[Federal Register Volume 74, Number 183 (Wednesday, September 23, 2009)]
[Notices]
[Pages 48564-48566]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-22963]


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FEDERAL COMMUNICATIONS COMMISSION

[DA 09-2030]


Notice of Debarment; Schools and Libraries Universal Service 
Support Mechanism

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: The Enforcement Bureau (the ``Bureau'') debars Mr. Steven 
Newton from the schools and libraries universal service support 
mechanism (or ``E-Rate Program'') for a period of three years based on 
his conviction of wire fraud, aiding and abetting, and collusion in 
connection with his participation in the program. The Bureau takes this 
action to protect the E-Rate Program from waste, fraud and abuse.

DATES: Debarment commences on the date Mr. Steven Newton receives the 
debarment letter or September 23, 2009, whichever date comes first, for 
a period of three years.

FOR FURTHER INFORMATION CONTACT: Rebekah Bina, Federal Communications 
Commission, Enforcement Bureau, Investigations and Hearings Division, 
Room 4-C330, 445 12th Street, SW., Washington, DC 20554. Rebekah Bina 
may be contacted by phone at (202) 418-7931 or e-mail at 
<a href="/cdn-cgi/l/email-protection#590b3c3b3c323831771b303738193f3a3a773e362f"><span class="__cf_email__" data-cfemail="cc9ea9aea9a7ada4e28ea5a2ad8caaafafe2aba3ba">[email protected]</span></a>. If Ms. Bina is unavailable, you may contact 
Michele Berlove, Acting Assistant Division Chief, Investigations and 
Hearings Division, by telephone at (202) 418-1420 and by e-mail at 
<a href="/cdn-cgi/l/email-protection#d6bbbfb5beb3bab3f8b4b3a4bab9a0b396b0b5b5f8b1b9a0"><span class="__cf_email__" data-cfemail="f994909a919c959cd79b9c8b95968f9cb99f9a9ad79e968f">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: The Bureau debarred Mr. Steven Newton from 
the schools and libraries universal service support mechanism for a 
period of three years pursuant to 47 CFR 54.8 and 47 CFR 0.111. 
Attached is the debarment letter, DA 09-2030, which was mailed to Mr. 
Steven Newton and released on September 11, 2009. The complete text of 
the notice of debarment is available for public inspection and copying 
during regular business hours at the FCC Reference Information Center, 
Portal II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. In 
addition, the complete text is available on the FCC's Web site at 
http://www.fcc.gov. The text may also be purchased from the 
Commission's duplicating inspection and copying during regular business 
hours at the contractor, Best Copy and Printing, Inc., Portal II, 445 
12th Street, SW., Room CY-B420, Washington, DC 20554, telephone (202) 
488-5300 or (800) 378-3160, facsimile (202) 488-5563, or via e-mail 
http://www.bcpiweb.com.

Federal Communications Commission.
Hillary S. DeNigro,
Chief, Investigations and Hearings Division, Enforcement Bureau.
September 11, 2009
DA 09-2030

VIA CERTIFIED MAIL RETURN RECEIPT REQUESTED

Mr. Steven Newton, 35402 Paseo Viento, Capastrano Beach, California 
92624-1837.

Re: Notice of Debarment, File No. EB-08-IH-1928

    Dear Mr. Newton: 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\
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    \1\ 47 C.F.R. 54.8(g) (2008). See also 47 C.F.R. Sec.  
0.111(a)(14).
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    On July 14, 2009, 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 July 22, 2009.\3\ The Notice of 
Suspension suspended you from participating in activities associated 
with or relating to 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\
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    \2\ Letter from Hillary S. DeNigro, Chief, Investigations and 
Hearings Division, Enforcement Bureau, Federal Communications 
Commission, to Mr. Steven Newton, Notice of Suspension and 
Initiation of Debarment Proceedings, 24 FCC Rcd 9098 (Inv. & 
Hearings Div., Enf. Bur. 2009) (Attachment 1)(``Notice of 
Suspension'').
    \3\ 74 Fed. Reg. 36221 (July 22, 2009).
    \4\ See Notice of Suspension, 24 FCC Rcd at 9099-101.
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    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

