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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of ) EB Docket No. 03-85
)
BUSINESS OPTIONS, INC. ) File No. EB-02-TC-151
)
Order to Show Cause and ) NAL/Acct. No.
200332170002
Notice of Opportunity for Hearing )
) FRN: 0007179054
CONSENT DECREE
1. The Enforcement Bureau (the ``Bureau'') of the
Federal Communications Commission (``FCC'' or
``Commission'') and Business Options, Inc. (``BOI'') hereby
enter into this Consent Decree for the purpose of
terminating the above captioned proceeding (the
``Proceeding'') initiated by an Order to Show Cause and
Notice of Opportunity for Hearing (``Order to Show Cause'')
issued by the Commission on April 7, 2003.1
2. For purposes of this Consent Decree, the following
definitions shall apply.
(a) ``Affiliates'' means any entity owned, directed or
controlled by either Kurtis J. Kintzel, and/or
Keanan Kintzel, which provides or markets long
distance telephone service.
(b) ``AVATAR'' means Avatar Enterprises, Inc., all
d/b/a entities, and any entity owned, directed or
controlled by AVATAR or its principals, Kurtis J.
and Keanan Kintzel, including all subsidiaries,
commonly-owned affiliates, successors, and assigns
that provide or market long distance telephone
service.
(c) ``BOI'' means Business Options, Inc., all d/b/a
and related entities that provide or market the
sale of long distance telephone service, including
U.S. Bell, Inc., Link Technologies, Buzz Telecom
Corporation, and any entity owned, directed or
controlled by the company or its principals,
Kurtis J. Kintzel and Keanan Kintzel, including
all subsidiaries, commonly-owned affiliates,
successors, and assigns that are engaged in the
business of providing or marketing long distance
telephone service.
(d) ``Bureau'' means the Enforcement Bureau of the
Federal Communications Commission.
(e) ``BUZZ'' means Buzz Telecom Corporation, all d/b/a
entities, and any entity owned, directed or
controlled by BUZZ or its principals, Kurtis J.
Kintzel and Keanan Kintzel, including all
subsidiaries, commonly-owned affiliates,
successors, and assigns that are engaged in the
business of providing or marketing long distance
telephone service.
(f) The ``Companies'' means BOI, U.S. Bell/LINK, BUZZ,
and AVATAR.
(g) ``Customer" means a consumer (a natural person,
individual, governmental agency or entity,
partnership, corporation, limited liability
company or corporation, trust, estate,
incorporated or unincorporated association, and
any other legal or commercial entity however
organized) offered, receiving, or previously
receiving inter-exchange services from the
Companies.
(h) ``Discontinuance Application'' means the
application that must be filed by a domestic
carrier before it discontinues, reduces or impairs
service as prescribed in 47 C.F.R. § 63.71 (2002).
(i) ``Effective Date'' means the date on which the
Order becomes a Final Order.
(j) ``FCC'' or the ``Commission'' means the Federal
Communications Commission and all of its bureaus
and offices.
(k) ``Final Order'' means an order that is no longer
subject to administrative or judicial
reconsideration, review, appeal, or stay.
(l) ``Independent Third Party Verifier'' means, in
addition to the qualifications set forth in 47
C.F.R. § 64.1120(c)(3), an entity (i) whose
employees are not paid directly by the Companies,
(ii) whose owners are not employed by the
Companies in any way, and (iii) whose employees
and/or owners are not related by blood or marriage
to Kurtis or Keanan Kintzel.
(m) ``Misleading'' means a misrepresentation,
omission, or other practice that is intended or
could reasonably be expected to deceive, confuse
or misinform a reasonable consumer acting
reasonably under the circumstances.
(n) ``Order'' means the order of the presiding officer
adopting the terms of this Consent Decree without
change, addition, or modification.
(o) ``Order to Show Cause'' means the Order to Show
Cause and Notice of Opportunity for Hearing, 18
FCC Rcd 6881 (2003).
(p) The ``Parties'' means the Companies and the
Bureau.
(q) The ``Proceeding'' means the evidentiary hearing
initiated by the Order to Show Cause.
