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May 9, 2012
DA 12-733
SENT VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
AND EMAIL
Mr. Jonathan M. Slaughter
c/o William R. Blanchard, Jr.
Blanchard Law Offices
505 South Perry Street
Montgomery, AL 36104
Re: Notice of Suspension and Initiation of Debarment Proceeding
File No. EB-12-IH-0050
Dear Mr. Slaughter:
The Federal Communications Commission (Commission or FCC) 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 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 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 Commission's rules are designed
to ensure that all E-Rate funds are used for their intended purpose. For
example, schools and libraries must apply and meet certain qualifications
to be eligible to receive E-Rate funds. Additionally, services purchased
at a discount under the E-Rate program cannot be "sold, resold, or
transferred . . . [for] money or any other thing of value."
On September 29, 2011, you pled guilty to committing fraudulent activities
associated with the E-Rate program while you were owner and president of
E-Rate Consulting Services, LLC (ECS) in Montgomery, Alabama. ECS assisted
schools and school districts in their efforts to qualify for E-Rate
funding. ECS arranged to receive through the mail its clients' E-Rate
checks, and was supposed to forward those checks to the clients. Between
May 2006 and January 2009, however, you converted approximately $892,000
in E-Rate funds to your personal use without your clients' knowledge.
Specifically, you deposited E-Rate checks payable to your clients into an
ECS bank account and, instead of transmitting the E-Rate funds to your
clients, kept the money and used it largely for your personal expenses.
Your fraudulent scheme affected six schools and 14 school districts
located in 13 states.
On January 6, 2012, the United States District Court for the Middle
District of Alabama sentenced you to serve 51 months in prison followed by
three years of supervised release. The court also ordered you to pay a
$100 special assessment.
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-A236, with a copy to Theresa Z. Cavanaugh,
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, 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) 418-1697. 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)
Andrew O. Schiff, Assistant United States Attorney, United States
Department of Justice (via e-mail)
Appendix
ECS' CLIENTS STATE TOTAL AMOUNT CONVERTED
Dermott Public School Arkansas $6,809.24
District
Citrus County School Florida $678,288.69
District
Eckerd Halfway House/E-Ku Florida $5,670
Sumee
Hendry County School Florida $39,031.19
District
Kuna Joint School District Idaho $3,523.67
Middleton School District Idaho $4,299.25
#134
The Winchendon School Massachusetts $8,316.00
Northwood Children's Minnesota $24,797.66
Services
Prairie Academy Minnesota $4,673.99
Poplar Bluff School District Missouri $7,672.77
Red Cloud Community School Nebraska $2,254.52
District
SAU 41-Hollis Brookline New Hampshire $1,765.18
Schools
Beaufort County School North Carolina $9,730.00
District
Middle Ohio Education Ohio $23.01
Penns Valley Area School Pennsylvania $10,966.83
District
Bedford County School Tennessee $23,215.94
District
Banquete Independent School Texas $18,655.72
District
Cleburne Independent School Texas $7,231.32
District
Leander Independent School Texas $31,872.31
District
Teague Independent School Texas $3,190.56
District
TOTAL $891,987.85
Any further reference in this letter to "your conviction" refers to your
guilty plea and subsequent sentencing for mail fraud in United States v.
Jonathan Michael Slaughter, Criminal Case No. 2:11cr162-MEF-01, Judgment
(M.D. Ala. 2012) (Judgment).
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).
In the Matter of NEC-Business Network Solutions, Inc., Notice of Debarment
and Order Denying Waiver Petition, 21 FCC Rcd 7491, 7493, para. 7 (2006).
47 C.F.R. S: 54.501.
Id. S: 54.513(a).
United States v. Jonathan Slaughter, Case No. 2:11cr162-MEF-01, Plea
Agreement at 3-4 (M.D. Ala. 2011) (Plea Agreement).
Id. at 4.
Id.; Justice News, Dep't of Justice, Montgomery Man Pleads Guilty to
Stealing $892,000 from Schools in 13 States, Sept. 29, 2011,
http://www.justice.gov/usao/alm/press/current_press/2011_09_29_slaughter.pdf
(Press Release).
Plea Agreement at 4-5.
Id.
Id. See Appendix.
Judgment at 2-3.
Id. at 5.
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.
Jonathan M. Slaughter
May 9, 2012
Page 3
WASHINGTON, DC 20554
FEDERAL COMMUNICATIONS COMMISSION
Enforcement Bureau
Investigations and Hearings Division