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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
In the Matter of ) File No. EB-06-IH-2307
Communications Options, Inc. ) NAL/Acct. No. 200732080031
Apparent Liability for Forfeiture ) FRN 0003735230
)
)
ORDER OF FORFEITURE
Adopted: March 13, 2008 Released: March 13, 2008
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Order of Forfeiture ("Order"), we assess a monetary forfeiture
of $65,000 against Communications Options, Inc. ("COI"). We find that
COI willfully and repeatedly violated section 54.711(a) of the Federal
Communications Commission's (the "Commission" or "FCC") rules by
failing to maintain records and documentation to justify information
reported in its Telecommunications Reporting Worksheets ("Worksheets")
and provide the records and documentation to the Commission upon
request. Further, we find that COI willfully and repeatedly violated a
Commission order issued pursuant to sections 4(i), 4(j), 218 and 403
of the Communications Act of 1934, as amended (the "Act"), by failing
to respond on a timely basis to a directive of the Enforcement Bureau
("Bureau") to provide certain information and documents, and support
its response with an affidavit or declaration.
II. BACKGROUND
2. The facts and circumstances of this case 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. COI
is a telecommunications carrier that began providing
telecommunications service in the United States in November, 1990. The
Universal Service Administrative Company ("USAC"), the administrator
of the universal service fund ("USF"), received information in March
2005 alleging that COI was not reporting revenues collected from
Presubscribed Interexchange Carrier Charges ("PICC") or End User
Common Line ("EUCL") charges. Pursuant to a referral from USAC, on
July 13, 2006, the Bureau issued a letter of inquiry ("LOI") to COI.
The LOI directed COI to, among other things, submit a sworn, written
response to a series of questions relating to COI's compliance with
its filing and payment obligations involving regulatory fees, the USF,
the Telecommunications Relay Services ("TRS") Fund, and the North
American Numbering Plan Administration ("NANPA") Fund. COI's response
was due on August 2, 2006. COI failed to respond by that date, and
when Bureau staff contacted COI to inquire about the status of COI's
response, COI stated that it "overlooked" the deadline and requested
an extension until August 31, 2006. On August 28, 2006, the Bureau
informed COI that failure to respond fully and timely to a Bureau
letter of inquiry constitutes a violation of the Act and Commission
rules. COI submitted a response to the LOI on August 31, 2006.
Contrary to the Bureau's directive, COI's LOI Response was not
supported with an affidavit or declaration under penalty of perjury,
signed and dated by an authorized officer of COI with personal
knowledge of the representations provided in COI's response, verifying
the truth and accuracy of the information submitted and to the
production of all requested information and documents in COI's
possession, custody, control or knowledge.
3. On July 27, 2007, the Bureau issued the NAL in the amount of $65,000
against COI for apparently failing to maintain records and
documentation to justify information reported in COI's Worksheets and
provide the records and documentation to the Commission upon request;
and to respond on a timely basis to a directive of the Bureau to
provide certain information and documents, and support its response
with an appropriate affidavit or declaration. The NAL ordered COI,
within 30 days, i.e., by August 27, 2007, to pay the proposed
forfeiture or respond to the NAL, 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. To date, COI has not paid
the forfeiture amount or submitted a formal response to the NAL.
III. DISCUSSION
4. We find by a preponderance of the evidence that COI has willfully and
repeatedly failed to maintain records and documentation to justify
information reported in COI's Worksheets and provide the records and
documentation to the Commission upon request; and to respond on a
timely basis to a directive of the Bureau to provide certain
information and documents, and support its response with the required
affidavit or declaration.
5. 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.
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)(E) 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."
7. We find by a preponderance of the evidence that COI has willfully and
repeatedly failed to maintain records and documentation to justify
information reported in COI's Worksheets and provide the records and
documentation to the Commission upon request. The Commission's
Forfeiture Policy Statement and implementing rules prescribe a base
forfeiture of $1,000 for failure to maintain required records. We
find, however, that failing to maintain records and documentation
supporting the Telecommunications Reporting Worksheets warrants a
substantial increase to the base forfeiture amount in light of the
important public policy aspects of the underlying rule. As the
Commission has observed in another USF enforcement action, "the size
and scope of the universal service and [other federal regulatory]
programs impose a monumental burden on the Commission [and] USAC . . .
to verify that each and every carrier has complied with the revenue
reporting requirements. By necessity, the Commission and the other
entities must rely on carriers' compliance with our rules." To assist
the Commission and USAC in this endeavor, the document retention rule
was adopted to ensure the accuracy of a Worksheet could be
established, particularly in a case where information suggests the USF
contributor is not fully reporting revenue. Thus, we find the failure
to maintain documents supporting a Worksheet as directed by the
Commission analogous to the filing of inaccurate information in that
the provider prevents accurate administration of the program and
enforcement of Commission rules. The Commission has previously
concluded a $50,000 forfeiture is appropriate for the filing of an
inaccurate Worksheet. We conclude that the same amount also is
appropriate for the failure to maintain supporting documents and
provide them to the Commission. Taking into account all of the factors
enumerated in section 503(b)(2)(D) of the Act, we assess a forfeiture
of $50,000 against COI for failing to maintain records and
documentation supporting COI's Worksheets.
