######### Before the

**FEDERAL COMMUNICATIONS COMMISSION**

**Washington, D.C. 20554**

In the Matter of )

) File No. ENF-99-01

Long Distance Direct, Inc. )

) NAL/Acct. No. 916EF0003

Apparent Liability for Forfeiture )

######### MEMORANDUM OPINION AND ORDER

Adopted: February 9, 2000; Released: February 17, 2000

By the Commission:

**I. INTRODUCTION**

I.  

1 In this Order, we assess a forfeiture of \$2,000,000 against Long
Distance Direct, Inc. (LDDI), an interexchange carrier (IXC), for
willfully or repeatedly violating section 258 of the Communications Act
of 1934, as amended (Act),[^1] and rules and orders issued by the
Commission under the Act,[^2] by submitting a change in the primary
interexchange carrier (PIC) of 25 consumers without proper authorization
(a practice known as "slamming"). We also find that LDDI willfully or
repeatedly violated section 201(b)[^3] of the Act by imposing charges on
Complainants' telephone bills for unauthorized services ( a practice
known as "cramming"). The \$2,000,000 forfeiture assessed here
represents a \$40,000 penalty for each of the 25 slamming violations and
a \$40,000 penalty for each of the 25 cramming violations.

**II. BACKGROUND**

II. 2 The facts and circumstances surrounding this case are set forth in
    the Notice of Apparent Liability previously issued by the Commission
    (*LDDI NAL*),[^4] and need not be reiterated at length. Between
    January 1, 1998 and October 31, 1998, more than 800 consumers
    contacted the Commission and alleged that they had been slammed and,
    in many cases, crammed, by LDDI. The Commission investigated the
    allegations of 25 of these consumers (Complainants), and obtained a
    written statement from each as to the matters at issue.

    3 Each of the Complainants stated that they were both slammed and
    crammed by LDDI. Complainants discovered that their long distance
    service had been changed to LDDI only after reviewing their long
    distance telephone bills or being so informed during a solicitation
    by another carrier. Complainants then attempted to contact LDDI to
    determine why LDDI had changed their PIC. Many were unable to reach
    LDDI even after repeated attempts. Those who were successful in
    reaching LDDI were often told that the PIC-change had been
    authorized by a call made from the Complainant's telephone to the
    "Friends to Friends" psychic hotline. After Complainants notified
    LDDI of the unauthorized PIC-change, they discovered on their next
    telephone bill not only that LDDI had continued to provide service,
    but also that it had imposed a "membership fee" (purportedly for
    membership in the "Friends to Friends" psychic hotline), and "other
    charges." A number of Complainants recall telephoning the "Friends
    to Friends" psychic hotline, but state that they were immediately
    put on hold and never spoke to anyone. The remaining Complainants
    say they had no contact with the "Friends to Friends" hotline.

4 We issued the *LDDI* *NAL* in December 1998. We found LDDI's
submission of unauthorized PIC-changes and imposition of unauthorized
"membership" and "other" charges to constitute apparent violations of
sections 258 and 201(b) of the Act, and of Commission rules and orders.
We found these apparent violations to be particularly egregious, as they
were repeated, and continued over a period of months. In addition, they
appeared to be far more than minor technical failures: not one of the
Complainants could reasonably be said to have authorized service by LDDI
or the imposition of the charges at issue. Based upon our review of the
facts and circumstances surrounding these apparent violations, we
proposed that LDDI be liable for a forfeiture in the amount of \$40,000
for each of the slamming violations, and \$40,000 for each of the
cramming violations, resulting in a total forfeiture amount of
\$2,000,000.[^5]

