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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
)
Publix Network Corporation; ) EB Docket No. 02-149
Customer Attendants, LLC; ) File No. EB-01-TC-052
Revenue Controls Corporation; ) NAL/Acct. No. 200232170003
SignTel, Inc.; and Focus Group, ) FRN: 0004-3412-51
LLC )
)
Order to Show Cause and )
Notice of Opportunity for
Hearing
ORDER TO SHOW CAUSE AND
NOTICE OF OPPORTUNITY FOR HEARING
Adopted: June 12, 2002 Released: June 19, 2002
By the Commission:
I. INTRODUCTION
1. In this Order to Show Cause and Notice of Opportunity
for Hearing, we find that an evidentiary hearing is required to
determine whether (1) the Commission should revoke the operating
authority of the Publix Companies,1 (2) the Publix Companies and
the principal or principals of the Publix Companies should be
ordered to cease and desist from any future provision of
interstate common carrier services without the prior consent of
the Commission, (3) the Publix Companies are entitled to any of
the telecommunications relay services (``TRS'') fund monies that
they requested or received from the TRS Fund, and (4) a
forfeiture against any or all of the Publix Companies is
warranted and, if so, the amount of the forfeiture.
2. As set forth in detail below, it appears that the
Publix Companies may have unlawfully obtained over six million
dollars in payments from the TRS Fund by means of a scheme to
create the appearance that they were operating a legitimate
telecommunications relay service. Moreover, in perpetrating this
scheme, the Publix Companies appear to have made repeated
misrepresentations to the Commission and to have violated a
number of the statutorily-mandated requirements and the
Commission's rules relating to the TRS Fund and to the
provisioning of TRS.
II. BACKGROUND
A. Statutory and Regulatory Background
3. Telecommunications relay services were created to bring
to those with a hearing or speech disability the benefits of
universal service that had hitherto been unavailable to that
segment of the public by ``provid[ing] the ability for an
individual with a hearing or speech disability to engage in
communication by wire or radio with a hearing individual in a
manner that is functionally equivalent to the ability of an
individual who does not have a hearing or speech disability to
communicate using voice communication services by wire or
radio.''2 To accomplish this, TRS employs a communications
assistant (``CA'') who functions as, in effect, a translator
between the person with a hearing or speech disability, who is
typically communicating via a text telephone (``TTY''), and an
individual without any such disability, who is using a standard
telephone. A TRS call may be initiated by the TTY user or the
standard telephone user. A caller can dial either a toll free
number or 711 to access a TRS center. The CA will answer and
process the call. After the caller gives the CA the number of
the person to be called, the CA places the call to that person.
The CA's responsibility is to type to the person with the TTY and
speak to the person with the standard telephone, relaying exactly
what is spoken or typed by each party.3 For interstate TRS,
callers pay only the cost of the long-distance telephone call as
if the call were placed directly between the telephones. They do
not pay for the TRS service. TRS providers recover their costs
of providing this service through the TRS Fund. 4
4. The Act requires each common carrier providing voice
transmission services to provide TRS in accordance with the
standards set forth in Section 64.604 of the Commission's rules.5
Carriers may do this either by providing TRS directly, or by
contracting with a TRS provider. Section 64.604 of the
Commission's rules established the TRS Fund,6 currently
administered by the National Exchange Carrier Association
(``NECA''), which reimburses TRS providers for the costs of
providing interstate TRS.7 Carriers providing interstate
telecommunications services must contribute to the TRS Fund on
the basis of interstate end-user telecommunications revenues.8
5. Payments from the TRS Fund to TRS providers are based
on schedules of payment formulae that NECA files annually with
the Commission.9 These formulae are based on total monthly
interstate TRS minutes of use (``MOU''),10 defined as the MOU for
completed interstate TRS calls placed through a TRS center
beginning after call set-up and concluding after the last message
call unit.11 TRS providers are eligible to receive payments from
the TRS Fund only if they are: (1) TRS facilities operated under
contract with and/or by certified state TRS programs pursuant to
Section 64.605; (2) TRS facilities owned by or operated under
contract with a common carrier providing interstate services
pursuant to Section 64.604; or (3) interstate common carriers
offering TRS pursuant to Section 64.604.12 To receive payments,
TRS providers must submit monthly reports of interstate MOU to
NECA.13
6. As required by the Act,14 the Commission has
established mandatory minimum standards for all TRS providers.15
Congress mandated certain of these standards, such as the
requirement to operate every day for 24 hours per day and the
prohibition on keeping records of or disclosing the content of
TRS calls.16 The Commission's implementing rules also cover
matters such as training, typing speed, and communication
competence for the CAs. Besides employee qualifications, TRS
hardware and access requirements are outlined, as well as
reporting functions, payments, contribution computation, and
complaint procedures.17
B. Background of the Case
7. The Publix Companies have, since 1999, been collecting
reimbursements from the TRS Fund for purportedly providing TRS
service eligible for compensation under the Commission's rules.
The Publix Companies began operating what they described as a TRS
center in January 1999 and began submitting MOU reports to NECA
in February of that year.18 From that period until April 2001,
the Publix Companies submitted 8,014,815 MOU to NECA as a basis
for payment from the TRS Fund. The last billing statement they
sent to NECA for compensation from the TRS Fund was dated August
13, 2001, and covered purported TRS MOU for July 2001. The
Publix Companies have received reimbursements in excess of $6
million.19
8. A random audit of the Publix Companies' TRS operations
by NECA20 in 2001 raised significant questions of whether their
relay operations qualified them for the TRS Fund payments that
they had requested and received. The relay operation did not
appear to function as a public TRS center in compliance with the
requirements of the Act and the Commission's rules. For instance,
a typical TRS center would handle hundreds to thousands of calls
daily, but the Publix Companies' relay operations appeared to
handle only a small number of calls, virtually all between
employees of the Publix Companies. It appears that all of the
telephone calls in the daily call reports were between 9:00 a.m.
and 5:00 p.m., Monday through Friday, even though the
Commission's rules require TRS providers receiving reimbursements
to provide service 24 hours a day, seven days a week. The
average length of the calls was about 50 times longer than those
reported by other TRS providers, and the volume of minutes the
Publix Companies were reporting was also suspicious. At the time
of the NECA audit, the Publix Companies' reported volume of
minutes had risen to approximately 500,000 monthly. For 2000,
only Sprint and AT&T, large TRS providers with multiple state
contracts and centers, reported more minutes. This was
particularly striking given that the Publix Companies' TRS
contact information apparently never had been published in the
Telecommunications for the Deaf, Inc. Blue Book, the national
directory of TTY and TRS numbers, and the Publix Companies had
made little apparent effort at advertising. These, and other
concerns about compliance with the Commission's mandatory minimum
standards and billing inaccuracies, led NECA to contact the FCC
regarding possibly fraudulent activity and violations of the Act
and the Commission's rules.
