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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
)
1 HOME LENDING CORPORATION )
D.B.A. CAPITAL LINE FINANCIAL, LLC. ) File No. EB-03-TC-031
) NAL/Acct. No. 200732170002
Apparent Liability for Forfeiture ) FRN: 0015635519
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: October 20, 2006 Released: October 20, 2006
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
that 1 Home Lending Corporation d.b.a. Capital Line Financial, LLC
("Capital Line") apparently willfully or repeatedly violated section
227 of the Communications Act of 1934, as amended ("Act"), and the
Commission's rules and orders by delivering at least four unsolicited,
prerecorded advertising messages to three consumers. Based on the
facts and circumstances surrounding these apparent violations, we find
that Capital Line is apparently liable for a forfeiture in the amount
of $18,000.
II. BACKGROUND
2. On April 22, 2003, in response to consumer complaints alleging that
Capital Line had delivered unsolicited, prerecorded advertising
messages to several consumers, the Commission staff issued a citation
to Capital Line pursuant to section 503(b)(5) of the Act. The staff
cited Capital Line for delivering one or more prerecorded, unsolicited
advertisements to a residential telephone line, in violation of
section 227 of the Act and the Commission's rules and orders.
According to the complainants, the unsolicited advertisements offered
information concerning home loans. The citation, which the staff
served by certified mail, return receipt requested, informed Capital
Line that subsequent violations could result in the imposition of
monetary forfeitures of up to $11,000 per violation and included a
copy of the consumer complaints that formed the basis of the citation.
The citation informed Capital Line that within 30 days of the date of
the citation, it could either request a personal interview at the
nearest Commission field office, or could provide a written statement
responding to the citation.
3. Capital Line filed a written response to the citation on May 21, 2003,
arguing that it placed calls only to established customers of its
title company subsidiary. Capital Line did not, however, provide any
evidence of an established business relationship ("EBR") with any of
the complainants whose complaints formed the basis of the citation. On
May 13, 2005, Capital Line filed a supplemental response in which it
requested that the Commission rescind the citation. To support its
request, Capital Line attached a decision from the Superior Court of
California, which had dismissed a claim, filed by one of the citation
complainants, for private damages under the TCPA. Capital Line argued
that the Commission should rescind the citation because the California
court had found an EBR between the complainant and an affiliate of
Capital Line. We are not, however, bound by that court's decision
regarding that complainant's relationship with Capital Line.
Furthermore, Capital Line did not provide any independent evidence of
an EBR with that complainant or with the other two complainants whose
complaints formed part of the basis for the citation. Accordingly,
the citation was not rescinded, nor is there any reason to rescind
it now.
4. Despite the citation's warning that subsequent violations could result
in the imposition of monetary forfeitures, the Commission has received
subsequent consumer complaints indicating that Capital Line apparently
continued to send illegal prerecorded, unsolicited advertisements
after receiving the citation. As discussed below, we base our action
here on this information from consumers alleging that Capital Line
sent unsolicited prerecorded advertising messages after the date of
the citation, and that the messages did not qualify for any exemption
from the prohibition imposed by our rules. In sum, despite prior
warning, Capital Line has continued to engage in the same unlawful
conduct since the April 2003 citation.
III. DISCUSSION
A. Violations of the Commission's Rules Restricting Prerecorded Messages
5. Section 227(b)(1)(B) of the Act prohibits any person from initiating
"any telephone call to any residential telephone line using an
artificial or prerecorded voice to deliver a message without the prior
express consent of the called party, unless the call is initiated for
emergency purposes or is exempted by rule or order of the Commission."
Section 64.1200(a)(2) of the Commission's rules provides exemptions
for calls: 1) made for emergency purposes; 2) made for non-commercial
purposes; 3) made for commercial purposes that do "not include or
introduce an unsolicited advertisement or constitute a telephone
solicitation"; 4) to persons "with whom the caller has an established
business relationship at the time the call is made"; and 5) "made by
or on behalf of a tax-exempt nonprofit organization."
6. As explained above, Capital Line initiated prerecorded messages that
invited consumers to consider taking out a Capital Line home mortgage
loan. For example, one of the messages first informed the consumer
that Capital Line "just obtained the lowest start rate in the mortgage
loan industry in over 40 years of 1.5%." The message then went on to
invite the consumer to "[g]ive us a call . . . [w]e're open 7 days a
week . . . our loans have no up front fees, no out of pocket costs and
you can actually skip the first month of your mortgage payments."
Based on the record before us, we find that the prerecorded messages
at issue here were not made for any emergency or non-commercial
purposes, and were not on behalf of a tax-exempt, nonprofit
organization, but were commercial in nature and included or introduced
"unsolicited advertisements" or constituted "telephone solicitations."
