# May 16, 2008

# **DA 08-1176**

# 

# **[VIA CERTIFIED MAIL]{.underline}** 

## [RETURN RECEIPT REQUESTED AND FACSIMILE (203-977-7301)]{.underline}

Mr. Thomas J. Kennedy III

c/o Stanley A. Twardy, Jr.

Day Pitney LLP\
One Canterbury Green

Stamford, CT 06901-2047

> **Re: Notice of Debarment, File No. EB-08-IH-0285**

Dear Mr. Kennedy:

Pursuant to section 54.8 of the rules of the Federal Communications
Commission (the "Commission"), by this Notice of Debarment you are
debarred from the schools and libraries universal service support
mechanism (or "E-Rate program") for a period of three years.[^1]

On February 6, 2008, the Enforcement Bureau (the "Bureau") sent you a
Notice of Suspension and Initiation of Debarment Proceedings (the
"Notice of Suspension").[^2] That Notice of Suspension was published in
the Federal Register on March 10, 2008.[^3] The Notice of Suspension
suspended you from the schools and libraries universal service support
mechanism and described the basis for initiation of debarment
proceedings against you, the applicable debarment procedures, and the
effect of debarment.[^4]

Pursuant to the Commission's rules, any opposition to your suspension or
its scope or to your proposed debarment or its scope had to be filed
with the Commission no later than thirty (30) calendar days from the
earlier date of your receipt of the Notice of Suspension or publication
of the Notice of Suspension in the Federal Register.[^5] The Commission
did not receive any such opposition.

As discussed in the Notice of Suspension, you pled guilty to and were
convicted of mail fraud, in violation of 18 U.S.C. §1341, for your
participation in the E-Rate program.[^6] You admitted to participating
in a scheme to defraud the E-Rate program by, among other things, taking
actions with other co-schemers to ensure that costs for services on
E-rate projects would be billed at inflated rates, which in turn led to
inflated invoices being submitted to the Universal Service
Administrative Company for reimbursement from the E-rate program.[^7]
Such conduct constitutes the basis for your debarment, and your
conviction falls within the categories of causes for debarment under
section 54.8(c) of the Commission's rules.[^8] For the foregoing
reasons, you are hereby debarred for a period of three years from the
debarment date, i.e., the earlier date of your receipt of this Notice of
Debarment or its publication date in the Federal Register.[^9] Debarment
excludes you, for the debarment period, from activities "associated with
or related to the schools and libraries support mechanism," including
"the receipt of funds or discounted services through the schools and
libraries support mechanism, or consulting with, assisting, or advising
applicants or service providers regarding the schools and libraries
support mechanism."[^10]

Sincerely,

Hillary S. DeNigro

> Chief

Investigations and Hearings Division

Enforcement Bureau

cc: Kristy Carroll, Esq., Universal Service Administrative Company (via
e-mail)

Anthony E. Kaplan, Esq., Supervisory Assistant United States Attorney

Calvin B. Kurimai, Esq., Assistant United States Attorney

# 

# February 6, 2008

# **DA 08-300**

# 

# **[VIA CERTIFIED MAIL]{.underline}** 

## [RETURN RECEIPT REQUESTED AND FACSIMILE (203-977-7301)]{.underline}

Mr. Thomas J. Kennedy III

c/o Stanley A. Twardy, Jr.\
Day Pitney LLP\
One Canterbury Green\
Stamford, CT 06901-2047\
Email: satwardy@daypitney.com

> **Re: Notice of Suspension and Initiation of Debarment Proceedings,**
>
> **File No. EB-08-IH-0285**

Dear Mr. Kennedy:

The Federal Communications Commission ("FCC" or "Commission") has
received notice of your conviction for mail fraud in violation of 18
U.S.C. § 1341 in connection with your participation in the schools and
libraries universal service support mechanism ("E-Rate program").[^11]
Consequently, pursuant to 47 C.F.R. § 54.8, this letter constitutes
official notice of your suspension from the E-Rate program. In addition,
the Enforcement Bureau ("Bureau") hereby notifies you that we are
commencing debarment proceedings against you.[^12]

