[Federal Register Volume 74, Number 139 (Wednesday, July 22, 2009)]
[Notices]
[Pages 36221-36223]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-17407]


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FEDERAL COMMUNICATIONS COMMISSION

[DA 09-1529]


Notice of Suspension and Initiation of Debarment Proceedings; 
Schools and Libraries Universal Service Support Mechanism

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: The Enforcement Bureau (the ``Bureau'') gives notice of Mr. 
Steven Newton's suspension from the schools and libraries universal 
service support mechanism (or ``E-Rate Program''). Additionally, the 
Bureau gives notice that debarment proceedings are commencing against 
him. Mr. Newton, or any person who has an existing contract with or 
intends to contract with him to provide or receive services in matters 
arising out of activities associated with or related to the schools and 
libraries support, may respond by filing an opposition request, 
supported by documentation to Rebekah Bina, Federal Communications 
Commission, Enforcement Bureau, Investigations and Hearings Division, 
Room 4-C330, 445 12th Street, SW., Washington, DC 20554.

DATES: Opposition requests must be received by August 21, 2009. 
However, an opposition request by the party to be suspended must be 
received 30 days from the receipt of the suspension letter or August 
21, 2009, whichever comes first. The Bureau will decide any opposition 
request for reversal or modification of suspension or debarment within 
90 days of its receipt of such requests.

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#b7e5d2d5d2dcd6df99f5ded9d6f7d1d4d499d0d8c1"><span class="__cf_email__" data-cfemail="89dbecebece2e8e1a7cbe0e7e8c9efeaeaa7eee6ff">[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#b6fbdfd5ded3dad398f4d3c4dad9c0d3f6d0d5d598d1d9c0"><span class="__cf_email__" data-cfemail="f2bf9b919a979e97dcb097809e9d8497b2949191dc959d84">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: The Bureau has suspension and debarment 
authority pursuant to 47 CFR 54.8. Suspension will help to ensure that 
the party to be suspended cannot continue to benefit from the schools 
and libraries mechanism pending resolution of the debarment process. 
Attached is the suspension letter, DA 09-1529, which was mailed to Mr. 
Newton and released on July 14, 2009. The complete text of the notice 
of suspension 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.
    The attached is the Suspension and Initiation of Debarment Letter 
to Mr. Steven Newton.

Federal Communications Commission.
Hillary DeNigro,
Chief, Investigations and Hearings Division, Enforcement Bureau.
    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#0f687c634f6b6a696a616b6a7d687d607a7f216c6062"><span class="__cf_email__" data-cfemail="284f5b44684c4d4e4d464c4d5a4f5a475d58064b4745">[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. 2 and 
1343, and 15 U.S.C. 1, in connection with your participation in the 
schools and libraries universal service support mechanism (``E-Rate 
program'').\1\ Consequently,

[[Page 36222]]

pursuant to 47 CFR 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.\2\
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    \1\ 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'').
    \2\ 47 CFR 54.8 (2008). See also 47 CFR 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.\3\ 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.\4\ Specifically, you admitted that as former Vice 
President at Premio Computers, Inc.\5\ and principal manager of SEMA4, 
Inc.\6\ and Digital Connect Communications, Inc.\7\ you participated in 
schemes to defraud the E-Rate program of money and property through 
materially false and fraudulent pretenses for your own enrichment.\8\ 
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.\9\ 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.\10\
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    \3\ Second Report and Order, 18 FCC Rcd at 9225, para. 66; 
Program Management Order, 22 FCC Rcd at 16387, para. 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 CFR 54.8(a)(6).
    \4\ Newton Judgment at 1-2. See also VNCI Superseding Indictment 
at paras. 4-6, 8-11, 15, 19, 22-24, 72-78, 133-137, 145-151.
    \5\ 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.
    \6\ SEMA4 is a California company that provided equipment and 
services for a project funded by the E-Rate program. See VNCI 
Superseding Indictment at paras. 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).
    \7\ 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 paras. 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).
    \8\ See VNCI Superseding Indictment at paras. 4-6, 8-11, 15-16, 
19, 22-24, 72-78, 133-137, 145-151.
    \9\ Id.
    \10\ 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 paras. 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.\11\ 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.\12\
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    \11\ 47 CFR 54.8(b)-(e); see also 54.8(a)(4).
    \12\ 47 CFR 54.8(a)(1); see also 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, 
pending the Bureau's final debarment determination.\13\ 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.\14\ 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.\15\ 
Such requests, however, will not ordinarily be granted.\16\ The Bureau 
may reverse or limit the scope of suspension only upon a finding of 
extraordinary circumstances.\17\ The Bureau will decide any request for 
reversal or modification of suspension within 90 days of its receipt of 
such request.\18\
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    \13\ 47 CFR 54.8(a)(7), (e)(1); see also Second Report and 
Order, 18 FCC Rcd at 9226, para. 69.
    \14\ 47 CFR 54.8(e)(4).
    \15\ Id.
    \16\ Id.
    \17\ 47 CFR 54.8(f); see also Second Report and Order, 18 FCC 
Rcd at 9226, para. 70.
    \18\ 47 CFR 54.8(e)(5), (f); see also Second Report and Order, 
18 FCC Rcd at 9226, para. 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.\19\ Therefore, pursuant to 
section 54.8 of the Commission's rules, your conviction requires the 
Bureau to commence debarment proceedings against you.\20\
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    \19\ ``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 CFR 54.8(c). You were 
convicted on various fraud charges. See supra note 4.
    \20\ See 47 CFR 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.\21\ Absent 
extraordinary circumstances, the Bureau will debar you.\22\ The Bureau 
will

[[Page 36223]]

decide any request for reversal or limitation of debarment within 90 
days of receipt of such request.\23\ 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.\24\
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    \21\ 47 CFR 54.8(e)(3), (5); see also Second Report and Order, 
18 FCC Rcd at 9226, para. 70.
    \22\ 47 CFR 54.8(e)(5); see also Second Report and Order, 18 FCC 
Rcd at 9227, para. 74.
    \23\ 47 CFR 54.8(e)(5), (f); see also Second Report and Order, 
18 FCC Rcd at 9226, para. 70.
    \24\ 47 CFR 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 CFR 
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.\25\ The Bureau may, if necessary to protect the 
public interest, extend the debarment period.\26\
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    \25\ 47 CFR 54.8(a)(1), (d), (g); see also Second Report and 
Order, 18 FCC Rcd at 9225, para. 67.
    \26\ 47 CFR 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, NE., Suite 110, Washington, DC 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#481a2d2a2d232920660a212629082e2b2b662f273e"><span class="__cf_email__" data-cfemail="66340304030d070e48240f08072600050548010910">[email protected]</span></a> and to 
<a href="/cdn-cgi/l/email-protection#81cce8e2e9e4ede4afc3e4f3edeef7e4c1e7e2e2afe6eef7"><span class="__cf_email__" data-cfemail="5b163238333e373e75193e2937342d3e1b3d3838753c342d">[email protected]</span></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#f1a39493949a9099dfb3989f90b1979292df969e87"><span class="__cf_email__" data-cfemail="421027202729232a6c002b2c23022421216c252d34">[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#eba68288838e878ec5a98e9987849d8eab8d8888c58c849d"><span class="__cf_email__" data-cfemail="074a6e646f626b62294562756b6871624761646429606871">[email protected]</span></a>.

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

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

[FR Doc. E9-17407 Filed 7-21-09; 8:45 am]
BILLING CODE 6712-01-P


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