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Federal Communications Commission
Washington, D.C. 20554
In the Matter of ) File No. EB-04-IH-0525
Blackstone Calling Card, Inc. ) NAL/Acct. No. 20063208009
Apparent Liability for )
NOTICE OF APPARENT LIABILITY FOR FORFEITURE AND ORDER
Adopted: December 16, 2005 Released:
December 19, 2005
By the Chief, Enforcement Bureau:
1. In this Notice of Apparent Liability for
Forfeiture and Order (``NAL''), we find that Blackstone
Calling Card, Inc. (``Blackstone'') apparently violated
Commission orders by willfully and repeatedly failing to
respond to directives of the Enforcement Bureau (``Bureau'')
to provide certain information and documents. Based on our
review of the facts and circumstances of this case, and for
the reasons discussed below, we find that Blackstone is
apparently liable for a monetary forfeiture in the amount of
2. Blackstone is a Florida-based company that
characterizes itself as ``one of the country's largest
providers of prepaid telecommunications products and
services.''1 Blackstone offers various services and
products to the public, including a variety of prepaid
calling cards.2 On its website, Blackstone offers
Blackstone-labeled calling cards, among other products,
directly to the public for a fee.3
3. On March 30, 2004, Bureau staff sent a letter to
Blackstone requesting information pertaining to Blackstone's
compliance with section 64.1195 of the Commission's rules.4
Blackstone provided certain contact information requested
and an unsupported statement that ``Blackstone Calling Card,
Inc., is not a carrier.''5
4. After determining that Blackstone appeared to have
failed to timely register with the Commission or timely file
required Telecommunications Reporting Worksheets
(``Worksheets''), the Bureau issued a letter of inquiry
(``LOI'') to Blackstone on October 21, 2004.6 The LOI
directed Blackstone, among other things, to submit a sworn
written response to a series of questions relating to
Blackstone's apparent failure to register and file
Worksheets and to make mandated federal telecommunications
regulatory program payments. On December 20, 2004,
Blackstone provided an incomplete response to the LOI and
stated that Blackstone ``has never provided any
telecommunications services,'' ``is not required'' to file
Worksheets, contribute to the federal universal service fund
(``USF''), or pay regulatory fees, and ``is solely a
distributor of prepaid phone cards.''7 Contrary to the
directions of the LOI, however, Blackstone did not provide
financial statements, tax returns, or specific
identification of its alleged non-telecommunications
products, services and associated revenue. In addition, the
certification Blackstone supplied to support its response
did not contain a statement that it was made under penalty
of perjury and thus failed to conform to Commission Rule
1.16, 47 C.F.R. § 1.16, as required in the LOI.8
5. As a result of Blackstone's inadequate and
incomplete response, the Bureau was compelled to send a
second LOI to Blackstone on June 28, 2005, requesting
additional information that would permit the Bureau to
examine Blackstone's claim, directing it to provide complete
responses to inquiries in the original LOI, and agreeing to
hold in abeyance other pending inquiries until the Bureau
reviewed the additional responses. The June 2005 LOI also
warned Blackstone that its failure to respond fully to the
Bureau's LOI could subject Blackstone to potential
enforcement action.9 Blackstone failed to respond to the
June 28, 2005 LOI in any manner. Blackstone also failed to
respond to telephone messages left by Bureau staff regarding
Blackstone's continuing failure to respond. To date, the
Bureau has not received from Blackstone a complete response
to the October 21, 2004 LOI or any response to the June 28,
A. Apparent Violation
6. Under section 503(b)(1) of the Communications Act
of 1934, as amended (the ``Act''), any person who is
determined by the Commission to have willfully or repeatedly
failed to comply with any provision of the Act or any rule,
regulation, or order issued by the Commission shall be
liable to the United States for a forfeiture penalty.10
Section 312(f)(1) of the Act defines willful as ``the
conscious and deliberate commission or omission of [any]
act, irrespective of any intent to violate'' the law.11 The
legislative history to section 312(f)(1) of the Act
clarifies that this definition of willful applies to both
sections 312 and 503(b) of the Act12 and the Commission has
