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-609600-435610WASHINGTON, DC 20554
FEDERAL COMMUNICATIONS COMMISSION
Enforcement Bureau
Investigations and Hearings Division
00WASHINGTON, DC 20554
FEDERAL COMMUNICATIONS COMMISSION
Enforcement Bureau
Investigations and Hearings Division
February 24, 2014
DA 14-249
SENT VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
AND EMAIL
Mr. Bryan J. Cahoon
c/o James B. Krasnoo, Esq.
Krasnoo | Klehm LLP
28 Andover Street, Suite 240
Andover, MA 01810
Re: Notice of Suspension and Initiation of Debarment Proceedings
FCC Case No. EB-IHD-13-00010969
Dear Mr. Cahoon:
The Federal Communications Commission (Commission) has received notice of your conviction for fraud and theft of federal funds in violation of 18 U.S.C. § 666(a)(1)(A) in connection with the federal schools and libraries universal service support mechanism (E-Rate program). Consequently, pursuant to 47 C.F.R. § 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 the Bureau will commence E-Rate program debarment proceedings against you.
* 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. Sections 54.503 and 54.504 of the Commission's rules provide that an eligible entity must seek competitive bids for all services eligible for support and must comply with all applicable state and local competitive bidding requirements. Furthermore, the E-Rate program requires applicants to solicit services based on a fair and open competitive bidding process.
On June 28, 2013, you pleaded guilty to one count of fraud and theft of federal funds in connection with the E-Rate program while employed both as the Director of the Information Technology Department (IT Department) for the City of Lawrence, Massachusetts and also as a city subcontractor through your company, Networks@Home, LLC (Networks@Home). As head of the IT Department, your responsibilities included preparing requests for proposals, reviewing and identifying the lowest qualified bids submitted in response to requests for proposal, as well as submitting final proposals to the City of Lawrence's IT Purchasing Department to certify compliance with Massachusetts's procurement laws.
From early 2008 through December 2009, the City of Lawrence received federal grants of over $76 million, including approximately $2.3 million in E-Rate funds, to improve the network and technological infrastructure of the city's schools and libraries. During that same period, you orchestrated a scheme to circumvent the state's procurement requirements that provided bidding information and instructions to your friends and business associates, who were awarded at least eight contracts with the city totaling $178,555.
You also hired friends and associates to perform cabling and rewiring work for the city as interns for the IT Department and then, through Networks@Home and another company for which Networks@Home was a subcontractor, billed the City of Lawrence for that work at inflated rates. As a result, the city was double-billed for the same work. At least a portion of the funds that your friends and business associates and Networks@Home received as a result of these schemes were E-Rate program funds.
On December 17, 2013, the United States District Court for the District of Massachusetts sentenced you to serve 12 months and a day in prison followed by a one-year period of supervised release. In addition, the court ordered you to pay $465,000 in restitution and a $100 special assessment.
Pursuant to Section 54.8(b) of the Commission's rules, upon your conviction for theft of E-Rate funds, 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 either your 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 your 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 a 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.
* 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 Commission's 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 12[th] Street, S.W., Room TW-A325, Washington, D.C. 20554 and to the attention of Joy M. Ragsdale, Attorney Advisor, Investigations and Hearings Division, Enforcement Bureau, Room 4-C330, Federal Communications Commission, 445 12[th] Street, S.W., Washington, D.C. 20554 with a copy to Theresa Z. Cavanaugh, Division Chief, Investigations and Hearings Division, Enforcement Bureau, Room 4-C330, Federal Communications Commission, 445 12[th] Street, S.W., Washington, D.C. 20554. 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 12[th] 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 12[th] 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)
William F. Bloomer, United States Attorney's Office, District of Massachusetts (via e-mail)