5 LDDI submitted a response (Response) to the *LDDI NAL* on February 4,
1999. In its Response, LDDI does not deny that it submitted PIC-change
orders to Complainants' local exchange carriers.[^6] Nor does it deny
that it billed Complainants for "membership fees" and "other charges."
Instead, LDDI states that, in January of 1998, it entered into a "joint
marketing alliance" with Inphomation, Inc., d/b/a The Psychic Friends
Network (PFN) to market LDDI's long distance services together with
PFN's "Friends to Friends" psychic services network. Pursuant to this
arrangement, LDDI and PFN produced and aired television infomercials
promoting the "Friends to Friends" psychic network and the LDDI long
distance network. The infomercials displayed 800 numbers "owned and
controlled" by PFN which consumers could call to request service by LDDI
and membership in "Friends to Friends." LDDI asserts that it directed
PFN to obtain and confirm customers' authorizations in accordance with
Commission rules, and that PFN was then to submit the names and
telephone numbers of those customers to LDDI.[^7]

######### III. DISCUSSION

III. 

6 LDDI contests the Commission's finding of apparent liability. LDDI
argues first that a forfeiture order should not be issued at all.
Alternatively, LDDI argues that, if the Commission does determine that a
forfeiture is warranted, it should be in an amount substantially less
than \$2,000,000. As discussed below, we affirm the findings in the
*LDDI* *NAL* and decline to reduce the forfeiture amount.

######### A. Imposition of a Forfeiture

7 LDDI argues that a forfeiture order should not be issued because: 1)
LDDI delegated to PFN responsibility for obtaining proper authorization
and verification of PIC-changes and membership in "Friends to Friends,"
and PFN was an independent contractor; 2) LDDI took the "affirmative
step" of telephoning prospective customers and sending them a postcard
to thank them for subscribing to its services; and, 3) the Commission
allegedly does not have jurisdiction to impose penalties for imposing
unauthorized charges on consumer telephone bills.

[(1) Liability for the Acts of an Independent Contractor]{.underline}

8 LDDI argues first that the Commission should not issue a forfeiture
because PFN, not LDDI, was responsible for obtaining and verifying
consumers' authorization to be switched to LDDI and join "Friends to
Friends," and LDDI directed PFN to do so in accordance with the law.
LDDI asserts that PFN was an independent contractor, and contends that
section 217 of the Act does not impose liability for the acts of an
independent contractor.[^8]

9 The Commission has ruled on numerous occasions that carriers are
responsible for the conduct of third parties acting on the carrier's
behalf, including third party marketers.[^9] LDDI is not relieved of
liability merely because it directed PFN to secure consumer
authorizations in accordance with the law. Section 217 of the Act deems
"the act, omission or failure of any . . . person *acting for* or
employed by" any carrier to be the act, omission or failure of that
carrier. This language is extremely broad and clearly extends to PFN,
which was "acting for" LDDI in securing PIC-change authorizations.
Identical language in another federal statute has been construed to
impose criminal liability upon an employer for the acts of its
independent contractor. The court reasoned there: "The fact that \[the
party who violated the statute\] is said to have been an independent
contractor rather than an employee is of no significance here because
the section uses the disjunctive 'acting for or employed by.'"[^10]
Congress's clear intent in enacting section 217 was to ensure that
common carriers not flout their statutory duties by delegating them to
third parties.[^11] To hold that the section does not include
independent contractors would create a gaping loophole in the
requirements of the Act and frustrate legislative intent. Moreover, the
construction urged by LDDI is contrary to long-established principles of
common law holding statutory duties to be nondelegable.[^12]

# 

# 

#  [(2) LDDI's "Affirmative Steps"]{.underline}

IV. 10 LDDI argues next that a forfeiture should not be imposed because,
    in addition to directing PFN to obtain consumer authorization in
    accordance with the law, it took the "affirmative step, above and
    beyond that required by applicable FCC rules" of making a "courtesy
    call" to prospective subscribers to thank them for switching to LDDI
    and mailing them a "welcome postcard".[^13]

11 Not one of the Complainants reported receiving a courtesy telephone
call, and the few Complainants who recall a "welcome postcard" state
that they received it only after being slammed and crammed. Moreover,
there is no evidence that, prior to submitting PIC-changes and charging
"membership fees", LDDI even *attempted* to confirm that the
authorizations submitted by PFN were valid. Having failed to fulfill
such a fundamental obligation, LDDI cannot reasonably assert that its
actions went "above and beyond" the law.