[[Page 48565]]

the Federal Register.\5\ The Commission did not receive any such 
opposition.
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    \5\ See 47 C.F.R. Sec.  54.8 (e)(3),(4). That date occurred no 
later than Aug. 21, 2009. See supra note 3.
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    As discussed in the Notice of Suspension, you pleaded guilty and 
were sentenced to six months in prison following your conviction for 
federal crimes in connection with your participation in two schemes 
to defraud the E-Rate program.\6\ As former President at Premio 
Computers, Inc., and principal manager of SEMA4, Inc. and Digital 
Connect Communications, Inc. you participated in schemes to defraud 
the E-Rate program for your personal financial gain by controlling 
the bidding, application, and implementation and invoicing process, 
and by submitting materially false information to USAC regarding the 
cost and eligibility of equipment.\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\
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    \6\ See Notice of Suspension, 24 FCC Rcd at 9099. See also 
United States v. Steven Newton, Criminal Docket No. 3:05-CR-00208-
CRB-10, Plea Agreement (N.D. Cal. filed and entered Apr. 20, 2007); 
United States v. Steven Newton, Criminal Docket No. 3:05-CR-00208-
CRB-10, Judgment (N.D. Cal. filed and entered Mar. 31, 2009).
    \7\ See Notice of Suspension, 24 FCC Rcd at 9099. See also 
United States v. Video Network Communications, Inc. et al., Criminal 
Docket No. 3:05-CR-00208-CRB, Superseding Indictment (N.D. Cal. 
filed Dec. 8, 2005 and entered Dec. 12, 2005), http://www.usdoj.gov/atr/cases/f213600/213626.htm (accessed May 1, 2008).
    \8\ 47 C.F.R. Sec.  54.8(c). See also Sec.  54.8(a)(4),(b)-(e).
    \9\ See 47 C.F.R. Sec.  54.8(e)(5),(g). See also Notice of 
Suspension, 24 FCC Rcd at 9101.
    \10\ See 47 C.F.R. Sec.  54.8(a)(1),(a)(5),(d),(g); Notice of 
Suspension, 24 FCC Rcd at 9101.

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    Sincerely,

Hillary S. DeNigro,
Chief, Investigations and Hearings Division, Enforcement Bureau.

cc: Michael Wood, Antitrust Division, United States Department of 
Justice (via e-mail) Kristy Carroll, Esq., Universal Service 
Administrative Company (via e-mail)

Attachment 1

July 14, 2009
DA 09-1529

VIA CERTIFIED MAIL
RETURN RECEIPT REQUESTED AND FACSIMILE (415-522-1506) AND EMAIL 
(<a href="/cdn-cgi/l/email-protection#6f081c032f0b0a090a010b0a1d081d001a1f410c0002"><span class="__cf_email__" data-cfemail="5b3c28371b3f3e3d3e353f3e293c29342e2b75383436">[email protected]</span></a>)

Mr. Steven Newton, c/o Law Office of Garrick S. Lew, Attn: Garrick 
Sherman Lew, 600 Townsend Street, Suite 329E, San Francisco, 
California 94102.

Re: Notice of Suspension and Initiation of Debarment Proceedings, 
File No. EB-08-IH-1928