I.  **Notice of Suspension**

The Commission has established procedures to prevent persons who have
"defrauded the government or engaged in similar acts through activities
associated with or related to the schools and libraries support
mechanism" from receiving the benefits associated with that
program.[^13] You pled guilty to mail fraud for activities in connection
with your participation in the E-Rate program involving
telecommunications upgrade projects in four Connecticut school
districts.[^14] While employed as an account manager for a company that
had a partnership arrangement with Southwestern Bell Communications
("SBC"), you participated in a scheme to defraud SBC and the E-Rate
program.[^15] You and three SBC employees, including Richard E. Brown
and Keith J. Madeiros, decided that engineers would be hired for E-Rate
funded projects and that the cost of these engineering services would be
billed at inflated rates first to SBC and later to a SBC
subcontractor.[^16] SBC paid the invoices and then submitted those
invoices to USAC seeking excessive reimbursement from the E-rate
funds.[^17] The invoices were inflated by more than \$500,000.[^18] You
admitted that payments for the inflated amount were split primarily
among you, Mr. Brown, and Mr. Madeiros and that you received
\$249,525.[^19]

Pursuant to section 54.8(a)(4) of the Commission's rules,[^20] your
conviction requires the Bureau to suspend you from participating in any
activities associated with or related to the schools and libraries fund
mechanism, including the receipt of funds or discounted services through
the schools and libraries fund mechanism, or consulting with, assisting,
or advising applicants or service providers regarding the schools and
libraries support mechanism.[^21] Your suspension becomes effective upon
the earlier of your receipt of this letter or publication of notice in
the Federal Register.[^22]

Suspension is immediate pending the Bureau's final debarment
determination. In accordance with the Commission's debarment rules, you
may contest this suspension or the scope of this suspension by filing
arguments in opposition to the suspension, with any relevant
documentation. Your request must be received within 30 days after you
receive this letter or after notice is published in the Federal
Register, whichever comes first.[^23] Such requests, however, will not
ordinarily be granted.[^24] The Bureau may reverse or limit the scope of
suspension only upon a finding of extraordinary circumstances.[^25]
Absent extraordinary circumstances, the Bureau will decide any request
for reversal or modification of suspension within 90 days of its receipt
of such request.[^26]

II. **Initiation of Debarment Proceedings**

Your guilty plea to and conviction of criminal conduct in connection
with the E-Rate program, in addition to serving as a basis for immediate
suspension from the program, also serves as a basis for the initiation
of debarment proceedings against you. Your conviction falls within the
categories of causes for debarment defined in section 54.8(c) of the
Commission's rules.[^27] Therefore, pursuant to section 54.8(a)(4) of
the Commission's rules, your conviction requires the Bureau to commence
debarment proceedings against you.

As with your suspension, you may contest debarment or the scope of the
proposed debarment by filing arguments and any relevant documentation
within 30 calendar days of the earlier of the receipt of this letter or
of publication in the Federal Register.[^28] Absent extraordinary
circumstances, the Bureau will debar you.[^29] Within 90 days of receipt
of any opposition to your suspension and proposed debarment, the Bureau,
in the absence of extraordinary circumstances, will provide you with
notice of its decision to debar.[^30] If the Bureau decides to debar
you, its decision will become effective upon the earlier of your receipt
of a debarment notice or publication of the decision in the Federal
Register.[^31]

If and when your debarment becomes effective, you will be prohibited
from participating in activities associated with or related to the
schools and libraries support mechanism for three years from the date of
debarment.[^32] The Bureau may, if necessary to protect the public
interest, extend the debarment period.[^33]

Please direct any response, if by messenger or hand delivery, to Marlene
H. Dortch, Secretary, Federal Communications Commission, 236
Massachusetts Avenue, N.E., Suite 110, Washington, D.C. 20002, to the
attention of Diana Lee, Attorney Advisor, Investigations and Hearings
Division, Enforcement Bureau, Room 4-C330, with a copy to Vickie
Robinson, Assistant Chief, Investigations and Hearings Division,
Enforcement Bureau, Room 4-C330, Federal Communications Commission. If
sent by commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail), the response should be sent to the
Federal Communications Commission, 9300 East Hampton Drive, Capitol
Heights, Maryland 20743. If sent by first-class, Express, or Priority
mail, the response should be sent to Diana Lee, Attorney Advisor,
Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission, 445 12^th^ Street, S.W., Room 4-C330,
Washington, DC, 20554, with a copy to Vickie Robinson, Assistant Chief,
Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission, 445 12^th^ Street, S.W., Room 4-C330,
Washington, DC, 20554. You shall also transmit a copy of the response
via email to diana.lee@fcc.gov and to vickie.robinson@fcc.gov.

