####  Before the 

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of )

) File No. EB-01-MA-040

New Image Electronics )

Miami, Florida ) NAL/Acct. No. 200232700003

)

) FRN 0006-3343-12

)

## 

## [FORFEITURE ORDER]{.underline}

**Adopted: February 26, 2002 Released: March 1, 2002**

By the Chief, Enforcement Bureau:

**I.** **INTRODUCTION**

1\. In this *Forfeiture Order* ("*Order*"), we issue a monetary
forfeiture in the amount of seven thousand dollars (\$7,000), to New
Image Electronics ("NIE"), for willful violation of Section 302(b) of
the Communications Act of 1934, as amended ("Act"),[^1] and Section
2.803(a)(1) of the Commission\'s Rules (\"Rules\").[^2] The noted
violation involves NIE\'s marketing of non-compliant long-range cordless
telephones.

2\. On October 29, 2001, the District Director of the Commission\'s
Tampa, Florida Field Office issued a *Notice of Apparent Liability for
Forfeiture* (\"*NAL*\"),[^3] on behalf of the Commission\'s Miami,
Florida Resident Agent Office (\"Miami Office\"), in the amount of seven
thousand dollars (\$7,000). NIE filed a response on January 14, 2002.

**II.** **BACKGROUND**

3\. In February of 2001, the Federal Aviation Administration (\"FAA\")
reported to the Enforcement Bureau that it was receiving sporadic
interference to an aviation frequency in the Miami, Florida area. In
March of 2001, the Miami Office identified the source of the
interference as a long-range cordless telephone being operated from an
electronics store in Miami. Information subsequently obtained by the
Enforcement Bureau indicated that some long-range cordless telephones
were being marketed for use on civilian VHF aviation frequencies in a
number of states. The FAA provided technical measurements of some of the
long-range cordless telephones and indicated that some of the units
transmitted significant spurious signals on aviation frequencies, while
other units were purposely designed to operate in the aviation band. As
a result of the FAA\'s concerns, the Enforcement Bureau launched a
nationwide investigation into the unlawful use of long-range cordless
telephones that has resulted in the issuance of several citations and
NALs. The cordless telephone purchased by the FCC agents from NIE is the
same type of unlawful long-range cordless telephone that caused concern
for the FAA. This long-range cordless telephone had the potential to
cause serious interference to aviation and, thus, is a threat to public
safety.

4\. On July 27, 2001, agents from the Miami Office visited NIE, a retail
store located at 9 West Flagler Street, Miami, Florida 33130. The agents
inquired about the availability of long-range, cordless telephones for
purchase. The salesperson offered several models for sale, including a
Prolink, CT 600. The long-range cordless telephones offered for sale did
not possess the FCC authorization required for marketing these devices
in the United States. On August 24, 2001, the Miami Office issued a
citation to NIE for violation of Section 302(b) of the Act and Section
2.803(a)(1) of the Rules which prohibits the marketing of such devices.
On September 10, 2001, NIE responded to the citation. In its response,
NIE stated that the offending cordless telephones were no longer in the
store.

5\. On September 27, 2001, two FCC agents returned to NIE and again
inquired about the availability of long-range cordless telephones for
purchase. The salesperson sold the agents a Prolink, CT 600. The
cordless telephone purchased by the agents did not possess the labeling
or FCC authorization required for marketing the device in the United
States.[^4] On October 29, 2001, the District Director of the
Commission's Tampa, Florida Field Office issued a *NAL* to NIE for
marketing a non-compliant high-power cordless telephone in violation of
Section 302(b) of the Act and Section 2.803(a)(1) of the Rules. On
January 14, 2002, the Bureau received a response to the *NAL.* In its
response, NIE does not dispute the violations. However, NIE requests
cancellation or reduction of the forfeiture for other reasons.
Specifically, NIE asserts that because of a misunderstanding between it
and its former counsel, NIE believed that it was permitted to continue
selling the long-range cordless telephones as long as they were sold for
export only. NIE further contends that it mistakenly believed it was
selling the long-range cordless telephone for export when the Commission
agent gave his address as \"Puerto Rico.\" NIE also contends that it has
removed all of the offending items from its store, has obtained a credit
from its wholesaler for the return of those items, and is cooperating
with the Enforcement Bureau in this matter. Alternatively, NIE claims
that it would be an extreme financial hardship for it to pay the
forfeiture proposed in light of its small profit margin over the last
three years.