9. On June 25, 2001, the Enforcement Bureau (``EB'')
issued a subpoena for documents to Publix Network (``EB
Subpoena''), together with a letter of inquiry.21 On the same
day, the CCB sent a letter to Publix Network questioning whether
Publix Network was operating as a common carrier; questioning
whether Publix Network was an eligible TRS provider operating
pursuant to Section 64.604; rejecting Publix Network's method for
calculating MOU for conference calls; stating that CCB had reason
to believe that Publix Network's application for certification as
a TRS provider may have contained false statements or
misrepresentations;22 and notifying Publix Network that CCB had
directed NECA to continue to withhold payments pending the
outcome of EB's investigation of the Publix Companies'
operations.23 The Publix Companies responded to both EB and CCB
on July 23, 2001. In its response to CCB, Publix Network stated
that once it was given notice of CCB's concerns, it had ``worked
diligently to adjust its operations.''24 Publix Network further
stated that its management believed that Publix Network had
always been operating ``in substantial compliance with the TRS
minimum standards.''25 The Publix Companies also produced
thousands of documents and a CD-ROM pursuant to the EB
Subpoena.26
10. Based on the NECA audit and on the responses received
from the Publix Companies to the Commission's inquiries, it
appears that the Publix Companies have collected millions of
dollars in payments from the TRS Fund without actually having
provided TRS services that would have qualified them for
reimbursement. It appears that the Publix Companies did not
actually provide TRS as defined by the Commission's rules, thus
raising a threshold issue about their eligibility for
compensation from the TRS Fund.27 Moreover, there appears to be
pervasive misconduct and violations of Commission rules by the
Publix Companies. It appears that the Publix Companies violated
numerous operational, technical, and functional requirements set
forth in the Commission's TRS rules, submitted inflated bills for
reimbursement and other false and inadequate data to the TRS Fund
Administrator, and made repeated misrepresentations to the
Commission. Considered in their totality, it appears that the
actions of Publix Network and related companies may have
constituted not only multiple, technical violations of the Act
and the Commission's rules, but also a deliberate scheme to
obtain TRS Fund payments for which these companies were not
eligible. In view of the apparent pattern of pervasive
misconduct and violations, it appears that the Publix Companies
are not qualified, and should not be authorized, to operate as
common carriers in the future.
III. DISCUSSION
A. Whether the Publix Companies Collected Reimbursements
Without Providing TRS within the Meaning of the Act and
the Commission's Rules
11. TRS is defined as:
Telephone transmission services that provide the
ability for an individual who has a hearing or
speech disability to engage in communication by
wire or radio with a hearing individual in a
manner that is functionally equivalent to the
ability of an individual who does not have a
hearing or speech disability to communicate using
voice communication services by wire or radio.
Such term includes services that enable two-way
communication between an individual who uses a
text telephone or other nonvoice terminal device
and an individual who does not use such a device,
speech-to-speech services, video relay services
and non-English relay services. TRS supercedes
the terms ``dual party relay system,'' ``message
relay services,'' and ``TDD Relay.''28
The Publix Companies are eligible to receive payments from the
TRS Fund, if at all, only to the extent that they are an
interstate common carrier ``offering TRS pursuant to Section
64.604.''29 It appears that the services for which the Publix
Companies have sought TRS Fund reimbursement fundamentally do not
constitute TRS at all. Moreover, to the extent that any TRS was
actually provided by the Publix Companies, it appears that it was
not ``TRS pursuant to § 64.604,'' because the Publix Companies
did not substantially comply with the requirements of that rule.
1. Whether the service that the Publix Companies
provided constituted TRS
12. The Commission's definition of TRS requires
communication between an individual with a hearing or speech
disability and an individual without any such disability.
Communication solely between persons with hearing or speech
disabilities does not meet this definition; nor does
communication between individuals without any hearing or speech
disability. As explained below, it appears that virtually all of
the purported TRS calls for which the Publix Companies have
sought reimbursement occurred solely between employees of the
Publix Companies and that the CAs did not function as
transliterators, but initiated and directed the calls to other
employees of the Publix Companies. Thus these calls were, in
effect, calls solely between persons with hearing or speech
disabilities.
13. As described above, TRS is a service that allows
persons with hearing or speech disabilities to communicate with
those without any such disabilities. It appears that virtually
none of the calls that the Publix Companies reported to NECA
involved such a service. Instead, calls appear to have followed
two patterns. In the first, the Publix Companies' CAs would
place a call to several assistant developers (``ADs'') who were
in the employ of Dr. Raanan Liebermann, President of the Publix
Network Corp., through Focus Group, and would ask the ADs several
questions as per a prepared ``script.'' The CAs and ADs engaged
in these scripted conversations four to eight hours a day, five
days a week. The ADs, however, were, according to the Publix
Companies, all persons with hearing or speech disabilities, and
thus required no TRS to communicate among themselves. Moreover,
it appears that the CAs functioned as participants, indeed,
initiators of these calls. However, ``payments shall only be
available for interstate TRS calls that are placed by TRS
users,''30 not calls placed by CAs, whose function under the
rules is defined as transliterating ``conversation between two
end users of TRS.''31 If, as it appears, the CAs were active
participants in calls in which the only other participants were
employees with a hearing disability, then the CAs were not
transliterating conversation from text to voice to enable end
users with a hearing disability to communicate with end users
without such disabilities via TRS. Such calls do not meet the
definition of TRS under the Commission's rules.
14. In the second pattern, it appears that a moderator was
involved in the conference calls along with the CAs and ADs.
These moderators were employees of Dr. Liebermann through another
of the Publix Companies, SignTel. Apparently, the moderator
would call as many as six CAs of the Publix Companies (or vice-
versa), who in turn would usually contact as many as five ADs
each.32 When a moderator was involved in the call, it appears
that he or she would read out the questions per the script, and
the CAs would type out via TTY the questions for the ADs. When
the ADs responded, however, it appears that the responses were
not always forwarded to the moderators. Thus, it appears that
the moderator may have served only to create the appearance of
actual relay service.
15. Calls such as those described above do not constitute
TRS because they do not facilitate communications between persons
with hearing or speech disabilities and persons without such
disabilities. To the extent that the purported relay occurred
between ADs with hearing or speech disabilities, as would have
been the case on calls without moderators, these would have been
nothing more than conventional text telephone conversations. No
relay is necessary. Even when moderators were present, there is
evidence that often the CAs did not relay any communications
between the moderators and ADs, and if they did relay any
information, it was simply a statement by the CA that all the ADs
had finished a particular question, and that they were prepared
to move to the next question as per the prepared script. If this
was the case, then there was no TRS.33 Moreover, to the extent
that neither the moderator nor the AD had a hearing or speech
disability, there was no legitimate TRS.
16. We also note that these apparent rule violations are
serious and go to the core of the statutory purpose. The intra-
company service provided by the Publix Companies to themselves
does not further the purpose of interstate TRS:
The intent of Title IV of the ADA is to further
the Act's goal of universal service by providing
to individuals with speech or hearing disabilities
telephone services that are functionally
equivalent to those available to individuals
without disabilities.34
The Act further serves this public purpose by requiring that
common carriers make TRS part of their telecommunications
services, either by providing TRS themselves or under contract to
the public throughout the area in which they hold themselves out
to the public for hire.''35 Congress placed the responsibility
for providing TRS on common carriers in order to make TRS
available to the general public to the greatest extent possible.
The legislative history of TRS illustrates the public functions
that TRS is intended to provide by extending public, universal
service to the disabled community for whom telecommunications
services were not available.36 It does not appear that the
Publix Companies provided any service that promoted this public
purpose.
17. We thus direct the ALJ to determine whether the service
for which the Publix Companies requested and received payments
met the definition of TRS in the Act and the Commission's rules.
Accordingly, we will specify an issue to determine whether the
service for which the Publix Companies were reimbursed from the
TRS Fund constituted TRS. If it did not, then the Publix
Companies were not entitled to any payments from the TRS Fund.
