, the data files were generated and maintained by a billing software package custom designed for Kay. Tr. 1394-1385. Even if the Bureau had been provided with the DBF files, it would not have had the custom billing package needed to view and manipulate the files. Based on the testimony of Eric R. Johnson, a computer expert who testified at the hearing, there is reason to question the integrity and reliability of data produced by simply copying the DBF files. Although it is possible to view a DBF file generated by a custom database application in other software packages, it is not possible to insure that the integrity of the data will be maintained. This is because customer database applications are typically designed to have links whereby different data fields are interrelated and internal calculations are made. It cannot be assured that these internal links and calculations will be accurately reflected and reproduced if the DBF file is viewed with a software package other than its native application. Tr. 2046-2048. 73. The paper records produced by Kay in March 1995 (the customer maintenance screen printouts), WTB Ex. 347, and in November 1995 (the loading reports), WTB Ex. 19, contain virtually all of the same data that would have been contained in the DBF files. These productions actually were more accurate and reliable than the DBF files. Prior to producing the customer maintenance screen printouts in March 1995, Kay and his staff went through the more than 850 records, customer-by-customer, and did their best to audit the data to make sure it was accurate by matching it against the paper files and records. Tr. 1045-1046. 74. Kay generally performed the backups of the computer system. Backups of the Xenix system did not work properly, and the data was lost when the system ultimately crashed following the Northridge earthquake. Kay had backed up the Xenix system approximately every couple weeks, using a single backup tape that was overwritten each time. Kay understands that some sort of "file- allocation" table error on the Xenix server was duplicated on the backup, resulting in data loss. Tr. 1092. The last backup of the Xenix system would have occurred in January 1994. Tr. 1094. Kay later started doing backups of the DOS system in approximately July 1994. Tr. 1080-1090. On the DOS system, he performs backups approximately once a week and uses about three backup tapes which he rotates, overwriting the oldest one first. Tr. 1089-1091. Craig Sobel developed the backup routine, and Kay understood that it first erased the old files from the backup tape and then copied the current files from the server to the tape, so that the practical effect was "overwriting" the tape. Tr. 1090-1091. 75. Kay also had a practice under the old Xenix system of periodically purging deleted accounts from the billing system. Tr. 1094. Craig Sobel explained that when files are "deleted" from the system, they actually are simply marked for deletion (i.e., a delete flag is set), but are not actually purged until the database is "packed". Tr. 1428-1429. The Xenix system was last purged in approximately September 1993, and there have been no purges of the DOS system. Tr. 1094. 76. Just as it had never occurred to Kay to produce copies of the DBF files in response to Bureau requests for information, Tr. 1044, he likewise never considered producing the backup tapes in response to the 308(b) Request. Tr. 1095. When the idea was suggested to him during the hearing, however, he noted that, in addition to the fact that he had never previously provided any government agency with information in magnetic form, the backup tape cartridges would also have included a wide range of materials on his computer system (including confidential correspondence with legal counsel), and, like the DBF files themselves, would not reasonably have been responsive to the information request. Tr. 1095. Construction and Operation Issue 77. This issue may be divided into two parts: (1) whether Kay willfully or repeatedly violated rules regarding timely construction and/or permanent discontinuance of authorized facilities, and (2) whether Kay willfully or repeatedly violated rules regarding system loading. Timely Construction and/or Permanent Discontinuance 78. Kay generally constructed facilities promptly after license grant, if not before. Tr. 959. Indeed, he had a financial incentive to do so, in that the sooner he constructed and got a station operational, the sooner he could place customers on it and start generating revenue. Tr. 2366-2367. Often repeaters were pre-constructed, in which case the construction date is the date of license grant. Tr. 959. In cases where Kay converted users' existing licenses to private carrier or SMR systems licensed to Kay, the facilities were already constructed upon grant of the conversion authorization. Tr. 900-901. Similarly, facilities associated with authorizations which Kay acquired by assignment were deemed "constructed" as of the date the assignment of license application was granted. Tr. 901. Even where application was made for a new facility, Kay often pre-constructed stations, installing all the hardware, tuning the transmitter, and arranging for it to be remotely activated upon receipt of authorization. Tr. 2366. Even when not pre-constructed, new installations were typically completed within two to three months after grant. Id. 79. When Kay completed construction of a new location, he jotted down the date on a slip of paper which he would stick in a file. When the 800A letter arrived from the Commission he would then transfer the date and other pertinent information onto the 800A letter, mail it back to the Commission, keep a copy in the file, and discard the note. Tr. 958, 2367-2368. 80. Kay did not otherwise keep records specifically recording the construction completion dates of his facilities. This was due primarily to the way his systems were configured and how his business was operated. The measurements and alignment of Kay's repeaters was typically done weeks or months in advance of actual installation. Tr. 953. When equipment arrived from a vendor, it was untested, not tuned, and not assigned to a working frequency. Tr. 954. The equipment was removed from the box, aligned, tuned, power levels were set, and then set up on a test frequency. At that point it was placed on a shelf along with the other inventory and was not yet part of a particular station or call sign. Tr. 955. When a repeater was needed, one of these conditioned radios was pulled from the inventory. When a technician went to service a repeater site, he would frequently take one of the inventory repeaters with him and, if the problem was not something that could be easily repaired at the site, the malfunctioning repeater was removed, the inventory repeater was tuned to the frequency and installed, and the malfunctioning radio was returned to the shop where it could be repaired, if possible, and cycled back into the inventory. Tr. 956. As a result of this procedure, equipment was constantly being recycled, and Kay did not maintain records that associated and tracked a particular piece of equipment to a particular call sign. Tr. 956. 81. This practice regarding inventory and record keeping was reviewed by James P. Hanno, an expert witness with over twenty years experience in the land mobile industry as a licensee, an equipment vendor, and as a consultant. Kay Ex. 63 at  1-4. Mr. Hanno stated: The procedure described above is typical of most SMR operations with which I am familiar, especially those using modular, rack-mounted units. As practiced by Mr. Kay, the only records maintained in these instances are any purchase invoices, shipping statements, etc., associated with the purchase, delivery, and acceptance of the repeater, and possibly any work orders for specific installations or repairs. It is my understanding that Mr. Kay does not maintain detailed serial number records tracking all the changes and repairs made with respect to a specific licensed location, nor does he maintain logs at the repeater locations themselves. In my experience, fewer than half of all SMR operators maintain any more detailed records in this regard than does Mr. Kay. Id. at  11. 82. During the course of discovery, Kay provided the Bureau with as accurate and as complete information as possible regarding the dates on which his various facilities were constructed. In those cases where the facilities were neither pre-constructed, already constructed at grant, or there was no 800A letter, Kay did his best to determine the historical construction date by reference to other records, e.g., service invoices. Tr. 902. On or about May 11, 1995, Kay submitted his Amended Responses to Wireless Telecommunications Bureau's First Set of Interrogatories. Attachment A to that filing is a tabulation showing, inter alia, the license grant date and construction date for each Part 90 facility licensed to Kay. WTB Ex. 290. For purposes of this proceeding, the parties have stipulated that, as to each site annotated as "Not in operation" in the "Comments" column of Attachment A, that site was either not timely constructed or that operation of that facility had been permanently discontinued as of May 11, 1995. Tr. 1232. The Bureau presented no evidence that any authorized facilities other than those specifically covered by this stipulation were not timely constructed or that service on each facilities has been permanently discontinued. 83. The Wireless Telecommunications Bureau's Statement of Readiness for Hearing was filed in this proceeding on or about June 3, 1998. Paragraph 14 of that pleading provided: "The Bureau intends to present evidence that Kay did not construct stations WPEE253, WIK726, WIK896, WIK664, WIL260, WIK983, WIH339, WIL469, WIK875, WIK287, WIK374, WNJL306, and WNXW487 by the pertinent deadlines." Kay's uncontested testimony as to each of these stations is as follows:  WPEE253. Kay testified that this station was already constructed at the time the authorization was granted to him. Before it was licensed to him, Kay had been operating it as a community repeater on behalf of a customer, and it was later converted. Tr. 2363.  WIK276, WIK896, WIK664, WIL260, WIK983, WIL469, WIK875, WIK287, and WIK374. Kay testified that each of these stations was timely constructed. He specifically recalled having a lease at Sierra Peak, first at the Meridian Building and later at the TLF Building, and timely installing all repeaters that were going into Sierra Peak. Tr. 2362-2365.  WIH339. Kay recalled that this station was initially constructed at Mount Lukens at the time he acquired the authorization by assignment from a customer. Subsequently a location was added at Sierra Peak, and that modification was also timely constructed. Tr. 2365.  WNJL306. Kay specifically recalls the timely construction of this station at Santiago Peak in January or February 1988 at the Meridian Building, in that he recalls "getting a flat tire 20 miles back in the middle of nowhere." Tr. 2365-2366.  WNXW487. Kay testified that this station was timely constructed at both authorized locations, Heaps Peak and Santiago Peak, on a timely basis. System Loading 84. Kay operated stations on a commercial basis providing repeater service to end users. He established repeaters and provided communications service to end users through those repeaters. This is akin to the provision of cellular service. Tr. 864. He offered these services through Specialized Mobile Radio (SMR) stations that operated in the 800 MHz band, and through private carrier stations that operated in the 470-512 MHz band or "UHF". Tr. 1002, 1108. Kay's UHF stations were licensed in the Business Radio Service. Tr. 960-961. In both the 800 MHz and the UHF bands, Kay also operated community repeaters for customers. Tr. 971. In these circumstances the repeater authorization was held by the customer who either owned the repeater equipment or rented it from Kay. Tr. 938. 85. Prior to 1994, one of the items specified on an application for a private carrier UHF repeater license would have been the number of mobile units to be authorized. Tr. 974. During the period from October 1992 to some time in 1994, one of the items specified in an application for a conventional SMR 800 MHz repeater license was the number of mobile units to be authorized. Tr. 971, 975. Prior to October 1992, mobile units were not authorized as part of an SMR repeater license, and end users were separately licensed for the number of mobiles required by them. Tr. 975- 976. Thus, prior to October 1992, two authorizations were effectively required to legitimize 800 MHz SMR repeater operations--the repeater authorization held by the SMR operator, and the end user license held by the user. Tr. 1890-1899. Sometimes, end user applications were submitted concurrently with the repeater application as part of a package filing; at other times, the repeater application and end user applications were submitted separately at different times. It all depended on the particular configuration and circumstances. Tr. 976. 86. The October 1992 date is significant because 800 MHz end user licensing was eliminated as of that date. In August 1992 the Commission amended its rules and regulations to eliminate separate end user licensing as to 800 MHz SMR stations. Amendment of Part 90 of the Commission's Rules to Eliminate Separate Licensing of End Users of Specialized Mobile Radio Systems, Report and Order, PR Docket No. 92-79, 7 FCC Rcd 5558, 71 Rad Reg. 2d (P&F) 166 (1992). The elimination of end-user licensing became effective on October 8, 1992. 57 Fed Reg. 40850 (September 8, 1992). After October 1992 the Commission no longer accepted applications for 800 MHz SMR end user licenses. Tr. 972, 1906. 87. When Kay filed applications specifying a number of mobile units, he was generally projecting anticipated loading for as much as twelve months out, i.e., allowing approximately four months for the coordination and procession of the application plus the eight month construction and "in-operation" deadline applicable at the time. Tr. 976-977. In making these projections, Kay relied on his business judgment, his knowledge of the radio industry, his familiarity with his own business, anticipated sales, anticipated need for additional frequencies to meet customer expansion needs, communications with other radio dealers, conversations with his customers, etc. Tr. 977. He was making a "crystal ball" prediction, a forecast, a business estimate of anticipated future needs. Tr. 977- 978. 88. Kay's computer-based billing system (from which the data in WTB Exs. 19 and 347 was derived) provides neither a complete nor an accurate accounting of the loading on Kay's system. Kay considers the "loading" on a system to include his own "hard paying" customers (i.e., direct customers who pay Lucky's for repeater service); customers of other radio shops who obtain repeater service through Kay's facilities pursuant to special arrangements between those shops and Lucky's rental units which Southland charged for rental but which Lucky's did not charge for the repeater service; shop radios and "demo" units on hand for internal and other miscellaneous uses. Tr. 1069, 1087, 1116, 1128-1129. In short, the database reflects mobile units only for accounts for which a bill was generated to send to a customer. Tr. 1153-1154, and even then the billing system database would not accurately reflect many of these units, either currently or historically, for a number of reasons. 89. The database contained no information on any non-current customer who canceled service prior to approximately September 1993--the date the Xenix system was last purged. Tr. 1046, 1087-1088. For customers who are reflected in the database, only their most recent configuration is given. Changes in customer configuration (changes in repeater sites, additions or deletions of units, etc.) are not tracked. Tr. 1433. The database was designed solely and exclusively to facilitate billing, not to track loading; it does not accurately reflect loading. Kay often included access to multiple repeater sites as part of a customer's service package, but only billed the customer for one site. For example, a customer might be billed for access to repeaters at Mount Lukens and also given "free" access to repeaters at Sierra Peak, and only Mount Lukens would be reflected in the database. Tr. 1017-1018, 1048-1049. Prior to some time in either late 1993 or early 1994, the customer maintenance screen format did not accommodate a large number of repeater sites without the software causing other problems, and so the so-called "free" sites were not reflected. Tr. 1049, 1106-1107. But whether or not Kay specifically charged for access to a repeater site, if the customers had access to and, in fact, used the site, it was doing so pursuant to Kay's license and was, therefore, properly considered part of the loading on the system. Tr. 1075. 