7. The record also indicates that Capital Line did not have the prior
express consent of the recipients of these prerecorded messages to
deliver the unsolicited advertising messages or telephone
solicitations. Further, Capital Line has provided neither argument
nor evidence in response to our citation to prove tax-exempt nonprofit
status. Therefore, based on the evidence in the record, including the
complainants' affidavits, we find that the prerecorded messages were
unsolicited advertisements or telephone solicitations that were
prohibited by section 227(b)(1)(B) of the Act and Section
64.1200(a)(2) of the Commission's rules.
B. Proposed Forfeiture
8. We conclude that Capital Line apparently willfully or repeatedly
violated the Act and the Commission's rules and orders by delivering
unsolicited, prerecorded advertising messages. Capital Line
apparently did not cease its unlawful conduct even after the
Commission staff issued a citation warning that it was engaging in
unlawful conduct and could be subject to monetary forfeitures.
Accordingly, a proposed forfeiture is warranted against Capital Line
for its apparent willful or repeated violations of section 227 of the
Act and of the Commission's rules and orders regarding restrictions on
telephone solicitations.
9. Section 503(b) of the Act authorizes the Commission to assess a
forfeiture of up to $11,000 for each violation of the Act or of any
rule, regulation, or order issued by the Commission under the Act by a
non-common carrier or other entity not specifically designated in
section 503 of the Act. In exercising such authority, we are to take
into account "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 require."
10. Although the Commission's Forfeiture Policy Statement does not
establish a base forfeiture amount for violating the prohibition on
delivering unsolicited, prerecorded advertising messages to a
residential telephone line, we have found these violations to be
similar in nature to violating the prohibition on delivering
unsolicited advertisements to telephone facsimile machines. In Warrior
Custom Golf, we considered $4,500 per prerecorded advertising message
to be an appropriate base amount, and we apply that amount to each of
the four apparent unsolicited, prerecorded advertising violations
evidenced by the complaints. This results in a proposed total
forfeiture of $18,000. Capital Line shall have the opportunity to
submit evidence and arguments in response to this Notice of Apparent
Liability for Forfeiture to show that no forfeiture should be imposed
or that some lesser amount should be assessed.
IV. CONCLUSION AND ORDERING CLAUSES
11. We have determined that 1 Home Lending Corporation d.b.a. Capital Line
Financial, LLC apparently violated section 227 of the Act and the
Commission's related rules and orders by delivering the unsolicited,
prerecorded advertising messages identified above. We have further
determined that 1 Home Lending Corporation d.b.a. Capital Line
Financial, LLC is apparently liable for a forfeiture in the amount of
$18,000.
12. Accordingly, IT IS ORDERED, pursuant to section 503(b) of the
Communications Act of 1934, as amended, 47 U.S.C. S 503(b), and
section 1.80 of the Commission's rules, 47 C.F.R. S 1.80, and under
the authority delegated by sections 0.111 and 0.311 of the
Commission's rules, 47 C.F.R. SS 0.111, 0.311, that 1 Home Lending
Corporation d.b.a. Capital Line Financial, LLC is hereby NOTIFIED of
an APPARENT LIABILITY FOR FORFEITURE in the amount of $18,000 for
willful or repeated violations of section 227(b)(1)(B) of the Act, 47
U.S.C. S 227(b)(1)(B), section 64.1200(a)(2) of the Commission's
rules, 47 C.F.R. S 64.1200(a)(2), and the related orders described in
the paragraphs above.
13. IT IS FURTHER ORDERED THAT, pursuant to section 1.80 of the
Commission's rules, within thirty (30) days of the release date of
this Notice of Apparent Liability for Forfeiture, 1 Home Lending
Corporation d.b.a. Capital Line Financial, LLC SHALL PAY the full
amount of the proposed forfeiture or SHALL FILE a written statement
seeking reduction or cancellation of the proposed forfeiture.
14. Payment by check or money order, payable to the order of the "Federal
Communications Commission," may be mailed to Forfeiture Collection
Section, Finance Branch, Federal Communications Commission, P.O. Box
358340, Pittsburgh, Pennsylvania 15251. Payment by overnight mail may
be sent to Mellon Client Service Center, 500 Ross Street, Room 670,
Pittsburgh, Pennsylvania 15262-0001, Attn: FCC Module Supervisor.
Payment by wire transfer may be made to: ABA Number 043000261,
receiving bank Mellon Bank, and account number 911-6229. The payment
should note NAL/Acct. No. 200732170002.
15. The response, if any, must be mailed to the Office of the Secretary,
Federal Communications Commission, 445 12^th Street, S.W., Washington,
D.C. 20554, ATTN: Enforcement Bureau - Telecommunications Consumers
Division, and must include the NAL/Acct. No. referenced in the
caption.
16. 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 submitted.