(r) ``Registration'' means the filing of the
information set forth in 47 C.F.R. § 64.1195
(2002).
(s) ``Re-provisioning'' means the practice of changing
a former customer's long distance telephone
service back to the Companies without obtaining
authorization or verification of any authorization
from that customer for the change.
(t) ``Sales Call'' means a telephone solicitation for
the purpose of obtaining or re-obtaining a
customer for the Companies' long distance
telephone service.
(u) ``Sales Representative'' means a person working
for or on behalf of the Companies, whose job
involves soliciting potential customers for the
Companies' long distance telephone service.
(v) ``Slamming'' means the changing of a telephone
owner's long distance carrier without following
the procedures set forth in 47 C.F.R. § 64.1120
(2002).
(w) ``U.S. Bell/LINK'' means U.S. Bell, Inc. and its
successor, Link Technologies, including all
subsidiaries, commonly-owned affiliates,
successors, and assigns.
I. BACKGROUND
3. On April 7, 2003, the Commission released the
Order to Show Cause, initiating an evidentiary hearing to
determine whether BOI had (1) made misrepresentations or
engaged in lack of candor, (2) changed consumers' preferred
carrier without their authorization in willful or repeated
violation of section 258 of the Act2 and sections 64.1100-
1190 of the Commission's rules,3 (3) failed to file FCC Form
499-A in willful or repeated violation of section 64.1195 of
the Commission's rules,4 and (4) discontinued service
without Commission authorization in willful or repeated
violation of section 214 of the Act5 and sections 63.71 and
63.505 of the Commission's rules.6 The Commission ordered
BOI to show cause why BOI's operating authority under
section 214 of the Act7 should not be revoked and why BOI's
principals should not be ordered to cease and desist from
the provision of any interstate common carrier services
without the prior consent of the Commission. The Order to
Show Cause put BOI on notice that the Commission could order
a forfeiture of as much as $80,000 for each unauthorized
conversion of named complainants' long distance service,
$3,000 for the failure to file a sworn statement or
Registration Statement, and $120,000 for the unauthorized
discontinuance of service. The Bureau was made a party to
the Proceeding.
4. On August 20, 2003, the presiding officer issued
a Memorandum Opinion and Order8 expanding the hearing to
determine whether: 1) BOI, BUZZ and/or U.S. Bell/LINK had
failed to make required contributions to federal universal
service support programs in violation of section 254(d) of
the Act9 and section 54.706 of the Commission's rules;10 2)
BOI, BUZZ and/or U.S. Bell/LINK had failed to make required
contributions to the Telecommunications Relay Services
(``TRS'') Fund, in violation of section 64.604(c)(5)(iii)(A)
of the Commission's rules;11 and 3) BOI, BUZZ, U.S.
Bell/LINK had failed to file Telecommunications Reporting
Worksheets in violation of sections 54.711, 54.713 and
64.604(c)(iii)(B) of the Commission's rules.12 The
presiding officer also put BOI, BUZZ and/or U.S. Bell/LINK
on notice that the Commission could order a forfeiture for
the failure to make required universal service contributions
and a forfeiture of as much as $10,000 for each failure to
file required TRS contributions and for each failure to file
Telecommunications Reporting Worksheets.13
5. On December 9, 2003, the presiding officer granted
the Bureau's first motion for partial summary decision,
finding that BOI had changed consumers' long distance
telephone service on sixteen occasions without following
Commission verification procedures in violation of section
258 of the Act14 and section 64.1120(c) of the Commission's
rules,15 had willfully failed to file its FCC Form 499-A in
violation of section 64.1195 of the Commission's rules,16
and had discontinued service to customers in Vermont without
Commission authorization in violation of section 214 of the
Act17 and section 63.71 of the Commission's rules.18
6. On December 24, 2003, the presiding officer
granted the Bureau's second motion for partial summary
decision, finding that BOI had willfully and repeatedly
failed to make required contributions to federal universal
service support programs in violation of section 254(d) of
the Act19 and section 54.706 of the Commission's rules,20
had willfully and repeatedly failed to make TRS Fund
contributions in violation of section 64.604(c)(5)(iii)(A)
of the Commission's rules,21 and had willfully and
repeatedly failed to file Telecommunications Reporting
Worksheets in a timely manner in violation of sections
54.711 of the Commission's rules.22
7. On January 28, 2004, pursuant to section 1.94(a)
of the Commission's Rules,23 the Bureau informed the
presiding officer of the initiation of the negotiations that
lead to this Consent Decree. Pursuant to section 1.93(b) of
the Commission's rules,24 the Bureau negotiated this Consent
Decree to secure future compliance with sections 214, 254,
and 258 of the Act25 and related Commission rules in
exchange for prompt disposition of the issues raised in the
Order to Show Cause, other than the issues already
adjudicated by the presiding officer.