90. The table below shows, in each columns from left to right: (a) the call sign and primary location of each trunked SMR (YX) authorization currently held by Kay; (b) the number of base station repeater channels authorized under the call sign at the primary location; (c) the number of mobiles required to satisfy the 70 mobiles per channel loading criterion; and, (d) the actual number of units reflected in Kay's billing records as of November 1995. As shown, Kay's trunked SMR (YX) systems were fully loaded to well over 70 mobiles per channel. Loading on Kay's Trunked SMR (YX) Systems Call Sign / Location Channels Required Actual WNMY402 / Mount Luken 11 1260 2687 WNPJ874 / Mount Lukens 7 (combined) (combined) WNJA910 / Oat Mountain 17 1190 2028 WNSK552 / Castro Peak 3 210 785 WNJL306 / Santiago Peak 9 630 2702 WNXW327 / Heaps Peak 8 560 743 WNKV762 / Snow Peak 3 210 453 91. Kay provided repeater service to end users on a commercial basis acting as a "private carrier" with respect to UHF stations or as an "SMR" with respect to 800 MHz stations. Unlike other Part 90 licenses, commercial service providers experience a constant fluctuation in loading. Customers come and go, customers increase and decrease their mobile counts and otherwise change their configuration, with the result that loading goes up and down over any particular period of time. Tr. 1002, 1116-1117, 1130-1131. Kay kept radios in inventory to be able to respond to these constant changes and fluctuations in customers demand, as well as to be used as loaners, rentals, and demos. The record reflects that Kay maintained an inventory of user radios (both UHF and 800 MHz, both conventional and trunking) from approximately 1,000 to 1,500 units before the January 1994 earthquake and about 600 to 700 units after the earthquake and now. Tr. 2273-2274, 2494- 2495; Kay Ex. 48. 92. In addition to repeater service provided directly to users by Lucky's and/or radios sold or rented to users by Southland, Kay has arrangements with more than two dozen other dealers who use Lucky's repeaters for their own internal shop and memo use, to provide service to loaner and rental units and to provide service to their own customers. Tr. 2374-2377. These dealers, at any given time, have an average of 15 to 20 loaners, demos, and rentals active on Kay's repeater system but which would not be reflected in Kay's computer-based billing system. Tr. 2378-2379. Kay identified a substantial number of these dealers by name, specifically confirming his relationship with them currently and prior to January 1994. Tr. 2379-2382. The billing system and hence the data reproduced in WTB Ex. No. 19, reflects no loading on certain stations simply because the service area is overlapped by other stations, the specified facility is one licensed under multiple call signs and other similar idiosyncrasies. Tr. 1107-1113. It also did not reflect "talk-around" use, i.e., units that transmit direct, mobile-to-mobile, without going through the repeater itself, but which nonetheless operate under the auspices of the repeater authorization. Tr. 1078, 1082. 93. Most applications submitted by Kay did not require an examination of loading. Kay recalls only a few times when he was actually required to demonstrate loading on his own system. Tr. 1221. Kay explained that he had found legitimate ways to avoid the exercise because it was such a complicated task. It required looking at the entire loading situation on the channel by all licensees. If a channel were already loaded to more than the specified level by other co-channel licensees, the loading on the application that he was proposing did not matter. When Kay did have to look at the loading on his own system, he relied on the totality of his business records (computer system, paper records, etc. plus what he knew off the top of his head. Tr. 1221-1226. Another method used by Kay was to "package" repeater applications with the end user applications in such a manner that the question of loading on existing systems of the applicant would be irrelevant because an application "would be granted into a fully loaded environment," Tr. 976, 2342-23243. Indeed, the record contains an example of such a "package" application that was presented by Kay and granted by the Commission. WTB Ex. 311; Tr. 2347-2349. Multiple Applications Issue (1) Roy Jensen 94. Roy Jensen was employed by Southland from the Spring of 1990 to May 1992. Tr. 1463. He became general manager shortly after joining Southland. Tr. 1464. Neither Jensen nor the Southland employees he supervised had any direct duties with regard to Lucky's. Tr. 1465. Jensen and Kay had late dinners together several times a week during which they would, in Jensen's words, "discuss business in general." Tr. 1493. 95. Jensen's "best recollection" is that Kay asked Jensen to sign an application for a land mobile license. Tr. 1484. He believes that WTB Ex. 306 is a copy of that application. Tr. 1486. It is an application for an 800 MHz end user license, FCC File No. 9008511576, seeking authority to operate 37 mobiles. WTB Ex. 306 at p. 1. The applicant is designated as Roy Jensen dba Consolidated Financial Holdings. Id. The application was granted by the Commission, and an end user license (Call Sign WNUG662) was issued, which Jensen received in the mail. WTB Ex. 307; Tr. 1488. 96. Jensen testified that Consolidated Financial Holdings is a business name that he registered some time ago in order to pursue business activities unrelated to his employment at Southland. He does not recall when he took out the name, but it could have been during his first year at Southland, i.e., 1990. He does not recall the nature of the anticipated business project and he states that he never pursued it. Tr. 1478-1479. Jensen denies that Consolidated Financial Holdings ever operated any radios (repeaters or mobiles), Tr. 1485, and he denies that he ever told Kay he wanted to operate 37 mobiles, Tr. 1488. Jensen does acknowledge having done off-hours surveillance work, together with Southland employee Kevin Hessman, providing mobile radio communications support for the Los Angeles Police Department. Tr. 1521-1523. 97. Kay testified that he assisted Jensen in obtaining the user license so that Jensen could use shop radios outside of his employment with Southland to pursue his own business interests. Kay recalled that Jensen "was always involved in one type of would-be entrepreneurship or another.... He always wanted to have his hand in business in some fashion." Tr. 2520. When Jensen expressed admiration and interest in Kay's SMR activities. Kay explained that Jensen could do that as well, and he assisted Jensen in obtaining the end user license and provided Jensen with free use of shop radios to pursue Jensen's outside business activities. Tr. 2520-2521. There was no written agreement between Jensen and Kay. Tr. 1485, 2521. 98. When asked about the termination of his employment with Southland, Jensen testified that he had been "laid off" in May 1992. Tr. 1507. This was a repeat of a false statement that Jensen had previously made to another government agency. See Kay Ex. No. 1. In a ruling, dated October 7, 1992, Administrative Law Judge Polly Thomas of the Inglewood Office of Appeals of the California Unemployment Insurance Appeals Board, in Case No. ING-63549, concluded that Jensen's "testimony, that he believed after leaving his final meeting with [Kay] that he had been laid off, was not found to be credible." Kay Ex. No. 1 at p. 4. She further found that "when [Jensen] wrote on his application for [unemployment] benefits... that he had been laid off, he knowingly made up false statement to the Department." Id. (emphasis added). "Apparently believing that the real reasons for his being out of work would disqualify him for unemployment benefits, [Jensen] attempted to hide the complete circumstances of his discharge from the Department." Id at pp. 4-5 (emphasis added). (2) Kevin Hessman 99. Kevin Hessman was employed by Southland from May 1990 to October 1993. Tr. 1796- 1797. He obtained the job through his friendship with Roy Jensen. Tr. 1796. He did not have any duties relating to Lucky's. Tr. 1797. He was a stock room clerk; he did shipping and receiving and was an "all around go-fer." Tr. 1797, 1292-1293. 100. Kevin Hessman claims that approximately six months after he began working for Southland, he was approached by Kay and Jensen and asked to sign some FCC application forms. Jensen allegedly told him it was to "to help Jim with the business, and everyone else did it." Tr. 1798. He does not recall Kay saying anything in this meeting; he said Jensen did most of the talking. Tr. 1798-1799. 101. WTB Ex. 208 is an 800 MHz end user license (Call Sign WNXV559) issued on July 1, 1992, in the name of Kevin Hessman dba Hessman Security, and authorizing the operation of 73 mobile units on SMRS Station WNYR747. Hessman recalls receiving this license in the mail at his mother's house where he was residing at the time. Tr. 1798. WTB Ex. 309 is an 800 MHZ end user license (Call Sign WNNE920) issued on April 29, 1992, in the name of Kevin Hessman dba Hessman Security, and authorizing the operation of 24 mobile units on SMRS Station WNXS450. Hessman also received this license in the mail. Tr. 1800-1801. 102. Hessman claims that "Hessman Security" did not exist and never operated any mobiles, yet he admits that he was "not surprised" when the licenses arrived in the mail in the name of Hessman Security. Indeed, upon reflection he recalled some sort of discussion about that and just spitballing names of what to call it. I think Hessman Security was what Roy and Jim and me just agreed on.... It was no big surprise when I got the licenses in that name." Tr. 1797, 1808, 1813- 1814. When the licenses arrived, he took no steps to have the Commission correct the fact that they were issued in an allegedly nonexistent business name, Tr. 1809-1809, 1814. When the licenses arrived in the mail, Hessman says he asked Kay if Kay wanted them, and Kay said that he did not need them. Tr. 1802. 103. Hessman admits that he occasionally did off-hours "public safety" work using Southland rental radios. Tr. 1803. He also did off-hours volunteer work providing support communications to the Los Angeles Police Department. He recalls that this would involve approximately 40 people, two to a car, assisting with such things as drunk driving patrols. Tr. 1804-1805. 104. Kay recalls that at some point in approximately 1992, Hessman and/or Jensen approached Kay to ask if they could make use of company radios in connection with some sort of off- hours security operations. Kay agreed. They required a couple of channels to adequately cover the Los Angeles area, so Kay selected a couple of 800 MHz channels, prepared the appropriate applications for end user licenses, and had them signed by Kevin Hessman. Tr. 1295-1296. Kay's best recollection at the time is that he believed based on what he was told that the proposed activities involved some sort of after-hours contract security work, and he thinks that he therefore wrote it up as a business use when he prepared the end user applications. The Bureau was unable to produce copies of the actual applications, however, to refresh Kay's recollection. Tr. 1296-1297. Kay did not know the details of what Hessman and Jensen were doing in this regard at the time, because he was not "in the loop." Tr. 1296. He learned only in the course of this proceeding that they apparently were doing volunteer work for the Los Angeles Police Department. Tr. 1295, 1297. Southland employees recall that Hessman and Jensen were involved together in some sort of after-hours security activity while in Kay's employ. Tr. 2293, 2297-2299, 2315-2316, and Kay also knew that Roy Jensen had been involved with security companies before coming to work for Southland. Tr. 2520. 105. Kay's understanding of the FCC regulations was that, prior to the elimination of end user licensing in October 1992, employees who wanted to use Kay's repeater system in connection with activities outside the scope of their employment with Kay would have to be separately licensed for such use. In addition to FCC licensing considerations, if an employee were going to use Kay's radio system in pursuit of an outside business activity, e.g., contract security work, Kay believed they should be separately licensed as a separate business activity in consideration of potential liability problems. Tr. 1298. 106. Kay Ex. No. 7 is the ruling, dated January 21, 1994, by Administrative Law Judge J. S. Berger of the Inglewood Office of Appeals of the California Unemployment Insurance Appeals Board, in Case No. ING-30425. When Hessman applied for unemployment benefits after being discharged from Southland employment he alleged that he had been laid off due to lack of work, that Southland was down-sizing, and that his services were no longer needed. Kay Ex. No. 7 at p. 2. In point of fact, however, he had been discharged for cause, in other words, fired. Id.; Tr. 12193- 1294. Judge Berger thus found that Hessman "willfully and knowingly made false statements to obtain benefits." Kay Ex. 7 at p. 3. (3) Vincent Cordaro 107. Vincent Cordaro worked for Southland from 1991 to May 1995. Tr. 1818, 1867. He briefly held the position of service manager, and then became general manager when Roy Jensen was terminated. Tr. 1818. He had no duties with respect to Lucky's. Tr. 1820. Prior to coming to work for Southland, Cordaro had been the owner of Mobile Service Station (MRSS), a two-way mobile radio business that was purchased by Kay. Tr. 1818. Cordaro held an SMR end user license in connection with his business activities at MRSS. Tr. 1885. His duties with MRSS also included assisting customers in obtaining necessary FCC licenses. Tr. 1889. Kay had prepared FCC applications for Cordaro when Cordaro owned MRSS. Tr. 1275. MRSS provided radio equipment and service to its customers. It did not directly provide repeater service, but Cordaro made arrangements for MRSS customers to receive repeater service through other licensees, including Lucky's. Tr. 1818. 108. Rasnow Peak SMR (Management Agreement). WTB Ex. 322 is a Radio System Management and Marketing Agreement dated November 11, 1994, between Cordaro and Kay. WTB Ex. 323 is a copy of the same agreement as re-executed by the parties on December 30, 1994, to give effect to an option provision contained in the agreement. Tr. 1273-1274. The written agreement provides that Kay will manage Station WNXR890, and at the SMR repeater that was located at Rasnow Peak, less than two miles from Cordaro's residence at the time. Tr. 1926. The station was managed in largely the same manner as stations Kay managed for Marc Sobel and Jerry Gales, except that Kay recalls that Cordaro made more direct personal use of his station. Tr. 1280. At the time the Rasnow Peak repeater was originally applied for, the channel in question was already loaded to 61 units by other licensees. This means that had Kay desired to apply for the license in his own name he could have easily done so--if his base station license had been accompanied by a proposal to serve a minimum of nine end user units, the application would have been acceptable without regard to loading (or lack thereof) on any other stations licensed to Kay. Tr. 2479-2483. 109. Prior to execution of the written agreement, there was an oral understanding between Kay and Cordaro regarding Cordaro's Rasnow Peak SMR. Tr. 1274. The understanding was that Kay would supply the equipment and would market the station to the extent he could. Cordaro would have free use of mobiles on the station. Kay was to receive the first $500 or $600 (he does not remember the precise amount) of any revenues generated from his marketing of services on the station. Tr. 1276-1277. 110. Cordaro and Kay entered into an oral arrangement whereby Cordaro would obtain a license for an SMR facility located at Rasnow Peak, which was less than two miles from Cordaro's residence at the time. Tr. 1926. 111. Rasnow Peak SMR (Assignment Application). WTB Ex. 321 is an application for Commission consent to the assignment of the license for SMRS Station WNXR890 from Cordaro to Kay. The assignor's portion of the application (an FCC Form 1046) bears the signature of Vince Cordaro and is dated 11/21/92. WTB Ex. 321 at p. 3. It is accompanied by a notary form executed by Barbara Ashauer indicating that Vince Cordaro appeared personally before her on November 21, 1992, and executed a one page document entitled Assignment of Authorization (the same title appearing on the FCC Form 1046). Id. at p. 4. The assignor's portion of the application (FCC Form 574) bears the signature of James A. Kay, Jr. dated 4/24/94. Id. at p. 1. Kay explained that, although the Form 1046 had been executed by Cordaro in November 1992, Kay did not file the assignment application until sometime after April 24, 1994, because if "basically got lost in the shuffle." Tr. 1290. Kay does not specifically recall advising Cordaro in April 1994 that he was filing the assignment application, but he is sure he would have done so. Tr. 1290-1291. 