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August 17, 2011
DA 11-1424
SENT VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
AND FACSIMILE
Mr. Tyrone D. Pipkin
c/o Mr. Walter Francis Becker, Jr.
Chaffe McCall LLP
Energy Centre
1100 Poydras St., Suite 2300
New Orleans, LA 70163-2300
Re: Notice of Suspension and Initiation of Debarment Proceedings,
File No. EB-11-IH-1071
Dear Mr. Pipkin:
The Federal Communications Commission ("Commission") has received notice
of your conviction of conspiracy to defraud the United States in violation
of 18 U.S.C S: 371 in connection with your participation in the federal
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 the
Bureau will commence 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. Schools may
receive E-Rate program funding for eligible goods and services by filing
application forms, seeking competitive bids, and selecting the most
cost-effective vendor. To ensure the integrity of the program, the E-rate
program rules prohibit an E-Rate vendor or anyone associated with an
E-Rate vendor from participating in the application process or vendor
selection.
On March 28, 2011, you entered a plea agreement and pleaded guilty to
conspiring with others to defraud and obtain money from the E-Rate Program
by controlling the application, bidding, and implementation process of the
E-Rate program for schools located in four states. Specifically, you and a
co-conspirator violated E-Rate program rules by completing E-Rate
applications on behalf of Innovation Schools and other schools from
December 2001 through September 2005. Second, you and a co-conspirator
obstructed the open competitive bidding process by concealing your
relationship with a school official who devised a scheme to ensure
Innovation Schools and other schools would hire GNT and Computer Training
and Associates ("CTA") as their E-Rate service providers. In exchange, you
and a co-conspirator paid the school official $79,382 in bribes and
kickbacks for steering E-Rate contracts to your companies. As a result of
your assistance, Innovation Schools received more than $10,000 in federal
E-Rate funding in 2003, 2004 and 2005. Your company and CTA directly
benefited from this scheme by receiving over $1.4 million in E-Rate work
from Innovation Schools and other schools located in Florida and
elsewhere. These actions constitute the conduct or transactions upon which
this suspension notice and proposed debarment proceeding is based.
On June 21, 2011, the United States District Court for the Eastern
District of Louisiana sentenced you to serve one year and a day in prison
followed by a two year period of supervised release for conspiring to
defraud the federal E-Rate program in multiple states. The court also
ordered you to pay a $6,000 criminal fine for your role in the conspiracy
scheme.
Pursuant to section 54.8(b) of the Commission's rules, upon your
conviction the Bureau is required to suspend you from participating in any
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. Your suspension becomes effective
upon receipt of this letter or publication of the notice in the Federal
Register, whichever comes first.
In accordance with the Commission's debarment rules, you may contest this
suspension or the scope of this suspension by filing arguments, with any
relevant documents, within 30 calendar days after receipt of this letter
or after a 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 to reverse or modify a suspension within 90
calendar days of its receipt of such request.
II. Initiation of Debarment Proceedings
As discussed above, your guilty plea and conviction of criminal conduct in
connection with the E-Rate program serves as a basis for immediate
suspension from the program, as well as a basis to commence debarment
proceedings against you. Conviction of criminal fraud is cause for
debarment as defined in section 54.8(c) of the Commission's rules.
Therefore, pursuant to section 54.8(b) of the rules, your conviction
requires the Bureau to commence debarment proceedings against you.
As with the suspension process, you may contest debarment or the scope of
the proposed debarment by filing arguments and any relevant documentation
within 30 calendar days of receipt of this letter or publication in the
Federal Register, whichever comes first. The Bureau, in the absence of
extraordinary circumstances, will notify you of its decision to debar
within 90 calendar days of receiving any information you may have filed.
If the Bureau decides to debar you, its decision will become effective
upon either your receipt of a debarment notice or publication of the
decision in the Federal Register, whichever comes first.
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 set a longer debarment period or extend an existing
debarment period if necessary to protect the public interest.
Please direct any response, if sent by messenger or hand delivery, to
Marlene H. Dortch, Secretary, Federal Communications Commission, 445 12th
Street, S.W., Room TW-A325, Washington, D.C. 20554, to the attention of
Joy M. Ragsdale, Attorney Advisor, Investigations and Hearings Division,
Enforcement Bureau, Room 4-A236, with a copy to Theresa Z. Cavanaugh,
Acting Division Chief, Investigations and Hearings Division, Enforcement
Bureau, Room 4-C322, Federal Communications Commission. All messenger or
hand delivery filings must be submitted without envelopes. If sent by
commercial overnight mail (other than U.S. Postal Service ("USPS") Express
Mail and Priority Mail), the response must be sent to the Federal
Communications Commission, 9300 East Hampton Drive, Capitol Heights,
Maryland 20743. If sent by USPS First Class, Express Mail, or Priority
Mail, the response should be addressed to Joy Ragsdale, Attorney Advisor,
Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission, 445 12th Street, S.W., Room 4-A236, Washington,
D.C. 20554, with a copy to Theresa Z. Cavanaugh, Acting Division Chief,
Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission, 445 12th Street, S.W., Room 4-C322, Washington,
D.C. 20554. You shall also transmit a copy of your response via e-mail to
Joy M. Ragsdale, joy.ragsdale@fcc.gov and to Theresa Z. Cavanaugh,
Terry.Cavanaugh@fcc.gov.