2. Whether the Publix Companies Offered ``TRS
pursuant to Section 64.604''
18. The Commission's rules provide for TRS Fund payments to
TRS providers only when they are ``offering TRS pursuant to
Section 64.604.''37 Even to the extent that the Publix Companies
may arguably have provided some legitimate TRS, it appears that
they may have violated many of the mandatory minimum standards
required of TRS providers in Section 64.604. If the Publix
Companies did not provide TRS ``pursuant to Section 64.604,''
they would not be eligible for TRS Fund reimbursement.
19. We recognize that absolute compliance with each
component of the rules may not always be necessary to fulfill the
purposes of the statute and the policy objectives of the
implementing rules, and that not every minor deviation would
justify withholding funding from a legitimate TRS provider. We
therefore hold that a TRS provider is eligible for TRS Fund
reimbursement if it has substantially complied with Section
64.604. This approach will allow a finding that an insignificant
violation of the requirements of the implementing regulations
does not render the Publix Companies ineligible so long as the
Publix Companies have satisfied the underlying purposes of those
requirements.38
20. In making a determination whether the Publix Companies
have substantially complied with Section 64.604, the ALJ must
consider the statutory purpose of TRS, to provide
telecommunications services to persons with hearing or speech
disabilities that are the functional equivalent of those
available to individuals without such disabilities, the policies
underlying the particular regulation, and the practical effect of
any violation in question on the achievement of these goals. We
note that Congress, in crafting the statutory requirements, found
certain features essential to ensure that TRS was in fact
functionally equivalent to the telecommunications services
generally available to the public. For example, in keeping with
the public availability of such telecommunications services, the
statute mandates that, under the rules, TRS must be available 24
hours a day, 7 days a week and requires an adequate back-up power
source to ensure the continuity of service that is functionally
equivalent to normal telephone service.39 Also, in keeping with
the restrictions against recording a telephone call, there is a
prohibition against keeping a record of a TRS conversation beyond
the duration of the call ensures that TRS provides the
functionally equivalent element of privacy of ordinary telephone
services.40 The operational, technical, and functional standards
in Section 64.604 are designed to ensure that the essential
purposes and policy objectives of the statute are met. The
standards governing CAs, for example, are intended to ensure that
the CAs can provide smooth, rapid transliteration of conversation
between the end users of TRS such that there is a seamless
translation. The technical standards such as the requirement for
``equal access to interexchange carriers,'' are designed to
ensure that TRS users have the ``same access'' to all such
services ``as voice users.''41 The functional standards, such as
the requirement to maintain consumer complaint logs,42 to provide
public access to information,43 and to furnish true and adequate
data'' to the Fund Administrator44 are designed to ensure the
public accessibility, integrity, and functionality of the TRS
system. The ALJ should determine, using the foregoing
principles, whether the Publix Companies' operations were in
substantial compliance with the requirements of Section 64.604.
To do so, the ALJ should first make findings on the specific
issues raised below regarding whether and to what extent the
Publix Companies met the operational, technical, and functional
standards of Section 64.604. In light of those findings, the ALJ
should then determine whether the Publix Companies substantially
complied with Section 64.604, and therefore were entitled to
receive payments for providing TRS pursuant to Section 64.604.
a. Operational Standards of Section 64.604(a)
21. Section 64.604(a) delineates certain mandatory minimum
operational standards. It appears that the Publix Companies did
not comply with the requirements of Sections 64.604(a)(1) and
(2). The evidence before us suggests that the Publix Companies'
CAs were not sufficiently trained to provide the level of service
necessary to effectuate the purposes of the statute; that the
Publix Companies retained records in violation of the statutorily
mandated prohibition against keeping records past the duration of
the call; that the Publix Companies' facilities were not
available 24 hours a day, 7 days a week; and that the Publix
Companies never provided equal access to interexchange carriers.
(i.) Communications Assistants
22. In providing traditional TRS, CAs must be sufficiently
trained to meet the special communication needs of persons with
hearing or speech disabilities, and must, inter alia, have
competent skills in typing, grammar, spelling, and interpretation
of typewritten American Sign Language.45 It appears that most,
or all, of the Publix Companies' CAs failed to meet these
mandatory minimum qualifications. For instance, the Publix
Companies' documents acknowledge that as of April 28, 2001, not
one of the Publix Companies' CAs could type the required minimum
of 60 words per minute.46 Therefore, we will specify an issue to
determine whether the Publix Companies complied with the
requirements for communications assistants under the Commission's
rules.
(ii.) Confidentiality and Conversation Content
23. CAs are "prohibited from disclosing the content of any
relayed conversation regardless of content, and . . . from
keeping records of the content of any conversation beyond the
duration of the call, even if to do so would be inconsistent with
state or local law."47 However, in responding to the Enforcement
Bureau's subpoena, the Publix Companies produced over 30 boxes
containing verbatim transcripts of purported TRS conversations.
We will assume here for the sake of argument that the
conversations that the Publix Companies retained qualify as a
"relayed conversation," although, as we have noted elsewhere in
this order, it appears that they do not. We will therefore
specify an issue to determine whether the Publix Companies kept
records and or disclosed the content of relayed conversations in
violation of 47 U.S.C. § 225(d)(1)(F) and 47 C.F.R. Section
64.604(a)(2)(i).
b. Technical Standards of Section 64.604(b)
(i.) Equal Access to Interexchange Carriers
24. Under the Commission's rules, individuals who use a TRS
center are entitled to have access to their chosen interexchange
carrier through the TRS center, and to all other operator
services.48 In our First Report and Order, we determined that
there could be ``only a limited exemption from this rule'' for
state certified entities that applied for an exemption as part of
their application for state certification and provided
``sufficient justification'' for the exemption on the basis of a
pre-existing contractual agreement.49 We did not provide for
any exemptions for common carriers who were operating TRS
directly, rather than through a state certified program pursuant
to such contractual agreement.50 Publix Network's Application
states that ``Publix Network users [will] have access to their
chosen interexchange carriers and all other operator services.''
The Publix Companies admit, however, that they have never met
this requirement.51 Thus, it appears that the Publix Companies
have violated Section 64.604(b)(3).52 To resolve this apparent
conflict between Publix Network's certification to the Commission
and its later admission and to determine whether the Publix
Companies met the prescribed standard, we will specify and issue
to determine whether the Publix Companies complied with Section
64.604(b)(3).
(ii.) TRS Facilities
25. As mandated by the Commission's rules, TRS facilities
must operate 24 hours a day, seven days a week, and must have
redundancy features and an uninterruptible power source for
emergency purposes.53 Publix Network's Application states its
facilities were ``operational 24 hours a day, seven days a
week.''54 The Publix Companies admit, however, that for most of
the time they operated and as they currently operate, relay
service was not available 24 hours a day, seven days a week.55
The purported relay service appears to have been primarily open
from 9:00 a.m. until 5:00 p.m., Monday through Friday, excluding
some holidays. The Publix Companies contend that they have
backup features and an uninterruptible power supply, but it
appears that these facilities may be inadequate. Thus, it
appears that Publix Companies' facilities were not in accord with
the requirements set forth in Section 64.604(b)(4) of the
Commission's rules. Accordingly, we will specify an issue to
determine whether the Publix Companies complied with Section
64.604(b)(4).
c. Functional Standards of Section 64.604(c) - Public
Access to Information
26. The Commission's rules require carriers to advertise
the availability of their TRS facilities through ``publication in
their directories, periodic billing inserts, placement of TRS
instructions in telephone directories, through directory
assistance services, and incorporation of TTY numbers in
telephone directories.''56 As we have stated, it is critical that
TRS providers reach the widest possible potential user population
in order to maximize the utility of TRS and to effectuate the
goals of the Act and the ADA.57 There is no evidence before us
showing that the Publix Companies made efforts reasonably
calculated to satisfy this requirement. Accordingly, we will
specify an issue to determine whether the Publix Companies'
complied with the requirements of Section 64.604(c)(3).