112. Cordaro understands that by executing an FCC Form 1046 he is assigning his rights in a Part 90 radio license to another entity. Tr. 1850. He acknowledges that his signature is on the FCC Form 1046 with respect to SMRS Station WNXR890 (WTB Ex. 321 at p. 3), but he claims the form was not completed (i.e., was blank) when he executed it. Tr. 1850-1851. Cordaro claims that on one or more occasions Kay presented him with blank FCC application forms and asked Cordaro to sign them. Tr. 1851-1853. He claims to have been unaware of the assignment application until after he left Southland and it was called to his attention by Barney Peterson, another Los Angeles area SMR operator. Tr. 1854-1855. On or about April 18, 1995, the Wireless Bureau in Gettysburg, Pennsylvania received a letter, dated April 14, 1995, addressed to Terry Fishel from Cordaro which stated as follows: This letter is to serve as formal notification that I do not consent to the assignment of station license WNXR890 to James A. Kay, Jr. or anyone else. Although the referenced filing may include an assignment of authorization signed by me, it was filed under false pretenses. WTB Ex. 325. Cordaro's signature is on the letter, Tr. 1855, but Cordaro does not recall writing or sending the letter. Tr. 1856. 113. Barbara Ashauer, who notarized Cordaro's signature on the FCC Form 1046 testified that she would not have notarized Cordaro's signature on a blank FCC Form 1046 because the applicable California notary rules prohibit notarizing a signature on any form that is not complete. If there are blanks that are not to be filled in for some legitimate reason, that is to be indicated by putting a line through it, filling in "N/A" to indicate "not applicable ," or some similar indication. Tr. 1988-1999. She has never executed a notarization such as this one when information on the accompanying form was left blank. Tr. 1999. 114. Cordaro did not renew the authorization for the Rasnow Peak SMR facility, and the license for Station WNXR890 expired and was purged from the Commission's database. Thus, neither the license nor the management agreement is any longer effective. Tr. 1279, 1947. 115. End User Licenses. WTB Ex. 316 is an 800 MHz end user license (Call Sign WPBB695) issued on November 16, 1993, in the name of Vince Cordaro dba VSC Enterprises, and authorizing the operation of 64 mobiles units on SMRS Station WNXR890. Kay believes he more than likely assisted in the preparation of the application for this license on behalf of Cordaro, but he could not state for certain without reviewing the application itself which was not made available by the Bureau. Tr. 1282. Kay recognized it as an end user authorization that allowed Cordaro to operate up to 64 units and/or share use with other users on an SMR base station also licensed to Cordaro. Tr. 1282-1283. Kay recalls that the channel was already fully loaded in this area at the time. Kay does not recall how the number of 64 mobile units was arrived at, but the number was largely irrelevant insofar as Kay recalls this channel was already fully loaded by other co-channel users at the time, and no applications for new facilities could be filed regardless of whether Cordaro was licensed for 1 unit or 500 units. Tr. 1283-1284. 116. Santiago Peak SMR. WTB Ex. 317 is an SMR repeater license (Call Sign WNPY680), issued September 30, 1992, in the name of Vincent S. Cordaro dba VSC Enterprises, authorizing a facilities on 851.4125 MHz at Santiago Peak, Corona (Orange) California. WTB Ex. 318 is an SMR repeater license (Call Sign WNPY680), issued May 11, 1993, in the name of Vincent S. Cordaro dba VSC Enterprises, authorizing a facility on 851.4125 MHZ at Santiago Peak, Corona (Orange) California, and up to 72 associated mobile units. WTB Ex. 317 was issued when end user licensing was still in effect and thus does not reflect any mobiles; mobiles would be separately licensed to the users on one or more end user licenses. WTB Ex. 318 was issued after October 1992, and therefore reflects authority to operate associated mobiles in addition to the repeater itself. It was not uncommon for SMR licensees to modify their base station licenses to include authority for mobile units after the elimination of end user licensing. Tr. 1286. The license address on both versions of the Santiago Peak SMR authorization (WTB Exs. 316 and 317) was Cordaro's home address at the time. Tr. 1829. Kay believes that this authorization was later assigned from Cordaro to Marc Sobel sometime after May 1993. Tr. 1286-1287. 117. The "Vince Licenses" Note. WTB Ex. 319 is a handwritten list of information labeled "Vince Licenses". Cordaro requested this list from Kay in late 1992 after Cordaro had received a protest with respect to one of his facilities from Jim Doering, another SMR operator in the Los Angeles area. At Cordaro's request, Kay jotted down a list of pending applications and licenses issued in Cordaro's name. Tr. 1287-1288. The list indicates that Cordaro at the time (1) held an SMRS base station authorization for 852.4875 MHz at Rasnow Peak; (2) had a pending (recently mailed) application for an associated end user license; (3) had a pending application for a new SMRS base station on 851.4125 MHz at Santiago Peak; and (4) had a pending application for an end user license to use Kay's Santiago Peak SMR Station WNXS753 (and indicates that this is on the same frequency as Doering's SMR). WTB Ex. 19. The document also contains the notation: "Attorney - Curt Brown, Brown and Schwaninger, Atty at Law". Id. Kay added this information to the list because Cordaro asked who Kay used as an attorney. Tr. 1287-1288. 118. Cordaro admitted that he had in fact asked for the listing set forth in WTB Ex. 319. He initially insisted that he had done so in late 1994 in connection with entering into the written management agreement with Kay (WTB Exs. 322 & 323), Tr. 1825-1826, 1889-1890, but on cross- examination, when confronted with the dates of various authorizations and applications that are referenced in the handwritten list he equivocated. Tr. 1293-1295. WTB Ex. 319 contains two references to pending SMR end user applications, and such applications were no longer accepted by the FCC after October 1992. It also makes reference to a pending application for a "new" SMR base station at Santiago Peak on 851.4125 MHz, an application which was granted (and hence no longer pending) in 1992, as indicated by the September 30, 1992, license issue date on the authorization for call sign WNPY680 (WTB Ex. 317). Tr. 1293-1295. 119. Cordaro's Independent Business Activities. Cordaro has been an entrepreneur, owning and operating MRSS, long before he came to work for Southland. Tr. 1269. It was fully understood between Cordaro and Kay that Cordaro would be free to pursue outside business interests and activities while he was employed by Southland, "as long as he wasn't banging on competition with [Kay] where he would adversely affect [Kay's] business." Id. Kay knew that Cordaro had a company called VSC Enterprises that was involved in a number of different activities, though he was not aware of all the details; and he also know that Cordaro together with a friend name Rudy Catania were in some sort of radio communications activities such as installing cable television systems, master antenna systems, etc. Id. Kay also knew that Cordaro had an office in his home. Tr. 1269-1270. 120. Shortly after Cordaro sold MRSS and went to work for Southland, he found himself shifting from being a business proprietor to an employee, and he found that it changed his entire tax structure. In conversations with Kay it was discussed that he could enjoy certain tax advantages by maintaining a business enterprise in his own name, and one way to do this would be for him to own and operate an SMR station. Tr. 1275-1276. It was as a result of this conversation that Kay assisted Cordaro in obtaining the Rasnow Peak SMR license and entered into a management agreement with Cordaro for the station. Id. 121. VSC Enterprises is a consulting business started by Cordaro before Kay purchased MRSS. It is still in existence today. Tr. 1837. During the hearing Cordaro denied that VSC used radios or ever told Kay that VSC had a need for radios. Tr. 1837-1838. In 1992 Jim Doering, another SMR operator in the Los Angeles area had filed a protest against an SMR end user application filed by Vincent S. Cordaro d/b/a VSC Enterprises, arguing that Kay was the real party in interest behind the application. A responsive letter dated September 4, 1992, was filed jointly on behalf of Cordaro and Kay by Brown and Schwaninger. WTB Ex. 351. The letter response stated: Separate and apart from his work for Kay ..., Cordaro also operates a radio communications consulting company. ... Prior to undertaking employment from Kay, Cordaro operated an independent business. Part of the understanding under which Cordaro is employed by Kay is that Cordaro is free to engage in any line of business which is not in conflict with his work for Kay. ... If Cordaro is granted the license which he requests, he will operate the units which he requests as an individual and in pursuit of his independent business activities. Accordingly, Cordaro, and not Kay, is the real party in interest in Cordaro's application. WTB Ex. 351 at p. 2. 122. Attached to the September 4, 1992, letter was an affidavit, executed by Cordaro on September 4, 1992, in which he "declare[d] under penalty of perjury under the laws of the United States that the foregoing document is true and correct." Id. at p. 5. Cordaro admits that it is his signature on the affidavit. Tr. 1841. He says he does not remember whether he saw the September 4 letter before he signed the affidavit, Tr. 1841, but the record indicates that an undated draft of the letter, along with a draft of the affidavit, that had been faxed by Brown and Schwaninger on September 3, 1992, was in Cordaro's possession. WTB Ex. 314; Tr. 1908-1920. It is not Cordaro's practice to sign official documents without reading them. Cordaro acknowledged that the September 4, 1992, affidavit he signed is only one sentence long, that it very clearly made reference to another document, and that he therefore knew when he read and signed it that another accompanying document was involved. Tr. 1920. (3) Jerry Gales 123. Kay has known Jerry Gales since the 1980's. Tr. 1240. Gales was an SMR operator in the Los Angeles area long before Kay knew him. He operated a trunked system at Oat Mountain and another conventional channel that Kay later purchased from him. Tr. 1243. Gales had health problems which prevented him from doing many of the physical things associated with maintaining an SMR, e.g., going up to the mountain tops, etc., so he made an arrangement with Kay so that Kay's people could handle those matters. Tr. 1243. WTB Ex. 326 is a written management agreement, dated November 2, 1994, between Gales and Kay, with respect to Station WPFF295. Gales and Kay had an oral arrangement regarding this station prior to November 1994, and it would probably have been entered into about the time Gales first obtained the license for this station. Tr. 1240-1241. Under this arrangement, Kay would provide the equipment, construction, and maintenance of the station, and would market services on the station. Tr. 1245. Gales did not participate in the physical construction and maintenance of the station due to his health condition, but he knew personally the persons who would have done it, i.e., either Kay or Marc Sobel. Tr. 1242, 1245-1246. In partial compensation under this arrangement, Kay provided Gales with free office space at his Van Nuys facility so that Gales could continue to pursue his land mobile sales and marketing activities. Gales operated out of the free office provided to him by Kay from mid-1990 until approximately 1996. Tr. 1244. 124. The station was managed in largely the same manner as the stations Kay managed for Marc Sobel and Vince Cordaro. Tr. 1280. Kay understood that the written agreement was a standard boilerplate agreement used by Brown and Schwaninger. Tr. 1246. It was "[o]ne hundred percent prepared by [Brown and Schwaninger]. They apparently used it for all their clients." Tr. 1247. Kay later learned that after the Commission had designated Marc Sobel for a license revocation hearing based on this agreement, Brown and Schwaninger did "the equivalent of an automotive recall of all these agreements and re-wrote them and even notified all their clients if they had one of these contracts it needed to be rewrote." Tr. 1247. (5) Carla Marie Pfeifer 125. Kay and Carla Pfeifer first became acquainted in the mid-to-late 1970's. Tr. 1538. At that time Kay operated a shop dealing with citizen's band and side band radios, and Ms. Pfeifer's first husband, who was getting involved in CB, met Kay through a friend. Kay, Pfeifer, and Pfeifer's first husband became social friends. Tr. 1539. Kay and Pfeifer were in the same bowling league, and they gathered together at friends' homes for holiday dinners, birthdays, or just to visit. Tr. 1575. This was a long term relationship. Id. Pfeifer was never employed by Kay, but, on and off during the time from the early 1980's to the early 1990's she did occasionally visit his shop on Saturdays and would pitch in and help with customers if Kay's staff was too busy. Tr. 1539-1540. This was something that happened very sporadically, that she did simply out of friendship with Kay, and for which she did not get paid. Tr. 1574-1575. 126. WTB Ex. 305 is an SMR repeater license (Call Sign WNHD783), issued January 23, 1990, to Carla Pfeifer, authorizing a facilities on 851.3625 and 854.3875 MHz at Castro Peak, Malibu (Los Angeles) California. Kay assisted Pfeifer in obtaining this license pursuant to an arrangement whereby Kay was to construct the station and market service and when it was filled with users Pfeifer would share in the service revenues. Tr. 1541-1542. Pfeifer saw this as a business opportunity for herself as well as for Kay--she viewed it as a venture which, if successful, would make money for her as well as for Kay. Tr. 1575. Pfeifer explained that one of the reasons for this particular arrangement was that Kay was in a better position financially and professionally to finance and implement the station. Tr. 1576. 127. At the time Pfeifer's conventional SMR authorization for Castro Peak (WTB Ex. 305) was issued, Kay would have been eligible to have held an authorization for the same facilities. Without regard to loading on any existing facilities he may have held at the time, he could have nonetheless applied for the same facilities specified in WTB Ex. 305 as a conventional SMR along with a packaged end user application, or he could have applied for the same facilities as a community repeater operator in the business radio service. Tr. 2432-2433. A "package" filing is one in which the SMR base station license application and one or more end users license applications are filed simultaneously, such that the number of end users being authorized is sufficient to fully load the channel. In this situation, any loading or lack thereof on existing facilities held by the base station applicant is irrelevant because the new base station "would be granted into a fully loaded environment." Tr. 2343. This was a method frequently used by Kay, Tr. 976, and the record reflects at least one example of such an application that was in fact granted by the Commission. WTB Ex. 311; Tr. 2437-2439. 128. A number of documents were entered into evidence purporting to bear the signature of Pfeifer, but as to which she questioned whether the signatures were in fact hers. Pfeifer testified: "I have discovered over some time that there have been some papers that have been submitted to FCC that I feel are not my signature." Tr. 1554. She offered no independent basis for this belief, however, other than her subjective determination that some of the signatures do not look to her like her own. Thus, while signature on a letter to the FCC dated August 31, 1987 (WTB Ex. 299), "appears to be my signature...I cannot guarantee it is my signature." Tr. 1554. Similarly, she questions the signature at item 11 of a NABER frequency coordination form (WTB Ex. 303): "It appears to be my signature , but I do not believe it is my signature.... It does not look like my writing." Tr. 1557-1558. When pressed as to what in particular caused her to question the signature, she simply said it was "[t]he whole signature." Tr. 1558. Assuming it is not her signature, she does not know who wrote it. Tr. 1559. Pfeifer further stated that she does not believe it is her signature on a letter to the FCC dated August 4, 1987 (WTB Ex. 304): "The signature on this particular document in no way looks like my signature." Tr. 1559-1560. 