17. Requests for payment of the full amount of this Notice of Apparent
Liability for Forfeiture under an installment plan should be sent to:
Chief, Revenue and Receivables Operations Group, 445 12th Street,
S.W., Washington, D.C. 20554.
18. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability
for Forfeiture shall be sent by first class mail and certified mail
return receipt requested to 1 Home Lending Corporation d.b.a. Capital
Line Financial, LLC in care of Mr. William E. Raney, Esq., Copilevitz
& Canter, LLC, 423 W. Eighth Street, Suite 400, Kansas City, Missouri
64105; to 1 Home Lending Corporation d.b.a. Capital Line Financial,
LLC, Attention: William J. Tessar, 23925 Park Sorrento, Suite 200,
Calabasas, CA 91302-4010; and to 1 Home Lending Corporation d.b.a.
Capital Line Financial, LLC, Attention: William J. Tessar, 22801
Ventura Boulevard, #205, Woodland Hills, CA 91367.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Chief
Enforcement Bureau
47 U.S.C. S 503(b)(1). The Commission has the authority under this section
of the Act to assess a forfeiture against any person who has "willfully or
repeatedly failed to comply with any of the provisions of this Act or of
any rule, regulation, or order issued by the Commission under this Act
...."; see also [1]47 U.S.C. S 503(b)(5) (stating that the Commission has
the authority under this section of the Act to assess a forfeiture penalty
against any person who is not the holder of a Commission authorization so
long as (A) such person is first issued a citation of the violation
charged; (B) is given a reasonable opportunity for a personal interview
with an official of the Commission, at the field office of the Commission
nearest to the person's place of resident; and (C) subsequently engages in
conduct of the type described in the citation).
According to publicly available information, Capital Line Financial, LLC,
also listed as 1 Home Lending Corporation, is headquartered at 23925 Park
Sorrento, Suite 200, Calabasas, CA 91302-4010; a branch address is listed
at 22801 Ventura Boulevard, #205, Woodland Hills, CA 91367. Therefore, all
references to "Capital Line" in this NAL encompass 1 Home Lending
Corporation as well as Capital Line Financial, LLC. Capital Line's agent
for service of process is William J. Tessar. Daniel Shields is listed as
president; Paul Joseph Karl is listed as designated officer; Glen Podell
is listed as financial executive and owner. Accordingly, all references in
this NAL to "Capital Line" also encompass William J. Tessar, Daniel
Shields, Paul Joseph Karl, Glen Podell, and all other principals and
officers of the entity, as well as the corporate entity itself.
See [2]47 U.S.C. S [3]227(b)(1)(B); [4]47 C.F.R. S 64.1200(a)(2).
Throughout this NAL, we will be citing the Commission's rules as they
existed at the time of the violations; see also Rules and Regulations
Implementing the Telephone Consumer Protection Act of 1991, CG Docket No.
02-278, Report and Order, 18 FCC Rcd 14014 (2003) (TCPA Report and Order).
See Citation from Kurt A. Schroeder, Deputy Chief, Telecommunications
Consumers Division, Enforcement Bureau, issued to Capital Line on April
22, 2003.
See 47 U.S.C. S 503(b)(5) (authorizing the Commission to issue citations
to non-common carriers for violations of the Act or of the Commission's
rules and orders).
See Complaints from Michele Robinson, Barbara Schneider, and Richard
Stahl, requesting Commission action against Capital Line, which were
attached to the citation.
See Letter from William Raney, Copilevitz & Canter, LLC (representing
Capital Line), to Kurt Schroeder, Deputy Chief, Telecommunications
Consumers Division, Enforcement Bureau, FCC, dated May 21, 2003.
See n.6, supra.
See Letter from William Raney, Copilevitz & Canter, LLC (representing
Capital Line), to Kurt Schroeder, Deputy Chief, Telecommunications
Consumers Division, Enforcement Bureau, FCC, dated May 10, 2005
("Supplemental Response").
See 47 U.S.C. S 227(b)(3) (allowing a person or entity to bring, subject
to the laws or rules of the State court, an action in State court for
monetary damages resulting from violations of the Telephone Consumer
Protection Act of 1991).
See Supplemental Response, Attachment. The Court did not require Capital
line to pay damages for sending the prerecorded message to Ms. Schneider
because of an alleged established business relationship between her and an
alleged affiliate of Capital Line, "Countrywide." In particular, the Court
found that Countrywide had provided the first mortgage to Ms. Schneider's
residential property. Id.
See Citibank, N. A., v. Graphic Scanning Corp. and Graphnet Systems, Inc.,
618 F.2d 222, 225 (2^nd Cir. 1980) (state court determination that a
contract was not void for illegality was not binding on the FCC, nor did
the court's determination preclude a claim before the FCC that the
contract was illegal due to a violation of the Communications Act).
See n.6, supra.
