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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
In the Matter of ) File No. EB-04-IH-0654
International Telecom Exchange, Inc. ) NAL/Acct. No. 200632080161
Apparent Liability for Forfeiture ) FRN 0013218409
)
)
ORDER OF FORFEITURE
Adopted: July 26, 2007 Released: July 27, 2007
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Order of Forfeiture ("Order"), we assess a monetary
forfeiture of $28,062 against International Telecom Exchange, Inc. and
International Telecom Exchange Group, Inc. (collectively, "ITE"). We
find that ITE willfully and repeatedly failed to respond on a timely
basis to a directive of the Enforcement Bureau ("Bureau") to provide
certain information and documents. Further, we find that ITE has
violated section 64.604(c)(5)(iii)(A) of the Commission's rules by
willfully and repeatedly failing to contribute to the
Telecommunications Relay Service ("TRS") Fund on a timely basis.
II. BACKGROUND
2. The facts and circumstances of this cases are set forth in the Notice
of Apparent Liability for Forfeiture and Order ("NAL") previously
issued by the Commission, and need not be repeated at length here. ITE
characterizes itself as a provider of residential and business long
distance telephone service, international telephone services, and
pre-paid phone card services. On January 26, 2005, the Bureau sent ITE
a letter of inquiry ("LOI") requiring the company within twenty days
to answer certain questions and produce certain information concerning
its compliance with a variety of Commission rules, including section
64.604(c)(5)(iii)(A), which requires carriers providing interstate
telecommunications services to contribute to the fund that supports
TRS on the basis of their interstate end-user telecommunications
revenues. Upon ITE's request, the Bureau granted ITE an extension of
time until March 25, 2005 to respond to the LOI, but the company
failed to produce any information until September 2005, and only after
repeated efforts by Bureau staff to elicit a response. ITE paid past
due TRS contributions on May 31, 2006.
3. On June 1, 2006, the Bureau issued the NAL in the amount of $28,062
against ITE for apparently failing to respond on a timely basis to a
directive of the Bureau to provide certain information and documents,
as well as apparently failing to contribute to the TRS Fund. The NAL
ordered ITE to pay the proposed forfeiture or respond to the notice
within 30 days, submitting evidence and arguments in response to the
NAL to show that no forfeiture should be imposed or that some lesser
amount should be assessed.
4. On August 10, 2006, ITE requested an extension of time in order to
submit a settlement proposal. On August 11, 2006, Bureau staff
extended the period of time for ITE to respond to the NAL, giving ITE
until September 14, 2006. On August 24, 2006 ITE stated that the
company was unable to pay the forfeiture proposed in the NAL. Bureau
staff informed counsel for ITE that under Commission precedent,
inability to pay claims are based on a company's average gross
revenue, as demonstrated by a company's tax returns for the most
recent three-year period, and that any information that ITE wished to
provide the Bureau, including a response to the NAL, must be submitted
before September 14, 2006. To date, ITE has still not paid the
forfeiture amount, submitted a formal response to the NAL, or provided
any documentation in support of its inability to pay claim.
III. DISCUSSION
5. We find by a preponderance of the evidence that ITE has willfully and
repeatedly failed to respond on a timely basis to a directive of the
Bureau to provide certain information and documents, and willfully and
repeatedly violated section 64.604(c)(5)(iii)(A) by failing to
contribute to the TRS Fund on a timely basis. Although ITE has
asserted through informal means that it has paid some portion of its
TRS balance and that it is unable to pay the forfeiture proposed in
the NAL, it has never formally responded to the NAL, and its arguments
are nonetheless meritless.
6. Under section 503(b)(1)(B) of 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. 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. 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 Act, and the
Commission has so interpreted the term in the section 503(b) context.
The Commission may also assess a forfeiture for violations that are
merely repeated, and not willful. "Repeated" means that the act was
committed or omitted more than once, or lasts more than one day. 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. The Commission will then issue a
forfeiture if it finds by a preponderance of the evidence that the
person has violated the Act or a Commission order or rule.