129. A number of other documents bear signatures that appear no more or less dissimilar than those discussed above, but which Pfeifer admitted were signed by her. These include: (a) a check dated August 28, 1996 (WTB Ex. 296) Tr. 1546, 1578; (b) a NABER frequency coordination form, at item 11 (WTB Ex. 295) Tr. 1548; (c) a check dated August 28, 1987 (WTB Ex. 302) Tr. 1556; (d) a letter to the FCC dated August 19, 1988 (WTB Ex. 297) Tr. 1557; (e) a letter to the FCC dated August 3, 1987 (WTB Ex. 298) Tr. 1557-1558; and (f) an invoice (WTB Ex 301) Tr. 1578. The Bureau did not produce the original documents in question, nor did it present any forensic evidence that the signatures were in fact not those of Pfeifer, much less who (if not Pfeifer) wrote the signatures. 130. Kay expressly denied signing Pfeifer's name to virtually any document in the record purporting to bear her signature, Tr. 2342, 2345-2347, including specifically the documents as to which Pfeifer specifically questioned the genuineness of her signature. Tr. 2435 (WTB Ex. 299), Tr. 2436-2437 (WTB Ex. 303), and Tr 24237 (WTB Ex. 304). When Kay prepared applications or other FCC-related documents on behalf of Pfeifer, he made copies of them and gave them to her. Tr. 2346. The Bureau did not produce the originals of the documents bearing Pfeifer's signature, and it further appears that the copies in the record did not come from the Bureau's files. None of the documents bears an FCC date receipt stamp, and most of the documents discussed above are labeled across the top with the words "Carla Attachment" and a number. The Bureau does not know whether these are copies of documents from the FCC files or copies of documents which Ms. Pfeifer herself provided to Bureau investigators. Tr. 2334. (6) Oat Trunking Group, Inc. 131. Oat Trunking Group, Inc. (OTG) is a corporation of which Kay is the President and sole shareholder. Tr. 862-863. OTG has never had any payrolled employees. Tr. 863, 1267. WTB Ex. 312 is an application in the name of OTG for a community repeater base station together with 29 mobile units. Kay explained the purpose of the application as follows: I was going to use it to hold a license for a community repeater and have my corporation share use of that station with other users in accordance with the sharing rules of the FCC, so that's perfectly permissible. I can also have Buddy Corporation employees use the station. Sister corporations with the same management can share stations with each other. There was nothing extraordinary or abnormal about it, sir. Tr. 1267-1268. 132. The application is signed by Vincent Cordaro who was at that time an officer of OTG. Tr. 863. Asked why Cordaro, rather than Kay, had signed the application, Kay explained: I don't recall the precise reasons. If I were to make a best estimate, it's because at that time I was trying to get Mr. Cordaro more involved in the operations of my company to possibly even become an owner in my company. This was dated I think that's 6-8-92. That would be just after he became the general manager of my company, and he wanted to be more involved and possibly become an owner of the company. Since that didn't work out for him is I think one of the reasons he ultimately left my employ. He wanted more than just to be an employee. Tr. 1268-1269. Kay's association with OTG was never concealed from the Commission. He is listed as the application preparer on the FCC Form 574 in WTB Ex. 312. Another application filed in the name of OTG at approximately the same time sought to convert an existing conventional station to a community repeater. WTB Ex. 311. That application was also signed by Cordaro and also lists Kay as the preparer. Id. at p. 2, item 37. It also conspicuously identifies Kay as the licensee of an associated SMR facility. Id. p 2, item 38. The transmittal letter covering the application, moreover, is signed by Kay and very clearly explains Kay's involvement in the proposal. Id. at p. 1. Interference Issue 133. In May 1992, Paul Oei, an electronics engineer employed in the Commission's Los Angeles field office, Tr. 1345, 1360-1361, accompanied another FCC employee, Mr. Ben Nakamiyo, on an investigation of an interference complaint against Kay. Tr. 1352-1353. Nakamiyo, not Oei, was the FCC official responsible for the investigation, and Oei was along on the trip as part of his training. Tr 1361-1362. Jim Doering, another Los Angeles SMR operator and a competitor of Kay, had complained that Kay was rebroadcasting one or more signals from one frequency onto another from his Van Nuys office location. Tr. 1353. Doering complained that these retransmissions were causing interference to a facility licensed to him on the frequency 854.4875 at Santiago Peak. Tr. 1370. 134. Nakamiyo and Oei visited Kay's office location at Van Nuys and asked to inspect a control station there. Tr. 1353. Oei testified that a control station normally has a microphone attached to it, but that in this case the control station has a wire or cable connected where the microphone normally would have been. Tr. 1354. Oei testified that Nakamiyo's notes indicated that Kay removed the cable and replaced it with a microphone during the inspection, although Oei himself does not recall observing this. Tr. 1363. Either Nakamiyo or Oei took power measurements from the control station, and Oei took down notes. Tr. 1363. 135. The repeater channel in question that was the subject of the interference complaint was the frequency pair 809.4875 MHz and 854.4875 MHz. The frequency 809.4875 MHz is known as the "input," i.e., the frequency on which mobiles and control stations transmit into the repeater and on which the repeater receives their transmissions. The frequency 854.4875 MHz is known as the "output," i.e., the frequency on which the repeater re-transmits the signal it receives and the frequency on which mobiles and control stations receive the repeater transmissions. Oei and Nakamiyo monitored the allegedly interfering signal simultaneously on the input and output frequencies, and used direction finding techniques to determine that the transmissions on the input frequency were emanating from Kay's Van Nuys office location. Tr. 1365. Oei does not recall whether they made any attempt to determine the source of the transmissions on the output frequency, i.e., which repeater the transmissions were being sent through, Tr. 1365, 1380, and there is no indication in the record that any such determination was ever attempted. 136. During the May 1992 inspection, Kay produced a license, issued to Buddy Corp., that authorized a control station at the Van Nuys location for the purpose of controlling SMR Stations WNMY402 and WNJA910. Tr. 1367-1368. This license authorized transmissions from the fixed location at Kay's office on the input frequency of repeater channels authorized on those two call signs. Tr. 1368-1369. Station WNJA910 is authorized for the base station frequency 854.4875 MHz at Oat Mountain and was so authorized at the time of the May 1992 inspection. Tr. 1369. This is a trunked station, authorized as a "YX," and therefore has exclusive use within a 70 mile radius. Tr. 1381-1382. 137. The Oat Mountain site is less than ten miles from Kay's Van Nuys office location. Tr. 1365-1366. The Santiago site is more than 70 miles away from Oat Mountain. Tr. 1383. Oei admitted that the Buddy Corp. control station license authorized Kay to control the WNJA910 repeater (i.e., make transmissions on the repeater input frequency) from the Van Nuys location without prior moinitoring because the repeater was licensed as a "YX" with exclusive use and the Van Nuys control station was within a 20 miles radius of the Oat Mountain repeater site. Tr. 1381-1382. He felt, however, that Kay's "link" configuration (in which Kay was apparently receiving transmission on the output of Station WNMY402 and retransmitting them on the input of WNJA910) was improper because he was using the link as a repeater rather than as a control station. Tr. 1381. Oei could not, however, cite a specific rule that prohibits the described configuration. Tr. 1383. 138. Kay gave testimony fully describing and explaining the station that was inspected in May 1992. It consists of four devices: a power supply, two EF Johnson 800 MHz trunked radios (Model No. 8615), and a Rayfield Easy-Link unit that connects the two radios together. Tr. 2484-2485. Kay operated the two EF Johnson radios pursuant to the Buddy Corp. control station license which authorized him to control Stations WNMY402 (Mount Lukens) and WNJA910 (Oat Mountain) from his Van Nuys office location. Both locations are less than twenty miles from Kay's Van Nuys office. Tr. 2486. The configuration takes output from the Oat Mountain repeater and retransmits it through the Mount Lukens repeater, and vice versa. Tr. 2487-2488. 139. The back-to-back linking of two radios in the configuration used by Kay is accomplished with standard, readily available equipment and in full accordance with manufacturer intentions and recommendations. Tr. 2489; Kay Exs. 44 & 45. The purpose of this is to extend the coverage or "footprint" of each repeater, thereby improving service to the end users. Tr. 2485-2488. Thus, for example, a mobile unit located in Hollywood that can not access the Oat Mountain repeater but can access the Mount Lukens repeater will, by virtue of this configuration, be able to communicate through both repeaters and thus enjoy a much larger service area. Tr. 2488. James P. Hanno, who has over twenty years experience in the land mobile industry as a licensee, an equipment vendor, and as a consultant, testified as follows: I have also been asked to comment on the use in the land mobile industry of devices which allow the linking of remote repeater sites. I am familiar with such devices. Essentially, the device receives the output frequency of a channel on one repeater and relays it on the input frequency of a different channel on a repeater at a different location. The device may be co- located with one of the repeater sites, or it may be located at an intermediate point between the two repeaters. This is a common practice in the industry. Its purpose is to extend the communications range of the customer. Without the link, the customer can only communicate to points within the footprint of the specific repeater he is operating on. With the link, his coverage area includes the footprint of the repeater he is operating on plus the footprint of the linked repeater. Several equipment vendors offer off- the-shelf devices designed expressly for this purpose. Kay Ex. 63 at  12. 140. Kay understands that he is obligated to avoid interference by coordinating his usage of a non-exclusive channel with other properly licensed co-channel users within a 70 mile radius. Tr. 970. Where he has exclusive use of channel, such as in the case of a licensed "YX" trunked system, however, and operates within the scope of his authorization, he does not believe he is responsible for possible interference to stations located beyond the 70 mile separation. Tr. 2490-2491. Indeed, Mr. Kay testified that Paul Oei had used the term "legal interference" to describe the situation in which two co-channel stations, both properly licensed and separated by one another by the prescribed distance, and both operating within the scope of their authorizations, may nonetheless sometimes interfere with one another. Tr. 2491. For example, Kay's Los Angeles repeater operations often experience "legal interference" from stations operating in San Diego. Id. Kay explained that this is simply an unavoidable consequence of the fact that "the radio signals unfortunately don't politely end at the end of your authorized service area, and oftentimes do play with the other guy's operations." Id. 141. Roy Jensen testified that "[t]here were a couple of circumstances that [Kay] explained to me where he claimed to have" interfered with other operators. Tr. 1467. Jensen did not observe this and could give no specific instances of his personal knowledge. Jensen acknowledged that Kay's descriptions of interference situations, schemes, and techniques were "explained to me just because of necessity, understanding customer problems." Tr. 1466. Jensen also acknowledged that there would have been legitimate business reasons for Kay to understand and discuss intentional interference techniques. "[I]f a customer complains about the interference, being able to track it down is a valuable skill." Tr. 1476. 142. Even in the one instance in which Jensen claims to have observed Kay jamming from the tech room at Lucky's, Tr. 1468-1469, Jensen stated that Kay did not hold the channel open for very long and that "[i]t was kind of a demonstration of concept type thing." Tr. 1470. Jensen claims that Kay used a service monitor to transmit on a repeater input to lock onto a repeater, but he does not know what frequency Kay was allegedly transmitting on or what repeater he allegedly locked onto. Tr. 1477-1478. Similarly, while Jensen alleges that Kay claimed to have jammed other operators, he does not know any specific repeater or company name. Tr. 1471. Effect of De Facto Control Issue 143. Sobel has been involved in the land mobile radio business in the Los Angeles area since approximately 1976. Tr. 1707-1708. Sobel was involved in the business before Kay, and actually is the one who introduced Kay to it. Tr. 1712. Sobel is a two-way radio dealer. He sells and services radios, he provides repeater service, he installs and maintains, systems for users and for other dealers, and provides consulting services. Tr. 1708. Sobel first became interested in obtaining authorizations for 800 MHz facilities in the early 1990's. Tr. 1707. Prior to that time, his repeaters were operated in the UHF bands (450 MHz and 470-512 MHz). Tr. 1709. 144. Kay and Sobel have been friends for twenty years. WTB Ex. 228 at p. 71; WTB Ex. 229 at pp. 326-327. In the early 1990's, when Sobel became interested in obtaining 800 MHz repeater licenses, he approached Kay for assistance. Tr. 1712. By this time Kay had developed a repeater business that had far surpassed Sobel's in size and scope. Id. There were several reasons why Sobel turned to Kay for help in pursuing 800 MHz licensing. Kay already held 800 MHz licenses and was familiar with the rules and procedures which were different than for UHF applications. Also, Kay and Sobel were good friends, Sobel trusted Kay's judgment. Tr. 1712-1713. 145. Kay helped Sobel locate target frequencies to apply for, but Sobel was directly involved in the process. Sobel did not merely accept Kay's recommendations without input or question. Indeed, Sobel sometimes rejected Kay's initial suggestions based on his own information regarding the local industry and environment. For example, in at least one case he declined an initial recommendation because he would have been on the same frequency as a competitor he considered too aggressive. In other cases he determined that the existing loading on the channel by other pre- existing licensees did not permit the authorization of enough mobile units to make pursuit of the channel worthwhile. Tr. 1714. 146. Kay prepared the 800 MHz applications at Sobel's direction and on Sobel's behalf. This was primarily because Kay already had specialized software to do so. Tr. 1714-1715. It was also easier for Kay to do this because he already had the technical information for many of the sites in his computer system. Tr. 1713. Sobel sometimes prepared the applications himself using Kay's computer. Tr. 1715. Regardless of who prepared the 800 MHz applications, however, Sobel always reviewed and signed them. Tr. 1715. Kay never filed an application on behalf of Sobel that was not first reviewed, approved, and signed by Sobel. Tr. 1715-1716. It is typical in the land mobile industry for someone other than the licensee to prepare applications. Licensees rely on frequency coordinators, application preparation firms, equipment vendors, etc., for the preparation of Part 90 applications, even including assistance in selection of frequencies to be applied for. Tr. 1716-1720. If Sobel had engaged the services of a frequency coordinator or an application preparation firm, the services provided would not have been significantly different than those provided by Kay. Tr. 1719. 147. Sobel's home address was used on all applications. Kay has no access to this location, and, therefore, all correspondence regarding Sobel's 800 MHz applications were directed to Sobel. Other than information that might appear on public notice, Kay would have no knowledge of Commission correspondence regarding the 800 MHz applications and licenses except through Sobel. Tr. 1720-1721. Sobel's home address was also designated as an authorized control point on the 800 MHZ licenses. Tr. 1721-1722. 