so interpreted the term in the section 503(b) context.13
The Commission may also assess a forfeiture for violations
that are merely repeated, and not willful.14 ``Repeated''
means that the act was committed or omitted more than once,
or lasts more than one day.15 To impose such a forfeiture
penalty, the Commission must issue a notice of apparent
liability and the person against whom the notice has been
issued must have an opportunity to show, in writing, why no
such forfeiture penalty should be imposed.16 The Commission
will then issue a forfeiture if it finds by a preponderance
of the evidence that the person has willfully or repeatedly
violated the Act or a Commission order or rule.17
7. Sections 4(i), 4(j), 218, and 403 of the Act
afford the Commission broad authority to investigate the
entities it regulates. Section 4(i) authorizes the
Commission to ``issue such orders, not inconsistent with
this Act, as may be necessary in the execution of its
functions,'' and section 4(j) states that ``the Commission
may conduct its proceedings in such manner as will best
conduce to the proper dispatch of business and to the ends
of justice.'' Section 403 of the Act grants the Commission
``full authority and power at any time to institute an
inquiry, on its own motion . . . relating to the enforcement
of any of the provisions of this Act.''18
8. We first conclude that under the Act and
Commission rules Blackstone is a carrier providing
telecommunications services. Blackstone stated in its
partial LOI response that it is solely a distributor of
carriers' prepaid phone cards and made the unsubstantiated
assertion that Blackstone itself has never provided
telecommunications service.19 Blackstone, however, failed
to provide documentation to support that assertion and,
because it did not respond to the Bureau's follow-up LOI,
Blackstone did not provide any documents or information in
response to that LOI that allowed the Bureau to substantiate
its assertion. In the absence of such substantiating
evidence, contrary to Blackstone's assertion, we conclude it
is a provider of telecommunications services. Under the
Act, telecommunications service is ``the offering of
telecommunications for a fee directly to the public . . .
regardless of the facilities used.''20 Additionally, the
Act defines a telecommunications carrier as any provider of
telecommunications services.21 In this regard, the
Commission has long held that calling card providers are
providing telecommunications services.22 Based on
information collected in this investigation, we know that
Blackstone apparently offers telecommunications service for
a fee directly to the public, for example, by offering
interstate and international telecommunications service
through Blackstone-labeled calling cards marketed on its
website. Thus, it appears Blackstone is providing
telecommunications services. We therefore find that
Blackstone is a carrier providing telecommunications service
and subject to the regulations governing all such
9. We next find that Blackstone apparently violated
Commission orders by failing on multiple occasions to
respond to Bureau inquiries. Section 218 of the Act
specifically authorizes the Commission to ``obtain from . .
. carriers . . . full and complete information necessary
to enable the Commission to perform the duties and carry out
the objects for which it was created.''24 Sections 4(i),
4(j), and 403 of the Act unequivocally grant the Commission
the power to direct responses to inquires in order to
execute its functions.25 As indicated above, the Bureau
directed Blackstone to provide certain documents and
information to enable the Commission to perform its
enforcement function and evaluate allegations that
Blackstone violated Commission rules. Blackstone received
both LOIs. Blackstone received the October 21, 2004 LOI as
evidenced by its own incomplete response. Blackstone also
received the June 28, 2005 LOI, sent by the Bureau via U.S.
mail and by facsimile to the facsimile number provided by
Blackstone in response to the March 30 Audit Letter, as
evidenced by confirmation of the facsimile transmission.
Further, in July 2005, Bureau staff took the additional step
of attempting to contact Blackstone by telephone. Staff
left messages with Blackstone employees for the President
and Chief Executive Officer of Blackstone, Luis Arias,
addressee of the LOIs and signatory of Blackstone's
incomplete response to the first LOI. In those messages,
Bureau staff specifically stated that the Bureau had not
received the required response to the June 2005 LOI.