B. Whether the Publix Companies Violated Commission Rules
by Providing Inaccurate Information to the TRS Fund
Administrator
27. Section 64.604(c)(5)(iii) creates the TRS Fund as the
cost recovery mechanism for provision of interstate TRS and
appoints an Administrator, NECA, to oversee the collection and
disbursement of funds in compliance with the Act and Commission's
rules. NECA collects data from TRS providers in order to
determine the costs of providing TRS, and the amount of the
reimbursement to be provided. Under Section 64.604(c)(5)(iii)(C)
of our rules, TRS providers must provide the Fund Administrator
with true and accurate data.58 This includes total TRS MOU,
total interstate TRS MOU, total TRS operating expenses, and total
TRS investment in general accordance with Part 32 of the Act.59
The provision of true and accurate data by each interstate TRS
provider is essential because these providers are compensated
based on an average cost methodology. From the historical data
and forecasts of expenses and demand submitted by each interstate
TRS provider, the TRS Fund Administrator develops the
compensation rate per minute, the projections of demand, and the
TRS funding requirement for the coming year. The provision of
false or inadequate data can thus have an overall effect on TRS
Fund projections of demand, on compensation rates, and on funding
requirements. A number of accounting inconsistencies and
financial irregularities, however, suggest that the Publix
Companies may have violated this rule by providing false and
inadequate data to NECA. This bears directly both on the Publix
Companies' compliance with the standards of Section 64.604 and on
the Publix Companies' qualification to operate as a common
carrier.
1. Inaccuracies in Reported Costs
28. It appears that cost items reported by the Publix
Companies in the NECA-prescribed cost categories contained
significant inaccuracies. For example, the Publix Companies
reported automobile lease, operating, and maintenance expenses as
``salaries.'' They also included a security system installed at
Dr. Liebermann's home as ``building maintenance'' and software
development and consulting as ``engineering.'' The Publix
Companies' largest actual expense, according to the work papers
they provided to NECA, was for royalties on a ``patent pending''
conferencing technology for which SignTel was allegedly paid
$0.96 per minute.60 Thus, if the Publix Companies are in reality
one entity for purposes of this proceeding, then the largest TRS
operating expense that they reported to NECA was for payments
that they made to themselves for a license on developmental
technology.
29. Moreover, because the Publix Companies apparently
failed to follow proper accounting practices, there are
additional issues raised about the accuracy of their reported
data. The Publix Companies appear to be inconsistent in their
accounting methodology as to whether they use the cash basis of
accounting for their financial statements and record keeping, or
the accrual basis, and this inconsistency affects the
reliability, accuracy, and adequacy of the Publix Companies'
reported data. In addition, we have been unable to ascertain
whether certain expenses should have been allocated among the
Publix Companies, and therefore cannot determine whether reported
expenses were actually incurred for their relay operation. The
relay operations were charged with all of the costs that likely
should have been shared with or assigned to other entities within
the Publix Companies structure. Under NECA and Commission
guidelines, it is the Publix Companies' responsibility to
demonstrate that expenses were not co-mingled, and that each
reported expense relates exclusively to the communication service
the Publix Companies purport to be TRS.61 The documentation
provided by the Publix Companies is such that we cannot now
determine how the expenses relate to the purported relay service.
The Publix Companies also reported extensive accounting and legal
expenses related to the provision of their purported TRS service
that may have been unrelated to their TRS operation. Other
accounting anomalies include discrepancies between the accounts
and the dollar values reported to NECA, when compared with Publix
Network's general ledger, as well as various inconsistencies
contained in the data it provided NECA during the audit.62
Accordingly, we will specify an issue to determine whether, and
the extent to which, the Publix Companies reported inaccurate and
inadequate financial and operating data to the Fund Administrator
and whether, in light of those findings, the Publix Companies
complied with the requirements of Section 64.604(c)(5)(iii)(C).63
2. Inaccuracies in Reported MOU
30. It also appears that the Publix Companies may have
billed the TRS Fund for excessive MOU (even assuming, arguendo,
that they did provide legitimate TRS). First, it appears that
they billed NECA for time prior to call set-up, and even for
incomplete calls, in violation of the Commission's rules.64
There is also evidence that the Publix Companies billed NECA for
more MOU than electronically passed through the switch of
Southern New England Telecommunications Corporation (``SNET''),
its local and interexchange carrier.65 In October 2000, for
example, SNET calculated Publix Network's switch minutes at
485,859 minutes.66 For that same month, Publix Network reported
to NECA 515,101 MOU for TRS service (almost 30,000 minutes in
excess of all the minutes that passed through the switch) and the
Publix Companies were compensated from the TRS Fund based on that
figure.
31. Moreover, the Publix Companies reported to NECA as TRS
MOU the sum of all TRS MOU for each leg of a conference call as
if each leg were separately reimbursable. This resulted in
billing the TRS Fund for multiple MOU each time a CA provided a
single minute of service. For instance, if there were four ADs
on the call communicating through a single CA, the number of
minutes would quadruple.67 The Publix Companies contend that
these conference call MOU were billed based upon Dr. Liebermann's
understanding of how a long-distance conference call would be
billed by an interexchange carrier, and argue that they employed
a ``reasonable interpretation'' in their approach.68 We have
reviewed the Publix Companies' arguments in support of its
interpretation of MOU allowable for conference calls and CCB's
reasons for rejecting them. As discussed below, we have
determined that CCB has set forth the correct view of how MOU for
conference calls should be calculated and adopt their reasoning
therein. We further find that the Publix Companies' arguments do
not set forth a reasonable interpretation of our rules.
32. Under the Publix Companies' approach, the TRS provider
would be reimbursed multiple times for each minute of labor of a
single CA. The Publix Companies' analogy to conference call
billing rates is not relevant to billing TRS MOU for conference
calls under the TRS rules. As CCB has correctly stated in its
correspondence with Publix Network:
[T]he price of a conference call, or any other call, is
not a factor in determining reimbursement for TRS
service. The individual placing the call is
responsible for the call whether it is directly dialed
or placed through TRS. TRS reimbursement does not
include the cost of the call itself, but rather is
based on and derived from the expense items listed in
the annual TRS center data request.69
The proper calculation of TRS-reimbursable MOU reflects the
minutes of actual relay service, irrespective of how many callers
are on the call. CCB correctly rejected the Publix Companies'
argument that they reasonably determined that compensation for
each leg of the call was allowable.