148. When Sobel began to receive grants of the 800 MHz licenses, he entered into an oral arrangement with Kay. The essence of the deal was that Sobel would install the stations using equipment Kay had in his inventory; Kay would provide repeater site space for most (but not all) of the stations; Kay would market the system (i.e., resell airtime to end users); and Sobel and Kay would split the revenues beyond the first $600 per month per repeater (the first $600 going to Kay to compensate him for the equipment, site rental, etc). Tr. 1723. 149. Sobel viewed this as a good business arrangement for himself on a number of scores. First, it allowed him to obtain and implement 800 MHz authorizations without having to spend the $6,000 to $7,000 per repeater that would otherwise have been required for the equipment, not to mention the monthly expenses. Tr. 1724. Sobel would also receive an immediate initial return in the form of the hourly rate he charged Kay for installation and maintenance services--functions that he would have performed for no compensation had he decided to pursue the 800 MHz stations independently of Kay. Tr. 1724-1725. 150. It was also advantageous to Sobel to have Kay resell airtime on the 800 MHZ repeaters rather than for Sobel to have to market them on his own. Sobel's land mobile business is a one-man operation which keeps him personally occupied at least 30 to 60 hours per week, and sometimes as much as 70 hours per week. Tr. 1726-1727. Kay, by comparison, had a sales staff in place and was already actively marketing 800 MHz services. Tr. 1726. 151. While Sobel could have made the decision to construct, operate, and market the 800 MHz stations independently of Kay, he determined that the arrangement with Kay made good business sense. On his own he would have had to purchase repeater equipment (at approximately $6,000 to $7,000 per repeater), or lease it (at a monthly cost of $200 to $300 per repeater). Tr. 1727. He would also have been required to lease repeater site space. Tr. 1728. In addition, Sobel would not have received compensation for having installed and maintained the stations--thus, he would have been required to do this work himself for no compensation or contract it out, thereby incurring further expense. Tr. 1728-1729. 152. Sobel is not an absentee owner of the management agreement stations. He resides in the stations' service area and is a hands-on owner who has remained actively and fully involved in all aspects of the day to day operations. Except for matters specifically and directly related to Kay's resale of airtime, Sobel has been solely responsible for and directly involved in daily operations. Sobel constructed the facilities and he maintains them. WTB Ex. 328 at pp. 104, 107. He regularly monitors the repeaters and frequently visits the transmitter sites. WTB Ex. 328 at p. 117; Tr. 1734- 1735. 153. The price to be charged for repeater service is largely dictated by local industry standard, and Sobel has personally determined when to make adjustments. WTB Ex. 328 at p. 123. He has, on occasion, overruled Kay's initial determination as a reseller regarding the rates to be charged. When special deals are negotiated, Sobel either handles it or knows about it. Id. at pp. 129- 130. Sobel has the right to approve or disapprove any service contracts entered into by Kay. Id. at pp. 128-129. Sobel reviews Kay's customer contracts approximately once or twice per month. Id. at p. 122. Sobel also reviews with Kay the decisions regarding which customers to place on which repeaters. Id. at p. 123. 154. Kay prepared much of the FCC and frequency coordination paperwork for the 800 MHz repeaters, subject to Sobel's supervision, review, and approval. This was a matter of convenience. Kay had a special software package that generated the appropriate forms. WTB Ex. 328 at pp. 74- 75. On some occasions Sobel actually prepared the applications himself using Kay's computer. Id. at p. 74. Nothing was ever filed with the Commission on Sobel's behalf before Sobel reviewed, approved, and signed it. Tr. 1715-1716. This was more than token approval. Sobel is intimately familiar with the application forms and procedures, having prepared his own UHF repeater applications as well as many applications for his clients and customers, Tr. 1714. 155. As previously discussed, the arrangement provided that Kay would provide space to Sobel at some of the sites. At a few sites Sobel leases space from persons other than Kay, and at one site Sobel subleases space to Kay. At the other sites, Sobel either leases or subleases space from Kay. Tr 1732. Where the space is provided by Kay for Sobel's UHF repeaters (which are otherwise entirely independent of Kay), Sobel makes monthly cash payments to Kay. Tr. 1727. Kay's provision of space for the 800 MHz repeaters, however, is included as part of the arrangement with Sobel. Tr. 1723. A typical mountain top repeater site is a small building, perhaps 1,200 to 1,500 square feet, and some even smaller, next to a tower or antenna structure. Tr. 1710. Inside the building are equipment racks and cabinets, wiring and cabling, transceivers, power supplies, etc. Tr. 1710-1711. A small building may house only about five repeaters, while a larger one may have more than 100. Tr. 1711. A given building may house multiple licensees. It is quite common in the Los Angeles land mobile radio community for multiple licensees, even competitors, to share a common repeater and antenna sites in order to realize economies of scale. Tr. 1711, 1732-1733. 156. The arrangement between Sobel and Kay is nothing more than a lease of channel capacity or airtime to Kay which Kay then resells. This is a common arrangement in the Los Angeles land mobile radio community, and one that is perfectly legal under the FCC's policies and precedents. There are several dealers in the Los Angeles area who provide repeater service to their customers without holding any licenses of their own. They do this by marketing services and/or reselling airtime on repeaters licensed to other operators. Tr. 1739-1740. 157. Consistent with the fact that Kay is operating as a reseller of airtime on Sobel's 800 MHz repeaters, the customers on Sobel's 800 MHz repeaters are Kay's (not Sobel's) customers. Sobel nonetheless remains fully aware of who are the customers. Sobel typically does the account activations and deactivations. Tr. 1741, 1744. Sobel has unrestricted access to the customer contracts. Tr. 1741. Repeater service agreements are fairly standard, and Sobel is familiar with the structure. Tr. 1741. 158. In the fall of 1994, Sobel became aware of a draft hearing designation order in the Kay proceeding. Kay had obtained the draft through a FOIA request and he informed Sobel of it. Tr. 1751-1752. The draft HDO contained the following language. Information available to the Commission also includes that James A. Kay, Jr. has done business under a number of assumed names. We believe that these names include some or all of the following: Air Wave Communications ... [and] Marc Sobel dba Airwave Communications. Kay Ex. 5 at p. 2, . Air Wave Communications is a name under which Marc Sobel does business. Tr. 1152-1153, 1752. 159. Sobel was surprised upon learning of this language suggesting that he was nothing more than an alias of James Kay. Tr. 1752-1754. As Sobel explained: I was surprised, because, as you can see, I'm a real person. I'm not an alias of James Kay, clearly. My business is my business. Air Wave Communications, he has nothing to do with it. He's not a partner, he's not part of the d/b/a and it was just an absolute surprise and a little bit of anger that they should include my name in their process of the HDO against James Kay. In other words, I thought it was entirely unfair and inappropriate. Tr. 1753. Kay Ex. 6 is a letter, dated December 6, 1994, which Sobel wrote to Gary Stanford of Bureau staff in Gettysburg. The purpose of this letter was to correct the apparent misbelief of the Commission that Sobel was a fictitious name being used by Kay rather than a real, separate individual. Tr. 1557-1559. In the letter, Sobel advised the Commission: I would like to assure you that I am an Independent Two Way Radio Dealer. I am not an employee of Mr. Kay's or of any Mr. Kay's companies. I am not related to Mr. Kay in any way. I have my own office and business telephone numbers. I advertise under my own company name in the Yellow Pages My business tax registration and resale tax permits go back to 1978--long before I began conducting any business whatsoever with Mr. Kay. Kay Ex. 6 at p. 1. Sobel closed the letter with the following invitation: "Should you need further assistance ... in this matter, please call me at your earliest convenience." Id. at p. 2. Neither Stanford nor anyone else from the Commission ever responded to Sobel's letter. Tr. 1559. 160. After learning of the draft HDO, Sobel asked Brown and Schwaninger to prepare a written agreement to document the relationship between him and Kay. The purpose of drafting such a written agreement was "to clarify our separateness, our positions as two businesses, and our relationship in my station that [Kay] managed." Tr. 1761. Sobel was not in any way dissatisfied with Kay's performance under the pre-existing oral arrangement. He had no reason to distrust Kay, and he had no desire to modify the relationship. Tr. 1764. Indeed, the parties did not change their relationship after the agreement was placed in writing--the written agreement was simply intended to clarify their position on paper. Id. 161. WTB Ex. 339 is a copy of the written management agreement between Sobel and Kay as executed on October 28, 1994. Brown and Schwaninger did not provide Kay and Sobel with preliminary drafts of the agreement; rather, it was their understanding this was a standard boilerplate agreement used by Brown and Schwaninger with all their clients. Tr. 1246, 1763. In fact, Kay had been advised by Brown and Schwaninger that "the management agreements met the FCC rules on all four corners." Tr. 2445. 162. Paragraph VIII of the written management agreement expressly provides: Supervision by Licensee: Licensee shall retain ultimate supervision and control of the operation of the Stations. Licensee shall have unlimited access to all transmitting facilities of the Station, shall be able to enter the transmitting facilities and discontinue any and all transmissions which are not in compliance with FCC Rules and shall be able to direct any control point operator employed by Agent to discontinue any and all transmissions which are not in compliance with FCC Rules. All contracts entered into with end users of the Stations' services shall be presented to the Licensee, either by original proposed contract or copy thereof, before such contracts go into effect, and Licensee shall have the right to reject any such contract within five (5) days of presentation, however, such rejection shall be reasonable and based on the mutual interests of the parties. Licensee shall have the right to locate the Stations' transmitting facilities at any place of Licensee's choosing, provided, however, that after the original construction of the transmitting facilities of the Stations is completed and/or following execution of this agreement, Licensee shall give sixty (60) days notice to Agent of any future relocation of any of the Stations. Such relocation shall only occur if it is in the best interest of both Parties. WTB Ex. 339 at p. 5,  VIII. 163. WTB Ex. 340 is a copy of a virtually identical replacement agreement executed on December 30, 1994. The agreement was re-executed because Kay had initially neglected to pay Sobel a $100 fee to effectuate an option provision in the written agreement, and in order to expand the list of call signs covered by the agreement. WTB Ex. 228 at pp. 110-111; WTB Ex. 341. The agreement gives Kay an option to acquire any one of the Sobel stations for $500. Sobel and Kay both understood an option to be a "future" right that may or may not ever be exercised. Tr. 1303, 1744- 145. In fact, Kay has never exercised the option provision. Tr. 1746. Prior to the written agreement, the parties had an understanding that Kay would have either an option or a right of first refusal. Tr. 1745-1746. Kay required this protection because he would be writing five year service contracts to resell service on the stations and needed to be assured of continued access to the channel capacity. WTB Ex. 229 at pp. 365-366. 164. Prior to the written agreement, the parties also had a long-standing understanding that if the stations were ever sold, Kay would share in the proceeds to compensate him for work he had done and expenses he had incurred in clearing the channels. Tr. 1747. All of the frequencies subject to the management agreement were, at the time they were acquired by Sobel, encumbered by other users, i.e., there were other licensees authorized to share use of the channels. Tr. 1747-1748. The process of "clearing" channels, researching the status of co-channel licenses, obtaining cancellation of inactive stations, negotiating assignments or cancellations of other licenses, etc., involved a great deal of work that Kay was in a better position to undertake. Tr. 1748. 165. Sobel was not, in any event, generally in the mode of selling stations. Tr. 1749. On the rare occasion when one of the management agreement stations was sold, the parties did not follow the specific terms of the option provision even after the written agreement was executed. For example, on one occasion Kay negotiated a deal with a third party whereby Sobel received $20,000 from the sale of one of the channels, event though under the literal terms of the written agreement Kay could have exercised his $500 option and diverted the additional monies to himself. Tr. 1746. On another occasion, Kay approached Sobel with an offer he had received from a third party to acquire all of the management agreement stations for $1.5 Million. Sobel turned down the proposal and decided to keep the stations. Tr. 1749. This was at a time when Kay needed the money and could have exercised his option to acquire each of the stations for only $500, but he instead went along with Sobel's desire to retain the stations. Id. 166. Under the oral arrangement between Kay and Sobel, Kay provided the equipment, but it was being leased to Sobel for use in the management agreement stations. Indeed, it was in large measure to compensate Kay for the provision of this equipment that it was agreed that Kay would receive the initial $600 in revenue each month. The written agreement, however, expressly provides: "Agent [i.e., Kay] shall lease to Licensee [i.e., Sobel] all equipment necessary to construct and operate the Stations. All rents to be collected by Agent for lease of equipment to Licensee shall be deemed by the Parties to be a portion of Agent's compensation for services described herein." WTB Ex. 340 at p. 3  IV. 167. The written management agreement prepared by Brown and Schwaninger is no longer in effect, having been replaced by a revised agreement drafted by Kay's current regulatory counsel. Tr. 2370-2377; Kay Ex. 64. Kay explained that the new agreement was prepared and executed [b]ecause while we believed the initial agreement was perfectly legal on all four corners, the Commission's scrutiny and the ruling that came from the Marc Sobel matter clearly indicated that the agreement may have some problems. So, we have had counsel draft a new agreement which hopefully will be more on all four corners with the Commission's expectations and we executed the new agreement. Tr. 2371. Misrepresentation and Lack of Candor Issue Background 168. The issue added by Judge Sippel, requested by the Bureau in its Motion to Enlarge Issues filed on December 30, 1997, seeks a determination whether Kay "misrepresented facts or lacked candor in presenting a Motion to Enlarge, Change, or Delete Issues that was filed by Kay on January 12, 1995 and January 25, 1995. Judge Sippel's' addition of the issue was predicated on Judge Frysiak's conclusion that Sobel misrepresented facts in asserting in his January 25 affidavit that Kay did not have an interest in his stations. Judge Frysiak's conclusion rests, in large part, on his determination that Sobel intentionally concealed the Management Agreement between Kay and Sobel disclosing their relationship until July 3, 1996, in response to a 308(b) inquiry. See Marc Sobel, 12 FCC Rcd 22879, 22897, 22902 (ALJ, 1997). 