If you have any questions, please contact Ms. Lee via mail, by telephone
at (202) 418-1420 or by e-mail at [diana.lee@fcc.gov]{.underline}. If
Ms. Lee is unavailable, you may contact Ms. Vickie Robinson, Assistant
Chief, Investigations and Hearings Division, by telephone at (202)
418-1420 and by e-mail at vickie.robinson@fcc.gov.

> Sincerely yours,

Trent B. Harkrader

Deputy Chief

Investigations and Hearings Division

Enforcement Bureau

cc: Kristy Carroll, Esq., Universal Service Administrative Company (via
e-mail)

Anthony E. Kaplan, Esq., Supervisory Assistant United States Attorney

#  Calvin B. Kurimai, Esq., Assistant United States Attorney

[^1]: *See* 47 C.F.R. §§ 0.111(a), 54.8.

[^2]: Letter from Hillary S. DeNigro, Chief, Investigations and Hearings
    Division, Enforcement Bureau, Federal Communications Commission, to
    Mr. Thomas J. Kennedy III, Notice of Suspension and Initiation of
    Debarment Proceedings, 23 FCC Rcd 1669 (Inv. & Hearings Div., Enf.
    Bur. 2008) (Attachment 1).

[^3]: 73 Fed. Reg. 12733 (March 10, 2008).

[^4]: *See* Notice of Suspension, 23 FCC Rcd at 1670-72.

[^5]: *See* 47 C.F.R. §§ 54.8 (e)(3) and (4). That date occurred no
    later than April 9, 2008. *See supra* note 3.

[^6]: *See* Notice of Suspension, 23 FCC Rcd at 1670.

[^7]: *See id*. In addition to Richard E. Brown, the Bureau debarred
    Keith J. Madeiros, both former SBC account manager participating in
    the scheme, from the E-Rate program. *See* Letter from Hillary S.
    DeNigro to Keith J. Madeiros, Notice of Debarment, DA 08-1177
    (Enf. Bur., Investigations & Hearings Div., rel. May 16, 2008).

[^8]: *Id*. at 1670; 47 C.F.R. § 54.8(c).

[^9]: *See* Notice of Suspension, 23 FCC Rcd at 1672.

[^10]: *See* 47 C.F.R. §§ 54.8(a)(1), 54.8(a)(5), 54.8(d); Notice of
    Suspension, 23 FCC Rcd at 1672.

[^11]: Any further reference in this letter to "your conviction" refers
    to your February 13, 2007 guilty plea and subsequent conviction of
    mail fraud. *United States v. Thomas J. Kennedy III*, Criminal
    Docket No. 3:07-CR-186 (RNC), Plea Agreement (D. Conn. filed Aug.
    24, 2007 and entered Aug. 27, 2007) ("*Kennedy Plea Agreement*"),
    Judgment (D. Conn. filed and entered Jan. 24, 2008) ("*Kennedy
    Judgment*").

[^12]: 47 C.F.R. § 54.8; 47 C.F.R. § 0.111 (delegating to the
    Enforcement Bureau authority to resolve universal service suspension
    and debarment proceedings). The Commission adopted debarment rules
    for the schools and libraries universal service support mechanism in
    2003. *See Schools and Libraries Universal Service Support
    Mechanism*, Second Report and Order and Further Notice of Proposed
    Rulemaking, 18 FCC Rcd 9202 (2003) ("*Second Report and Order*")
    (adopting section 54.521 to suspend and debar parties from the
    E-rate program). In 2007, the Commission extended the debarment
    rules to apply to all of the Federal universal service support
    mechanisms. *Comprehensive Review of the Universal Service Fund
    Management, Administration, and Oversight; Federal-State Joint Board
    on Universal Service; Schools and Libraries Universal Service
    Support Mechanism; Lifeline and Link Up; Changes to the Board of
    Directors for the National Exchange Carrier Association, Inc.*,
    Report and Order, 22 FCC Rcd 16372, 16410-12 (2007) (*Program
    Management Order*) (renumbering section 54.521 of the universal
    service debarment rules as section 54.8 and amending subsections
    (a)(1), (5), (c), (d), (e)(2)(i), (3), (e)(4), and (g)).