33. Thus, it appears that the Publix Companies billed MOU
that include minutes where there was no actual relay (i.e.,
including call set up or time after the end of relay service),
and charged multiple times for the same relay service. In
addition, it appears that the Publix Companies deliberately kept
the telephone connections open between the ADs and the CAs, even
when no communication was actually occurring. In other words, it
appears that the Publix Companies generated idle air time
intentionally designed to inflate MOU. Any MOU generated as a
result of such a practice would not constitute minutes of use
within the Act and the Commission's rules. Similar schemes have
been held to be non-compensable where the purpose of the activity
was merely to generate payments. For example, the Commission has
stated that the use of an autodialer in order to generate
payphone compensation by calling toll free numbers billed to the
called party would not only be a violation of the Act and
Commission's rules, but could also constitute wire fraud.70 The
North Carolina Public Utilities Commission has held non-
compensable the minutes of use generated by the maintenance of
open switches 23 hours and 59 minutes a day for the sole purpose
of generating minutes of use for reciprocal compensation.71 The
North Carolina Commission looked behind the mechanical generation
of minutes of use to whether there were actual end users of the
services.72 By analogy to these precedents, we direct the ALJ to
determine whether the MOU generated by creating idle air time
were compensable MOU. As noted above, we believe that the
activities conducted by the Publix Companies did not constitute
TRS and that consequently the Publix Companies were not entitled
to any payments from the TRS Fund. Nevertheless, assuming
arguendo, that legitimate TRS service was offered by the Publix
Companies, we instruct the ALJ, using the standards governing
calculation of MOU as stated herein, to determine the extent to
which the Publix Companies overbilled NECA for MOU or whether any
additional payments are due to the Publix Companies.
C. Whether the Publix Companies Made Intentional
Misrepresentations or Willful Material Omissions to the
Commission
34. Commission applicants, permittees, and licensees may
not ``in any response to Commission correspondence or inquiry, or
in any application, pleading, report or any other written
statement submitted to the Commission, make any misrepresentation
or willful material omission bearing on any matter within the
jurisdiction of the Commission.''73 It appears that the Publix
Companies may have violated this rule or otherwise engaged in
misrepresentations or lack of candor on multiple occasions.74
For example, Publix Network's Application to be certified as a
TRS provider states that ``Publix Network TRS meets all of the
FCC's operational, technical and functional minimum standards set
forth in 47 C.F.R. Section 64.604, and in some respects exceeds
those standards.''75 As discussed above, this appears to be
false. Moreover, as discussed above, the Publix Companies
repeatedly told the Commission that their relay facilities were
operational 24 hours a day, seven days a week, but, as the Publix
Companies admit, that does not appear to be have been true
between the time of the application and the NECA audit.76 In
addition, Publix Network's Application states that the relay
service offers consumers equal access to interexchange carrier of
choice, and that too appears to be inaccurate. Other apparent
violations of the mandatory minimum standards are discussed
above. Given the apparent pervasive pattern of violations of the
Act and Commission's rules at issue here, it appears that these
inaccurate statements may have been intentional and thus
constitute unlawful misrepresentation or lack of candor.
Accordingly, we will specify an issue to determine the extent to
which the Publix Companies made misrepresentations or willful
material omissions, or lacked candor, to the Commission or its
agents.
35. It appears that the Publix Companies may also have
violated a specific requirement that TRS providers report true
and accurate information to the Fund Administrator as part of
their duty to complete required FCC reporting forms used by the
Administrator to determine annually the compensation rates for
TRS. All carriers are required to complete the
Telecommunications Reporting Worksheet, FCC Form 499-A annually,
(``Worksheet'') in order to enable the TRS Administrator to
collect the necessary funding to compensate the TRS providers.
Section 220(e) of the Act imposes a duty of truthfulness and
accuracy in accounting matters on common carriers. Carriers
filing false information are subject to fine or imprisonment as
specified in Section 220(e) of the Act. It appears from the
evidence that the Publix Companies may have failed to submit a
number of annual reports required under the Act, and may have
willfully provided false information or willfully neglected or
failed to provide correct information on their 2001 Worksheet.
We therefore will specify an issue to determine the extent to
which the Publix Companies filed false information on this or any
other Worksheet that they submitted to the Fund Administrator.
36. As a general matter, it appears that the Publix
Companies may have engaged in a pervasive pattern of
misrepresentation in order to obtain payments from the TRS Fund.
There is evidence that they may have provided a sham service
which they denominated TRS but which may have been nothing more
than self-directed calls among employees of closely related
corporate entities. It appears that rather than providing actual
TRS between legitimate end users, employees initiated calls to
other employees, and that the calls may have contained periods in
which there was no conversation but vast amounts of dead time
intended solely to increase MOU for future reimbursement. It
appears that the Publix Companies deliberately inflated the MOU
they reported to NECA by including minutes where there was no
actual relay (i.e., including call set up or time after the end
of relay service); charging for more minutes than passed through
the SNET switch; billing multiple times for the same relay
service; and deliberately generating MOU by ``dotting'' to keep
the lines open when there was no conversation. The deliberate
manipulation of MOU or deliberate misrepresentations regarding
the ``TRS'' services being provided in order to obtain or
increase payments from the TRS Fund would not only violate the
Act and Commission rules but could also constitute criminal
behavior.77 We direct the ALJ to consider the totality of the
evidence and determine whether there was a pervasive pattern of
misrepresentation or lack of candor.
D. Whether the Publix Companies Should Remain Authorized
to Act as a Common Carrier
37. It appears that the Publix Companies engaged in a
pervasive pattern of rule violations and misrepresentations in
order to obtain millions of dollars in payments from the TRS Fund
to which they were not entitled. It thus appears that the
continued operation of the Publix Companies as a common carrier
may not serve the public convenience and necessity within the
meaning of Section 214 of the Act. We therefore direct the ALJ
to determine whether the Publix Companies' blanket Section 214
authorization should be revoked; such revocation would make the
Publix Companies ineligible as a common carrier for future
compensation from the TRS Fund. Further, in light of the
egregious nature of the Publix Companies' apparently unlawful
activities, we direct the ALJ to determine whether specific
Commission authorization should be required for the Publix
Companies, or the principal or principals of the Publix
Companies, to provide any interstate common carrier services in
the future.78
E. Whether the Publix Companies are Entitled to Any
Portion of the Payments from the TRS Fund that They
Requested or Received
38. If the Publix Companies did not provide interstate TRS
within the meaning of the Act and the Commission's rules or did
not substantially comply with the mandatory minimum standards
required under the Act and the rules, then, as a matter of law,
they were and are not entitled to payment from the TRS Fund. In
addition, the Publix Companies are entitled to reimbursement from
the TRS Fund for MOU only as properly calculated under our rules
and accurately reported. Accordingly, the ALJ is to determine,
in light of the evidence adduced, whether the Publix Companies
are entitled to all or any portion of the payments that they
requested or received from the TRS Fund. If the ALJ determines
that the Publix Companies did not provide interstate TRS within
the meaning of the Act and the Commission's rules or did not
substantially comply with Section 64.604 for any period of time
for which Publix Companies reported MOU and requested
reimbursement from the TRS Fund, then, as a matter of law, the
ALJ must conclude that, for any such periods of time, the Publix
Companies were not entitled to any such payments. Therefore, to
the extent that the ALJ determines that the Publix Companies were
eligible for any TRS Fund reimbursements, the ALJ must determine
the number of MOU for which Publix Companies are entitled to
receive payment from the TRS Fund, based on the number of MOU
reported by Publix Companies for such period, but to exclude
duplicative billings for multiple legs of conference calls,
reported MOU that cannot be documented or verified, or any other
improperly reported MOU.
F. Whether Piercing the Corporate Veil is Appropriate
39. It appears that the Publix Companies are, for legal
purposes, one and the same, and that they should be jointly
liable for any penalties and/or forfeitures and/or reimbursements
that may result from a hearing. The FCC has found several
criteria useful in determining whether to ``pierce the corporate
veil.'' The seminal case was decided in 1969, where the
Commission stated:
The fact that GTI and GTEC are separate
corporate entities is not determinative.