II. AGREEMENT
8. The Parties agree and acknowledge that this
Consent Decree shall constitute a final settlement between
the Parties of the Proceeding and the Order to Show Cause.
In consideration for the termination of this Proceeding in
accordance with the terms of this Consent Decree, the
Parties agree to the terms, conditions, and procedures
contained herein.
9. The Companies admit that they operate as resellers
of interstate telecommunications services and that the FCC
has jurisdiction over them and the subject matter of this
Proceeding for the purposes of this Consent Decree. The
Companies represent and warrant that they are the properly
named parties to this Consent Decree and are solvent and
have sufficient funds available to meet fully all financial
and other obligations set forth herein. The Companies
further represent and warrant that they have caused this
Consent Decree to be executed by their authorized
representative, Kurtis J. Kintzel, as a true act and deed,
as of the date affixed next to said representative's
signature. Kurtis J. Kintzel and the Companies respectively
affirm and warrant that he is acting in his capacity and
within his authority as a corporate officer of the
Companies, and on behalf of the Companies, and that by his
signature Kurtis J. Kintzel is binding the Companies to the
terms and conditions of this Consent Decree. The Companies
and their principals, Kurtis J. Kintzel and Keanan Kintzel,
also represent that they have been represented by counsel of
their choice in connection with this Consent Decree and are
fully satisfied with the representation of counsel.
10. The Parties waive their right to a hearing on the
issues not already adjudicated which are designated in the
Show Cause Order, including all of the usual procedures for
preparation and review of an initial decision. The Parties
waive their right to judicial reconsideration, review,
appeal or stay, or to otherwise challenge or contest the
validity of this Consent Decree and the Order, provided the
presiding officer issues the Order without change, addition,
or modification of this Consent Decree. The Companies also
waive whatever rights they may have to contest the validity
of the presiding officer's summary decisions discussed in
paragraphs 5 and 6, above.
11. The Parties agree that the Show Cause Order may be
used in construing this Consent Decree.
12. The Parties agree that this Consent Decree is for
settlement purposes only and that signing does not
constitute an admission by the Companies, or their
principals, of any violation of law, rules or policy
associated with or arising from its actions or omissions as
described in the Order to Show Cause.
13. The Bureau agrees that, in the absence of material
new evidence relating to issues described in the Order to
Show Cause that the Bureau did not obtain through discovery
in this Proceeding or is not otherwise currently in the
Commission's possession, the Bureau and the Commission will
not use the facts developed in this Proceeding, or the
existence of this Consent Decree, to institute, on its own
motion, any new proceedings, formal or informal, or to make
any actions on its own motion against the Companies, or
their principals, concerning the matters that were the
subject of the Order to Show Cause. Consistent with the
foregoing, nothing in this Consent Decree limits, inter
alia, the Commission's authority to consider and adjudicate
any formal complaint that may be filed pursuant to section
208 of the Communications Act, as amended, and to take any
action in response to such formal complaint.
14. For purposes of settling the matters set forth
herein, the Companies and their Affiliates agree to take the
actions described below.
(a) Beginning on the Effective Date, no Sales
Representative will make a Sales Call that is
Misleading in any material respect or that represents,
suggests or implies that:
(i) the Sales Call is a courtesy call;
(ii) the Companies, or any one of them, are taking
or have taken over for another entity that
provides long distance telephone service
including, but not limited to, AT&T, Sprint, MCI
or any former Bell operating company such as
Verizon, SBC, or Qwest, unless such is
actually the case;
(iii) the only service being sold is state-to-
state unless such is actually the case; or
(iv) the Companies have a tariff on file with
the FCC.
