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Before the
Federal Communications Commission
Washington, D.C. 20554
)
In the Matter of )
File No. EB-07-IH-5124
Liberty Phones, Inc. )
NAL/Acct. No. 200732080037
Apparent Liability for Forfeiture )
)
NOTICE OF APPARENT LIABILITY FOR FORFEITURE AND ORDER
Adopted: September 20, 2007 Released: September 24, 2007
By the Chief, Investigations and Hearings Division:
I. INTRODUCTION
1. In this Notice of Apparent Liability for Forfeiture and Order ("NAL"),
we find that Liberty Phones, Inc. ("Liberty Phones") 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 Liberty Phones is apparently liable for a monetary
forfeiture in the amount of $20,000.
II. BACKGROUND
2. Liberty Phones, an Arkansas-based company authorized to provide local
and interexchange telecommunications services since 2002, provides
prepaid residential and small business telephone service. On February
6, 2006, Liberty Phones submitted to the Bureau a Certificate of
Customer Proprietary Network Information ("CPNI") filing pursuant to
section 64.2009(e) of the Commission's rules. Upon checking, Bureau
staff learned there was no record of Liberty Phones registering with
the Commission or submitting Telecommunications Reporting Worksheets
(FCC Form 499) to the Universal Service Administrative Company
("USAC"), or making associated payments to the requisite federal
regulatory programs.
3. On May 31, 2007, the Bureau issued a letter of inquiry ("LOI") to
Liberty Phones to obtain information concerning Liberty Phones'
compliance with various Commission filing and contribution
requirements. The LOI directed Liberty Phones to respond to the
Bureau's inquiries by June 20, 2007. On June 19, 2007, staff from the
office of Liberty Phones' attorney requested an extension to submit
Liberty Phones' LOI response until June 29, 2007, citing conflicting
work demands. Bureau staff granted Liberty Phones' request for an
extension to respond to the LOI. On June 26, 2007, staff from the
office of Liberty Phones' counsel requested another extension to
respond to the LOI, citing again other work demands. In response, on
June 28, 2007, Bureau staff denied Liberty Phones' request for an
additional blanket extension, but advising that counsel could contact
Bureau staff regarding concerns with responding to any specific
inquiries. On June 29, Liberty Phones did not provide any response to
the LOI.
4. The Bureau sent a follow-up letter on July 17, 2007 directing Liberty
Phones to provide complete responses to inquiries in the LOI by no
later than July 24, 2007. The July 17, 2007 Letter also warned Liberty
Phones that its failure to respond fully to the Bureau's LOI by the
due date that already passed could itself subject the company to
potential enforcement action. Liberty Phones failed to respond to the
July 17, 2007 Letter in any manner. Bureau staff made a final attempt
on July 24, 2007 to contact Liberty Phones, through its counsel's
office, to determine the status of Liberty Phones' LOI response. Staff
in the office of Liberty Phones' counsel told the Bureau that she had
delivered the July 17, 2007 Letter to counsel but could not make any
representation about when or if her office or Liberty Phones would
respond to the LOI. To date, the Bureau has not received any response
to the LOI.
5. 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. 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
also may 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
willfully or repeatedly violated the Act or a Commission order or
rule.
6. 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 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."
III. DISCUSSION
A. Apparent Violation
7. We find that Liberty Phones apparently violated Commission orders by
willfully and repeatedly failing 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." 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. As indicated
above, the Bureau directed Liberty Phones to provide certain documents
and information to enable the Commission to perform its enforcement
function and evaluate allegations that Liberty Phones may have
violated Commission rules. There is no question that Liberty Phones
received both the May 31, 2007 LOI and the July 17, 2007 Letter, as
evidenced by confirmation of the facsimile transmissions, return
receipts, and correspondence with staff in the office of Liberty
Phones' attorney. Indeed, Liberty Phones, through its counsel, even
requested and was granted an extension of the original LOI due date
from June 20 to June 29, 2007. Further, Bureau staff took the
additional step of attempting to contact the office of Liberty Phones'
counsel by telephone to determine the status of Liberty Phones'
response to the LOI. Despite the Bureau's efforts to elicit
information from Liberty Phones, as of the date of this NAL, Liberty
Phones has failed to provide any response whatsoever to the Bureau's
LOI. We therefore conclude that Liberty Phones' continuing failure to
respond to the Bureau's LOI constitutes an apparent willful and
repeated violation of Commission orders.