12 In fact, LDDI's actions fell far short of the law. A number of
Complainants state that they had no contact with LDDI or "Friends to
Friends" prior to being slammed and crammed. The remaining Complainants
telephoned "Friends to Friends" but were immediately put on hold and
spoke to no one. Commission rules in effect during the period at issue
provided that, when a consumer initiated a call to an IXC and
*authorized* a switch in service, the IXC was not required to *verify*
that *authorization*. These rules certainly did not relieve the carrier
of the obligation to obtain authorization in the first instance.[^14]
LDDI violated these rules, for it never obtained Complainants'
*authorization*. Those Complainants who had no contact with LDDI or PFN
provided no authorization. Nor had those Complainants who telephoned PFN
and never spoke to anyone: The mere act of placing a telephone call does
not constitute authorization for being switched to a different IXC and
charged "membership fees".

[(3) Jurisdiction to Impose a Forfeiture for Cramming]{.underline}

V.  13 LDDI argues that a forfeiture may not be imposed with respect to
    the "membership" and "other" charges it placed on Complainants'
    phone bills, as the Commission does not have jurisdiction over the
    unauthorized placement of charges on a telephone bill for enhanced
    services.

14 LDDI is incorrect. Section 201(b) of the Act prohibits "unjust and
unreasonable" practices by carriers "in connection with \[interstate or
foreign\] communication service". LDDI's inclusion of "membership" and
"other" fees on Complainants' telephone bills was an "unjust and
unreasonable" practice because the fees were unauthorized. That practice
was "in connection with" communication service because it was
inextricably intertwined with LDDI's long distance service.

15 The record underscores the extent to which the unauthorized
"membership" and "other" fees imposed by LDDI were "in connection with"
its marketing, billing, and provision of long distance service. By its
own admission, LDDI joined PFN in a "joint marketing alliance" pursuant
to which LDDI's long distance services were to be promoted together with
the "Friends to Friends" psychic network. The infomercial produced by
LDDI and PFN advertised the services of both companies. PFN was to
obtain subscribers to LDDI's IXC services through the "Friends to
Friends" hotline. The telephone bills imposing the "membership" and
"other" fees were generated and mailed to Complainants by LDDI. These
bills state, "as a \["Friends to Friends"\] Charter member you are
entitled to . . . our discount long distance service." LDDI's welcome
postcard provides that, "As a Friends to Friends Charter Member you have
been switched free of charge to . . . LDDI ... ." Further, LDDI received
a significant amount of the "membership" fees imposed upon consumers --
more than \$3 million in the first six months of 1998.[^15] In short,
LDDI's practice of imposing "membership" and "other" fees was so
inextricably intertwined with its marketing, billing and provision of
long distance service that the practice was clearly "in connection with"
communication service. The Commission correctly exercises its
jurisdiction here to remedy violations of section 201(b).[^16]

######### 

######### B. Amount of the Forfeiture 

16 LDDI argues alternatively that, if the Commission determines that a
forfeiture should be imposed, the amount of the forfeiture should be
substantially reduced. Invoking the factors set forth in section
503(b)(2)(D) of the Act,[^17] LDDI asserts that: 1) LDDI's violations
were not "particularly egregious"; 2) LDDI is a responsible carrier;
and, 3) LDDI is not able to pay a penalty of \$2,000,000.

[(1) Gravity of the Violations]{.underline}

VII. 17 LDDI argues that a penalty of \$40,000 for each of the slamming
     and cramming violations is inconsistent with the Commission's
     *Forfeiture Policy Statement*[^18] and prior Commission
     decisions.[^19] LDDI urges first that its violations are not
     "particularly egregious", finding it significant that the
     unauthorized PIC-changes and "membership fees" did not result from
     forged letters of authorization, but from Complainants telephoning
     a number advertised in the LDDI/PFN infomercials. [^20] According
     to LDDI, the fact that Complainants made these calls "at the very
     least, evidenced the end-user's interest in the advertised
     services."[^21]