(b) Beginning on the Effective Date, the Companies
will verify any and all new and/or former customers
only by using the procedures authorized by the
Commission and/or applicable state public utility
commissions, including those currently set forth in
47 C.F.R. § 64.1120(c). Any Independent Third Party
Verifier used by the Companies shall not be located in
the same building as any of the Companies.
(c) Beginning on the Effective Date, for any
telecommunications carrier that is providing or will
provide interstate telecommunications service and that
is owned, managed or controlled by Kurtis J. Kintzel
and/or Keanan Kintzel, such telecommunications carrier
shall comply with any Commission registration
requirements, including those currently set forth
in 47 C.F.R. § 64.1195.
(d) Beginning on the Effective Date, none of the
Companies will discontinue long distance telephone
service to customers in any State unless it first
receives authorization from the Commission and/or
applicable state public utility commissions, including
such authorization that is currently required by
the FCC in accordance with 47 C.F.R. § 63.71.
(e) Beginning on the Effective Date, the Companies
will file their quarterly and annual
Telecommunications Reporting Worksheets by the due
dates specified thereon.
(f) Beginning on the Effective Date, the Companies
will make their current federal universal service
contributions by the due date specified on each
invoice sent to them by the Universal Service
Administrative Company (``USAC'').
(g) Beginning on the Effective Date, the Companies
will make their TRS contributions by the due date
specified on each invoice sent to them by the
National Exchange Carrier Association (``NECA'').
(h) Beginning on the Effective Date, the Companies
will pay (if they have not already done so) their
past due TRS contributions as billed by the National
Exchange Carrier Association (``NECA'').
(i) The Companies will pay their remaining past due
federal universal service obligations of
$772,659.56 in 24 monthly payments of $35,298.75 each,
in accordance with the documents signed by the
Companies and their representatives on February
[to be filled in], 2004.
(j) Prior to any sale, dissolution, reorganization,
assignment, merger, acquisition or other action
that would result in a successor or assign for
provision of the Companies' interstate communications
services, the Companies will furnish a copy of this
Consent Decree to such prospective successors or
assigns and advise same of their duties and obligations
under this Order.
(k) The Companies will be responsible for making the
substantive requirements and procedures set forth in
this Consent Decree known to their respective
directors and officers, and to managers, employees,
agents, and persons associated with the Companies who
are responsible for implementing the obligations
set forth in this Consent Decree. The Companies will,
within thirty (30) days of the Effective Date, deliver
to each of their current directors and officers, and
to all Sales Representatives, written instructions as
to their respective responsibilities in connection
with the Companies' compliance and obligations under
this Consent Decree. The Companies will
distribute said instructions to all of their future
directors and officers wherever located, and to all
future Sales Representatives, on the date such
individuals are appointed or hired to such positions.
(l) The Companies will establish a Sales
Representative Code of Conduct (the "Code"), which
will conform to this Consent Decree and be reviewed and
signed by all current Sales Representatives. As part
of their initial training, each new Sales
Representative will also sign the Code. All Sales
Representatives will reaffirm semi-annually, in writing
that they have recently reviewed, and fully
understand, the Code. The Code will establish a
strict quality standard, to which all Sales
Representatives will be required to adhere. The
Code will establish, inter alia, that all Sales
Representatives will make representations consistent
with the restrictions specified in paragraph 14(a)
above.
(m) Beginning on the Effective Date, the Companies
will inform all Sales Representatives that violation
of the provisions of paragraph 14(a) will result in
mandatory penalties and increasingly severe measures
for repeat offenders, including employee re-
training, compensation reduction, suspension from
work, and termination.
(n) Beginning on the Effective Date, the Companies
will promptly and in good faith address and resolve
all complaints in a reasonable manner consistent with
this Consent Decree. In all cases where the Companies
conclude that Misleading statements were made by a
Sales Representative, the Companies will contact
the Customer and provide appropriate remedies.