7. 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. In determining the appropriate
forfeiture amount, we consider the factors enumerated in section
503(b)(2)(D) of the Communications Act of 1934, as amended (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 require."
8. 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. ITE's failure to respond to
the Bureau's inquiries for approximately eight months occurred
following two extension requests by ITE of the required response
deadline, repeated promises that a response would be submitted soon,
and numerous attempts by Bureau staff to obtain a response from ITE.
The company provided a full response to the LOI only after the Bureau
expended significant resources to obtain one.
9. We find that the substantial delay in responding to the LOI in the
circumstances presented here warrants a substantial increase to the
base amount. Misconduct of this type exhibits a blatant disregard for
the Commission's authority that cannot be tolerated, and, more
importantly, threatens to compromise the Commission's ability to
adequately investigate and enforce violations of its rules. In this
case, the misconduct inhibits our ability to adequately detect and
deter potential rule violations in areas of critical importance to the
Commission, i.e., the reporting and contribution requirements for
federal regulatory programs. Considering all these circumstances and
taking into account the factors enumerated in section 503(b)(2)(D) of
the Act, we impose a forfeiture against ITE of $15,000 for failing to
respond to the LOI on a timely basis.
10. We also find that ITE has failed to make any TRS Fund contributions on
a timely basis since it began providing telecommunications service in
2002. In response to ITE counsel's statement in telephone
conversations that the company had paid some portion of its TRS
balance, Bureau staff contacted the TRS administrator to review the
company's payment history. ITE did, in fact, make payments of
$4,350.93 on July 26, 2005, and $5,784.52 on May 31, 2006. Both of
these payments, however, were received many months after originally
due. Where a carrier fails to satisfy its TRS obligations for an
extended period of time, it thwarts the Commission's responsibility to
ensure that telecommunications relay services "are available to the
extent possible and in the most efficient manner, to hearing-impaired
and speech-impaired individuals in the United States."
11. The Commission has established a base forfeiture amount of $10,000 for
each instance in which a carrier fails to make required TRS
contributions in a timely manner. We find ITE liable for a base
forfeiture in the amount of $10,000 for failing to timely pay its TRS
Fund contribution that was due on September 26, 2005. In the past the
Commission has also imposed an upward adjustment to forfeitures for
the failure to pay TRS Fund contributions based on half the companies'
unpaid contributions. Given that ITE has failed to make any TRS Fund
contribution on time since it began providing telecommunications
service in 2002, we find that an upward adjustment, in an amount
approximately one-half of the carrier's unpaid TRS Fund contributions
($6,124) is appropriate for ITE's failure to timely pay its TRS Fund
contribution due on September 26, 2005. Taking into account the
factors enumerated in section 503(b)(2)(D) of the Act, we conclude
that an upward adjustment of $3,062 is reasonable, and find ITE liable
for a total forfeiture of $13,062 for its willful and repeated
violations of section 64.604(c)(5)(iii)(A) of the Commission's rules.
12. After requesting time to make a settlement proposal, ITE claimed that
it is unable to pay the forfeiture proposed in the NAL. Bureau staff
advised the company that under Commission precedent, inability to pay
claims are assessed based on a company's average gross revenue, as
demonstrated by a company's tax returns for the most recent three-year
period, and informed the company that it could submit information in
support of its claim by September 14, 2006. The company did not submit
any additional information, and has failed to substantiate its claim
that it is unable to pay the proposed forfeiture. Moreover, the
Commission has held that forfeitures of approximately eight percent of
a company's average gross revenue are appropriate. In response to the
January 26, 2005 LOI, ITE submitted tax returns for 2002 and 2003. The
$28,062 forfeiture proposed in the NAL and affirmed here is
substantially below eight percent of the company's average gross
revenue for this period, and the other information provided with the
company's September 19, 2005 LOI Response does not demonstrate that
the company is unable to pay the forfeiture. Accordingly, we reject
ITE's claim that it is unable to pay the forfeiture.
