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                                 July 14, 2009

   DA 09-1529

   VIA CERTIFIED MAIL

   RETURN RECEIPT REQUESTED AND FACSIMILE (415-522-1506)

   AND EMAIL (gsl@defendergroup.com)

   Mr. Steven Newton

   c/o Law Office of Garrick S. Lew

   Attn: Garrick Sherman Lew

   600 Townsend Street, Suite 329E

   San Francisco, California 94102

   Re: Notice of Suspension and Initiation of Debarment Proceedings,

   File No. EB-08-IH-1928

   Dear Mr. Newton:

   The Federal Communications Commission ("FCC" or "Commission") has received
   notice of your conviction of Wire Fraud, Aiding and Abetting, and
   Collusion, in violation of 18 U.S.C. S:S: 2 and 1343, and 15 U.S.C. S: 1,
   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 pleaded
   guilty and were sentenced to six months in prison in connection with your
   participation in two schemes to defraud the E-Rate program. Specifically,
   you admitted that as former Vice President at Premio Computers, Inc. and
   principal manager of SEMA4, Inc. and Digital Connect Communications, Inc.
   you participated in schemes to defraud the E-Rate program of money and
   property through materially false and fraudulent pretenses for your own
   enrichment. You did this, with the help of other co-conspirators or
   defendants, by controlling the bidding, application, and implementation
   and invoicing process of the E-Rate program. You submitted materially
   false information to USAC regarding the cost and eligibility of equipment
   services and intentionally misrepresented the school district's ability
   and willingness to pay their portion of the E-Rate projects.

   Pursuant to section 54.8 of the Commission's rules, your conviction on
   criminal offenses arising out of activities associated with or related to
   the schools and libraries support mechanism requires the Bureau to suspend
   you from continuing to participate in any activities associated with or
   related to the schools and libraries support mechanism. Activities arising
   out of or related to the schools and libraries support mechanism include
   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.

   Your suspension becomes effective upon the earlier of your receipt of this
   letter or publication of notice in the Federal Register, 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. 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 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 suspension and debarment defined in section 54.8(c) of the
   Commission's rules. Therefore, pursuant to section 54.8 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. The Bureau will decide any request for reversal
   or limitation of debarment within 90 days of receipt of such request. 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
   Rebekah L. Bina, Attorney Advisor, Investigations and Hearings Division,
   Enforcement Bureau, Room 4-C330, with a copy to Michele Levy Berlove,
   Acting 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 Rebekah L. Bina, Attorney Advisor, Investigations and Hearings
   Division, Enforcement Bureau, Federal Communications Commission, 445 12th
   Street, S.W., Room 4-C327, Washington, DC, 20554, with a copy to Michele
   Berlove, Acting 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 Rebekah.Bina@fcc.gov and to
   Michele.Berlove@fcc.gov.

   If you have any questions, please contact Ms. Bina via mail, by telephone
   at (202) 418-7931 or by e-mail at Rebekah.Bina@fcc.gov. If Ms. Bina is
   unavailable, you may contact Ms. Michele Levy Berlove, Acting Assistant
   Chief, Investigations and Hearings Division, by telephone at (202)
   418-1477 and by e-mail at Michele.Berlove@fcc.gov.

   Sincerely yours,

   Hillary S. DeNigro

   Chief

   Investigations and Hearings Division

   Enforcement Bureau

   cc: Kristy Carroll, Esq., Universal Service Administrative Company (via
   e-mail)

   Michael Wood, Antitrust Division, United States Department of Justice (via
   e-mail)

   Any further reference in this letter to "your conviction" refers to your
   guilty plea and subsequent two count conviction on wire fraud, collusion,
   and aiding and abetting. See United States v. Steven Newton, Criminal
   Docket No. 3:05-CR-00208-CRB-10, Plea Agreement (N.D. Cal. filed and
   entered Apr. 20, 2007) ("Newton Plea"). See also United States v. Steven
   Newton, Criminal Docket No. 3:05-CR-00208-CRB-10, Judgment (N.D. Cal.
   filed and entered Mar. 31, 2009) (Convicted on Counts 11 and 22)("Newton
   Judgment"). See also generally United States v. Video Network
   Communications, Inc. et al., Criminal Docket No. 3:05-CR-00208-CRB,
   Superseding Indictment (N.D. Cal. filed Dec. 8, 2005 and entered Dec. 12,
   2005), http://www.usdoj.gov/atr/cases/f213600/213626.htm (accessed May 1,
   2008) ("VNCI Superseding Indictment").