    Dear Mr. Newton: The Federal Communications Commission (``FCC'' 
or ``Commission'') has received notice of your conviction of Wire 
Fraud, Aiding and Abetting, and Collusion, in violation of 18 U.S.C. 
Sec. Sec.  2 and 1343, and 15 U.S.C. Sec.  1, 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. Sec.  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\
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    \11\ Any further reference in this letter to ``your conviction'' 
refers to your guilty plea and subsequent two count conviction on 
wire fraud, collusion, and aiding and abetting. See United States v. 
Steven Newton, Criminal Docket No. 3:05-CR-00208-CRB-10, Plea 
Agreement (N.D. Cal. filed and entered Apr. 20, 2007) (``Newton 
Plea''). See also United States v. Steven Newton, Criminal Docket 
No. 3:05-CR-00208-CRB-10, Judgment (N.D. Cal. filed and entered Mar. 
31, 2009) (Convicted on Counts 11 and 22)(``Newton Judgment''). See 
also generally United States v. Video Network Communications, Inc. 
et al., Criminal Docket No. 3:05-CR-00208-CRB, Superseding 
Indictment (N.D. Cal. filed Dec. 8, 2005 and entered Dec. 12, 2005), 
http://www.usdoj.gov/atr/cases/f213600/213626.htm (accessed May 1, 
2008) (``VNCI Superseding Indictment'').
    \12\ 47 C.F.R. Sec.  54.8 (2008). See also 47 C.F.R. Sec.  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 of the 
Commission's rules 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)).
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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 pleaded guilty and were sentenced to six months in 
prison in connection with your participation in two schemes to 
defraud the E-Rate program.\14\ Specifically, you admitted that as 
former Vice President at Premio Computers, Inc.\15\ and principal 
manager of SEMA4, Inc.\16\ and Digital Connect Communications, 
Inc.\17\ you participated in schemes to defraud the E-Rate program 
of money and property through materially false and fraudulent 
pretenses for your own enrichment.\18\ You did this, with the help 
of other co-conspirators or defendants, by controlling the bidding, 
application, and implementation and invoicing process of the E-Rate 
program.\19\ You submitted materially false information to USAC 
regarding the cost and eligibility of equipment services and 
intentionally misrepresented the school district's ability and 
willingness to pay their portion of the E-Rate projects.\20\
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    \13\ 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. Sec.  
54.8(a)(6).
    \14\ Newton Judgment at 1-2. See also VNCI Superseding 
Indictment at ]] 4-6, 8-11, 15, 19, 22-24, 72-78, 133-137, 145-151.
    \15\ Premio Computers, Inc. manufactures computers, software and 
peripheral equipment, and sells them to wholesale, commercial, and 
government entities. See In the Matter of Premio, Inc., Notice of 
Debarment, 22 FCC Rcd 1019, 1021 (Jan. 22, 2007). Premio Computers, 
Inc. was debarred from the E-Rate program for its involvement in E-
Rate related fraud. See generally id.
    \16\ SEMA4 is a California company that provided equipment and 
services for a project funded by the E-Rate program. See VNCI 
Superseding Indictment at ]] 74-75. The charges against SEMA4 were 
dismissed. See United States v. SEMA4, Inc., Criminal Docket No. 
3:05-CR-00208-CRB-3 (N.D. Cal. terminated June 12, 2007).
    \17\ Digital Connect Communications, Inc. was a California 
company that provided telecommunication and Internet access 
equipment and services to schools participating in the E-Rate 
program. See VNCI Superseding Indictment at ]] 134-135. The charges 
against this company were dismissed. See United States v. Digital 
Connect Communications, Inc., Criminal Docket No. 3:05-CR-00208-CRB-
4 (N.D. Cal. terminated June 12, 2007).
    \18\ See VNCI Superseding Indictment at ]] 4-6, 8-11, 15-16, 19, 
22-24, 72-78, 133-137, 145-151.
    \19\ Id.
    \20\ These misrepresentations included inflating the costs of 
eligible telecommunications equipment and services in applications 
to cover the cost of ineligible equipment and services. See VNCI 
Superseding Indictment at ]] 8-11, 22-24, 78, 145-151.
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    Pursuant to section 54.8 of the Commission's rules, your 
conviction on criminal offenses arising out of activities associated 
with or related to the schools and libraries support mechanism 
requires the Bureau to suspend you from continuing to participate in 
any activities associated with or related to the schools and 
libraries support mechanism.\21\ Activities arising out of or 
related to the schools and libraries support mechanism include 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.\22\
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    \21\ 47 C.F.R. Sec.  54.8(b)-(e); see also Sec.  54.8(a)(4).
    \22\ 47 C.F.R. Sec.  54.8(a)(1); see also Sec.  54.8(a)(3).
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    Your suspension becomes effective upon the earlier of your 
receipt of this letter or publication of notice in the Federal 
Register,

