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May 16, 2008
DA 08-1176
VIA CERTIFIED MAIL
RETURN RECEIPT REQUESTED AND FACSIMILE (203-977-7301)
Mr. Thomas J. Kennedy III
c/o Stanley A. Twardy, Jr.
Day Pitney LLP
One Canterbury Green
Stamford, CT 06901-2047
Re: Notice of Debarment, File No. EB-08-IH-0285
Dear Mr. Kennedy:
Pursuant to section 54.8 of the rules of the Federal Communications
Commission (the "Commission"), by this Notice of Debarment you are
debarred from the schools and libraries universal service support
mechanism (or "E-Rate program") for a period of three years.
On February 6, 2008, the Enforcement Bureau (the "Bureau") sent you a
Notice of Suspension and Initiation of Debarment Proceedings (the "Notice
of Suspension"). That Notice of Suspension was published in the Federal
Register on March 10, 2008. The Notice of Suspension suspended you from
the schools and libraries universal service support mechanism and
described the basis for initiation of debarment proceedings against you,
the applicable debarment procedures, and the effect of debarment.
Pursuant to the Commission's rules, any opposition to your suspension or
its scope or to your proposed debarment or its scope had to be filed with
the Commission no later than thirty (30) calendar days from the earlier
date of your receipt of the Notice of Suspension or publication of the
Notice of Suspension in the Federal Register. The Commission did not
receive any such opposition.
As discussed in the Notice of Suspension, you pled guilty to and were
convicted of mail fraud, in violation of 18 U.S.C. S:1341, for your
participation in the E-Rate program. You admitted to participating in a
scheme to defraud the E-Rate program by, among other things, taking
actions with other co-schemers to ensure that costs for services on E-rate
projects would be billed at inflated rates, which in turn led to inflated
invoices being submitted to the Universal Service Administrative Company
for reimbursement from the E-rate program. Such conduct constitutes the
basis for your debarment, and your conviction falls within the categories
of causes for debarment under section 54.8(c) of the Commission's rules.
For the foregoing reasons, you are hereby debarred for a period of three
years from the debarment date, i.e., the earlier date of your receipt of
this Notice of Debarment or its publication date in the Federal Register.
Debarment excludes you, for the debarment period, from activities
"associated with or related to the schools and libraries support
mechanism," including "the receipt of funds or discounted services through
the schools and libraries support mechanism, or consulting with,
assisting, or advising applicants or service providers regarding the
schools and libraries support mechanism."
Sincerely,
Hillary S. DeNigro
Chief
Investigations and Hearings Division
Enforcement Bureau
cc: Kristy Carroll, Esq., Universal Service Administrative Company (via
e-mail)
Anthony E. Kaplan, Esq., Supervisory Assistant United States Attorney
Calvin B. Kurimai, Esq., Assistant United States Attorney
February 6, 2008
DA 08-300
VIA CERTIFIED MAIL
RETURN RECEIPT REQUESTED AND FACSIMILE (203-977-7301)
Mr. Thomas J. Kennedy III
c/o Stanley A. Twardy, Jr.
Day Pitney LLP
One Canterbury Green
Stamford, CT 06901-2047
Email: satwardy@daypitney.com
Re: Notice of Suspension and Initiation of Debarment Proceedings,
File No. EB-08-IH-0285
Dear Mr. Kennedy:
The Federal Communications Commission ("FCC" or "Commission") has received
notice of your conviction for mail fraud in violation of 18 U.S.C. S: 1341
in connection with your participation in the schools and libraries
universal service support mechanism ("E-Rate program"). Consequently,
pursuant to 47 C.F.R. S: 54.8, this letter constitutes official notice of
your suspension from the E-Rate program. In addition, the Enforcement
Bureau ("Bureau") hereby notifies you that we are commencing debarment
proceedings against you.
I. Notice of Suspension
The Commission has established procedures to prevent persons who have
"defrauded the government or engaged in similar acts through activities
associated with or related to the schools and libraries support mechanism"
from receiving the benefits associated with that program. You pled guilty
to mail fraud for activities in connection with your participation in the
E-Rate program involving telecommunications upgrade projects in four
Connecticut school districts. While employed as an account manager for a
company that had a partnership arrangement with Southwestern Bell
Communications ("SBC"), you participated in a scheme to defraud SBC and
the E-Rate program. You and three SBC employees, including Richard E.