Despite the Bureau's significant efforts to elicit
information from Blackstone, as of the date of this NAL,
Blackstone has failed to provide a complete response to the
Bureau's first LOI and failed to respond to the Bureau's
second LOI at all. We conclude that Blackstone's continuing
failure to respond to the Bureau's LOIs constitutes an
apparent willful and repeated violation of Commission
III.A. Forfeiture Amount
10. Section 503(b)(1) of the Act provides that any
person that willfully or repeatedly fails to comply with any
provision of the Act or any rule, regulation, or order
issued by the Commission, shall be liable to the United
States for a forfeiture penalty.27 Section 503(b)(2)(B) of
the Act authorizes the Commission to assess a forfeiture of
up to $130,000 for each violation or each day of a
continuing violation, up to a statutory maximum of
$1,325,000 for a single act or failure to act.28 In
determining the appropriate forfeiture amount, we consider
the factors enumerated in section 503(b)(2)(D) of the Act,
including ``the nature, circumstances, extent, and gravity
of the violation and, with respect to the violator, the
degree of culpability, any history of prior offenses,
ability to pay, and such other matters as justice may
11. Section 1.80 of the Commission's rules and the
Commission's Forfeiture Policy Statement establish a base
forfeiture amount of $3,000 for failure to file required
forms or information, and $4,000 for failure to respond to a
Commission communication.30 Blackstone's failures to
respond occurred despite attempts by Bureau staff to call
Blackstone's attention to the importance of responding to
LOIs. We find that the lack of a complete response to the
first LOI and the total failure to respond to the second
LOI, notwithstanding the Bureau's significant efforts to
contact Blackstone executives, warrants a substantial
increase to this base amount. Misconduct of this type
exhibits a disregard for the Commission's authority and,
more importantly, threatens to compromise the Commission's
ability to adequately investigate violations of its rules.
In this case, such misconduct inhibits our ability
adequately to detect and deter potential rule violations in
an area of critical importance to the Commission --
contributions to the USF. Prompt and full responses to
Bureau inquiry letters are critical to the Commission's
enforcement function. We therefore propose a total
forfeiture against Blackstone of $20,000 for failing to
respond to Commission communications. This forfeiture
amount is consistent with recent precedent in similar cases,
where companies failed to provide responses to LOIs
concerning compliance with the Commission's universal
service rules despite evidence that the LOIs had been
12. We also direct Blackstone to respond fully to the
December 2004 and June 2005 LOIs within thirty days of the
release of this order. Failure to do so may constitute an
additional violation potentially subjecting Blackstone to
further penalties, including potentially higher monetary
forfeitures, the revocation of operating authority, and the
disqualification of Luis Arias and any other Blackstone
principal from the provision of any common carrier services
without the prior consent of the Commission.32
IV. ORDERING CLAUSES
13. ACCORDINGLY, IT IS ORDERED THAT, pursuant to
section 503(b) of the Communications Act of 1934, as
amended, 47 U.S.C. § 503(b), and section 1.80 of the
Commission's rules, 47 C.F.R. §1.80, Blackstone Calling
Card, Inc., is hereby NOTIFIED of its APPARENT LIABILITY FOR
FORFEITURE in the amount of $20,000 for willfully and
repeatedly violating Commission orders.
14. IT IS FURTHER ORDERED THAT, pursuant to section
1.80 of the Commission's rules, 47 C.F.R. § 1.80, within
thirty days of the release date of this NOTICE OF APPARENT
LIABILITY FOR FORFEITURE, Blackstone Calling Card, Inc.,
SHALL PAY the full amount of the proposed forfeiture
currently outstanding on that date or SHALL FILE a written
statement seeking reduction or cancellation of the proposed
15. Payment of the forfeiture must be made by check or
similar instrument, payable to the order of the Federal
Communications Commission. The payment must include the
NAL/Acct. No. and FRN No. referenced above. Payment by
check or money order may be mailed to Federal Communications
Commission, P.O. Box 358340, Pittsburgh, PA 15251-8340.
Payment by overnight mail may be sent to Mellon Bank /LB
358340, 500 Ross Street, Room 1540670, Pittsburgh, PA 15251.
Payment by wire transfer may be made to ABA Number
043000261, receiving bank Mellon Bank, and account number
16. IT IS FURTHER ORDERED, that pursuant to sections
4(i), 4(j), 218 and 403 of the of the Communications Act of
1934, as amended, 47 U.S.C. §§ 4(i), 4(j), 218 and 403, and
section 54.711 of the Commission's rules, 47 C.F.R. §
54.711, Blackstone Calling Card, Inc., shall fully respond
to the October 2004 and June 2005 Letters of Inquiry sent by
the FCC's Enforcement Bureau within 30 days of the release
of this order.