**III. DISCUSSION**

III. 6\. The forfeiture amount in this case was assessed in accordance
     with Section 503(b) of the Communications Act of 1934, as amended
     ("Act"),[^5] Section 1.80 of the Rules,[^6] and *The Commission's
     Forfeiture Policy Statement and Amendment of Section 1.80 of the
     Rules to Incorporate the Forfeiture Guidelines*, 12 FCC Rcd 17087
     (1997), *recon. denied*, 15 FCC Rcd 303 (1999). In examining NIE's
     response, Section 503(b) of the Act requires that the Commission
     take into account the nature, circumstances, extent and gravity of
     the violation and, with respect to the violator, the degree of
     culpability, any history of prior offenses, ability to pay, and
     other such matters as justice may require.[^7]

7\. Section 302(b) of the Act provides that no person shall manufacture,
import, sell, offer for sale, or ship devices or home electronic
equipment and systems, or use devices, which fail to comply with
regulations promulgated pursuant to this section. Section 2.803(a)(1) of
the Rules provides that:

> \(a\) Except as provided elsewhere in this section, no person shall
> sell or lease, or offer for sale or lease (including advertising for
> sale or lease), or import, ship, or distribute for the purpose of
> selling or leasing or offering for sale or lease, any radio frequency
> device unless: (1) \[i\]n the case of a device subject to
> certification, such device has been authorized by the Commission in
> accordance with the rules in this chapter and is properly identified
> and labeled as required by  2.925 and other relevant sections in this
> chapter\[.\]

NIE contends that, after consulting with its prior attorney, it believed
that it was permitted to continue selling the long-range cordless
telephones as long as they were sold for export only. NIE also contends
that it sold the cordless telephone to the FCC agent thinking that it
was being sold for export, because the agent told the salesperson that
his address was in Puerto Rico and the salesperson mistakenly believed
for export purposes, that Puerto Rico was outside the United States.
Section 2.807(b) of the Rules[^8] exempts devices "manufactured solely
for export" from the prohibition of Section 2.803(a)(1) which prohibits
the marketing of non-compliant devices. However, the exemption only
applies to devices that the *manufacturer* actually exports (emphasis
added). NIE was not the manufacturer of the device at issue here. As a
retailer, NIE is not entitled to use this exemption. In any event, the
fact that NIE was selling the long-range cordless telephones in a retail
store in Miami, Florida indicates that NIE was engaged in marketing the
long-range cordless telephones to the general public in the United
States.[^9] Moreover, even though NIE alleges that there was a
misunderstanding between it and its former counsel, reliance upon advice
of counsel is \"grounds for neither rescission nor mitigation of a
forfeiture penalty.\"[^10] Additionally, NIE\'s statement to this effect
is inconsistent with the information NIE initially provided the Bureau
in response to the citation issued to NIE on August 24, 2001. In its
response of September 10, 2001, NIE informed the Bureau that the
cordless telephones were no longer in the store. If the cordless
telephones were no longer in the store, they could not possibly be sold
for export or otherwise. Further, even if export by NIE was permitted,
Puerto Rico is not considered to be outside of the United States for the
purpose of export.