13. In conclusion, we find that a forfeiture in the amount of $28,062 is
warranted. The total forfeiture amount of $28,062 includes: (1) a
penalty of $15,000 for failing to respond on a timely basis to a
directive of the Bureau to provide certain information and documents;
and (2) a penalty of $13,062 for failing to make its TRS program
contribution when due on September 26, 2005. We again caution that
additional violations of the Act or the Commission's rules could
subject ITE to further enforcement action. Such action could take the
form of higher monetary forfeitures and/or possible revocation of
ITE's operating authority, including disqualification of ITE's
principals from the provision of any interstate common carrier
services without the prior consent of the Commission.
IV. ORDERING CLAUSES
14. Accordingly, IT IS ORDERED THAT, pursuant to section 503(b) of the
Communications Act of 1934, as amended, and sections 0.111, 0.311, and
1.80 of the Commission's rules, that International Telecom Exchange,
Inc. and International Telecom Exchange Group, Inc. SHALL FORFEIT to
the United States government the sum of $28,062 for willfully and
repeatedly violating the Commission's rules.
15. Payment of the forfeiture shall be made in the manner provided for in
Section 1.80 of the Rules within 30 days of the release of this Order.
If the forfeiture is not paid within the period specified, the case
may be referred to the Department of Justice for collection pursuant
to Section 504(a) of the Act. 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 911-6106. Requests for full payment under an installment plan
should be sent to: Associate Managing Director, Financial Operations,
445 12th Street, S.W., Room 1A625, Washington, D.C. 20554.
16. IT IS FURTHER ORDERED that a copy of the Order by certified
mail/return receipt requested to Charles H. Helein, Helein &
Marashlian, LLC, the CommLaw Group, 1483 Chain Bridge Road, Suite 301,
McLean, VA 22101.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Chief
Enforcement Bureau
47 C.F.R. S: 64.604(c)(5)(iii)(A).
See International Telecom Exchange, Inc., Notice of Apparent Liability for
Forfeiture and Order, 21 FCC Rcd 6232 (Enf. Bur. 2006).
See http://www.itetelecom.com (accessed May 17, 2007).
See Letter from Hillary DeNigro, Deputy Chief, Investigations and Hearings
Division, Enforcement Bureau, Federal Communications Commission, to Brian
Jarrah, President/CEO, International Telecom Exchange, Inc. (dated January
26, 2005) ("January 26, 2005 LOI" or "LOI").
47 C.F.R. S: 64.604(c)(5)(iii)(A).
NAL, 21 FCC Rcd at 6234-35, P:P: 7-11.
Id. at P: 28.
Electronic mail message from Lance Steinhart, counsel to International
Telecom Exchange, Inc. to Eric Bash, Assistant Chief, Investigations &
Hearings Division, Enforcement Bureau, Federal Communications Commission
(dated August 10, 2006).
Electronic mail message from Eric Bash, Assistant Chief, Investigations &
Hearings Division, Enforcement Bureau, Federal Communications Commission
to Lance Steinhart, counsel to International Telecom Exchange, Inc. (dated
August 11, 2006).
Electronic mail message from Lance Steinhart, counsel to International
Telecom Exchange, Inc. to David Janas, Special Counsel, Investigations &
Hearings Division, Enforcement Bureau, Federal Communications Commission
(dated August 24, 2006).
Electronic mail message from David Janas, Special Counsel, Investigations
& Hearings Division, Enforcement Bureau, Federal Communications Commission
to Lance Steinhart, counsel to International Telecom Exchange, Inc. (dated
August 28, 2006). E.g., Coleman Enters., Inc., Order of Reconsideration,
16 FCC Rcd 10023, 10024, P: 6 (2001) ("the Commission has discretion to
determine what documentation it considers as reliable and objective
evidence of ability to pay"); Hoosier Broad. Corp., Memorandum Opinion
and Order, 15 FCC Rcd 8640, 8641, P: 7 (Enf. Bur. 2000) ("`[c]laims of
inability to pay should be supported by tax returns or other financial
statements prepared under generally accepted accounting procedures for the
most recent three year period.'") (quoting Barry A. Stevenson Edmonds,
Order, 12 FCC Rcd 1976, 1977, P: 5 (Compliance and Information Bur.,
1997)).