Brown and Keith J. Madeiros, decided that engineers would be hired for
E-Rate funded projects and that the cost of these engineering services
would be billed at inflated rates first to SBC and later to a SBC
subcontractor. SBC paid the invoices and then submitted those invoices to
USAC seeking excessive reimbursement from the E-rate funds. The invoices
were inflated by more than $500,000. You admitted that payments for the
inflated amount were split primarily among you, Mr. Brown, and Mr.
Madeiros and that you received $249,525.
Pursuant to section 54.8(a)(4) of the Commission's rules, your conviction
requires the Bureau to suspend you from participating in any activities
associated with or related to the schools and libraries fund mechanism,
including the receipt of funds or discounted services through the schools
and libraries fund mechanism, or consulting with, assisting, or advising
applicants or service providers regarding the schools and libraries
support mechanism. Your suspension becomes effective upon the earlier of
your receipt of this letter or publication of notice in the Federal
Register.
Suspension is immediate pending the Bureau's final debarment
determination. In accordance with the Commission's debarment rules, you
may contest this suspension or the scope of this suspension by filing
arguments in opposition to the suspension, with any relevant
documentation. Your request must be received within 30 days after you
receive this letter or after notice is published in the Federal Register,
whichever comes first. Such requests, however, will not ordinarily be
granted. The Bureau may reverse or limit the scope of suspension only upon
a finding of extraordinary circumstances. Absent extraordinary
circumstances, the Bureau will decide any request for reversal or
modification of suspension within 90 days of its receipt of such request.
II. Initiation of Debarment Proceedings
Your guilty plea to and conviction of criminal conduct in connection with
the E-Rate program, in addition to serving as a basis for immediate
suspension from the program, also serves as a basis for the initiation of
debarment proceedings against you. Your conviction falls within the
categories of causes for debarment defined in section 54.8(c) of the
Commission's rules. Therefore, pursuant to section 54.8(a)(4) of the
Commission's rules, your conviction requires the Bureau to commence
debarment proceedings against you.
As with your suspension, you may contest debarment or the scope of the
proposed debarment by filing arguments and any relevant documentation
within 30 calendar days of the earlier of the receipt of this letter or of
publication in the Federal Register. Absent extraordinary circumstances,
the Bureau will debar you. Within 90 days of receipt of any opposition to
your suspension and proposed debarment, the Bureau, in the absence of
extraordinary circumstances, will provide you with notice of its decision
to debar. If the Bureau decides to debar you, its decision will become
effective upon the earlier of your receipt of a debarment notice or
publication of the decision in the Federal Register.
If and when your debarment becomes effective, you will be prohibited from
participating in activities associated with or related to the schools and
libraries support mechanism for three years from the date of debarment.
The Bureau may, if necessary to protect the public interest, extend the
debarment period.
Please direct any response, if by messenger or hand delivery, to Marlene
H. Dortch, Secretary, Federal Communications Commission, 236 Massachusetts
Avenue, N.E., Suite 110, Washington, D.C. 20002, to the attention of Diana
Lee, Attorney Advisor, Investigations and Hearings Division, Enforcement
Bureau, Room 4-C330, with a copy to Vickie Robinson, Assistant Chief,
Investigations and Hearings Division, Enforcement Bureau, Room 4-C330,
Federal Communications Commission. If sent by commercial overnight mail
(other than U.S. Postal Service Express Mail and Priority Mail), the
response should be sent to the Federal Communications Commission, 9300
East Hampton Drive, Capitol Heights, Maryland 20743. If sent by
first-class, Express, or Priority mail, the response should be sent to
Diana Lee, Attorney Advisor, Investigations and Hearings Division,
Enforcement Bureau, Federal Communications Commission, 445 12th Street,
S.W., Room 4-C330, Washington, DC, 20554, with a copy to Vickie Robinson,
Assistant Chief, Investigations and Hearings Division, Enforcement Bureau,
Federal Communications Commission, 445 12th Street, S.W., Room 4-C330,
Washington, DC, 20554. You shall also transmit a copy of the response via
email to diana.lee@fcc.gov and to vickie.robinson@fcc.gov.
