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July 27, 2012
DA 12-1211
SENT VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
AND EMAIL
Mr. Willard Ross Lanham
c/o Stephen N. Preziosi
Law Office of Stephen N. Preziosi P.C.
570 Seventh Avenue, Ninth Floor
New York, NY 10018
Re: Notice of Suspension and Initiation of Debarment Proceeding
File No. EB-12-IH-0847
Dear Mr. Lanham:
The Federal Communications Commission (Commission or FCC) has received
notice of your conviction for theft of federal education funds in
violation of 18 U.S.C. S: 666(a)(1), and mail fraud in violation of 18
U.S.C. S: 1341, in connection with 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 participating in activities associated with the
E-Rate program. In addition, the Enforcement Bureau (Bureau) hereby
notifies you that it 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 [E-Rate program]" from receiving the
benefits associated with that program. The statutory provisions and
Commission rules relating to the E-Rate program are designed to ensure
that all E-Rate funds are used for their intended purpose. For example,
Section 254(h)(1)(B) of the Communications Act of 1934, as amended,
requires E-Rate program applicants to make bona fide requests for services
intended for educational purposes in order to receive E-Rate discounts.
Further, the Commission has stated that "[a] funding request may not be
bona fide where a service provider has charged the beneficiary an inflated
price." The Commission also limits E-Rate funding to certain eligible
services, which does not include consulting services.
On March 5, 2012, a jury rendered a guilty verdict convicting you on one
count of theft of federal funds and three counts of mail fraud in
connection with your activities as an E-Rate consultant for the New York
City Department of Education (DOE). Your responsibilities as a DOE
consultant included overseeing Project Connect, a project designed to
bring Internet connectivity to New York City schools. On April 28, 2011,
the Special Commissioner of Investigation for the New York City School
District (SCI) released a report alleging, among other matters, that you
had orchestrated a fraudulent invoicing and billing scheme using DOE
vendors and subcontractors to overcharge DOE for Project Connect.
Testimony and documentary evidence admitted during your trial corroborates
SCI's allegations. Specifically, witnesses testified that you: 1) arranged
for employees of your company, Lanham Enterprises, Inc., to work as
consultants for DOE, 2) inflated their hourly rates far above their
salaries, and 3) arranged for Project Connect subcontractors to bill those
inflated rates to a Project Connect contractor using invoices that
misstated the true nature of the charges. Witnesses further testified you
directed employees of that contractor to "bundle" the consultant charges
with services eligible for E-Rate funding on invoices and billing
spreadsheets sent to DOE in order to make it appear that the consultants
were doing work associated with wiring the schools for Internet access
service. Your scheme resulted in DOE being fraudulently billed more than
$3.6 million for Project Connect between 2002 and 2008, of which you
profited approximately $1.7 million. The DOE included at least a portion
of these overcharges in its E-Rate funding requests for Project Connect.
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 E-Rate program, including the
receipt of funds or discounted services through the E-Rate program, or
consulting with, assisting, or advising applicants or service providers
regarding the E-Rate program. Your suspension becomes effective upon
receipt of this letter or its publication in the Federal Register,
whichever comes first.
In accordance with the Commission's suspension and debarment rules, you
may contest this suspension or the scope of this suspension by filing
arguments, with any relevant documents, within thirty (30) calendar days
of receipt of this letter or its publication 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 to reverse or modify a suspension within ninety (90) calendar days
of its receipt of such request.
II. Initiation of Debarment Proceedings
In addition to requiring your immediate suspension from the E-Rate
program, your conviction 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 the proposed debarment or
the scope of the proposed debarment by filing arguments and any relevant
documentation within thirty (30) calendar days of receipt of this letter
or its 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 ninety (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 E-Rate
program 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-C330, with a copy to Theresa Z. Cavanaugh,
Chief, Investigations and Hearings Division, Enforcement Bureau, Room
4-C330, 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-C330, Washington, D.C. 20554, with a copy to
Theresa Z. Cavanaugh, Chief, Investigations and Hearings Division,
Enforcement Bureau, Federal Communications Commission, 445 12th Street,
S.W., Room 4-C330, 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) 418-1697. You may contact me at
(202) 418-1553 or at the e-mail address noted above if Ms. Ragsdale is
unavailable.
Sincerely yours,
Theresa Z. Cavanaugh
Chief
Investigations and Hearings Division
Enforcement Bureau
cc: Johnnay Schrieber, Universal Service Administrative Company (via
e-mail)
Rashann Duvall, Universal Service Administrative Company (via e-mail)
Brian A. Jacobs, U. S. Attorney's Office, Southern District of New York
(via e-mail)
Alvin L. Bragg, Jr., U. S. Attorney's Office, Southern District of New
York (via e-mail)
Paul M. Krieger, U. S. Attorney's Office, Southern District of New York
(via e-mail)
Any further reference in this letter to "your conviction" refers to the
jury's verdict finding you guilty on one count of theft of federal funds
and three counts of mail fraud. Trial Transcript at 887, United States v.
Willard Lanham, Jury Trial, No. 11 CR 548 GBD (S.D.N.Y. 2012) (Trial
Tr.); United States v. Willard Lanham, No. 11 CR 548 GBD, Order (S.D.N.Y.
June 13) (order denying motions for judgment of acquittal and for a new
trial).
See 47 C.F.R. S: 0.111 (delegating authority to the Bureau to resolve
universal service suspension and debarment proceedings). The Commission
adopted debarment rules for the E-Rate program 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) (renumbering Section 54.521 of the universal service debarment
rules as Section 54.8 and amending subsections (a)(1), (a)(5), (c), (d),
(e)(2)(i), (e)(3), (e)(4), and (g)).