[[Page 48566]]

pending the Bureau's final debarment determination.\23\ 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.\24\ 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.\25\ Such requests, however, 
will not ordinarily be granted.\26\ The Bureau may reverse or limit 
the scope of suspension only upon a finding of extraordinary 
circumstances.\27\ The Bureau will decide any request for reversal 
or modification of suspension within 90 days of its receipt of such 
request.\28\
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    \23\ 47 C.F.R. Sec.  54.8(a)(7), (e)(1); see also Second Report 
and Order, 18 FCC Rcd at 9226, ] 69.
    \24\ 47 C.F.R. Sec.  54.8(e)(4).
    \25\ Id.
    \26\ Id.
    \27\ 47 C.F.R. Sec.  54.8(f); see also Second Report and Order, 
18 FCC Rcd at 9226, ] 70.
    \28\ 47 C.F.R. Sec.  54.8(e)(5), (f); see also Second Report and 
Order, 18 FCC Rcd at 9226, ] 70;
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II. Initiation of Debarment Proceedings

    Your guilty plea 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 suspension and 
debarment defined in section 54.8(c) of the Commission's rules.\29\ 
Therefore, pursuant to section 54.8 of the Commission's rules, your 
conviction requires the Bureau to commence debarment proceedings 
against you.\30\
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    \29\ ``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. Sec.  54.8(c). You 
were convicted on various fraud charges. See supra note 4.
    \30\ See 47 C.F.R. Sec.  54.8(b), (c).
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    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.\31\ Absent 
extraordinary circumstances, the Bureau will debar you.\32\ The 
Bureau will decide any request for reversal or limitation of 
debarment within 90 days of receipt of such request.\33\ 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.\34\
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    \31\ 47 C.F.R. Sec.  54.8(e)(3), (5); see also Second Report and 
Order, 18 FCC Rcd at 9226, ] 70.
    \32\ 47 C.F.R. Sec.  54.8(e)(5); see also Second Report and 
Order, 18 FCC Rcd at 9227, ] 74.
    \33\ 47 C.F.R. Sec.  54.8(e)(5), (f); see also Second Report and 
Order, 18 FCC Rcd at 9226, ] 70.
    \34\ 47 C.F.R. Sec.  54.8(e)(5). 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).
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    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.\35\ The Bureau may, if necessary 
to protect the public interest, extend the debarment period.\36\
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    \35\ 47 C.F.R. Sec.  54.8(a)(1), (d), (g); see also Second 
Report and Order, 18 FCC Rcd at 9225, ] 67.
    \36\ 47 C.F.R. Sec.  54.8(g).
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    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 Rebekah L. Bina, Attorney Advisor, Investigations 
and Hearings Division, Enforcement Bureau, Room 4-C330, with a copy 
to Michele Levy Berlove, Acting 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 Rebekah L. Bina, Attorney Advisor, Investigations and Hearings 
Division, Enforcement Bureau, Federal Communications Commission, 445 
12th Street, SW., Room 4-C327, Washington, DC, 20554, with a copy to 
Michele Berlove, Acting Assistant Chief, Investigations and Hearings 
Division, Enforcement Bureau, Federal Communications Commission, 445 
12th Street, SW., Room 4-C330, Washington, DC, 20554. You shall also 
transmit a copy of the response via e-mail to <a href="/cdn-cgi/l/email-protection#b7e5d2d5d2dcd6df99f5ded9d6f7d1d4d499d0d8c1"><span class="__cf_email__" data-cfemail="fcae999e99979d94d2be95929dbc9a9f9fd29b938a">[email protected]</span></a> 
and to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="5d10343e35383138731f382f31322b381d3b3e3e733a322b">[email protected]</a>.
    If you have any questions, please contact Ms. Bina via mail, by 
telephone at (202) 418-7931 or by e-mail at <a href="/cdn-cgi/l/email-protection#44162126212f252c6a062d2a25042227276a232b32"><span class="__cf_email__" data-cfemail="e8ba8d8a8d838980c6aa818689a88e8b8bc68f879e">[email protected]</span></a>. If 
Ms. Bina is unavailable, you may contact Ms. Michele Levy Berlove, 
Acting Assistant Chief, Investigations and Hearings Division, by 
telephone at (202) 418-1477 and by e-mail at 
<a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="3a775359525f565f14785f4856554c5f7a5c5959145d554c">[email protected]</a>.

    Sincerely yours,

Hillary S. DeNigro,
Chief, Investigations and Hearings Division Enforcement Bureau.

cc: Kristy Carroll, Esq., Universal Service Administrative Company 
(via e-mail)
[FR Doc. E9-22963 Filed 9-22-09; 8:45 am]
BILLING CODE 6712-01-P


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