(o) Within 60 days from the Effective Date, the
Companies will provide a formal report to the
Bureau. The Companies will provide additional
reports every twelve (12) months thereafter, with a
final report due fifty (50) months from the Effective
Date. Each report will include the following: (a)
evidence of payment of the Companies' past due
universal service obligations, the last of which
is expected to occur no later than March 1, 2006;
(b) evidence of payment of the Companies' most recent
invoice from the Universal Service Administrative
Company; (c) evidence of payment of the Companies'
most recent invoice from NECA concerning TRS; (d)
a copy of the Companies' Telecommunications Reporting
Worksheets filed since the previous report; (e) the
name(s) and address(es) of all Independent Third
Party Verifiers used by the Companies since the
previous report; and (f) information since the last
report relating to all customer complaints based on
alleged Misleading statements from Sales
Representatives, including, the name and address of
the customer, the name of the Sales Representative, a
brief summary of the alleged Misleading statement,
the disciplinary action taken, if any, against the
Sales Representative, and the resolution of the
complaint. If, by the date of the report, the
Companies are still investigating one or more such
complaints and/or have not yet acted on any such
complaint(s), the report should so state.
15. The Companies will make a voluntary contribution
(not a fine or a penalty) in the amount of $510,000 in
installments over a forty-eight (48) month period, with the
first payment due May 15, 2004, and each successive payment
due on the 15th day of the following month. The first
forty-seven payments shall be in the amount of $10,700; the
forty-eighth and last payment shall be in the amount of
$7,100. The Companies may prepay this amount, and are
encouraged to do so, without penalty. The Companies must
make these payments by check, wire transfer or money order
drawn to the order of the Federal Communications Commission,
and the check, or money order must refer to NAL Acct. No.
200332170002 and FRN No. 0007179054. See 47 C.F.R. §
1.80(h). The Companies must mail the check or money order
to: Forfeiture Collection Section, Finance Branch, Federal
Communications Commission, P.O. Box 73482, Chicago, Illinois
60673-7482.
16. In express reliance on the covenants and
representations contained herein, the Bureau agrees to
terminate this Proceeding and resolve the Show Cause Order.
17. The Companies represent and warrant that they
shall not, for the purpose of circumventing any part of this
Consent Decree, effect any change in their form of doing
business or their organizational identity or participate
directly or indirectly in any activity to form a separate
entity or corporation which engages in acts prohibited in
this Consent Decree or for any other purpose which would
otherwise circumvent any part of this Consent Decree or the
obligations of this Consent Decree. Nothing in the
foregoing sentence shall be construed to prohibit the
Companies from effecting any change in their form of doing
business or their organizational identity, or participating
directly or indirectly in any activity to form a separate
entity or corporation, where such change does not have the
effect of circumventing any part of this Consent Decree.
18. The Companies' and the Bureau's decision to enter
into this Consent Decree is expressly contingent upon the
signing of the Order by the presiding officer and the Order
becoming a Final Order without revision, change, addition,
or modification of this Consent Decree. The Parties agree
that either the Bureau or the Companies may withdraw from
this Consent Decree if any revision, change, addition, or
modification is made to its terms.
19. The Parties agree that this Consent Decree shall
become part of the record of this Proceeding only on its
Effective Date.
20 If the Commission, or the United States on behalf
of the Commission, brings a judicial action to enforce the
terms of this Consent Decree, the Parties will not contest
the validity of the Consent Decree, and the Companies and
their Affiliates will waive any statutory right to a trial
de novo. The Companies and their Affiliates do not waive
any statutory right to a trial de novo to determine whether
they violated this Consent Decree.
21. The Companies and their principals waive any
rights they may otherwise have under the Equal Access to
Justice Act, 5 U.S.C. § 504 and 47 C.F.R. § 1.1501 et seq.
22. In the event that this Consent Decree is rendered
invalid by any court of competent jurisdiction, it shall
become null and void and may not be used in any manner in
any legal proceeding.