18 Neither the *Forfeiture Policy Statement* nor the Commission's prior
decisions suggests that the \$40,000 base forfeiture amount for slamming
is limited to situations involving forged letters of authorization. The
violations at issue here are particularly egregious. They were repeated,
and continued over a period of months. And they were more than minor
technical failures, as not one of the Complainants can reasonably be
said to have authorized the charges at issue here. The record indicates
that those who telephoned the "Friends to Friends" psychic hotline were
put on hold and never spoke to anyone. The record further indicates that
the remaining Complainants had no contact with LDDI or PFN prior to
being slammed and crammed. Contrary to LDDI's assertion, the fact that
certain Complainants telephoned "Friends to Friends" does not
demonstrate that they were interested in switching to LDDI or joining
"Friends to Friends." In any event, mere "interest" is a far cry from
the actual authorization required under the Act and our rules.

19 LDDI argues further that a penalty of \$40,000 for each cramming
violation is inconsistent with the *Forfeiture Policy Statement* because
the Commission "conspicuously omit\[ted\] reference to unauthorized
charges on consumers' telephone bills...".[^22] LDDI is incorrect.
Although the *Forfeiture Policy Statement* does not establish a
forfeiture amount for cramming, it does state that, "any omission of a
specific rule violation ... should not signal that the Commission
considers any unlisted violation as nonexistent or unimportant."[^23] In
addition, the Commission retains the discretion to depart from the
*Forfeiture Policy Statement* and issue forfeitures on a case-by-case
basis under the general forfeiture authority granted it by section 503
of the Act.[^24] The imposition of charges on a telephone bill for
"services" the consumer has not authorized is sufficiently egregious to
warrant a forfeiture in an amount equal to that for slamming. In the
case both of slamming and cramming, the consumer is charged without
consent, and consumer confusion is exploited. Moreover, as discussed
earlier, the cramming violations at issue here were not minor
infractions. Complainants were charged for "services" they had not
authorized and never received. Accordingly, by analogy to the standard
forfeiture for slamming provided by the *Forfeiture* *Policy*
*Statement*, \$40,000 is an appropriate forfeiture for these
unauthorized charges.

[(2) Degree of Culpability and Prior Offenses]{.underline}

VIII. 20 LDDI argues that the forfeiture is excessive because it has
      been "an exemplary long distance carrier."[^25] It notes that it
      has never before been the subject of an enforcement action, and
      asserts that the acts at issue were those of PFN, an independent
      contractor. LDDI points again to its alleged "affirmative steps"
      of making courtesy calls and sending welcome postcards to
      prospective subscribers. Additionally, LDDI emphasizes that it
      took appropriate remedial measures when it learned that PFN had
      not obtained proper authorizations: it ended the relationship with
      PFN, reimbursed Complainants, provided timely and detailed
      responses to the Commission's notices of informal complaint, and
      implemented rigorous measures to prevent future unauthorized
      PIC-changes.[^26]

21 The size of the penalty imposed here merely reflects the large number
of violations: 25 acts of slamming and 25 acts of cramming. While LDDI
has never before been the subject of an enforcement action, we view
these violations as particularly egregious. As discussed earlier, LDDI's
failure to ensure that Complainants had authorized a change to LDDI and
membership in "Friends to Friends" cannot be cured by courtesy calls and
welcome postcards. Finally, LDDI's remedial efforts after being
confronted by the Commission were no more than might be expected of any
carrier. In particular, we note that LDDI has not shown that it has
taken any remedial action regarding the hundreds of consumers (other
than Complainants) who contacted the Commission asserting that they were
switched to LDDI without their permission.