See the following consumer complaints requesting Commission action: 1)
Complaint of Richard Horn, filed October 25, 2005, and December 14, 2005
(received prerecorded messages on October 25, 2005, and December 14,
2005); 2) complaint of Mark Klein, filed January 24, 2006 (received
prerecorded message on January 4, 2006); 3) complaint of Kirby Beall,
filed February 16, 2006 (received prerecorded message on February 16,
2006). Each of the complainants signed declarations stating that the
messages they received advertised Capital Line's home loans, and that they
did not have established business relationships with Capital Line.
47 U.S.C. S 227(b)(1)(B).
"Unsolicited advertisement" means "any material advertising the commercial
availability or quality of any property, goods, or services which is
transmitted to any person without that person's prior express invitation
or permission." 47 C.F.R. S 64.1200(f)(10).
"Telephone solicitation" means "the initiation of a telephone call or
message for the purpose of encouraging the purchase or rental of, or
investment in, property, goods, or services, which is transmitted to any
person," but "does not include a call or message: (i) to any person with
that person's prior express invitation or permission; (ii) to any person
with whom the caller has an established business relationship; or (iii) by
or on behalf of a tax-exempt nonprofit organization." 47 C.F.R. S
64.1200(f)(9).
An "established business relationship" is defined as "a prior or existing
relationship formed by a voluntary two-way communication between a person
or entity and a residential subscriber with or without an exchange of
consideration, on the basis of the subscriber's purchase or transaction
with the entity within the eighteen (18) months immediately preceding the
date of the telephone call or on the basis of the subscriber's inquiry or
application regarding products or services offered by the entity within
the three months immediately preceding the date of the call, which
relationship has not been previously terminated by either party." 47
C.F.R. S 64.1200(f)(3).
47 C.F.R. S 64.1200(a)(2).
See complaint of Mark Klein, filed January 24, 2006.
Id.
TCPA Report and Order, 18 FCC Rcd at 14097-98, para. 140.
47 U.S.C. S 227(b)(1)(B).
47 C.F.R. S 64.1200(a)(2).
Section 503(b)(2)(C) provides for forfeitures up to $10,000 for each
violation in cases not covered by subparagraph (A) or (B), which address
forfeitures for violations by licensees and common carriers, among others.
See 47 U.S.C. S 503(b). In accordance with the inflation adjustment
requirements contained in the Debt Collection Improvement Act of 1996,
Pub. L. 104-134, Sec. 31001, 110 Stat. 1321, the Commission implemented an
increase of the maximum statutory forfeiture under section 503(b)(2)(C) to
$11,000. See 47 C.F.R. S1.80(b)(3); Amendment of Section 1.80 of the
Commission's Rules and Adjustment of Forfeiture Maxima to Reflect
Inflation, 15 FCC Rcd 18221 (2000); see also Amendment of Section 1.80(b)
of the Commission's Rules and Adjustment of Forfeiture Maxima to Reflect
Inflation, 19 FCC Rcd 10945 (2004) (this recent amendment of section
1.80(b) to reflect inflation left the forfeiture maximum for this type of
violator at $11,000).
47 U.S.C. S 503(b)(2)(D); The 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, 17100-01, para. 27 (1997),
recon. denied, 15 FCC Rcd 303 (1999).
Warrior Custom Golf, Inc., Notice of Apparent Liability for Forfeiture, 19
FCC Rcd 23648 (Enf. Bur. 2004) ("Warrior Custom Golf") (first NAL to
address prerecorded advertising messages).
See Warrior Custom Golf, 19 FCC Rcd at 23652, para. 10 (citing Get-Aways,
Inc., Notice of Apparent Liability for Forfeiture, 15 FCC Rcd 4843 (2000);
Tri-Star Marketing, Inc., Notice of Apparent Liability for Forfeiture, 15
FCC Rcd 11295 (2000); Tri-Star Marketing, Inc., Forfeiture Order, 15 FCC
Rcd 23198 (2000); Carolina Liquidators, Inc., Notice of Apparent
Liability for Forfeiture, 15 FCC Rcd 16837 (2000); Carolina Liquidators,
Inc., Forfeiture Order, 15 FCC Rcd 21775 (2000); 21^st Century Fax Ltd.,
Notice of Apparent Liability for Forfeiture, 15 FCC Rcd 24406 (2000);
21^st Century Fax Ltd., Forfeiture Order, 17 FCC Rcd 1384 (2002)); see
also Septic Safety, Inc., Forfeiture Order, 21 FCC Rcd 6868, 6872, paras.
10-11 (Enf. Bur. 2006).
See n.14, supra.
See [5]47 U.S.C. S 503(b)(4)(C); [6]47 C.F.R. S 1.80(f)(3).
47 C.F.R. S 1.80.
47 C.F.R. S 1.1914.
Federal Communications Commission DA 06-2084
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Federal Communications Commission DA 06-2084
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References
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