[^13]: *See* *Second Report and Order*, 18 FCC Rcd at 9225, ¶ 66;
    *Program Management Order*, 22 FCC Rcd at 16387, ¶ 32. The
    Commission's debarment rules define a "person" as "\[a\]ny
    individual, group of individuals, corporation, partnership,
    association, unit of government or legal entity, however,
    organized." 47 C.F.R. § 54.8(a)(6).

[^14]: *See Kennedy Plea Agreement* at 1; *United States v. Thomas J.
    Kennedy III*, Criminal Docket No. 3:07-CR-186 (RNC), Information, ¶¶
    7-28 (D. Conn. filed Aug. 24, 2007 and entered Aug. 27, 2007)
    ("*Kennedy Information*");
    http://www.usdoj.gov/usao/ct/Press2008/20080123-5.html (last
    accessed Jan. 25, 2008) ("*DOJ January 23, 2008 Press Release*").

[^15]: *See Kennedy Information* at ¶¶ 13-15; *DOJ January 23, 2008
    Press Release* at 1.

[^16]: *See Kennedy Information* at ¶¶ 15-28; *DOJ January 23, 2008
    Press Release* at 1. The Bureau has debarred Richard E. Brown from
    the E-Rate program. *See* Letter from Hillary S. DeNigro to Richard
    E. Brown, Notice of Debarment, 22 FCC Rcd 20569 (Enf. Bur.,
    Investigations & Hearings Div., rel. Nov. 27, 2007); 72 Fed. Reg.
    73821 (Dec. 28, 2007). The Bureau has suspended Keith J. Madeiros
    from the E-Rate program and initiated debarment proceedings against
    him. *See* Letter from Hillary S. DeNigro to Keith J. Madeiros,
    Notice of Suspension and Initiation of Debarment Proceedings, DA
    08-129 (Enf. Bur., Investigations & Hearings Div., rel. Jan. 18,
    2008).

[^17]: *See Kennedy Information* at ¶¶ 21, 26; *DOJ January 23, 2008
    Press Release* at 1.

[^18]: *See id*.

[^19]: *See id*.

[^20]: 47 C.F.R. § 54.8(a)(4). *See* *Second Report and Order*, 18 FCC
    Rcd at 9225-9227, ¶¶ 67-74.

[^21]: 47 C.F.R. §§ 54.8(a)(1), (d).

[^22]: *Second Report and Order*, 18 FCC Rcd at 9226, ¶ 69; 47 C.F.R. §
    54.8(e)(1).

[^23]: 47 C.F.R. § 54.8(e)(4).

[^24]: *Id*.

[^25]: 47 C.F.R. § 54.8(e)(5).

[^26]: *See Second Report and Order*, 18 FCC Rcd at 9226, ¶ 70; 47
    C.F.R. §§ 54.8(e)(5), 54.8(f).

[^27]: "Causes for suspension and debarment are the conviction of or
    civil judgment for attempt or commission of criminal fraud, theft,
    embezzlement, forgery, bribery, falsification or destruction of
    records, making false statements, receiving stolen property, making
    false claims, obstruction of justice and other fraud or criminal
    offense arising out of activities associated with or related to the
    schools and libraries support mechanism, the high-cost support
    mechanism, the rural healthcare support mechanism, and the
    low-income support mechanism." 47 C.F.R. § 54.8(c). Such activities
    "include the receipt of funds or discounted services through \[the
    Federal universal service\] support mechanisms, or consulting with,
    assisting, or advising applicants or service providers regarding
    \[the Federal universal service\] support mechanisms." 47 C.F.R.
    § 54.8(a)(1).

[^28]: *See Second Report and Order,* 18 FCC Rcd at 9226, ¶ 70; 47
    C.F.R. § 54.8(e)(3).

[^29]: *Second Report and Order,* 18 FCC Rcd at 9227, ¶ 74.

[^30]: *See id.,* 18 FCC Rcd at 9226, ¶ 70; 47 C.F.R. § 54.8(e)(5).

[^31]: *Id*. The Commission may reverse a debarment, or may limit the
    scope or period of debarment upon a finding of extraordinary
    circumstances, following the filing of a petition by you or an
    interested party or upon motion by the Commission. 47 C.F.R. §
    54.8(f).

[^32]: *Second Report and Order*, 18 FCC Rcd at 9225, ¶ 67; 47 C.F.R. §§
    54.8(d), 54.8(g).

[^33]: *Id*.