[(3) Ability to Pay]{.underline}

IX. 22 LDDI argues that the forfeiture amount should be reduced because
    LDDI has sustained operating losses for each year of its existence,
    and because a \$2,000,000 forfeiture "would mean the certain demise
    of LDDI as a viable business concern . . . ".[^27] LDDI's assertion
    that it suffered operating losses is unavailing. We have repeatedly
    held that that a carrier's gross revenues are the best indicator of
    its ability to pay a forfeiture ."\[T\]he use of gross revenues to
    determine a party's ability to pay is reasonable, appropriate, and a
    useful yardstick in helping to analyze a company's financial
    condition for forfeiture purposes."[^28]

23 LDDI has not demonstrated that its gross revenues are such that LDDI
cannot pay a \$2,000,000 forfeiture. LDDI asserts that its gross
revenues in 1998 were \$12 million, [^29] but has provided no reliable
information as to its gross revenues in 1999. LDDI submitted its parent
company's consolidated SEC Form 10-Q for the period ending March 31,
1998, and refers in its Response to the same Form 10-Q for the period
ending June 30, 1998. Yet those forms do not provide recent financial
information, and establish only that LDDI's parent has significant
assets. We are unable to locate any more recent SEC filings. We
repeatedly requested that LDDI provide probative evidence of its current
financial status.[^30] Yet LDDI responded by providing an income
statement for the quarter ended March 30, 1999, which is neither
audited, attested to as accurate by an officer of the company nor even
authenticated. LDDI simply has not met its burden of proving that it is
unable to pay a \$2,000,000 forfeiture.

######### IV. CONCLUSION

24 After reviewing the information filed by LDDI in its Response, we
find that LDDI has failed to identify facts or circumstances to persuade
us that there is any basis for reconsidering the *LDDI NAL*. Further,
LDDI has not shown any mitigating circumstances sufficient to warrant a
reduction of the \$2,000,000 forfeiture penalty for which it is liable.

######### 

######### 

######### ORDERING CLAUSES

25 Accordingly, IT IS ORDERED THAT, pursuant to section 503(b) of the
Act, 47 U.S.C. § 503(b), and sections 0.111, 0.311 and 1.80(f)(4) of the
Commission\'s rules, 47 C.F.R. §§ 0.111, 0.311 and 1.80(f)(4), that LDDI
SHALL FORFEIT to the United States Government the sum of two million
dollars (\$2,000,000) for violating sections 201(b) and 258 of the Act,
47 U.S.C. §§ 201(b), 258, as well as the Commission\'s rules and
orders.[^31]

26 IT IS FURTHER ORDERED that a copy of this Order of Forfeiture shall
be sent by certified United States mail to Steven Lampert, President and
Chief Executive Officer, Long Distance Direct, Inc., One Blue Hill
Plaza, Suite 1430, Pearl River, New York 10965.

**FEDERAL COMMUNICATIONS COMMISSION**

Magalie Roman Salas

Secretary

[^1]: The Act at section 258 provides in relevant part, "No
    telecommunications carrier shall submit . . . a change in a
    subscriber's selection of a provider of telephone exchange service
    or telephone toll service except in accordance with such
    verification procedures as the Commissions shall prescribe."

[^2]: *See, e.g.*, 47 C.F.R. § 64.1150; *Implementation of the
    Subscriber Carrier Selection Changes Provisions of the
    Telecommunications Act of 1996 and Policies and Rules Concerning
    Unauthorized Changes of Consumers' Long Distance Carriers*, CC
    Docket No. 94-29, *Further Notice of Proposed Rule Making and
    Memorandum Opinion and Order on Reconsideration*, 12 FCC Rcd 10674
    (1997); *Policies and Rules Concerning Unauthorized Changes of
    Consumers' Long Distance Carriers*, 10 FCC Rcd 9560 (1995) (*LOA
    Order*), *stayed in part*, 11 FCC Rcd 856 (1995) (*In-bound Stay
    Order*); *Policies and Rules Concerning Changing Long Distance
    Carriers*, 7 FCC Rcd 1038 (1992) (*PIC-Change Order*), *recon.
    denied* 8 FCC Rcd 3215 (1993); *Investigation of Access and
    Divestiture Related Tariffs*, 101 FCC 2d 911 (1985) (*Allocation
    Order*), *Investigation of Access and Divestiture Related Tariffs*,
    101 FCC 2d 935 (Com. Car. Bur. 1985) (*Waiver Order*), *recon.* (of
    both *Allocation Order* and *Waiver Order*) *denied*, 102 FCC 2d 503
    (1985) (*Reconsideration Order).*

[^3]: The Act at section 201(b) provides in relevant part, "All charges,
    practices, classifications, and regulations for and in connection
    with such communication service, shall be just and reasonable, and
    any such charge, practice, classification, or regulation that is
    unjust or unreasonable is hereby declared to be unlawful... ."