   47 C.F.R. S: 54.8 (2008). See also 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 of the
   Commission's rules 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)).

   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).

   Newton Judgment at 1-2. See also VNCI Superseding Indictment at P:P: 4-6,
   8-11, 15, 19, 22-24, 72-78, 133-137, 145-151.

   Premio Computers, Inc. manufactures computers, software and peripheral
   equipment, and sells them to wholesale, commercial, and government
   entities. See In the Matter of Premio, Inc., Notice of Debarment, 22 FCC
   Rcd 1019, 1021 (Jan. 22, 2007). Premio Computers, Inc. was debarred from
   the E-Rate program for its involvement in E-Rate related fraud. See
   generally id.

   SEMA4 is a California company that provided equipment and services for a
   project funded by the E-Rate program. See VNCI Superseding Indictment at
   P:P: 74-75. The charges against SEMA4 were dismissed. See United States v.
   SEMA4, Inc., Criminal Docket No. 3:05-CR-00208-CRB-3 (N.D. Cal. terminated
   June 12, 2007).

   Digital Connect Communications, Inc. was a California company that
   provided telecommunication and Internet access equipment and services to
   schools participating in the E-Rate program. See VNCI Superseding
   Indictment at P:P: 134-135. The charges against this company were
   dismissed. See United States v. Digital Connect Communications, Inc.,
   Criminal Docket No. 3:05-CR-00208-CRB-4 (N.D. Cal. terminated June 12,
   2007).

   See VNCI Superseding Indictment at P:P: 4-6, 8-11, 15-16, 19, 22-24,
   72-78, 133-137, 145-151.

   Id.

   These misrepresentations included inflating the costs of eligible
   telecommunications equipment and services in applications to cover the
   cost of ineligible equipment and services. See VNCI Superseding Indictment
   at P:P: 8-11, 22-24, 78, 145-151.

   47 C.F.R. S: 54.8(b)-(e); see also S: 54.8(a)(4).

   47 C.F.R. S: 54.8(a)(1); see also S: 54.8(a)(3).

   47 C.F.R. S: 54.8(a)(7), (e)(1); see also Second Report and Order, 18 FCC
   Rcd at 9226, P: 69.

   47 C.F.R. S: 54.8(e)(4).

   Id.

   Id.

   47 C.F.R. S: 54.8(f); see also Second Report and Order, 18 FCC Rcd at
   9226, P: 70.

   47 C.F.R. S: 54.8(e)(5), (f); see also Second Report and Order, 18 FCC Rcd
   at 9226, P: 70;

   "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). You were
   convicted on various fraud charges. See supra note 4.

   See 47 C.F.R. S: 54.8(b), (c).

   47 C.F.R. S: 54.8(e)(3), (5); see also Second Report and Order, 18 FCC Rcd
   at 9226, P: 70.

   47 C.F.R. S: 54.8(e)(5); see also Second Report and Order, 18 FCC Rcd at
   9227, P: 74.

   47 C.F.R. S: 54.8(e)(5), (f); see also Second Report and Order, 18 FCC Rcd
   at 9226, P: 70.

   47 C.F.R. S: 54.8(e)(5). 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).

   47 C.F.R. S: 54.8(a)(1), (d), (g); see also Second Report and Order, 18
   FCC Rcd at 9225, P: 67.

   47 C.F.R. S: 54.8(g).

   Mr. Steven Newton

   July 14, 2009

   Page 2 of 5

                       Federal Communications Commission

                               Enforcement Bureau

                      Investigations and Hearings Division

                       445 12th Street, SW, Suite 4-C330

                             Washington, D.C. 20554