8. We also find by a preponderance of the evidence that COI has willfully
and repeatedly failed to respond on a timely basis to a directive of
the Bureau to provide certain information and documents, and support
its response with the required affidavit or declaration. 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. COI's failure to respond to the
Bureau's inquiries for approximately one month occurred following
COI's promise that its LOI response would be timely submitted.
However, when Bureau staff contacted COI after the deadline to inquire
about a response, COI informed Bureau staff that COI had "overlooked"
its obligation to respond. When COI finally did submit a response it
lacked the required supporting affidavit or declaration required by
the Commission.
9. We find that the substantial delay in responding to the LOI, and the
failure to fully comply with the Bureau's directives, 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 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 the
Commission's regulatory programs. Prompt, sworn responses to Bureau
inquiry letters are critical to the Commission's enforcement function.
We therefore impose a forfeiture against COI of $15,000 for failing to
provide a sworn response to the LOI on a timely basis. This forfeiture
amount is consistent with recent precedent in similar investigations
involving the failures of companies to respond to Bureau inquiries
concerning compliance with the reporting and contribution requirements
for the Commission's regulatory programs, despite evidence that the
LOIs had been received. COI and other carriers are warned that they
may not delay or resist the Bureau's direction to provide information
in response to an LOI. Such conduct obstructs the enforcement process
and will not be tolerated.
10. In conclusion, we find that a total forfeiture in the amount of
$65,000 is warranted. The total forfeiture amount includes: (1) a
penalty of $50,000 for failing to maintain records and documentation
to justify information reported in COI's Worksheets and provide the
records and documentation to the Commission upon request; and (2) 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 support its response with the required affidavit or declaration.
We again caution that additional violations of the Act or the
Commission's rules could subject COI to further enforcement action.
Such action could take the form of higher monetary forfeitures and/or
possible revocation of COI's operating authority, including
disqualification of COI's principals from the provision of any
interstate common carrier services without the prior consent of the
Commission.
IV. ORDERING CLAUSES
11. 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 Communications Options, Inc.
SHALL FORFEIT to the United States government the sum of $65,000 for
willfully and repeatedly violating the Commission's rules and a
Commission order issued pursuant to the Act.
12. 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/Account Number and FRN Number referenced
above. Payment by check or money order may be mailed to Federal
Communications Commission, P.O. Box 979088, St. Louis, MO 63197-9000.
Payment by overnight mail may be sent to U.S. Bank - Government
Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO
63101. Payment by wire transfer may be made to ABA Number 021030004,
receiving bank TREAS/NYC, and account number 27000001. For payment by
credit card, an FCC Form 159 (Remittance Advice) must be submitted.
When completing the FCC Form 159, enter the NAL/Account number in
block number 23A (call sign/other ID), and enter the letters "FORF" in
block number 24A (payment type code). Requests for full payment under
an installment plan should be sent to: Chief Financial Officer --
Financial Operations, 445 12th Street, S.W., Room 1-A625, Washington,
D.C. 20554. Please contact the Financial Operations Group Help Desk
at 1-877-480-3201 or Email: ARINQUIRIES@fcc.gov with any questions
regarding payment procedures.
13. IT IS FURTHER ORDERED that a copy of this Order will be sent by
certified mail/return receipt requested to Lewis H. Goldman, Esq., 45
Dudley Court, Bethesda, Maryland 20814.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Chief
Enforcement Bureau
47 C.F.R. S: 54.711(a).
47 U.S.C. S:S: 154(i), 154(j), 218, 403. The Telecommunications Act of
1996 amended the Communications Act of 1934, see Telecommunications Act of
1996, Pub. L. No. 104-104, 110 Stat. 56 (1996).
See Communications Options, Inc., Notice of Apparent Liability for
Forfeiture, 22 FCC Rcd 13680 (Enf. Bur. 2007) ("COI NAL" or "NAL").
See Letter from P.J. Moody, Controller, Communication Options, Inc. to
David Janas, Special Counsel, Investigations and Hearings Division,
Enforcement Bureau, Federal Communications Commission, Response 4 (Aug.
30, 2006) ("LOI Response").