[^4]: *See, In the Matter of Long Distance Direct, Inc., Notice of
    Apparent Liability for Forfeiture*, 14 FCC Rcd 314 (1998) at 316 -
    330.

[^5]: *LDDI NAL* at 2.

[^6]: The Commission's rules and orders require that IXCs such as LDDI
    submit PIC-change orders to local exchange carriers, who are then
    obligated to make the PIC-change absent some indication that the
    request is not legitimate. *See LOA Order*, 10 FCC Rcd 9560 (1995);
    *PIC-change Order*, 7 FCC Rcd 1038 (1992); *Allocation Order*, 101
    FCC 2d 911 (1985); *Waiver Order*, 101 FCC 2d 935 (Com. Car. Bur.
    1985).

[^7]: Response at 3 -- 4. Complainants' allegations, together with a
    review of the "welcome postcard" LDDI asserts it mailed to new
    customers, indicates that PFN's "Friends to Friends" psychic
    services network was a pay-per-call service in which "psychics"
    provided personal advice to the caller.

[^8]: The Act at section 217 provides, "In construing and enforcing the
    provisions of this Act, the act, omission, or failure of any
    officer, agent, or other person acting for or employed by any common
    carrier or user, acting within the scope of his employment, shall in
    every case be also deemed to be the act, omission, or failure of
    such carrier or user as well as that of the person."

[^9]: The Commission has repeatedly held that the failure of a third
    party marketer to obtain proper authorization for a PIC-change does
    not relieve the carrier of its independent obligation to ensure
    compliance with Commission rules. *See, Heartline* *Communications,
    Inc.*, 11 FCC Rcd 18487 (1996); *Excel Telecommunications, Inc.*, 11
    FCC Rcd 19765 (1997); *Target Telecom, Inc.*, 13 FCC Rcd 4456
    (1998); *MCI Telecommunications Corp.,* 11 FCC Rcd 1821 (1996).

[^10]: *United States of America v. Corbin Farm Service*, 444 F. Supp.
    510, 525 ( E.D. Cal.), *aff'd on other grounds*, 578 F.2d 259 (9^th^
    Cir. 1978). In that case, the court was charged with the
    construction of section 1361(b)(4) of the Insecticide, Fungicide,
    and Rodenticide Act, 7 U.S.C. §§ 1 *et* *seq*.

[^11]: *See, e.g., Miller's Apple Valley Chevrolet Olds-Geo, Inc. v.
    Goodwin*, 177 F.3d 232, 234 (4^th^ Cir. 1999) ("Statutory
    interpretation begins with the language of the Act. . . . \[T\]he
    intent of Congress is expressed in the text of the statute...").

[^12]: Employers are routinely held liable for breach of statutory
    duties, even where the failings are those of an independent
    contractor, and even where the party seeking redress is other than
    the government. *See* *Restatement* \[*Second\] of Torts* § 409,
    comment b at 371. *See* *also,* *e.g., Alva Steamship Co., Ltd. v.
    City of New York,* 616 F.2d 605, 609 (2d Cir. 1980) (exception to
    the rule of nonliability for the negligence of independent
    contractor is "the negligence of an independent contractor who
    performs a duty imposed by statute on the employer\").

[^13]: Response at 10.

[^14]: *In-bound Stay Order*, 11 FCC Rcd at 856. As stated in the Order,
    the Commission was "persuaded that temporarily staying the PIC
    verification requirements as they pertain to consumer-initiated
    calls will allow the Commission to develop a complete record upon
    which we can conduct meaningful cost-benefit analysis and make a
    more informed decision." *Id*.