If you have any questions, please contact Ms. Lee via mail, by telephone
at (202) 418-1420 or by e-mail at diana.lee@fcc.gov. If Ms. Lee is
unavailable, you may contact Ms. Vickie Robinson, Assistant Chief,
Investigations and Hearings Division, by telephone at (202) 418-1420 and
by e-mail at vickie.robinson@fcc.gov.
Sincerely yours,
Trent B. Harkrader
Deputy Chief
Investigations and Hearings Division
Enforcement Bureau
cc: Kristy Carroll, Esq., Universal Service Administrative Company (via
e-mail)
Anthony E. Kaplan, Esq., Supervisory Assistant United States Attorney
Calvin B. Kurimai, Esq., Assistant United States Attorney
See 47 C.F.R. S:S: 0.111(a), 54.8.
Letter from Hillary S. DeNigro, Chief, Investigations and Hearings
Division, Enforcement Bureau, Federal Communications Commission, to Mr.
Thomas J. Kennedy III, Notice of Suspension and Initiation of Debarment
Proceedings, 23 FCC Rcd 1669 (Inv. & Hearings Div., Enf. Bur. 2008)
(Attachment 1).
73 Fed. Reg. 12733 (March 10, 2008).
See Notice of Suspension, 23 FCC Rcd at 1670-72.
See 47 C.F.R. S:S: 54.8 (e)(3) and (4). That date occurred no later than
April 9, 2008. See supra note 3.
See Notice of Suspension, 23 FCC Rcd at 1670.
See id. In addition to Richard E. Brown, the Bureau debarred Keith J.
Madeiros, both former SBC account manager participating in the scheme,
from the E-Rate program. See Letter from Hillary S. DeNigro to Keith J.
Madeiros, Notice of Debarment, DA 08-1177 (Enf. Bur., Investigations &
Hearings Div., rel. May 16, 2008).
Id. at 1670; 47 C.F.R. S: 54.8(c).
See Notice of Suspension, 23 FCC Rcd at 1672.
See 47 C.F.R. S:S: 54.8(a)(1), 54.8(a)(5), 54.8(d); Notice of Suspension,
23 FCC Rcd at 1672.
Any further reference in this letter to "your conviction" refers to your
February 13, 2007 guilty plea and subsequent conviction of mail fraud.
United States v. Thomas J. Kennedy III, Criminal Docket No. 3:07-CR-186
(RNC), Plea Agreement (D. Conn. filed Aug. 24, 2007 and entered Aug. 27,
2007) ("Kennedy Plea Agreement"), Judgment (D. Conn. filed and entered
Jan. 24, 2008) ("Kennedy Judgment").
47 C.F.R. S: 54.8; 47 C.F.R. S: 0.111 (delegating to the Enforcement
Bureau authority to resolve universal service suspension and debarment
proceedings). The Commission adopted debarment rules for the schools and
libraries universal service support mechanism in 2003. See Schools and
Libraries Universal Service Support Mechanism, Second Report and Order and
Further Notice of Proposed Rulemaking, 18 FCC Rcd 9202 (2003) ("Second
Report and Order") (adopting section 54.521 to suspend and debar parties
from the E-rate program). In 2007, the Commission extended the debarment
rules to apply to all of the Federal universal service support mechanisms.
Comprehensive Review of the Universal Service Fund Management,
Administration, and Oversight; Federal-State Joint Board on Universal
Service; Schools and Libraries Universal Service Support Mechanism;
Lifeline and Link Up; Changes to the Board of Directors for the National
Exchange Carrier Association, Inc., Report and Order, 22 FCC Rcd 16372,
16410-12 (2007) (Program Management Order) (renumbering section 54.521 of
the universal service debarment rules as section 54.8 and amending
subsections (a)(1), (5), (c), (d), (e)(2)(i), (3), (e)(4), and (g)).
See Second Report and Order, 18 FCC Rcd at 9225, P: 66; Program Management
Order, 22 FCC Rcd at 16387, P: 32. The Commission's debarment rules define
a "person" as "[a]ny individual, group of individuals, corporation,
partnership, association, unit of government or legal entity, however,
organized." 47 C.F.R. S: 54.8(a)(6).