Letter from Wayne M. Scott, Vice President, Internal Audit Division,
Universal Service Administrative Company to Hillary DeNigro, Deputy Chief,
Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission, at 1 (Nov. 15, 2005) ("USAC Referral"). If an
interstate telecommunications provider fails to report PICC and EUCL
revenue on its Worksheet, the provider may significantly underreport
interstate telecommunications revenue, thereby preventing USAC from
invoicing a full assessment of the provider's fair share of universal
service contributions.
See USAC Referral, supra note 5.
Letter of Inquiry from Trent Harkrader, Acting Deputy Chief,
Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission to Stephen K. Vogelmeier, President,
Communication Options, Inc. (July 13, 2006) ("LOI").
Telephone conversation between P.J. Moody, Controller, Communication
Options, Inc. and David Janas, Special Counsel, Investigations and
Hearings Division, Enforcement Bureau, Federal Communications Commission,
dated August 23, 2006.
Letter from Trent Harkrader, Acting Deputy Chief, Investigations and
Hearings Division, Enforcement Bureau, Federal Communications Commission
to P.J. Moody, Controller, Communication Options, Inc. (Aug. 28, 2006).
See LOI Response, supra note 4.
LOI at 9 (directing COI to comply with 47 C.F.R. S: 1.16).
COI NAL, supra note 3.
Id. at P: 24.
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)(E).
See Commission's Forfeiture Policy Statement and Amendment of Section 1.80
of the Commission's Rules, Report and Order, 12 FCC Rcd 17087, 17114,
Appendix A (1997) ("Forfeiture Policy Statement"), recon. denied, 15 FCC
Rcd 303 (1999); 47 C.F.R. S: 1.80(b).
See Globcom, Inc., Order of Forfeiture, 21 FCC Rcd 4710 (2006) ("Globcom
Forfeiture Order"); Globcom, Inc., Notice of Apparent Liability for
Forfeiture and Order, 18 FCC Rcd 19893 (2003) ("Globcom NAL").
Globcom NAL, 18 FCC Rcd at 19904, P: 30.
See Matter of Federal-State Board on Universal Service, Report and Order
and Second Further Notice of Proposed Rulemaking, 17 FCC Rcd 24952, 25791,
P: 34 (2002).
Globcom Forfeiture Order, 21 FCC Rcd at 4721-24, P:P: 29-38; Globcom NAL,
18 FCC Rcd at 19904-05, P:P: 30-32.
47 C.F.R. S: 1.80; Forfeiture Policy Statement, 12 FCC Rcd at 17114.
See Electronic Mail Message from P.J. Moody, Controller, Communication
Options, Inc., to Eric Bash, Assistant Division Chief, and David Janas,
Special Counsel, Investigations & Hearings Division, Enforcement Bureau,
Federal Communications Commission (July 19, 2006, 12:35 p.m.) ("July 19,
2006 COI E-Mail").
See LOI at 9 (directing COI to comply with 47 C.F.R. S: 1.16).
See International Telecom Exchange, Inc., Notice of Apparent Liability for
Forfeiture and Order, 21 FCC Rcd 6232, 6240, P: 26 (Enf. Bur. 2006)
(proposing $28,062 forfeiture for apparent failure to respond on a timely
basis to a directive of the Enforcement Bureau to provide certain
information and documents, and for apparent failure to contribute to the
Telecommunications Relay Service Fund); BigZoo.com Corp., Order of
Forfeiture, 20 FCC Rcd 3954, 3956, P: 7 (Enf. Bur. 2005) (imposing $20,000
forfeiture for failure to respond on a timely basis to a directive of the
Enforcement Bureau to provide certain information and documents);
QuickLink Telecom, Inc., Order of Forfeiture, 20 FCC Rcd 14464, 14466, P:
10 (Enf. Bur. 2005) (same). See also SBC Communications, Inc., Forfeiture
Order, 17 FCC Rcd 7589, 7599, P: 29 (2000) (imposing a $100,000 forfeiture
for failure to provide a sworn statement attesting to the truth and
accuracy of the company's LOI response). We note that in the SBC case, a
major factor behind the $100,000 forfeiture amount was the company's
ability to pay. See SBC Communications, Inc., Notice of Apparent Liability
for Forfeiture, 16 FCC Rcd 19370, 19373, P: 11 (Enf. Bur. 2001)
(subsequent history omitted). We do not consider that factor here.
See Business Options, Inc., Order to Show Cause and Notice of Opportunity
for Hearing, 18 FCC Rcd 6881, 6894, P: 36 (2003) (subsequent history
omitted); NOS Communications, Inc., Order to Show Cause and Notice of
Opportunity for Hearing, 18 FCC Rcd 6952, 6965, P: 27 (2003) (subsequent
history omitted).
47 U.S.C. S: 503(b).
47 C.F.R. S:S: 0.111, 0.311, 1.80.
See 47 C.F.R. S: 1.1914.
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Federal Communications Commission DA 08-548
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Federal Communications Commission DA 08-548