17. The response, if any, to this NOTICE OF APPARENT
LIABILITY FOR FORFEITURE must be mailed to William H.
Davenport, Chief, Investigations and Hearings Division,
Enforcement Bureau, Federal Communications Commission, 445
12th Street, S.W., Suite 4-C330, Washington, D.C. 20554 and
must include the NAL/Acct. No. referenced above. E-mail
18. The Commission will not consider reducing or
canceling a forfeiture in response to a claim of inability
to pay unless the petitioner submits: (1) federal tax
returns for the most recent three-year period; (2) financial
statements prepared according to generally accepted
accounting practices (``GAAP''); or (3) some other reliable
and objective documentation that accurately reflects the
petitioner's current financial status. Any claim of
inability to pay must specifically identify the basis for
the claim by reference to the financial documentation
19. Requests for payment of the full amount of this
NOTICE OF APPARENT LIABILITY FOR FORFEITURE under an
installment plan should be sent to Associate Managing
Director -- Financial Operations, Room 1A625, 445 12th
Street, S.W., Washington, D.C., 20554.
20. IT IS FURTHER ORDERED THAT a copy of this NOTICE
OF APPARENT LIABILITY shall be sent, by certified
mail/return receipt requested to Mr. Luis Arias, President,
Blackstone Calling Card, Inc., 11600 N.W. 34th Street,
Miami, Florida, 33178.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Chief, Enforcement Bureau
2 See id.
3 See id. Blackstone-labeled calling cards direct
customers to Blackstone's website to obtain assistance and
information regarding card services.
4 See letter from Hugh Boyle, Chief Auditor, Investigations
and Hearings Division, Enforcement Bureau, to Blackstone
dated March 30, 2004 (``March 30 Audit Letter'').
5 Electronic mail message from Tania Diblin, Legal
Assistant, Blackstone, dated April 16, 2004.
6 Letter from Hillary S. DeNigro, Deputy Chief,
Investigations and Hearings Division, Enforcement Bureau,
to Luis Arias, Blackstone, dated October 21, 2004. The LOI
specifically required Blackstone to provide relevant
information with respect to Blackstone and any affiliate,
predecessor-in-interest, parent company, subsidiary,
director, officer, employee, and agent.
7 Letter from Luis Arias, Blackstone, to Carla Conover,
Investigations and Hearings Division, Enforcement Bureau,
dated December 20, 2004 (``Incomplete Response'').
8 Failure to provide a sworn statement supporting an LOI
response can, by itself, subject an entity to enforcement
action. See, e.g., SBC Communications, Inc., Forfeiture
Order, 17 FCC Rcd 7589 (2002) (``SBC Forfeiture Order'').
9 Letter from Hillary S. DeNigro, Deputy Chief,
Investigations and Hearings Division, Enforcement Bureau,
to Luis Arias, Blackstone, dated June 28, 2005.
Blackstone's receipt of the letter is shown by confirmation
of the facsimile transmission to the Blackstone facsimile
number supplied by Blackstone in response to the March 30
Audit Letter and to which both LOIs were sent.
10 47 U.S.C. § 503(b)(1)(B); 47 C.F.R. § 1.80(a)(1); see
also 47 U.S.C. § 503(b)(1)(D) (forfeitures for violation of
14 U.S.C. § 1464).
11 47 U.S.C. § 312(f)(1).
12 H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51 (1982).
13 See, e.g., Application for Review of Southern California
Broadcasting Co., Memorandum Opinion and Order, 6 FCC Rcd
4387, 4388 (1991) (``Southern California Broadcasting
14 See, e.g., Callais Cablevision, Inc., Grand Isle,
Louisiana, Notice of Apparent Liability for Monetary
Forfeiture, 16 FCC Rcd 1359, 1362, ¶ 10 (2001) (``Callais
Cablevision'') (issuing a Notice of Apparent Liability for,
inter alia, a cable television operator's repeated signal
15 Southern California Broadcasting Co., 6 FCC Rcd at 4388,
¶ 5; Callais Cablevision, Inc., 16 FCC Rcd at 1362, ¶ 9.