See Kennedy Plea Agreement at 1; United States v. Thomas J. Kennedy III,
Criminal Docket No. 3:07-CR-186 (RNC), Information, P:P: 7-28 (D. Conn.
filed Aug. 24, 2007 and entered Aug. 27, 2007) ("Kennedy Information");
http://www.usdoj.gov/usao/ct/Press2008/20080123-5.html (last accessed Jan.
25, 2008) ("DOJ January 23, 2008 Press Release").
See Kennedy Information at P:P: 13-15; DOJ January 23, 2008 Press Release
at 1.
See Kennedy Information at P:P: 15-28; DOJ January 23, 2008 Press Release
at 1. The Bureau has debarred Richard E. Brown from the E-Rate program.
See Letter from Hillary S. DeNigro to Richard E. Brown, Notice of
Debarment, 22 FCC Rcd 20569 (Enf. Bur., Investigations & Hearings Div.,
rel. Nov. 27, 2007); 72 Fed. Reg. 73821 (Dec. 28, 2007). The Bureau has
suspended Keith J. Madeiros from the E-Rate program and initiated
debarment proceedings against him. See Letter from Hillary S. DeNigro to
Keith J. Madeiros, Notice of Suspension and Initiation of Debarment
Proceedings, DA 08-129 (Enf. Bur., Investigations & Hearings Div., rel.
Jan. 18, 2008).
See Kennedy Information at P:P: 21, 26; DOJ January 23, 2008 Press Release
at 1.
See id.
See id.
47 C.F.R. S: 54.8(a)(4). See Second Report and Order, 18 FCC Rcd at
9225-9227, P:P: 67-74.
47 C.F.R. S:S: 54.8(a)(1), (d).
Second Report and Order, 18 FCC Rcd at 9226, P: 69; 47 C.F.R. S:
54.8(e)(1).
47 C.F.R. S: 54.8(e)(4).
Id.
47 C.F.R. S: 54.8(e)(5).
See Second Report and Order, 18 FCC Rcd at 9226, P: 70; 47 C.F.R. S:S:
54.8(e)(5), 54.8(f).
"Causes for suspension and debarment are the conviction of or civil
judgment for attempt or commission of criminal fraud, theft, embezzlement,
forgery, bribery, falsification or destruction of records, making false
statements, receiving stolen property, making false claims, obstruction of
justice and other fraud or criminal offense arising out of activities
associated with or related to the schools and libraries support mechanism,
the high-cost support mechanism, the rural healthcare support mechanism,
and the low-income support mechanism." 47 C.F.R. S: 54.8(c). Such
activities "include the receipt of funds or discounted services through
[the Federal universal service] support mechanisms, or consulting with,
assisting, or advising applicants or service providers regarding [the
Federal universal service] support mechanisms." 47 C.F.R. S: 54.8(a)(1).
See Second Report and Order, 18 FCC Rcd at 9226, P: 70; 47 C.F.R. S:
54.8(e)(3).
Second Report and Order, 18 FCC Rcd at 9227, P: 74.
See id., 18 FCC Rcd at 9226, P: 70; 47 C.F.R. S: 54.8(e)(5).
Id. The Commission may reverse a debarment, or may limit the scope or
period of debarment upon a finding of extraordinary circumstances,
following the filing of a petition by you or an interested party or upon
motion by the Commission. 47 C.F.R. S: 54.8(f).
Second Report and Order, 18 FCC Rcd at 9225, P: 67; 47 C.F.R. S:S:
54.8(d), 54.8(g).
Id.
Mr. Thomas J. Kennedy III
May 16, 2008
Page 2 of 2
Federal Communications Commission
Enforcement Bureau
Investigations and Hearings Division
445 12th Street, SW, Suite 4-C330
Washington, D.C. 20554
Mr. Thomas J. Kennedy III
February 6, 2008
Page 3 of 4
Attachment 1
Federal Communications Commission
Enforcement Bureau
Investigations and Hearings Division
445 12th Street, SW, Suite 4-C330
Washington, D.C. 20554