169. Judge Frysiak's decision was tainted because the Bureau deliberately concealed the fact that Kay had given a copy of the Management Agreement to the Bureau on March 24, 1995. Thus, in reaching his conclusion, the Judge was unaware of the March 24, 1995 filing and erroneously assumed that the Commission first received a copy of the Management Agreement on July 3, 1996. The Bureau concealed this information because it recognized that divulging that Kay gave a copy of the Agreement to the Bureau more than 2 years before the Bureau raised questions about the January 25, 1995 declaration seriously eroded its contention that Kay and Sobel intentionally deceived the Commission about their relationship, a necessary element in a misrepresentation finding. See Fox River Broadcasting, Inc., 93 FCC 2d 127, 129 (1983). The following chart lays out the Bureau's elaborate scheme. a. Designation Order in Sobel Case released February 12, 1997. Order recites that the Commission first learned of the Management Agreement on July 3, 1996 when it received a copy from Sobel pursuant to a 308(b) letter of inquiry. Commission not informed of March 1995 filing of Agreement. b. Motion to enlarge issues filed Apri1 3, 1997. Motion does not disclose that a copy of the Agreement was given to the Bureau in March 1995. Opposition recites: "Sobel has attempted in discovery in this proceeding to determine precisely when the Bureau became aware of and received a copy of the Agreement, but the Bureau has thus far refused to provide such information." Note 8. Bureau Reply filed May 1, 1997 continued to conceal March 1995 filing. Bureau also casts doubt on the Sobel Opposition by claiming inconsistency between Sobel's statements that he thought filing was made with the January 25 Declaration and that it had been filed in Kay discovery, an attack plan used in the hearing itself. c. MO&O, FCC 97M-82, released May 8, 1997. Filing of Agreement in March 1999 was not disclosed by the Bureau. d. Hearing on Misrepresentation Issue. Bureau sought to block out and cast doubt on testimony of Sobel that Agreement was to be filed with Kay discovery. Bureau Ex. 329, Tr. 300-304. Bureau, in examination of Sobel, seeks to establish in Judge's mind that Sobel first provided a copy of the Agreement on July 3, 1996. Bureau Ex. 329, Tr. 313-314. Bureau continues to conceal March 25, 1995 filing. e. Bureau's Proposed Findings filed September 25, 1997. Continued concealment of the filing of the Agreement on March 1995. Bureau also cast doubt on Sobel's testimony that the Agreement was to be supplied in Kay discovery and stressed filing by Sobel of Agreement in July 1996 in order to establish intentional deception. See paragraphs 55, 62, 90 94, 99, among others. f. Bureau Reply to Sobel's Findings filed October 21, 1997. Continued concealment of March 1995 filing of Agreement. g. Bureau's Comments on Sobel's and Kay's Replies filed October 31, 1997. Bureau falsely claimed: "none of Sobel's or Kay's filings in 1994, or 1995 disclosed the relationship between Sobel and Kay with respect to the Management Agreement stations." Par. 4. No disclosure of the March 1995 filing. Bureau emphasized Sobel's failure to produce the management agreement until specifically directed to do so by the Commission in 1996. Par. 6. Paragraphs 4-10, the Bureau's treatment of "lack of candor" is designed to mislead Judge Frysiak in order to establish intentional deception. The January 25, 1995 filing 170. On or about January 25, 1995, Brown and Schwaninger, acting on Kay's behalf, submitted in the above-captioned proceeding a pleading entitled "Motion to Enlarge, Change or Delete Issues." WTB Ex. 343. That pleading included the following statement: James A. Kay, Jr. is an individual. Marc Sobel is a different individual. Kay does not do business in the name of Marc Sobel or use Sobel's name in any way. ... Kay has no interest in any of the licenses or stations held by Marc Sobel. Marc Sobel has no interest in any of the licenses or stations authorized to Kay or any business entity in which Kay holds an interest. Because Kay has no interest in any license or station in common with Marc Sobel and because Sobel was not named as party to the instant proceeding, the Commission should either change the [HDO] to delete the reference to the stations identified as stations 154 through 164 in Appendix A, or should dismiss the [HDO] with respect to those stations. WTB Ex. 343 at pp. 4-5. This was the sole reference to Sobel in the entire sixteen page pleading that addressed numerous other matters. Id. Kay executed a general supporting affidavit whereby he "declare[d] under penalty of perjury ... that the ... Motion to Enlarge, Change, or Delete Issues is true and correct." Id. at p. 23. Kay explained that he scanned through the document and saw no obvious errors and therefore executed the affidavit that had been supplied to him by his legal counsel. Tr. 1301. He did "not analyz[e] the meaning of every nuance of every word through it, not even close." Tr. 2443-2444. 171. Kay believes that when his attorneys wrote in the pleading that he had no "interest" in Sobel's licenses, they meant that "James Kay does not have a legal interest, an ownership interest, in the licenses held by Marc Sobel." Tr. 1301. Kay understood the language denying an interest in Sobel's licenses or stations to mean that Kay "had no ownership interest as in owning a part of this, being a partner, in any licenses that were issued to Marc Sobel." Tr. 2444. Insofar sa the pleading stated that Kay did not have an interest in any "license or station" authorized to Sobel, Kay has always used the two words (station and license) interchangeably, noting that FCC licenses are titled Radio Station License. Tr. 1314. He used the terms interchangeably and he believes Dennis Brown, who wrote the pleading, did also. Tr. 2444. 172. Kay was obviously aware of the management agreement at the time he executed the affidavit, but he also knew the management agreement had been prepared by the same attorneys who drafted the pleading and the affidavit. Tr. 2444. Kay was specifically advised, by counsel, that, in fact, that the management agreement did not constitute an interest. Tr. 2444-2445. In any event, there was not a great correlation between the management agreement and the motion for which the affidavit was executed. One objective of the motion was to have stations licensed to Sobel removed from the HDO, but this was not its primary purpose and, indeed, only one paragraph in the sixteen page pleading was devoted to this matter. WTB Ex. 343. Moreover, most of the management agreement stations were not even affected by the HDO. Only two of the eleven Sobel call signs listed in Appendix A to the HDO were subject to the management agreement. Compare HDO, Appendix A, items 154-164, and WTB Ex. 341 pp. 1 & 837. The other nine stations included in the HDO had no connection to Kay whatsoever. Id. Conversely, fourteen out of the sixteen management agreement stations were not listed in the HDO. Id. 173. Kay and Sobel testified in this proceeding and answered questions put to them in a candid and forthright manner. Their testimony that they did not intend to deceive the Commission concerning their business dealings is entirely credible and is accepted. 174. Further, their testimony is buttressed by the evidence showing that Kay informed the Commissin of their business relationship long before any questions were raised by the Bureau. Thus, on March 10, 1995, in response to the Bureau's First Set of Interrogatories, Kay informed the Bureau that "Kay manages stations which are authorized to Marc Sobel" and on March 24, 1995, Kay gave the Bureau a copy of the Management Agreement which fully spelled out their business arrangement. This was more than two years before the Bureau first raised questions in its motion to enlarge filed April 3, 1997 in the Sobel's case. CONCLUSIONS Section 308(b) Issue 175. This issue is "[t]o determine whether James A. Kay, Jr. has violated Section 308(b) of the Act and/or Section 1.17 of the Commission's Rules, by failing to provide information requested in his responses to Commission inquiries." HDO at  10(a). Section 308(b) of the Communications Act provides, in pertinent part: The Commission, at any time after the filing of [an] original application and during the term of any ... license, may require from an applicant or licensee further written statements of fact to enable it to determine whether such original application should be granted or denied or such license revoked. Such ... statement of fact shall be signed by the applicant and/or licensee in any manner or form, including by electronic means, as the Commission may prescribe by regulation. 47 U.S.C.  308(b), Section 1.17 of the Commission's Rules and Regulation provides: The Commission or its representatives may, in writing, require from any applicant, permittee or licensee written statements of fact relevant to a determination whether an application should be granted or denied, or to a determination whether a license should be revoked, or to some other matter within the jurisdiction of the Commission. No applicant, permittee or licensee shall in any response to Commission correspondence or inquiry or in any application, pleading, report or any other written statement submitted to the Commission, make any misrepresentation or willful material omission bearing on any matter within the jurisdiction of the Commission. 47 C.F.R.  1.17. For the reasons recited, infra, it is concluded that this issue is resolved in Kay's favor. 176. There is no suggestion by the Commission in the HDO that Kay made any false statement in his response to the 308(b) request and the Bureau did not seek any modification or enlargement of the issues to permit consideration of a misrepresentation issue. Further, there is not any record evidence to support such a contention. The issue as designated, is whether Kay violated his obligations under 308(b) "by failing to provide information requested in his responses to Commission inquiries." HDO at  10(a). Accordingly, the Bureau's reliance in its Findings on FCC v. WOKO, Inc., 329 U.S. 223 (1946); RKO General, Inc. v. FCC, 670 F.2d 215 (D.C. Cir. 1981); and Trinity Broadcasting of Florida, Inc., 10 FCC Rcd 12020 (ALJ), which involve intentional misrepresentation and lack of candor, are misplaced. 177. While the Commission and its operating Bureaus have the unquestioned right to require its licensees to provide information necessary to accomplish the Commission's public interest responsibilities, there are limits. The point where an investigation exceeds permissible bounds was articulated in Stahlman v. FCC, 126 F.2d 123 (D.C. Cir 1942) where the Court said the Commission is not authorized "to require appellant or other witness whom it may summon to bare their records, relevant or irrelevant in the hope that something will turn up or to invade the privacy protected by the Fourth Amendment" Id at 128. While Stahlman involved a 403 investigation, the Court's admonition applies equally to 308(b) inquiries, such as that directed at Kay. The Bureau's 308(b) letter of inquiry to Kay exemplifies what is not permissible. 178. In each of the cases relied on by the Bureau, the 308(b) inquiry specifically informed the licensee of the conduct in question and the inquiry was narrowly focused to obtain the necessary information. Thus, in Carol Music, Inc., 37 FCC 379 (1964), the 308(b) information sought concerned broadcasts in aid of illegal gambling. In Warren L. Percival, 8 FCC 2d 333 (1967), the Commission sought specific information concerning whether the licensee had been convicted of a crime. Also, the 308(b) inquiry in PTL of Heritage Village Church, 7 FCC 2d 324 (1979) was narrowly focused to specific fund raising matters under scrutiny. 179. Unlike these cases, a review of the 308(b) letter authored by W. Riley Hollingsworth leads to the conclusion that the Bureau was engaged in a fishing expedition with the hope that something would turn up. Rather than explaining the nature of any particular inquiry, complaint, or alleged violation and asking for focused information, Kay was being asked to provide virtually every detail regarding the operation of his business. This included sensitive information such as his entire customer list and details regarding the technical configuration of each of his customers' system (which raised serious concerns for safety to liability and financial exposure). In addition, as reflected in the correspondence exchanged between Hollingsworth and Brown's lawyer, all of Kay's reasonable requests for modification of the extremely broad inquiry were arbitrarily ignored by Hollingsworth without explanation. The Bureau had the burden of demonstrating that the information sought was relevant and was material to specific concerns raised about specific licensee operations of Kay and that it was not engaged in a fishing expedition with the hope that something would turn up. It did not do so. Neither Hollingsworth, the author of the 308(b) request or any other Bureau official was called on as a witness to justify the Bureau's inquiry. On the basis of the record, it is concluded that the initial request which was unlimited in scope, seeking information involving all ofKay's 152 licenses was arbitrary and unreasonable and that the Bureau's unwillingness to clarify and narrow the initial request so as to address specific concerns about specific licenses was equally wrong. Under the circumstances, Kay can not be faulted for raising legal objections and for failing to provide all the information sought. In this connection, the findings establish that Kay did not have the computer capability to provide the Bureau the information it sought. His actions can not be viewed as an act of defiance of the Commission's lawful authority and does not warrant a sanction. 180. There are additional reasons, detailed in the Findings, why no sanction is warranted. Briefly recited, unlike cases relied on by the Bureau, after the case was designated for hearing, in the course of discovery, Kay provided the Bureau with all of the information that had been sought in the 308(b) Request. In all, Kay turned over some 36,000 documents. In addition, the 308(b) request was received by Kay only two weeks after the Northridge earthquake, a devastating natural disaster that did substantial damage to his business and his personal residence. The earthquake directly affected Kay's literal and physical ability to respond to the 308(b) request. 181. Finally, a series of actions by the Bureau raised legitimate concerns in Kay's mind whether the data sought would be kept confidential. These actions, detailed in the Findings, consisted of: (a) the Bureau's extremely broad request, which it has been concluded, was arbitrary and unreasonable; (b) the Bureau's unreasonable unwillingness to narrow its request; (c) the Bureau's unwillingness to provide assurance consistent with Kay's past experience, that the information to be supplied would be held in strictest confidence and not disclosed to a person who is not a Commission employee; (d) the Bureau's unexplained irrational demand for 50 copies of Kay's response; and (e) the circumstances surrounding the Bureau's denial of Kay's finders preference request. Accordingly, a fair review of the record adduced at hearing and the applicable precedent requires resolution of this issue in Kay's favor. Construction and Operation Issue 182. This issue is "[t]o determine if Kay has willfully or repeatedly violated any of the Commission's construction and operation requirements in violation of Section 90.155, 90.157, 90.313, 90.623, 90.627, 90.631, and 90.633 of the Commission's Rules. HDO at  10(c). The reference to 90.627 of the Rules in no longer relevant to the Construction and Operation Issue. See MO&O 98M-94. The issue may be treated in two parts: (1) whether Kay failed to timely construct and/or permanently discontinued operation of one or more authorized stations; and (2) whether Kay violated applicable loading requirements. In either case, however, the focus of this issue is not simply whether Kay at some time or another failed to comply with one or more rule provisions, but whether he engaged in willful or repeated violation of the specific rules listed in the issue. It is concluded that the Bureau has failed to meet its burden of establishing that Kay engaged in willful or repeated violation of the specified Rules. Timely Construction and/or Permanent Discontinuance 183. At all times and to the extent relevant to this issue, Section 90.155 required that conventional stations "must be placed in operation within eight (8) months from the date of grant or the authorization cancels automatically and must be returned to the Commission." 47 C.F.R.  90.155(a) (1994); accord 47 C.F.R.  90.633(c)-(d) (1994). Section 90.631(e) required that "licensees of trunked facilities must complete construction within one year." 47 C.F.R.  90.631(e) (1994), and Section 90.631(f) provided for automatic cancellation if this construction deadline is not met. 47 C.F.R.  90.631(f) (1994). 184. At all times and to the extent relevant to this case, Section 90.157 of the Rules provided: A station license shall cancel automatically upon permanent discontinuance of operations. Unless stated otherwise in this part or in a station authorization, for the purpose of this section, any station which has not operated for one year or more is considered to have been permanently discontinued. 47 C.F.R.  90.157 (1994); accord 47 C.F.R.  90.631(f) (1994) (specifying a shorter time for some 800 and 900 MHz trunked system licenses). 