Second Report and Order, 18 FCC Rcd at 9225, para. 66; Program Management
Order, 22 FCC Rcd at 16387, para. 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).
NEC-Business Network Solutions, Inc., Notice of Debarment and Order
Denying Waiver Petition, 21 FCC Rcd 7491, 7493, para. 7 (2006).
47 U.S.C. S: 245(h)(1)(B); Request for Review by Ysleta Independent School
District of the Decision of the Universal Service Administrator, CC Docket
Nos. 96-45, 97-21, Order, 18 FCC Rcd 26407, 26409, para. 5 (2003), (citing
Federal-State Joint Board on Universal Service, CC Docket No. 96-45,
Report and Order, 12 FCC Rcd 8776, 9076, para. 570 (1997)).
Schools and Libraries Universal Service Support Mechanism, Fifth Report
and Order and Order, 19 FCC Rcd 15808, 15818, para. 30 (2004). The
Commission has taken enforcement action against service providers who
inflated their rates and subsequently requested E-Rate funding for those
associated costs. See Letter from William H. Davenport, Chief,
Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission, to Steven G. Mihaylo, Notice of Suspension and
of Proposed Debarment, 20 FCC Rcd 1372 (Enf. Bur. 2005); see also Letter
from Hillary S. DeNigro, Chief, Investigations and Hearings Division,
Enforcement Bureau, Federal Communications Commission, to Richard E.
Brown, Notice of Debarment, 22 FCC Rcd 20569 (Enf. Bur. 2007) (debarment
of service provider who inflated costs in an attempt to defraud the E-Rate
program).
Federal-State Joint Board on Universal Service, Total Communications,
Inc., Site Link Communications, Inc., Requests for Review of Decisions of
the Universal Service Administrator, Order, 16 FCC Rcd 14020, 14023-24,
para. 9 & n.23 (Com. Car. Bur. 2001) (Site Link Order).
Trial Tr. at 887.
See Trial Testimony of Tom Kambouras; Trial Tr. at 34-36; Testimony of
Stephen Vigilante, Trial Tr. at 274-75.
Special Commissioner of Investigation Report to Hon. Dennis M. Walcott,
Chancellor New York City Public Schools, Dep't of Education from Richard
J. Condon, Special Commissioner of Investigation for the New York City
School District, SCI Case No. 2008-4446, at 1 (Apr. 28, 2011), at
http://www.nycsci.org/reports/04-11%20Lanham%20Rpt.pdf (SCI Report).
Testimony of Michael Pizza, Trial Tr. at 162-66; Testimony of Stephen
Vigilante, Trial Tr. at 289-96. These consultants also worked on a second
project that you managed for DOE that involved reviewing, paying, and
centralizing DOE's telephone bills. Testimony of Stephen Vigilante, Trial
Tr. at 282, 290.
Testimony of Tamika Stevenson, Trial Tr. at 218; see also SCI Report at 6
& n.18 (stating three of the consultants who were paid $30 to $70 per hour
had their services billed to DOE at $290 an hour or more).
Testimony of Christopher Louridas, Trial Tr. at 124-38; see also SCI
Report at 7 & n.20.
Testimony of Christopher Louridas, Trial Tr. at 124-26; Testimony of
Joseph Iacoviello, Trial Tr. at 81-82; Testimony of Stephen Vigilante,
Trial Tr. at 294-96; Testimony of Willard Lanham, Trial Tr. at 613,
616-18, 636-38, 702-12, 735-38.
See Testimony of Valerie Batista, Trial Tr. at 453-54 (testifying that
Verizon billed DOE $3.9 million for the telecommunications consultants'
work); SCI Report at 1 (stating that DOE paid Mr. Lanham approximately
$3.6 million for the consultants' work).
See Testimony of Stephen Vigilante, Trial Tr. at 274-75; see also News
Release, Representative Charles B. Rangel, Ranking Democrat, Committee on
Ways and Means, Chancellor Harold O. Levy and Congressman Charles Rangel
Announce Utilization of Federal Assistance for School Modernization (Jan.
8, 2002), at
http://www.house.gov/apps/list/speech/ny15_rangel/pr.wm.schoolsqzab.html
(News Release) (stating Project Connect would be "largely financed through
the federal E-[R]ate program").
47 C.F.R. S: 54.8(b); see Second Report and Order, 18 FCC Rcd at 9225-27,
paras. 67-74.
47 C.F.R. S: 54.8(a)(1), (d).
Second Report and Order, 18 FCC Rcd at 9226, para. 69; 47 C.F.R. S:
54.8(e)(1).
47 C.F.R. S: 54.8(e)(4).
Id.
Id. S: 54.8(f).
See Second Report and Order, 18 FCC Rcd at 9226, para. 70; 47 C.F.R. S:
54.8(e)(5).
"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." Id. S: 54.8(a)(1).
Id. S: 54.8(b).
Second Report and Order, 18 FCC Rcd at 9226, para. 70; 47 C.F.R. S:
54.8(e)(3).
Second Report and Order, 18 FCC Rcd at 9226, para. 70; 47 C.F.R. S:
54.8(e)(5).
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. Id. S: 54.8(f).
Second Report and Order, 18 FCC Rcd at 9225, para. 67; 47 C.F.R. S:
54.8(d), (g).
47 C.F.R. S: 54.8(g).
See FCC Announces Change in Filing Location for Paper Documents, Public
Notice, 24 FCC Rcd 14312 (2009) for further filing instructions.
Willard Ross Lanham
July 27, 2012
Page 2
WASHINGTON, DC 20554
FEDERAL COMMUNICATIONS COMMISSION
Enforcement Bureau
Investigations and Hearings Division