A. Proposed Forfeiture Amount
8. We propose a forfeiture in the amount of $20,000 for Liberty Phones'
willful and repeated failure to respond to the LOI. 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. We find that Liberty Phones' total
failure to respond to the LOI, notwithstanding the Bureau's multiple
attempts to obtain the company's response and its grant of a requested
extension of time, 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 areas of critical
importance to the Commission -- contributions to the federal
regulatory programs. Prompt and full responses to Bureau inquiry
letters are critical to the Commission's enforcement function. We
therefore propose a total forfeiture against Liberty Phones 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 Bureau inquiries concerning
compliance with the Commission's rules despite evidence that the
letters of inquiry had been received.
9. We also direct Liberty Phones to respond fully to the May 31, 2007 LOI
within thirty (30) days of the release of this order. Failure to do so
may constitute an additional violation potentially subjecting Liberty
Phones to further penalties, including potentially higher monetary
forfeitures, the revocation of operating authority, and the
disqualification of any Liberty Phones principal from the provision of
any common carrier services without the prior consent of the
Commission.
IV. ORDERING CLAUSES
10. ACCORDINGLY, IT IS ORDERED THAT, 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, Liberty
Phones, Inc., is hereby NOTIFIED of its APPARENT LIABILITY FOR
FORFEITURE in the amount of $20,000 for willfully and repeatedly
violating Commission orders.
11. IT IS FURTHER ORDERED THAT, pursuant to section 1.80 of the
Commission's rules, 47 C.F.R. S: 1.80, within thirty (30) days of the
release date of this NOTICE OF APPARENT LIABILITY FOR FORFEITURE,
Liberty Phones, 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
forfeiture.
12. 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, PA 15251. Payment by overnight mail may be sent to
Mellon Client Service Center, 500 Ross Street, Room 670, Pittsburgh,
PA 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 the NAL/Acct. No.
reference above.
13. 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.
S:S: 4(i), 4(j), 218 and 403, and section 54.711 of the Commission's
rules, 47 C.F.R. S: 54.711, Liberty Phones, Inc., shall fully respond
to the May 31, 2007 and July 17, 2007 Letters of Inquiry sent by the
FCC's Enforcement Bureau within thirty (30) days of the release of
this order.
14. The response, if any, to this NOTICE OF APPARENT LIABILITY FOR
FORFEITURE must be mailed to Hillary S. DeNigro, 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. In
addition, a copy of the response, if any, should be sent to the
following E-mail address: hillary.denigro@fcc.gov.
15. 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; 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.
16. 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, SW,
Washington, DC 20554.
17. IT IS FURTHER ORDERED THAT a copy of this NOTICE OF APPARENT LIABILITY
shall be sent, by certified mail/return receipt requested to
Christopher Malish, Foster, Malish, Blair, and Cowan, LLP, 1403 West
6th Street, Austin TX 78703.
FEDERAL COMMUNICATIONS COMMISSION
Hillary S. DeNigro
Chief, Investigations and Hearings Division
See Application of Liberty Phones, Inc. for a Certificate of Public
Convenience and Necessity to Provide Services as a Competing Local
Exchange Carrier Within the State of Arkansas, Docket No. 02-095-U, Order,
2 (Ark Comm. 2002); see also text-only cache of
http://libertyphonesinc.com/ as retrieved on December 3, 2006, 14:07 GMT.
Letter from Rodney H. Williams, President, Liberty Phones, Inc., to
Telecommunications Consumer Division, Enforcement Bureau, Federal
Communications Commission, Docket 06-36, Certificate of CPNI filing for
Liberty Phones, Inc. (filed February 6, 2006). Telecommunications carriers
are required to submit a compliance certificate on an annual basis signed
by an officer stating that, as an agent of the carrier, the officer has
personal knowledge that the company has established operating procedures
that adequately safeguard the use of CPNI, as provided in the Commission's
rules. See 47 C.F.R. S: 64.2009(e). Telecommunications carriers also must
provide a statement accompanying the certificate explaining how it is or
is not in compliance with the Commission's CPNI rules. See id.
See FCC Form 499-A (2007) (annual "Telecommunications Reporting Worksheet"
or "Worksheet"); FCC Form 499-A Instructions (2007) at 1, 3-5.