185. The parties have stipulated that, as to each site annotated as "Not in operation" in the "Comments" column of Attachment A to Kay's May 11, 1995, Amended Responses to Wireless Telecommunications Bureau's First Set of Interrogatories (WTB Ex. 290), that facility was either not timely constructed or operation of that facility had been permanently discontinued as of May 11, 1995. Tr. 1232. The Bureau presented no evidence that any authorized facilities other than those specifically covered by this stipulation were not timely constructed or that operation of any such facilities has been permanently discontinued. Moreover, the Bureau has not demonstrated any improper conduct or motive in connection with the facilities specifically covered by the stipulation. Accordingly, the record does not support any adverse conclusion against Kay in this regard, nor does the record warrant any sanction other than that separately considered under the Automatic Cancellation Issue. System Loading 186. The Bureau proposes adverse conclusions under the "loading" issue as to Kay's conventional channels. The rules relied on by the Bureau are Section 90.313 and 90.633. 187. A review of the subject rules indicates that there are no loading "requirements" per se for conventional channels. It appears that loading on conventional channels becomes an issue only in specified application processing contexts. For example, an applicant for additional channels may, depending on the circumstances, be required to demonstrate that any existing systems licensed to him in the same area and in the same frequency band are loaded. E.g., 47 C.F.R.  90.313(c), 90.623(d), & 90.633(e). Thus, a determination of whether a conventional channel licensee has violated "loading" rules requires much more than a snapshot comparison of authorized mobile units versus current actual loading count. It requires, rather, a demonstration that an applicant filed a particular application that required loading which the applicant did not, at the time of the application, have. The Bureau has not so demonstrated. 188. In addition, as pointed out by Kay and not disputed by the Bureau, channels below 470 MHz are not assigned on an exclusive basis, regardless of loading, and are not subject to any sort of loading requirements. Accordingly, the Bureau's inclusion of Kay's stations operating below 470 MHz in its loading analysis was improper and inapposite. As to Business Radio Service stations operating in the 470-512 MHz band, the Rule only prescribes a maximum loading limit, in that no more than 90 mobile units will be authorized on a given channel in a given service area. 47 C.F.R.  90.313(a)(3) (1994). The Bureau has not demonstrated, or even alleged, that Kay exceeded the maximum loading level. 189. For 800 MHz Conventional SMR stations, the Rule indicates an existing licensee typically may only receive authorization for an additional channel in the same service area if loading on the existing channel is at least 70 units. 47 C.F.R.  90.633(e) (1994). Section 90.633(a) specifies that loading requirements apply to the channel as a whole, not any one particular licensee. Accordingly, to determine whether an existing licensee is eligible for an additional channel it is necessary to examine the loading of all licensees sharing that channel, not simply the loading of the applicant. 190. The Bureau has not demonstrated that Kay ever submitted any application which triggered Section 90.633(c) of the rules for which he was not adequately loaded at the time. The Bureau instead complains about Kay's lack of historical loading records. The Bureau states: "[T]he record evidence demonstrates that Kay did not have the ability to accurately determine or report his loading to the Commission." WTB PF&C at  234. Elsewhere the Bureau asserts: "The evidence ... indicates Kay did not have a means of accurately counting his loading to determine his eligibility ...." Id. at  216. The record does not support the Bureau's assertion. As to any particular application as to which specific loading requirements might be applicable, Kay would have been able and willing to provide current loading information if the Commission requested it. For example, if the Commission had at any time requested the loading on a particular channel, Kay could first check his billing system, then examine his paper records, and, if necessary, collect relevant information from additional sources, e.g., determining from dealers how many units are active on the system. However, to collect historical information on an across-the-board basis for more than 150 calls signs, many of them involving multiple channels and/or multiple base station sites, was a virtually impossible task. As earlier noted, the Bureau's request was an impermissible fishing expedition. 191. Further, even assuming, arguendo, that the Rules contained a loading requirement in non application processing situations, the Bureau's reliance on loading as of a specific date runs counter to Commission policy and is invalid as a measurement of Kay's system loading. As discussed, supra, the Commission has made clear that a snapshot of loading at a single point in time does not accurately reflect system loading. The Commission has adopted a standard requiring a showing of average loading over a six month period. The Bureau has not offered such a showing, providing a further reason for rejecting its contention that Kay's "loading" was inadequate. 192. Moreover, in evaluating Kay's loading, the Bureau improperly limits its analysis solely and exclusively to Kay's computer billing records, even though the evidence shows that they were not kept primarily for loading information and do not present a complete or accurate picture of the system loading. The rules do not specify any particular form for loading records -- indeed, the Commission does not expressly require loading records at all, but rather states that it will evaluate loading based on the licensees "business records." Kay's computerized billing records tell only part of the story. There are also the paper files for each customer which include more detailed information that will also be informative as to system loading. Although these were among the 36,000 documents produced by Kay in discovery, the Bureau chooses instead to focus solely and exclusively on the computerized billing records. The Bureau can not dictate which of Kay's business records will count for loading purposes and which do not. The current rules by which the Bureau is bound do not specify what records will count and how they are to be maintained. It is therefore entirely inappropriate for the Bureau to limit its examination solely to business records that admittedly do not tell the full story. 193. In addition, the billing records did not include information about loaners and demo units, rental units, or the extensive use of Kay's system by other radio shops and dealers. The Bureau's objection that nothing other than the billing records may be considered because the billing records are what Kay produced when ordered by Judge Sippel to produce loading records. WTB PF&C at n.22, is without support. When he produced this information, Kay expressly disclosed these limitations, stating: Kay's records do not reflect Kay's own shop use, nor records of other users in other shops who used radios at no charge, and these records do not include rentals, demos and loaners, because none of these records resulted in customer billing for repeater services, even though use of the repeaters did occur. WTB Ex. 19 at p. 2. Moreover, in addition to the billing information, Kay also produced 36,000 documents including his paper files for each repeater customer. 194. Unable to demonstrate that Kay lacked eligibility as to any particular application or that he was not properly loaded in the context of any application requiring it, the Bureau has attempted to come in the back door by arguing that Kay should have amended his authorizations to reflect changes in loading. The Bureau's contention is that at a number of Kay's stations, the billing records, as of 1995, in many cases reflect less units than are authorized for the system. According to the Bureau, Kay was required by Section 90.135(a)(5) of the Rules, as in effect at the time of designation, 47 C.F.R.  90.135(a)(5) (1994), to amend the authorizations for these stations to reduce the number of authorized mobiles. WTB PF&C  231-238. 195. Initially, Section 90.135(a) was not specifically mentioned in the HDO and the issues against Kay did not include a violation of this rule. Moreover, the Bureau never sought to modify the issues to permit consideration of a violation of this rule. Contrary to the Bureau's assertion, the Bureau can not unilaterally modify the HDO by mentioning the rule in a prehearing "Statement of Readiness for Hearing." Consequently, since the alleged violation of Section 90.135(a)(5) of the Rules is beyond the scope of the HDO, it can not be considered. 196. Even assuming an alleged violation of Section 90.135(a)(5) was included among the many issues designated in this case, the Bureau's proof falls far short of establishing a violation. The Bureau's proof of an alleged violation consists of the billing records of March and/or November 1995. The Bureau offers no Commission precedent for the methodology it has employed. Aside from the deficiencies in relying solely on billing records, the Bureau's proof runs counter to the Commission's determination that a snapshot of loading at a single point in time does not accurately reflect system loading. 197. The rule itself does not indicate how soon a commercial operator must amend after a change in actual loading. In addition, a search of Commission precedent does not directly address the question. However, it is reasonable to assume that Section 90.135(a)(5) of the Rules does not require an immediate amendment each and every time there is a change in the loading on a station used to provide commercial service to public customers. It is to be expected that the actual loading for a commercial service provider (i.e., a private carrier licensee in the 470-512 MHz band and/or an SMR licensee in the 800 MHz band) will fluctuate over any particular period of time. Surely, a reasonable interpretation of the rule allows for the normal ebb and flow of business. 198. It is precisely for these reasons that the Commission has rejected the snapshot approach employed here by the Bureau. The Commission has decided that the six months averaging method is a reliable loading indicator where an application requiring a showing of loading is required. In the absence of evidence indicating the Commission has adopted a different standard in applying Section 90.135(a)(5), it is reasonable to use the same indicator which the Commission employs when an application for additional frequencies is filed. Thus, a showing that Kay has violated Section 90.135(a)(5) requires the Bureau to establish, with respect to each of Kay's authorizations, that the mobile count during a six month averaging period fell below the relevant level. The Bureau has not presented such evidence. Accordingly, for all the reasons set forth supra, the "loading" issue is resolved in favor of Kay. Abuse of Process Issue 199. This issue is "[t]o determine whether James A Kay, Jr. has abused the Commission's processes by filing applications in multiple names in order to avoid compliance with the Commission's channel sharing and recovery provisions in violation of Section 90.623 and 90.629. HDO at  10(d). Section 90.629 is no longer at issue in this proceeding. See MO&O 98M-94. The Bureau has failed to meet its burden of showing that Kay was the real party in interest in any of these applications, and has not, in any event, demonstrated that Section 90.623 would have precluded Kay from submitting any one of the questioned applications in his own name. It is therefore concluded that the Bureau has failed to meet its burden of proof under the issue. 200. The Bureau asserts that Kay abused the Commission process "by submitting applications for end user licenses in the names of individuals who had no bona fide intention of using radios." WTB PF&C at  250. Specifically, the Bureau claims: "Kay filed bogus end user applications in the names of Roy Jensen, Kevin Hessman, and Vincent Cordaro. While those applications represented that these individuals had businesses that required the use of radios, these individuals, who were employees of Kay, had no intention of using radios in these alleged businesses." Id. at 253. The Bureau's theory is that Kay did this as part of a scheme to "warehouse" spectrum so that he would have capacity to serve future users. Id. at  251-252. 201. Contrary to the Bureau's assertions, the undisputed record establishes there is a factual basis for Kay's belief that each of these individuals either were engaged in or intended to engage in pursuits beyond the scope of their employment by Kay in which they desired to use Kay's radios and repeaters. See Kay PF&C at  95-97, 104, 115. In these circumstances, prior to October of 1992, it would have been unlawful for Kay to have permitted these individuals to operate radios on his system for their own outside pursuits unless such operations were licensed. 202. The credibility of the witnesses against Kay on this issue is also questionable for other reasons. Both Hessman and Jensen were found to have made misrepresentations under oath before the Office of Appeals of the California Unemployment Insurance Appeals Board regarding the circumstances of their discharge from Kay's employ. In addition, Cordaro tells inconsistent stories. At hearing he denied having obtained an authorization in pursuit of an independent business activity; but in 1992 he signed and submitted to the Commission a declaration, under penalty of perjury, attesting to the opposite. WTB Ex. 351 at pp. 2 & 5. Also, the evidence adduced indicates that Cordaro further misrepresented to the Bureau during the investigation, to Kay during discovery, and to the Presiding Judge and the Commission during the hearing regarding the facts and circumstances surrounding computer files he removed from Kay's system. All three of these men have reason to dislike Kay and are clearly biased against him. Their testimony is not credible and is not accepted. 203. There is also reason to question the reliability, if not the credibility, of Carla Pfeifer. She purports to have vague and incomplete recollections about events that allegedly occurred ten plus years ago. She questions whether her signature on various documents is genuine, even though (a) the documents were all in her possession until such time as they were turned over to FCC investigators, and (b) she has no idea of who might have signed them. She acknowledged that she acquired the station as a business opportunity, but then she claims to have agreed to assign the license without any information or understanding of what the terms of the assignment were to be; indeed, she was not even aware until she was cross-examined at the hearing that the assignment had in fact been granted years ago. Ms. Pfeifer's testimony is certainly not adequate to sustain the Bureau's burden of proof. The Bureau has failed, in any event, to show that Kay would have had any motive for using Pfeifer as an application shill. See, paragraph 207 below. 204. Significantly, the Bureau is charging Kay with preparing and filing false applications, but in many cases it has not even placed copies of the applications in evidence. In the cases of Jensen and Cordaro, for example, the Bureau offered only copies of the resulting licenses, but Kay forthrightly admitted that he probably prepared or assisted in the preparation of the applications. There is no evidence that Kay in any way concealed his involvement. In the Roy Jensen end user application, for example, Kay's name and the call sign of Kay's associated station were handwritten (most likely by Kay) on the application. WTB Ex. 306 at p. 3. And the contact phone number provided at two different places on the application is a business number that rings at Kay's offices. WTB Ex. 306 at p. 1. 205. The Bureau further charges that Kay abused Commission process "by using the names of other to apply for additional frequencies for himself." WTB PF&C at  254. In this connection the Bureau is referring principally to the base station licenses held by Carla Pfeifer, Vincent Cordaro, Jerry Gales, and Marc Sobel. As the Bureau correctly notes, "it is an abuse of process to specify a surrogate to apply for a station so as to deny the Commission and the public the opportunity to review and pass on the qualifications of that party." Id., quoting Trinity Broadcasting of Florida, Inc., 10 FCC Rcd 12020, 12060 (ALJ 1999). But the Bureau has not met its burden of proving that Kay did any such thing. The Bureau has presented absolutely no evidence or other showing that Kay was ineligible to hold the licenses in question, and the Bureau has offered no evidence showing that Kay in any way acted to conceal his involvement in the applications; indeed, in many instances Kay's name and telephone number was provided in the applications as the contact person and the one who prepared the application. 