Where the ownership of stock is used to
dominate and control the subsidiary in such a
manner and to such extent that it becomes a
mere agency or instrumentality of the parent,
the separate corporate entities may be
disregarded. Furthermore, separate corporate
structures may be ignored where the purpose
of a statutory scheme or regulation would
otherwise be frustrated. The critical
question, therefore, is whether the conduct
of the . . . corporations in the light of the
relationship which exists among them requires
that the legal concept of separate corporate
identities be disregarded in order to
preserve the integrity of section 214 and to
prevent the respondents from defeating the
purpose and objective of the statutory
provisions for certification.79
Other criteria include: (1) a common identity of officers,
directors and shareholders; (2) sharing the same principal
offices; (3) closeness of relationship between entities.80
40. In this case, it appears that Dr. Liebermann runs the
affiliated entities in question with little or no regard to
corporate identity. For instance, most of the expenses for his
companies are paid from a single account. Other expenses are
often paid from his personal checking account. For example, two
agreements between Publix Network and RCC, and between Publix
Network and SignTel provide for a number of arrangements between
Publix Network and these companies that relate to how expenses
are paid and how Publix Network compensates RCC/SignTel for
``conferencing technology.'' Both agreements require RCC and
later SignTel to ``perform accounting and transact payments for
Publix [Network].''81 Evidence supports the proposition that
this is exactly what RCC and SignTel did. It also appears that
Dr. Liebermann's companies may have shared common officers,
directors, and/or shareholders.
41. The use of different office locations by Dr.
Liebermann's companies is relatively new. It appears that at one
time, both the CAs and the moderators were located in the same
building. Even if these entities are now located in different
offices, such a change is not dispositive. In the Mansfield
Journal case, the two entities in question were separate
corporations located over fifty miles apart. The court held that
the Commission could base its finding that the entities were
under common control upon the ``true locus of control'' because
of the high level of control exercised by the owners of both
entities.82 Here, it appears that the true locus of control was
with Dr. Liebermann, sole owner of the entities in question,
whether these companies operated in the same building or were
miles apart.
42. It is also no defense if Dr. Liebermann's contends that
his companies, other than Publix Network, are not common
carriers. The United States Court of Appeals for the Fifth
Circuit held that activities of non-common carrier affiliates may
be imputed to the common carrier parent.83 It appears that Dr.
Liebermann's other entities were critical for his operation. In
conversations between Dr. Liebermann's counsel and Commission
Staff, counsel does not hide the fact that the monies received
from the TRS Fund went through Publix Network and into SignTel,
and represented most, if not all, of SignTel's revenues. The
goals of the Communications Act and our rules would be frustrated
if the Commission cannot hold these affiliated entities
responsible, because it appears that funds from the TRS Fund were
transferred directly from the purported TRS provider, Publix
Network, to these affiliated entities, and that any reasonable
chance for recovery of such funds if wrongdoing is found, or
payment of any forfeiture is imposed upon Dr. Liebermann, could
well require the assets of his affiliated entities. Accordingly,
we will specify an issue to determine whether, and to the extent
which, in light of the legal standards set forth above, the
Publix Companies should be considered one and the same entity for
purposes of this proceeding, for purposes of issuing any
forfeiture order, and/or for purposes of any debt collection
action that may ensue as a result of this proceeding.
IV. CONCLUSION
43. In light of the totality of the information now before
us, an evidentiary hearing is required to determine whether the
continued operation of the Publix Companies as a common carrier
would serve the public convenience and necessity within the
meaning of Section 214 of the Act. Further, due to the
potentially egregious nature of the Publix Companies' apparently
unlawful activities, they will be required to show cause why an
order to cease and desist from the provision of any interstate
common carrier services without the prior consent of the
Commission should not be issued. In light of the apparent
violations outlined above, it also appears that a forfeiture
should be levied against the Publix Companies. Moreover, because
our investigation has raised substantial questions whether the
Publix Companies are entitled to any of the payments that they
have received and requested from the TRS Fund, we will specify an
issue to determine the extent to which the Publix Companies are
eligible for any payments.
V. ORDERING CLAUSES
44. ACCORDINGLY, IT IS ORDERED that, pursuant to Sections
4(i) and 214 of the Communications Act of 1934, as amended, 47
U.S.C. §§ 154(i) and 214, the principal or principals of the
Publix Companies ARE DIRECTED TO SHOW CAUSE why the operating
authority bestowed on the Publix Companies pursuant to Section
214 of the Communications Act of 1934, as amended, should not be
REVOKED.
45. IT IS FURTHER ORDERED that, pursuant to Section 312(b)
of the Communications Act of 1934, as amended, 47 U.S.C. §
312(b), the principal or principals of the Publix Companies ARE
DIRECTED TO SHOW CAUSE why an order directing them TO CEASE AND
DESIST FROM THE PROVISION OF ANY INTERSTATE COMMON CARRIER
SERVICES without the prior consent of the Commission should not
be issued.
46. IT IS FURTHER ORDERED that the hearing shall be held at
a time and location to be specified by the Chief Administrative
Law Judge in a subsequent order. The ALJ shall apply the
conclusions of law set forth in this Order to the findings that
he makes in that hearing, upon the following issues:
(a) to determine whether the service the Publix
Companies provided met the definition of TRS under
Section 225(a)(3) of the Act and Section 64.601(7)
of the Commission's rules;
(b) to determine whether the Publix Companies violated
Section 64.604(a)(1) of the Commission's rules;
(c) to determine whether the Publix Companies violated
Section 225(d)(1)(F) of the Act and Section
64.604(a)(2)(i) of the Commission's rules;
(d) to determine whether the Publix Companies violated
Section 64.604(b)(3) of the Commission's rules;
(e) to determine whether the Publix Companies violated
Section 64.604(b)(4) of the Commission's rules;
(f) to determine whether the Publix Companies violated
Section 64.604(c)(3) of the Commission's rules;
(g) to determine whether the Publix Companies violated
Section 64.604(c)(5)(iii)(C) of the Commission's
rules;
(h) to determine whether the Publix Companies violated
Section 64.604(c)(5)(iii)(E) of the Commission's
rules;
(i) to determine whether the MOU generated by the
Publix Companies constituted MOU compensable by
the TRS Fund;
(j) to determine whether the Publix Companies violated
Section 220(e) of the Act by not filing true and
accurate data in FCC Form 499-A;
(k) to determine whether the Publix Companies engaged
in a pervasive pattern of misrepresentation or
lack of candor;
(l) to determine whether the Publix Companies
misrepresented or willfully omitted facts in
written materials submitted to the Commission, in
violation of 47 C.F.R. Section 1.17;
(m) to determine whether, with respect to the issues
(a) through (l) specified above, the Publix
Companies knew or should have known that they were
committing such violations, whether they acted
with the intention of violating a known duty; and
whether they acted negligently, or with gross
neglect of a known duty;
(n) to determine whether the Publix Companies
substantially complied with the requirements of 47
C.F.R. Section 64.604;
(o) to the extent that the ALJ finds that the Publix
Companies were eligible for any TRS Fund
reimbursements they requested or received, to
determine the number of MOU for which the Publix
Companies were entitled to receive reimbursement
from the TRS Fund;
(p) to determine, in light of all the foregoing,
whether Publix Network's authorization to operate
as a common carrier should be revoked;
(q) to determine whether, in light of all the
foregoing, Publix Network, the Publix Companies,
and/or its principals should be ordered to cease
and desist from the provision of any interstate
common carrier services without the prior consent
of the Commission;
(r) to determine whether, in light of the evidence
adduced pursuant to the foregoing issues, Publix
Network, Publix Relay, SignTel, RCC, Customer
Attendants, Focus Group, and any other related
company under the control and direction of Dr.