47 U.S.C. S: 503(b)(1)(B).
47 U.S.C. S: 312(f)(1).
H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51 (1982).
See, e.g., Application for Review of Southern California Broadcasting Co.,
Memorandum Opinion and Order, 6 FCC Rcd 4387, 4388, P: 5 (1991) ("Southern
California Broadcasting Co.").
See, e.g., Callais Cablevision, Inc., Grand Isle, Louisiana, Notice of
Apparent Liability for Monetary Forfeiture, 16 FCC Rcd 1359 (2001)
(issuing a Notice of Apparent Liability for, inter alia, a cable
television operator's repeated signal leakage) ("Callais Cablevision,
Inc.").
Id. at 1362, P: 9; Southern California Broadcasting Co., 6 FCC Rcd at
4388, P: 5.
47 U.S.C. S: 503(b); 47 C.F.R. S: 1.80(f).
See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589,
7591, P: 4 (2002) (forfeiture paid).
47 U.S.C. S: 503(b)(2)(B); see also 47 C.F.R. S: 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).
47 U.S.C. S: 503(b)(2)(D).
47 C.F.R. S: 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).
NAL, 21 FCC Rcd at 6233-35, P:P: 4-12.
The first payment related to ITE's 2003 and 2004 499-A filings; payment is
due in the same year as the filing to which it relates. The second payment
related to ITE's 2005 499-A filing; payment was due on September 26, 2005,
but ITE did not make the payment until May 31, 2006, after the TRS
administrator transferred the delinquent debt to the Commission for
collection, and the Commission demanded payment. The amount of the
Commission's demand was actually higher - $6,124.49 - because it included
not only the delinquent debt, but also accrued interest, administrative
costs, and penalties. As indicated below in the text, this is the figure
the Bureau staff used for purposes of applying an upward adjustment to the
forfeiture for ITE's failure to pay its TRS Fund contributions on a timely
basis.
47 U.S.C. S: 225(b)(1).
See, e.g., Globcom, Inc., Order of Forfeiture, 21 FCC Rcd. 4710, 4721-24
P:P: 31-38 (2006).
See, e.g., id., 21 FCC Rcd at 4727, P: 5.
See NAL, 21 FCC Rcd at 6235, P: 12.
47 C.F.R. S: 64.604(c)(5)(iii)(A).
Electronic mail message from Lance Steinhart, counsel to International
Telecom Exchange, Inc. to David Janas, Special Counsel, Investigations &
Hearings Division, Enforcement Bureau, Federal Communications Commission
(dated August 24, 2006).
Electronic mail message from David Janas, Special Counsel, Investigations
& Hearings Division, Enforcement Bureau, Federal Communications Commission
to Lance Steinhart, counsel to International Telecom Exchange, Inc. (dated
August 28, 2006).
Coleman Enters., 16 FCC Rcd at 10024-26, P:P: 4-8 (forfeiture not deemed
excessive where it represented approximately 7.96 percent of the
violator's gross revenues); Hoosier Broad., 15 FCC Rcd at 8641, P: 7
(forfeiture not deemed excessive where it represented approximately 7.69
percent of the violator's gross revenues).
See Business Options, Inc., Order to Show Cause and Notice of Opportunity
for Hearing, 18 FCC Rcd 6881, 6894, P: 36 (2003); NOS Communications,
Inc., Order to Show Cause and Notice of Opportunity for Hearing, 18 FCC
Rcd 6952, 6965, P: 27 (2003).
47 U.S.C. S: 503(b).
47 C.F.R. S:S: 0.111, 0.311, 1.80.
47 U.S.C. S: 504(a).
See 47 C.F.R. S: 1.1914.
Federal Communications Commission DA 07-3412
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Federal Communications Commission DA 07-3412