16 47 U.S.C. § 503(b); 47 C.F.R. § 1.80(f).
17 See, e.g., SBC Communications, Inc., 17 FCC Rcd at 7591.
18 47 U.S.C. § 403. See also 47 U.S.C. § 154(i), (j).
19 Incomplete Response, p.1.
20 47 U.S.C. § 153(46).
21 Id., § 153(44).
22 See, e.g., AT&T Petition for Declaratory Ruling
Regarding Enhanced Prepaid Calling Card Services,
Regulation of Prepaid Calling Card Services, Order and
Notice of Proposed Rulemaking, 20 FCC Rcd 4826 (2005); Time
Machine, Memorandum Opinion and Order, 11 FCC Rcd 1186 (CCB
23 We specifically preserve our ability to pursue
additional enforcement action based on Blackstone's failure
to satisfy the requirements of the Act or Commission rules.
24 47 U.S.C. § 218.
25 47 U.S.C. §§ 154(i),(j), & 403.
26 See, e.g., SBC Forfeiture Order, 17 FCC Rcd at 7599-
7600, ¶¶ 23-28 (ordering $100,000 forfeiture for egregious
and intentional failure to certify the response to a Bureau
inquiry); Globcom, Inc., Notice of Apparent Liability for
Forfeiture and Order, 18 FCC Rcd 19893, 19898 n. 36 (2003)
(noting delayed response to an LOI is considered dilatory
behavior which may result in future sanctions); BigZoo.Com
Corporation, Notice of Apparent liability for Forfeiture
and Order, 19 FCC 24437 (Enf. Bur. 2004), Order of
Forfeiture, 20 FCC Rcd 3954 (Enf. Bur. 2005) (``BigZoo'')
(ordering $20,000 forfeiture for failure to respond to an
LOI); American Family Association, Licensee of Station
KBMP(FM), Enterprise, Kansas, Notice of Apparent Liability
for Forfeiture, 19 FCC Rcd 14072, Forfeiture Order, 19 FCC
Rcd 22025 (Enf. Bur. 2004) (ordering $3,000 forfeiture
against non-commercial educational station for a partial
response to an LOI); World Communications Satellite
Systems, Inc., Notice of Apparent Liability for Forfeiture,
18 FCC Rcd 18545 (Enf. Bur. 2003) (proposing $10,000
forfeiture for non-responsive reply to an LOI); Donald W.
Kaminski, Jr., Notice of Apparent Liability for Forfeiture,
16 FCC Rcd 10707 (Enf. Bur. 2001), Forfeiture Order, 18 FCC
Rcd 26065 (Enf. Bur. 2003) (ordering $4,000 forfeiture for
individual's failure to respond to an LOI).
27 47 U.S.C. § 503(b)(1)(B); 47 C.F.R. § 1.80(a)(2).
28 47 U.S.C. § 503(b)(2)(B). See also 47 C.F.R. §
1.80(b)(2); Amendment of Section 1.80(b) of the
Commission's Rules, Adjustment of Forfeiture Maxima to
Reflect Inflation, Order, 19 FCC Rcd 10945 (2004).
2947 U.S.C. § 503(b)(2)(D).
30 47 C.F.R. § 1.80; Commission's Forfeiture Policy
Statement and Amendment of Section 1.80 of the Rules to
Incorporate the Forfeiture Guidelines, Report and Order, 12
FCC Rcd 17087, 17114 (1997) (``Forfeiture Policy
Statement''), recon. denied 15 FCC Rcd 303 (1999).
31 See BigZoo, 20 FCC Rcd at 3955 (ordering $20,000
forfeiture for failure to respond to LOI); QuickLink
Telecom, Inc., Order of Forfeiture, 20 FCC Rcd 14464 (Enf.
Bur. 2005) (same).
32 See, e.g., Business Options, Inc., Consent Decree, 19
FCC Rcd 2916 (2003); NOS Communications, Inc., Affinity
Network Incorporated and NOSVA Limited Partnership, Consent
Decree, 2003 WL 22439710 (2003).