Raanan Liebermann, should, for purposes of this
proceeding, be considered one and the same entity.
47. IT IS FURTHER ORDERED that the Chief, Enforcement
Bureau, shall be a party to the designated hearing. Pursuant to
Section 312(d) of the Communications Act of 1934, as amended,
both the burden of proceeding and the burden of proof shall be
upon the Enforcement Bureau as to issues (a) through (r)
inclusive.
1. 48. IT IS FURTHER ORDERED that, to avail
themselves of the opportunity to be heard, the principal or
principals of the Publix Companies, pursuant to Section 1.91(c)
of the Commission's rules, SHALL FILE with the Commission within
30 days of the mailing of this Show Cause Order a WRITTEN
APPEARANCE stating that a principal or other legal representative
from the Publix Companies will appear at the hearing and present
evidence on the matters specified in the Show Cause Order. If
the Publix Companies fail to file a written appearance within the
time specified, the Publix Companies' right to a hearing SHALL BE
DEEMED TO BE WAIVED. In the event that the right to a hearing a
hearing is waived, the Presiding Judge, or the Chief,
Administrative Law Judge if no Presiding Judge has been
designated, SHALL TERMINATE the hearing proceeding as to that
entity and CERTIFY this case to the Commission in the regular
course of business, and an appropriate order shall be entered.
49. IT IS FURTHER ORDERED that, irrespective of the
resolution of the foregoing issues, the ALJ shall determine,
pursuant to Section 503(b)(3)(A) of the Act, 47 U.S.C. §
503(b)(3)(A), whether an Order of Forfeiture shall be issued
against any or each of the Publix companies and their
principal(s) for having willfully and/or repeatedly violated
Sections 1.17, 64.601(7), 64.604(a)(1), 64.604(a)(2)(i),
64.604(b)(3), 64.604(b)(4), 64.604(c)(3), 64.604(c)(5)(iii)(C),
and/or 64.604(c)(5)(iii)(E) of the Commission's rules, 47 C.F.R.
§§ 1.17, 64.601(7), 64.604(a)(1), 64.604(a)(2)(i), 64.604(b)(3),
64.604(b)(4), 64.604(c)(3), 64.604(c)(5)(iii)(C), and/or
64.604(c)(5)(iii)(E) and/or Sections 220(e), 225(a)(3) and
225(d)(1)(F) of the Act, 47 U.S.C. §§ 220(e), 225(a)(3) and
225(d)(1)(F). For each violation, the maximum potential
forfeiture liability for the parties, joint and separately, shall
be the statutory maximum of $120,000 per violation up to a total
of $1,200,000 for each continuing violation committed by a common
carrier. This figure is set based upon the seriousness of the
alleged violations, the continuing nature of the alleged
violations, the apparent culpability of each party, the
information available to us concerning the financial condition of
each party, and the ability of each party to profit from the
alleged rule and/or statutory violations.
50. IT IS FURTHER ORDERED that this document constitutes a
NOTICE OF OPPORTUNITY FOR HEARING pursuant to Section
503(b)(3)(A) of the Communications Act of 1934, as amended, 47
U.S.C. § 503(b)(A), for the potential forfeiture liability
outlined above.
51. IT IS FURTHER ORDERED that a copy of this ORDER TO SHOW
CAUSE AND NOTICE OF OPPORTUNITY FOR HEARING shall be sent by
certified mail, return receipt requested, to Dr. Raanan
Liebermann, Publix Network Corporation, 79 Bayard Avenue, North
Haven, CT 06473, and Gerard Waldron, Esq., Covington & Burling,
1201 Pennsylvania Avenue, N.W., Washington, D.C., 20004.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
_________________________
1 For purposes of this order, the Publix Companies refers to
Publix Network Corporation (``Publix''), Customer Attendants,
LLC (``Customer Attendants''), Revenue Controls Corporation
(``RCC''), SignTel, Inc. (``SignTel''), and Focus Group, LLP
(``Focus Group'').
2 47 C.F.R. § 64.601(7).
3 Id. § 64.601(5).
4 Id. § 64.604(c)(5)(iii)(E).
5 47 U.S.C. § 225(c).
6 47 C.F.R. § 64.604(c)(5)(iii).
7 Id. § 64.604(c)(5)(ii).
8 Id. § 64.604(c)(5)(iii)(A).
9 Id. § 64.604(c)(5)(iii)(E).
10 Id.
11 Id.
12 Id. § 64.604(c)(5)(iii)(F).
13 Id. § 64.604(c)(5)(iii)(E).
14 47 U.S.C. § 225(d)(1)(A)-(G).
15 47 C.F.R. § 64.604.
16 47 U.S.C. §225(d)(1)(C), (F).
17 Several of the requirements in Section 64.604 were modified
by the Commission in 2000. See Telecommunications Relay
Services and Speech-to-Speech Services for Individuals with
Hearing and Speech Disabilities, Report and Order and Further
Notice of Proposed Rulemaking, 15 FCC Rcd 5140 (2000).
18 Publix Network is the entity within the Publix Companies
that reports financial and operating data to NECA.
19 From January 1999 through January 2001, NECA paid the
Publix Companies $6,649,370. For the months February through
April, 2001, the Publix Companies requested payments totaling
$3,410,140 from the TRS Fund. NECA withheld payments on these
and future requests. In June 2001, the Chief of the Common
Carrier Bureau affirmed NECA's decision to withhold payment.
See Letter from Dorothy T. Attwood, Chief, Common Carrier Bureau
(``CCB''), Federal Communications Commission to Raanan
Liebermann, President, Publix Network Corporation, June 25, 2001
(``June CCB Letter'').
20 See 47 C.F.R. § 64.604(c)(5)(C).
21 Letter from David H. Solomon, Chief, Enforcement Bureau,
Federal Communications Commission to Raanan Liebermann,
President, Publix Network Corporation, June 25, 2001.
22 See Publix's Application for Interstate TRS Facility
Certification (``Application''), filed by Publix on April 6,
1998.
23 See June CCB Letter.
24 Id. at 2.
25 Id.
26 See letter from Gerard J. Waldron, Esq. to David L. Hunt,
Senior Attorney, Enforcement Bureau, Federal Communications
Commission, July 23, 2001; letter from Dr. Raanan Liebermann,
President, Publix Network Corporation, to David L. Hunt, Senior
Attorney, Enforcement Bureau, Federal Communications Commission,
July 23, 2001 (``Publix Reply to EB Subpoena''); letter from
Gerard J. Waldron, Esq., to Sanford S. Williams, Staff Attorney,
Common Carrier Bureau, Federal Communications Commission, July
23, 2001. (``July Publix Letter to CCB''). Documents produced
with the Publix Reply to EB Subpoena are hereinafter referred to
as ``Publix Response to EB Subpoena Request No. [the request and
page numbers will then be added for each citation] July 23,
2001.''
27 If the Publix Companies are found not to be entitled to any
portion of the monies that they have received from the TRS Fund,
the Commission will follow its normal debt collection procedures
to recover all such payments.