Telecommunications carriers must submit first a Form 499-A registration,
and upon issuance of a filer identification number by USAC, must submit
thereafter annual Telecommunications Reporting Worksheets for the purpose
of assessing various regulatory fee program payments. See 47 C.F.R. S:S:
1.1157, 52.17, 52.32, 54.706, 54.711, 64.604 and 64.1195. In addition,
telecommunications carriers, with certain exceptions, must file quarterly
Worksheets to determine monthly universal service contributions. See 47
C.F.R. S:S: 54.706, 54.711, 54.713; FCC Form 499-Q (2007) (quarterly
Worksheets). USAC is the data collection agent for FCC Form 499s. See FCC
Form 499-A (2007) at 8; FCC Form 499-Q (2007).
Letter from Trent B. Harkrader, Deputy Chief, Investigations and Hearings
Division, Enforcement Bureau, to Rodney H. Williams, President, Liberty
Phones, Inc., dated May 31, 2007 (the "LOI"). Bureau staff sent the LOI to
Liberty Phones' address in North Little Rock, Arkansas by certified mail,
return receipt requested and facsimile. Receipt of the letter is shown by
confirmation of the facsimile transmission to the Liberty Phones facsimile
number. The certified mail/return receipt hard copy was returned
undeliverable.
E-mail from Jennifer Washington, Paralegal, Foster, Malish, Blair and
Cowan, LLP, to Diana Lee, Attorney Advisor, Investigations and Hearings
Division, June 19, 2007 (requesting extension to submit the LOI response
until June 29, 2007).
E-mail from Diana Lee, Attorney Advisor, Investigations and Hearings
Division, Enforcement Bureau, to Jennifer Washington, Paralegal, Foster,
Malish, Blair and Cowan, LLP, June 19, 2007.
E-mail from Jennifer Washington, Paralegal, Foster, Malish, Blair and
Cowan, LLP, to Diana Lee, Attorney Advisor, Investigations and Hearings
Division, Enforcement Bureau, June 26, 2007 (requesting further extension
to submit Liberty Phones' response to the LOI by July 6, 2007).
E-Mail from Diana Lee, Attorney Advisor, Investigations and Hearings
Division, Enforcement Bureau, to Jennifer Washington, Paralegal, Foster,
Malish, Blair and Cowan, LLP, June 28, 2007 (denying Liberty Phones
request for another extension and expressed willingness to consider a
limited extension for specific inquiries).
Letter from Trent B. Harkrader, Deputy Chief, Investigations and Hearings
Division, Enforcement Bureau, to Christopher Malish, Foster, Malish, Blair
and Cowan, LLP, outside counsel for Liberty Phones, dated July 17, 2007
("July 17, 2007 Letter"). The letter was sent by certified mail/return
receipt requested, e-mail, and facsimile to Liberty Phone outside counsel.
Receipt of the letter is confirmed by facsimile transmission to Liberty
Phones outside counsel's facsimile number, by the certified mail return
receipts, and by transmission to the E-mail address of Ms. Jennifer
Washington, Paralegal, Foster, Malish, Blair and Cowan, LLP.
47 U.S.C. S: 503(b)(1)(B); 47 C.F.R. S: 1.80(a)(1); see also 47 U.S.C. S:
503(b)(1)(D) (forfeitures for violation of 14 U.S.C. S: 1464).
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 (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, 1362, P: 10
(2001) ("Callais Cablevision") (issuing a Notice of Apparent Liability
for, inter alia, a cable television operator's repeated signal leakage).
Southern California Broadcasting Co., 6 FCC Rcd at 4388, P: 5; Callais
Cablevision., 16 FCC Rcd at 1362, P: 9.
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 (2002) ("SBC Forfeiture Order").
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 U.S.C. S: 218.
47 U.S.C. S:S: 154(i),(j), & 403.
See, e.g., SBC Forfeiture Order, 17 FCC Rcd 7589, 7599-7600, P:P: 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 Rcd 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).
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).
See, e.g., Universal Telecommunications, Inc., Notice of Apparent
Liability for Forfeiture and Order, 21 Rcd 6579 (Enf. Bur. 2006) (ordering
$20,000 forfeiture for failure to respond to an LOI); BigZoo, 20 FCC Rcd
at 3955 (same); QuickLink Telecom, Inc., Order of Forfeiture, 20 FCC Rcd
14464 (Enf. Bur. 2005) (same).
See CCN, Inc., et. al, Order to Show Cause and Opportunity for Hearing,
Order, 13 FCC Rcd 13599 (1998) (revoking carrier's operating authority
based on findings of repeated violations); see also, 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).
See 47 C.F.R. S: 1.1914.
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Federal Communications Commission DA 07-4016
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Federal Communications Commission DA 07-4016