Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | EB Docket No. 02-149         |
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| Publix Network Corporation;      | ) | File No. EB-01-TC-052        |
| Customer Attendants, LLC;        | * |                              |
| Revenue Controls Corporation;    | * | NAL/Acct. No. 200232170003   |
| SignTel, Inc.; and Focus Group,  |   |                              |
| LLC                              | * | FRN: 0004-3412-51            |
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| Order to Show Cause and          | ) |                              |
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**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]{.underline}

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]{.underline}

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 NECA[^20]
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]{.underline}

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]{.underline}

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"]{.underline}

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
Administrator[^44] 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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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]{.underline}

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.

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 (9^th^ 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 4^th^ 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 (9^th^ 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 (5^th^ Cir. 1971).