28 47 C.F.R. § 64.601(7), see also 47 U.S.C. § 225(a)(3).
29 47 C.F.R. § 64.604(c)(5)(F)(3).
30 Telecommunications Relay Services, and the Americans with
Disabilities Act of 1990, Third Report and Order, 8 FCC Rcd
5300, 5305, (``Third Report and Order'') (emphasis added).
31 47 C.F.R. § 64.601(5).
32 It appears that not all of the conference calls that
involved a moderator were placed by the moderator. There is
evidence that often the CAs would call the ADs in anticipation
of receiving a call from the moderator.
33 Pursuant to Section 64.604(a)(2)(ii), end users can request
that the CA provide a summary instead of a verbatim
transliteration of the entire conversation. However, the
evidence suggests that the simple responses the moderator
received were part of the scheme to obtain monies illegally from
the TRS Fund by creating the appearance of a relayed
conversation. In other words, moderators were included in the
end user (an AD) to CA to end user (the moderator) triangle to
look more like legitimate TRS service.
34 Telecommunications Services for Individuals with Hearing
and Speech Disabilities, and the Americans with Disabilities Act
of 1990, First Report and Order and Request for Comments, 6 FCC
Rcd 4657, 4657 (``First Report and Order'').
35 47 U.S.C. § 225(c).
36 136 Cong. Rec H2421-02, H2431 (1990).
37 47 C.F.R. § 64.604(c)(5)(iii)(F).
38 See, e.g., Hickel v. Oil Shale Corp., 400 U.S. 48 (1970);
Kent v. United of Omaha Life Ins. Co., 96 F.3d 803, 807 (6th
Cir. 1996); Donato v. Metropolitan Life Ins. Co., 19 F.3d 375,
382-83 (7th Cir. 1994); cf. Cox Cable Tucson, Inc. v. Ladd, 795
F.2d 1479, 1485-7 (9th Cir. 1986).
39 47 U.S.C. § 225(d)(1)(C); see also 47 C.F.R. §
64.604(b)(4).
40 47 U.S.C. § 225(d)(1)(F); see also 47 C.F.R. §
64.604(a)(2)(i).
41 47 C.F.R § 64.604(b)(3).
42 Id. § 64.604(c)(1).
43 Id. § 64.604(c)(3).
44 Id. § 64.604(c)(5)(iii)(C).
45 Id. § 64.604(a)(1).
46 See Publix Response to EB Subpoena Request No. 12, P002086,
July 23, 2001. The Publix Companies assert that they did
improve on their CAs' typing skills, managing to change the
failure rate under the 60-words-per-minute standard from 100
percent to 88 percent, and later improved further to a failure
rate of 64 percent. Id.
47 47 C.F.R. § 64.604(a)(2)(i).
48 Id. § 64.604(b)(3).
49 First Report and Order at 4662.
50 Id.
51 See July Publix Letter to CCB, p. 3.
52 47 C.F.R. § 64.604(b)(3).
53 Id. § 64.604(b)(4).
54 Application at 5.
55 See July Publix Letter to CCB at 4.
56 47 C.F.R. § 64.604(c)(3).
57 Third Report and Order at 5300.
58 47 C.F.R. § 64.604(c)(5)(iii)(C) .
59 Id.
60 See Publix Response to EB Subpoena Request No. 16, P002186-
93, July 23, 2001 (``RCC/SignTel Agreements''). The two
agreements are identical except that one pertains to RCC and the
other to SignTel.
61 See 47 C.F.R. § 64.604(c)(5)(iii)(C). Further, Section
1001 of Title 18 of the United States Code requires that persons
not knowingly and willfully make materially false, fictitious,
or fraudulent statements or representations to a governmental
entity. See 18 U.S.C. § 1001.
62 For instance, the Publix Network's records indicate that
its actual average per-minute expenses for 1999 and 2000 were
$0.642 and $0.827 respectively. Yet, Publix Network also asserts
that its charges include $0.96 per minute royalty expense.
63 See para 35, infra, for issue of whether the Publix
Companies violated the requirements of Section 220(e) of the Act
by providing false information on any TRS Fund Worksheet.
64 See 47 C.F.R. § 64.604(c)(5)(iii)(E).
65 See, e.g., Publix Response to EB Subpoena Request No. 7,
P000313, July 23, 2001. Here, the record indicates that Publix
Network reported more TRS MOU than actual minutes that passed
through SNET's switch. Switch minutes are those minutes of time
where a circuit is open or an electronic path is completed.
Conversation minutes reflect actual call time when a
conversation can occur.
66 See Publix Response to EB Subpoena Request No. 7, P000309,
July 23, 2001.
67 For example, if there were a four-hour conference call with
four ADs, the Publix Companies would report 960 TRS MOU (240
minutes X 4 ADs) to NECA for reimbursement, whereas they should
have billed the TRS Fund for only 240 TRS MOU. This assumes, of
course, that any of the TRS MOU reported by the Publix Companies
were legitimate.
68 See July Publix Letter to CCB at 5.
69 See June CCB Letter; see also Letter from Maripat Brennan,
Director of Fund Administration, NECA to Raanan Liebermann, CEO,
Publix Network Corporation, May 10, 2001 (``May 10 NECA
Letter'').
70 See, e.g., Pay Telephone Reclassification and Compensation
Provisions of the Telecommunications Act of 1996, Report and
Order, (1996) at 20574-75.
71 BellSouth Telecommunications, Inc. v. US LEC of North
Carolina Inc., 201 PUR 4th 58, 89-91 (2000).
72 Id. at 88.
73 47 C.F.R. § 1.17.
74 We note that, by definition, misrepresentation and lack of
candor involve intent. See Trinity Broadcasting of Florida,
Inc. et al., Initial Decision, 10 FCC Rcd 12,020, 12,063 (1995);
Cannon Communications Corp. et al., Decision, 5 FCC Rcd 2695,
2700 (1990); MCI Telecommunications Corp., Order and Notice of
Apparent Liability, 3 FCC Rcd 509, 512 (1988); Fox River
Broadcasting, Inc., et al, Order, 93 FCC 2d 127, 129 (1983).
75 Application at 2.
76 See, eg., July Publix Letter to CCB at 4.
77 See, e.g., United States v. Henny, 527 F.2d 479 (9th
Cir. 1976), cert. denied 425 U.S. 991 (1976) (wire fraud found
when carrier attempted deliberately to inflate payments from a
long distance toll settlement pool by, among other things,
misreporting length of calls, inflating the number of calls, and
reporting free employee calls as compensable revenue generating
toll calls).
78 See CCN, Inc., et al., Order to Show Cause and Notice of
Opportunity for Hearing, 12 FCC Rcd 8547 (1997).
79 Petition by Telecable Corp. to Stay Construction or
Operation of a CATV System in Bloomington and Normal, Ill.,
Decision, 19 FCC 2d 574, 587 (1969) (footnotes omitted).
80 See generally Petition by Dimension Cable TV, Inc.,
Morrisonville, N.Y., to Stay Construction or Operation of a CATV
System Near Plattsburg, N.Y., Memorandum Opinion and Order, 27
FCC 2d 43 (1971).
81 See RCC/SignTel Agreements.
82 See Mansfield Journal Co. v. FCC, 180 F.2d 28, 37 (D.C.
Cir. 1950) (``Mansfield Journal'').
83 General Telephone Co. of the Southwest, et al., v. United
States and FCC, et al., 449 F.2d 846, 855 (5th Cir. 1971).