206. Kay explicitly testified that he could have easily applied, in his own name, for the Castro Peak license held by Carla Pfeifer had he so desired, Tr. 2432-2433, and the Bureau has not contradicted this. The record indicates that most, if not all, of the management agreement station licenses held by Marc Sobel were, at the time he obtained them, on encumbered channels. E.g., WTB Ex. 229 at pp. 198-199. The Bureau has not disputed this. Kay demonstrated that, if he had desired to apply in his own name for the Rasnow Peak authorization held by Cordaro, he would have been able to do so by simply demonstrating a need for only 9 mobile units, based on an analysis of the loading environment on the channel at that time. Tr. 2479-2483. The Bureau has not disputed this. In this connection, the record establishes Kay's adeptness at obtaining licenses on encumbered channels in his own name in circumstances where there were existing users already on the channel. E.g., Kay PF&C at  93. 207. Abuse of process, especially the particular manifestation of it alleged here, is a very serious charge. It can not be supported by mere speculation. It was incumbent upon the Bureau to prove that Kay did the acts it alleges. The Bureau can not even make out a case that Kay had any motive to do the things alleged. It has not demonstrated that Section 90.623 would have precluded Kay from submitting any one of the questioned applications in his own name. Accordingly, since the Bureau has not satisfied its evidentiary burdens, the issue is resolved in Kay's favor. Malicious Interference Issue 208. This issue is "[t]o determine whether James A. Kay, Jr. willfully or maliciously interfered with the radio communications of other systems, in violation of Sections 333 of the Act." HDO at  10(e). The Bureau has recommended resolution of this issue in Kay's favor. It is therefore not necessary to address the matter further. Effect of De Facto Control Issue 209. The issue as framed by Judge Sippel seeks to determine "[w]hether based upon the findings and conclusions reached in WT Docket No. 97-56 concerning Kay's participation in an unauthorized transfer of control Kay is basically qualified to be a Commission license." It is concluded that such findings and conclusions do not render Kay unfit to be a Commission licensee. 210. As discussed in Findings 168 and 169, the Sobel conclusion that Sobel was unfit to be a licensee was tainted by the fact that the Bureau deliberately concealed the fact that Kay provided to the Bureau a copy of the Management Agreement in March 1995. The Bureau did more than conceal this critical information. It falsely stated in its October 31, 1997 Comments to Kay's and Sobel's pleadings relating to the misrepresentation issue that "none of Sobel's or Kay's filings in 1994, or 1995 disclosed the relationship between Sobel and Kay with respect to the Management Agreement stations." Par. 4. Thus, Judge Frysiak erroneously assumed that the Bureau first obtained a copy of the Management Agreement in July 1996, in response to a letter of inquiry to Sobel. See Judge Frysiak's Initial Decision, 12 FCC Rcd at 22902, para. 74, 77. There is no doubt that his ultimate conclusion that Sobel "made misrepresentations and lacked candor about the transfer of control" (para. 78) was based on his erroneous assumption as to when the Agreement was given to the Bureau. In light of these considerations, Judge Frysiak's conclusion must be disregarded in determining Kay's fitness to be a licensee. 211. An unauthorized transfer of control, in and of itself, is not grounds for disqualification unless coupled with an intent to deceive or other disqualifying conduct. E.g., Deer Lodge Broadcasting, Inc., 86 FCC 2d 1066, 49 Rad. Reg. 2d (P&F) 1317 at  63-67 (1981); Blue Ribbon Broadcasting, Inc., 90 FCC 2d 1023, 51 Rad. Reg. 2d (P&F) 1474 at  7-9 (Rev. Bd. 1982); Silver Star Communications - Albany, Inc., 3 F.C.C.R. 6342 at  52-58 (Rev. Bd. 1988), aff'd 6 F.C.C.R. 6905, 70 Rad Reg. 2d (P&F) 18 at  13-20 (1991); Roy M. Speer, 11 F.C.C.R. 18393 at  88 (1996). While this principle evolved in broadcast cases, it applies equally in the wireless services. Brian L. O'Neill, 6 F.C.C.R. 2572, 69 Rad. Reg. 2d (P&F) 129 at 30 (1991); Century Cellunet of Jackson MSA Limited Partnership, 6 F.C.C.R. 6150, 70 Rad. Reg. 2d (P&F) 214 at  8 (1991); Catherine L. Waddill, 8 FCC 2710, 72 Rad. Reg. 2d (P&F) 500 at  19 (1993); Applications of Motorola, Inc., supra. 212. The Commission's usual response to unauthorized transfers is to require them to be undone. E.g., Ellis Thompson, 3 F.C.C.R. 3962 (Mob. Serv. Div. 1988) (cellular application granted conditioned on removal from an agreement a paragraph potentially conferring control on a third party), affirmed on recon., 4 F.C.C.R. 2599 (Com. Car. Bur. 1989), affirmed on review sub nom. Ellis Thompson Corp., 7 F.C.C.R. 3932 (1992), reversed on other grounds sub nom. Telephone and Data Systems, Inc. v. FCC, 19 F.3d 42 (D.C. Cir 1994); Petroleum V. Nasby Corp., 10 F.C.C.R. 6029 (Rev. Bd. 1995) recon. granted in part, 10 F.C.C.R. 9964 (Rev. Bd. 1995) (renewal and belated approval of an unauthorized transfer of control issued subject to a divestiture condition), remanded on other grounds 11 F.C.C.R. 3494 (1996). When a sanction has been imposed, it is typically a forfeiture, not license revocation. E.g., Rasa Communications Corp., 11 F.C.C.R. 13243 (1996); Kenneth B. Ulbricht (DA 96-2193; released December 31, 1996); Galesburg Broadcasting Co., 6 F.C.C.R. 2210 (1991); The Hinton Telephone Co., 6 F.C.C.R. 7002 (1991), forfeiture reduced, 7 F.C.C.R. 6643 (1992). See also, Forfeiture Policy Statement, 12 F.C.C.R. 17087 (1997). 213. Turning to the facts of this case, as discussed in the Findings, the written management agreement was prepared for Kay and Sobel by Washington, D.C. communications counsel, and both individuals were specifically advised that it complied with applicable FCC requirements. Moreover, there is no evidence of an intent to conceal the business arrangement from the Commission. The Agreement was voluntarily given to the Bureau in March 1995, long before the Bureau raised any questions about its propriety. Therefore, consistent with Commission precedent, even if it is ultimately concluded that the Agreement constitutes an unauthorized transfer of de facto control of Sobel's stations to Kay, the transgression is not grounds for disqualification. In addition, a requirement to undo the Agreement is not necessary since the Agreement is no longer in effect, having been replaced by a revised agreement drafted by Kay's current regulatory counsel. Further, the assessment of a forfeiture would appear to be precluded by the statute of limitation. See Section 503(b)(6)(B) of the Act and Section 1.80(c)(3) of the Rules which provide that no forfeiture penalty shall be imposed if the violation occurred more than one year prior to the issuance of the appropriate notice. However, even if this was not the case, a forfeiture would not be warranted considering the complete absence of an intent to conceal the Agreement, Kay having given the Bureau, in good faith, a copy of the agreement in March 1995. If the Bureau found the Agreement wanting, it should have timely notified Kay and Sobel of that fact, instead of waiting more than a year and designating Sobel's applications for hearing on the pretext that the agreement was first filed in July 1996. Under the circumstances, no sanctions are warranted. Misrepresentation and Lack of Candor Issue 214. The issue added by Judge Sippel seeks a determination whether Kay "misrepresented facts or lacked candor in presenting a Motion to Enlarge, Change, Or Delete Issues that was filed by Kay on January 12, 1995 and January 25, 1995." As previously documented Judge Sippel's action stemmed from Judge Frysiak's erroneous conclusion that Sobel intentionally concealed the Management Agreement until compelled to disclose it in July 1996, pursuant to a letter of inquiry. It is concluded that the issue, contrived by the Bureau, is without substance. The issue is resolved in favor of Kay. 215. The issue concerns a brief statement made in a 16 page pleading filed in January 1995, that Kay had no "interest" in Sobel's stations or licenses. The Bureau contends that the statement was intended to deceive the Commission about his business arrangement with Sobel. The Bureau's argument rests on the false premise that Sobel and Kay concealed their Management Agreement until Sobel responded to a letter of inquiry in July 1996. The Bureau's contention is baseless. Initially, as discussed in the Findings, the statement was intended to correct an error in the original HDO that Kay was conducting business under a number of names including Marc Sobel dba Airwave Communications. The HDO did not state that the Commission was inquiring into the relationship between Sobel and Kay, but rather its erroneous belief that Sobel was a fictitious name being used by Kay. The statement in issue must be fairly understood in that context. 216. Moreover, the record makes clear that Kay understood the language in the statement prepared by his counsel denying an interest in Sobel's licenses or stations to mean that Kay "had no ownership interest as in owning a part of this, being a partner, in any licenses that were issued to Marc Sobel." Tr. 2444. Kay did not consider his provision of equipment and services in connection with a managed station to give him an interest in that station license, any more than he considers his provision of equipment and services to a community repeater to give him an interest in the licenses held by the users of the community repeater. Tr. 937-939. Kay's testimony as to what he meant by the word "interest" and the phrase "stations or licenses" is entirely reasonable and credible. Significantly, the Bureau shared the same view when in March 1996, it, like Kay earlier, sought to sever the Sobel licenses from the Kay proceeding, although it was aware that "Kay manages stations which are authorized to Marc Sobel." See "Wireless Telecommunication's Bureau's Request For Certification" filed March 6, 1996, note 2. 217. Further, the actions of Sobel and Kay are inconsistent with an intent on their part to conceal the management agreement from the Commission. The Bureau's speculation can not be reconciled with the fact that only two months after the January 1995 pleading, in March 1995, long before the Bureau first raised questions about the Management Agreement and the January 1995 pleading, Kay produced copies of agreements for stations he managed, including the Sobel Management Agreement. Kay's Responses to Wireless Telecommunications Bureau's First Request for Documents (March 24, 1995). Bereft of its false premise that the Agreement was first filed in July 1996, the Bureau now speculates that Kay would not have produced the Sobel Management Agreement if the January 1995 pleading had been successful. The facts, however, do not support this speculation. The Bureau ignores the fact that Kay managed other stations besides Sobel's. In the March 1995 discovery response, in addition to the Sobel Management Agreement, Kay produced other management agreements that had no relevance to the January 1995 pleading and were not expressly implicated in the HDO. For example, it was by virtue of this discovery production that the Bureau received a copy of the management agreement between Kay and Jerry Gales. Bureau Ex. 326. 218. The sine qua non of disqualifying misrepresentation or lack of candor is a fraudulent or deceptive intent. Leflore Broadcasting v. FCC, 636 F.2d 454, 461 (D.C. Cir. 1980); Policy Regarding Character Qualifications in Broadcast Licensing, 102 FCC 2d 1179, 1196, 59 Rad Reg. 2d (P&F) 801 (1986); Fox River Broadcasting, Inc., 93 FCC 2d 127, 129, 53 Rd. Reg. 2d (P&F) 44 (1983). The Bureau has not offered even a shred of evidence that Kay and Sobel intended to deceive the Commission about their management agreement. On the contrary, the record shows that Kay and Sobel have been open and straightforward with the Commission. The misrepresentation issue is resolved in favor of Kay. Automatic Cancellation Issue 219. The HDO also calls for a determination as to whether any of Kay's licenses have automatically cancelled as a result of certain rule violations (issue h). 220. The Bureau lists a number of UHF repeaters which Kay has admitted are not in operation. WTB PF&C at  107. However, Kay notes it is not the entire station authorized under the call sign that is not in operation, but only certain parts thereof. As noted by Kay, a single authorization may, in addition to one or more base station locations, also authorize control stations, mobile and talk-around authority, etc. Further, in reviewing the list set forth by the Bureau in paragraph 107 of its proposed findings, the vast majority of the locations listed are designated as Signal Hill. In April 1994, he points out that he submitted an application to modify a large number of his UHF authorizations, and part of that proposal was to delete all the base stations authorized at Signal Hill. That application is still pending before the Bureau to this day, more than five years later. See Kay Ex. 65; Tr. 2383-2394. Of the remaining listed locations, Kay asserts that reference to the authorizations themselves will reveal that the vast majority of these are control stations, not base stations. As such, according to Kay, they are not subject to construction deadlines, and the maintenance of that particular portion of an authorization does not have any preclusive effect on other licensees and applicants. Kay also states that most if not all of these items would be deleted if long- pending modification applications are granted. 221. Similarly, the Bureau lists a number of 800 MHz stations which Kay has admitted are not in operation. WTB PF&C at  108. Kay claims that reference to the authorizations in question will reveal that each of these is a secondary base station site. Kay points out that at 800 MHz, a licensee may be authorized for both primary and secondary locations on the same authorization. While primary sites are subject to applicable construction deadlines, secondary sites are not subject to construction deadlines and are not protected from interference. Thus, as Kay indicates, automatic cancellation of authority for a secondary site would have no significant regulatory effect as a practical matter, because the site could be added back to the authorization at any time, subject to the restrictions applicable to all secondary sites. 222. The Bureau has suggested that "[t]he Presiding Judge may simply wish to conclude [certain] base stations were either not constructed or [permanently] discontinued operation ... and direct the Commission licensing staff to perform the appropriate licensing maintenance." WTB PF&C at n. 23. This appears to be consistent with Kay's offer "to cooperate with the Bureau, after the hearing, to determine which authorizations, if any, should be purged from the Commission's database as a result of this stipulation." Kay PF&C at n. 27. The parties seem to be in agreement, therefore, that this is an administrative housekeeping chore that can be better accomplished on an informal basis in a post-hearing context. However, in light of the significant questions raised by Kay, it is imperative that the Bureau staff coordinate this matter with Kay, i.e., this should be a joint and cooperative determination, not a unilateral determination of the Bureau staff. The Commission staff, of course, will ultimately make the determination and act accordingly, but it would be an inefficient use of public and private resources to have the Bureau act unilaterally only to have Kay then seek reconsideration of one or more of its determinations and action. Therefore, the Bureau is directed to coordinate this matter with Kay before cancelling any of Kay's authorizations. In addition, in light of the determination, below, that Kay is qualified to remain a licensee, it is time to lift the five year old freeze on the processing of Kay's applications and the Bureau is directed to do so expeditiously. 223. Finally, all issues having been resolved in favor of Kay, it is ultimately concluded that Kay is qualified to remain a licensee. Further, there is no basis for license revocation of any of his stations or imposition of a forfeiture. Accordingly, IT IS ORDERED, that unless an appeal from this Initial Decision is taken by a party, or it is reviewed by the Commission on its own motion in accordance with Section 1.276 of the Rules, the licenses of James A. Kay, Jr., holder of One Hundred Fifty Two Part 90 Licenses in the Los Angeles, California, area ARE NOT REVOKED. FEDERAL COMMUNICATIONS COMMISSION Joseph Chachkin Administrative Law Judge