8\. Finally, NIE asserts that because it has removed the long-range
cordless telephones from the store, has obtained a credit from its
wholesaler for the return of the phones and is cooperating with the
Enforcement Bureau, the forfeiture should be cancelled or reduced. We
disagree. Corrective action taken to come into compliance with
Commission rules or policy is expected, and does not nullify or mitigate
any prior forfeitures or violations.[^11]

9\. Alternatively, NIE asserts that it would be an extreme financial
hardship for NIE to pay the forfeiture imposed in light of the small
profit margin it has experienced over the last three years. In support
of its claim of financial hardship, NIE has submitted its federal income
tax returns for tax years 1998, 1999, and 2000. The Commission has
determined that, in general, a licensee\'s gross revenues are the best
indicator of its ability to pay a forfeiture.[^12] After reviewing the
financial data submitted, we find no evidence in NIE\'s response that
would support cancellation of the forfeiture or a reduction based upon
financial hardship.

####  IV. ORDERING CLAUSES

10\. Accordingly, IT IS ORDERED THAT, pursuant to Section 503(b) of the
Act and Sections 0.111, 0.311 and 1.80(f)(4) of the Rules,[^13] New
Image Electronics, Inc. IS LIABLE FOR A MONETARY FORFEITURE in the
amount of seven thousand dollars (\$7,000) for violating Section 302(b)
of the Act and Section 2.803(a)(1) of the Rules.

11\. Payment of the forfeiture shall be made in the manner provided for
in Section 1.80 of the Rules within 30 days of the release of this
*Order*. If the forfeiture is not paid within the period specified, the
case may be referred to the Department of Justice for collection
pursuant to Section 504(a) of the Act.[^14] Payment shall be made by
mailing a check or similar instrument, payable to the order of the
\"Federal Communications Commission,\" to the Federal Communications
Commission, P.O. Box 73482, Chicago, Illinois 60673-7482. The payment
should note NAL/Acct. No. 20023700003, and FRN 0006-3343-12. Requests
for full payment under an installment plan should be sent to: Chief,
Revenue and Receivables Group, 445 12th Street, S.W., Washington, D.C.
20554.[^15]

12\. IT IS FURTHER ORDERED that, a copy of this *Order* shall be sent by
Certified Mail Return Receipt Requested to New Image Electronics, Inc.
at 9 West Flagler Street, Miami, Florida 33130 and to its counsel Gary
S. Glasser, Esq. at Biscayne Building, Suite 1400, 19 West Flagler
Street, Miami, Florida 33130.

**FEDERAL COMMUNICATIONS COMMISSION**

David H. Solomon

Chief, Enforcement Bureau

[^1]: ^?^ 47 U.S.C. § 302(b).

[^2]: ^?^ 47 C.F.R. § 2.803(a)(1).

[^3]: ^?^ *Notice of Apparent Liability for Forfeiture*, NAL/Acct. No.
    200232700003 (Enf. Bur., Miami Office, released October 29, 2001).

[^4]: ^?^ *See e.g.,* 47 C.F.R.  15.201, 2.925, and 15.19.

[^5]: ^?^ 47 U.S.C. § 503(b).

[^6]: ^?^ 47 C.F.R. § 1.80.

[^7]: ^?^ 47 U.S.C. § 503(b)(2)(D).

[^8]: ^?^ 47 C.F.R.  2.807(b).

[^9]: ^?^ *See Amertel Electronics Corp.*, 8 FCC Rcd 4462, 4462 (Field
    Operations Bureau 1993).

[^10]: ^?^ *See Virginia RSA 6 Cellular Limited Partnership*, 7 FCC Rcd
    8022, 8022 (1992).

[^11]: ^?^ *See Seawest Yacht Brokers DBA San Juan Marina Friday Harbor,
    Washington*, 9 FCC Rcd 6099, 6099 (1994).

[^12]: ^?^ *See PJB Communications of Virginia, Inc.,* 7 FCC Rcd 2088,
    2089 (1992).

[^13]: ^?^ 47 C.F.R. §§ 0.111, 0.311, 1.80(f)(4).

[^14]: ^?^ 47 U.S.C. § 504(a).

[^15]: ^?^ *See* 47 C.F.R. § 1.1914.