If you have any questions, please contact Ms. Ragsdale via U.S. postal
mail, e-mail, or by telephone at (202) 418-7931. You may contact me at
(202) 418-1420 or at the email address noted above if Ms. Ragsdale is
unavailable.
Sincerely yours,
Theresa Z. Cavanaugh
Acting Chief
Investigations and Hearings Division
Enforcement Bureau
cc: Johnnay Schrieber, Universal Service Administrative Company (via
e-mail)
Rashann Duvall, Universal Service Administrative Company (via email)
Juan Rodriguez, Antitrust Division, United States Department of Justice
(via email)
Marvin Opotowsky, Antitrust Division, United States Department of Justice
(via email)
Any further reference in this letter to "your conviction" refers to your
conviction in United States v. Tyrone D. Pipkin, Criminal Docket Nos.
10-325 and 11-15 "A", Judgment (E.D.LA. filed June 21, 2011) ("Tyrone
Pipkin Judgment").
See 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 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; Rural
Health Care 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 app. C at 16410-12 (2007) (Program Management
Order) (section 54.521 of the universal service debarment rules was
renumbered as section 54.8 and subsections (a)(1), (5), (c), (d),
(e)(2)(i), (3), (e)(4), and (g) were amended.)
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).
47 C.F.R. S:S: 54.504, 54.511(c).
See Request for Review by Mastermind Internet Services, Inc.,
Federal-State Joint Board on Universal Service, Changes to the Board of
Directors of the National Exchange Carrier Association, Inc., CC Docket
No. 96-45, Order, 16 FCC Rcd 4028, 4032-33 P:P: 10-12 (2000) (Mastermind
Order) (finding that when an applicant surrenders control of the bidding
process to an employee of an entity that will also participate in the
bidding process as a prospective service provider, the applicant
irreparably impairs its ability to hold a fair and open competitive
bidding process); see also Universal Service Administrative Company's
("USAC") description of an Open and Fair Competitive Bidding Process at
http://www.universalservice.org/sl/applicants/step03/run-open-fair-competition.aspx.
United States v. Tyrone D. Pipkin, Criminal Docket No. 11-15 "A", Plea
Agreement (E.D. La. 2011) ("Plea Agreement"). The conspiracy scheme
involved schools in Arkansas, Florida, Illinois and Louisiana.
Tyrone Pipkin is co-owner of Global Networking Technologies, Inc. ("GNT"),
an E-Rate service provider hired by Innovation Schools and other schools
located in four states.
The Bureau will serve notice of suspension and initiation of debarment
proceedings to Gloria F. Harper, co-owner of GNT and owner of CTA, who
pleaded guilty to conspiracy on June 2, 2011, and awaits sentencing
scheduled for the fall of 2011. See Justice News, Dep't of Justice, Former
Co-Owner of Illinois Technology Company Sentenced to Serve One Year and a
Day in Prison for Role in Conspiracy to Defraud the Federal E-Rate
Program, June 21, 2011, at
http://www.justice.gov/opa/pr/2011/June/11-at-807.html ("Press Release").
United States v. Tyrone D. Pipkin, Criminal Docket No. 11-15 "A", Factual
Basis at 2 (E.D. La. 2011) ("Factual Basis").
Factual Basis at 3, 4. See also United States v. Tyrone D. Pipkin, Docket
No. 4:10cr67, Indictment at 2 (N.D. Fla. 2010).
Factual Basis at 4. See also Press Release P: 4.
Factual Basis at 4.
Id.
Second Report and Order, 18 FCC Rcd at 9226, P: 70; 47 C.F.R. S:
54.8(e)(2)(i).
Judgment at 2 (The prison term is one year and a day for both Count one of
Case No. 10-325 and Count one of Case No. 11-15 "A". Both terms will run
concurrently for a total prison term of one year and one day.).
Judgment at 5. You were also ordered to immediately pay a $200 Special
Assessment. Id.
47 C.F.R. S: 54.8(b). 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(f).
Second Report and Order, 18 FCC Rcd at 9226, P: 70; 47 C.F.R. S:S:
54.8(e)(5), (f).
"Causes for suspension and debarment are 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). Associated 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).
47 C.F.R. S: 54.8(b).
Second Report and Order, 18 FCC Rcd at 9226, P: 70; 47 C.F.R. S:
54.8(e)(3).
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), (g).
Id.
See FCC Public Notice, DA 09-2529 for further filing instructions (rel.
Dec. 3, 2009).
Tyrone D. Pipkin
August 17, 2011
Page 3 of 5
Federal Communications Commission
Enforcement Bureau
Investigations and Hearings Division
445 12th Street, SW, Suite 4-C330
Washington, D.C. 20554