23. Any material violation of the Consent Decree,
including the non-payment of any part of the forfeiture,
will constitute a separate violation of a Commission order,
entitling the Commission to exercise any rights and remedies
attendant to the enforcement of a Commission order. The
Commission agrees that before it takes any formal action in
connection with any alleged or suspected violation of this
Consent Decree, the Companies or their Affiliates will be
notified of the alleged or suspected violation and be given
a reasonable opportunity to respond.
24. The Parties agree that if any provision of the
Consent Decree conflicts with any subsequent rule or order
adopted by the Commission, where compliance with the
provision would result in a violation, (except an order
specifically intended to revise the terms of this Consent
Decree to which the Companies and their principals do not
consent) that provision will be superseded by such
Commission rule or order.
25. By this Consent Decree, the Companies do not waive
or alter their right to assert and seek protection from
disclosure of any privileged or otherwise confidential and
protected documents and information, or to seek appropriate
safeguards of confidentiality for any competitively
sensitive or proprietary information. The status of
materials prepared for, reviews made and discussions held in
the preparation for and implementation of the Companies'
compliance efforts under this Consent Decree, which would
otherwise be privileged or confidential, are not altered by
the execution or implementation of the terms of this Order
and no waiver of such privileges is made by this Consent
Decree.
26 The Parties agree that, within five (5) business
days after the date of this Consent Decree, they will file
with the presiding officer a joint motion and draft order
requesting that the presiding officer sign the draft order,
accept Consent Decree, and close the record. The Parties
will take such other actions as may be necessary to
effectuate the objectives of this Consent Decree.
27. This Consent Decree may be signed in counterparts.
For the Enforcement Bureau, For Business
Options, Inc.
Federal Communications Commission U.S. Bell, Inc./Link
Technologies
Buzz Telecom Corporation
Avatar Enterprises, Inc.
________________________________
________________________________
David H. Solomon Kurtis J. Kintzel
Chief Chief Executive Officer
_______________________________
________________________________
Date Date
_________________________
1 See Order to Show Cause and Notice of Opportunity for
Hearing, 18 FCC Rcd 6881 (2003).
2 47 U.S.C. § 258.
3 47 C.F.R. §§ 64.1100-1190 (2002).
4 47 C.F.R. § 64.1195 (2002).
5 47 U.S.C. § 214.
6 47 C.F.R. §§ 63.71 and 63.505 (2002).
7 47 U.S.C. § 214.
8 Memorandum Opinion and Order, FCC 03M-33 (Aug. 20, 2003).
9 47 U.S.C. § 254(d).
10 47 C.F.R. § 54.706 (2002).
11 47 C.F.R. § 64.604(c)(5)(iii)(A) (2002).
12 47 C.F.R. §§ 54.711, 54.713 and 64.604(c)(iii)(B) (2002).
13 Memorandum Opinion and Order, FCC 03M-33 (Aug. 20, 2003).
14 47 U.S.C. § 258.
15 47 C.F.R. § 64.1120(c) (2002). BOI's violations included
failures to elicit required information, failures to obtain
authorization of any kind, failures to use independent third
party verifiers and failures to obtain verification for each
service switched. Of the sixteen violations, nine occurred
within one year of the release date of the Order to Show
Cause, and only those nine would be considered in
determining a forfeiture penalty. See Memorandum Opinion
and Order, FCC 03M-54 at 8, n. 12 (Dec. 9, 2003).
16 47 C.F.R. § 64.1195 (2002).
17 47 U.S.C. § 214.
18 47 C.F.R. § 63.71 (2002). Memorandum Opinion and Order,
FCC 03M-54 (Dec. 9, 2003).
19 47 U.S.C. § 254(d).
20 47 C.F.R. § 54.706 (2002).
21 47 C.F.R. § 64.604(c)(5)(iii)(A) (2002).
22 47 C.F.R. § 54.711 (2002). Memorandum Opinion and Order,
FCC 03M-58 (Dec. 24, 2003).
23 47 C.F.R. § 1.94(a).
24 47 C.F.R. § 1.93(b).
25 47 U.S.C. §§ 214, 254 and 258.