[^15]: The consolidated Securities and Exchange Commission Form 10-QSB
    filed by Long Distance Direct Holdings, Inc., LDDI's parent
    corporation, for the quarter ending June 30, 1998 states that, in
    the first six months of 1998, "the Company's psychic marketing
    program generated \$3,254,980 or 34% of revenue through membership
    fees charged to the Company's customers...".

[^16]: LDDI argues in the alternative that, even if the Commission does
    have jurisdiction over cramming, that jurisdiction is shared with,
    and better exercised by, the Federal Trade Commission. Response at
    5, 11 - 15. But LDDI does not deny that slamming violations are
    properly before the Commission. The interdependency of the slamming
    and cramming violations at issue, as well as considerations of
    administrative efficiency, establish that the Commission is correct
    in exercising its jurisdiction here. We are fortified in our
    conclusion by the fact that the cramming at issue involved
    ostensible membership in "Friends to Friends", a pay-per-call
    service . At section 228 of the Act, Congress specifically
    "recognize\[d\] the Commission's authority to prescribe regulations
    and enforcement procedures and conduct oversight to afford
    reasonable protection to consumers of pay-per-call services . . .".

[^17]: The Act at section 503(b)(2)(D) provides that, in determining the
    amount of the forfeiture penalty, the Commission is required to take
    into account \"the nature, circumstances, extent, and gravity of the
    violation and, with respect to the violator, the degree of
    culpability, and history of prior offenses, ability to pay, and such
    other matters as justice may require.\"

[^18]: *Commission's Fofeiture Policy Statement and Amendment of Section
    1.80 of the Rules to Incorporate the Forfeiture Guidelines*, Report
    and Order, 12 FCC Rcd 17808 (1997) (*Forfeiture Policy Statement*).

[^19]: *See* Response at 19 n. 50 and the cases cited therein.

[^20]: Response at 17-20.

[^21]: Response at 17.

[^22]: Response at 17 --18.

[^23]: *Forfeiture Policy Statement*, 12 FCC Rcd at 17099.

[^24]: *Id.*

[^25]: Response at 7.

[^26]: Response at 20-21, 23.

[^27]: Response at 22.

[^28]: *Target Telecom, Inc.*, 13 FCC Rcd at 4458 (1998). *See also*
    *PJB Communications of Virginia*, 7 FCC Rcd 2088; *David L.
    Hollingsworth d/b/a Worldand Services*, 7 FCC Rcd 6640 (1992). LDDI
    cites *Applications of First Greenville Corp.*, 11 FCC Rcd 7399
    (1996) and *Benito Rish*, 10 FCC Rcd 2861 (1995). Response at 21.
    But those cases are readily distinguishable, as they involve
    forfeitures imposed upon small radio stations, not
    telecommunications resellers. Further, in *Applications of First
    Greenville Corp* , the radio licensee established that its sole
    shareholder had not received any income whatsoever from the stations
    and had lent the stations considerable sums. LDDI has made no such
    showing here. In *Benito Rish*, the Commission reduced the penalty
    because the radio licensee was licensed to a community of 425 and a
    reduced penalty would adequately deter future misconduct.

[^29]: Response at 22.

[^30]: Commission staff met with principals of LDDI and their legal
    counsel on May 5, 1999, and requested that, by June 6, 1999, LDDI
    provide audited financial statements for the year ending December
    31, 1999. LDDI did not respond. On June 16, 1999, Commission staff
    contacted LDDI's counsel, warned him that LDDI had the burden of
    proof to show that the forfeiture should not issue, and advised him
    that the carrier would have only until June 29 to substantiate its
    claims. LDDI then provided the March 30, 1999 income statement
    discussed above.

[^31]: The forfeiture amount should be paid by check or money order
    drawn to the order of the Federal Communications Commission.
    Reference should be made on the check or money order to \"NAL/Acct.
    No. 916EF0003.\" Such remittances should be mailed to Forfeiture
    Collection Section, Finance Branch, Federal Communications
    Commission, P.O. Box. 73482, Chicago, Illinois 60673-7482.