[Federal Register Volume 70, Number 21 (Wednesday, February 2, 2005)]
[Notices]
[Pages 5447-5449]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-1860]


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FEDERAL COMMUNICATIONS COMMISSION

[DA 05-112]


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

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: The Enforcement Bureau (Bureau) gives notice of Inter-tel 
Technologies, Inc.'s (Inter-Tel) suspension from the schools and 
libraries universal service support mechanism. In addition, the Bureau 
gives notice that debarment proceedings are commencing against Inter-
tel.

DATES: Opposition request must be received by February 22, 2005. An 
opposition request by the party to be suspended must be received 30 
days from the receipt of the suspension letter or by February 22, 2005. 
The Bureau will decide any opposition request for reversal or 
modification of suspension within 90 days of its receipt of such 
requests.

FOR FURTHER INFORMATION CONTACT: Romanda Williams, Federal 
Communications Commission, Enforcement Bureau, Investigations and 
Hearings Division, Room 4-C330, 445 12th Street, SW., Washington DC 
20554. Romanda Williams may be contacted by phone at (202) 418-1420 or 
e-mail at [email protected].

SUPPLEMENTARY INFORMATION: The Bureau has suspension and debarment 
authority under 47 CFR 54.521 and 47 CFR 0.111(a)(14). Suspension will 
help 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, Notice of 
Suspension and of Proposed Debarment Proceeding, DA 05-112, which was 
mailed to Inter-tel and released on January 19, 2005. The letter (1) 
gives notice of the suspension and proposed debarment; (2) gives the 
reasons for the proposed debarment; (3) explains the debarment 
procedure; and (4) describes the potential effect of the debarment. The 
complete text of the suspension letter 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 contractor, Best Copy and 
Printing, Inc., Portals II, 445 12th Street, SW., Room CY-B402, 
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.
William H. Davenport,
Chief, Investigations and Hearings Division, Enforcement Bureau.
    The suspension letter follows:

January 19, 2005.

Via Certified Mail--Return Receipt Requested

Mr. Steven G. Mihaylo,
Chief Executive Officer, Intel-Tel Technologies, Inc., 1615 S 52nd 
Street, Tempe, AZ 85281-6233.

Re: Notice of Suspension and of Proposed Debarment, File No. EB-05-
IH-0012

    Dear Mr. Mihaylo: The Federal Communications Commission (``FCC'' 
or ``Commission'') has received notice of the January 5, 2005 
conviction of Inter-Tel Technologies, Inc. (``Inter-Tel'') for mail 
fraud and aiding and abetting in violation of 18 U.S.C. 1341 and 2, 
and for conspiracy to suppress and eliminate competition in 
violation of the Sherman Antitrust Act, 15

[[Page 5448]]

U.S.C. 1.\1\ Consequently, pursuant to 47 CFR 54.521, this letter 
constitutes official notice of Inter-Tel's suspension from the 
schools and libraries universal service support mechanism (``E-rate 
program''). In addition, the Enforcement Bureau (``Bureau'') hereby 
notifies Inter-Tel that we are commencing debarment proceedings 
against it.\2\
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    \1\ United States v. Inter-Tel Technologies, Inc., No. CR-04-
399-CRB, Plea Agreement (N.D.Cal. filed Dec. 8, 2004) (``Inter-Tel 
Plea Agreement''). The Order accepting this plea agreement was 
signed by the Court on January 5, 2005, and entered on January 10, 
2005.
    \2\ 47 CFR 54.521; 47 CFR 0.111(a)(14) (delegating to the 
Enforcement Bureau authority to resolve universal service suspension 
and debarment proceedings pursuant to 47 CFR 54.521).
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I. Notice of Suspension

    Pursuant to section 54.521(a)(4) of the Commission's rules,\3\ 
Inter-Tel's conviction requires the Bureau to suspend it 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.\4\ Inter-Tel's suspension becomes effective upon the 
earlier of its receipt of this letter or publication of notice in 
the Federal Register.\5\
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    \3\ 47 CFR 54.521(a)(4). See Schools and Libraries Universal 
Service Support Mechanism, Second Report and Order and Further 
Notice of Proposed Rulemaking, 18 FCC Rcd 9202, 9225-9227, ]] 67-74 
(2003) (``Second Report and Order'').
    \4\ Second Report and Order, 18 FCC Rcd at 9225, ] 67; 47 U.S.C. 
254; 47 CFR 54.502-54.503; 47 CFR 54.521(a)(4).
    \5\ Second Report and Order, 18 FCC Rcd at 9226, ] 69; 47 CFR 
54.521(e)(1).
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    Suspension is immediate pending the Bureau's final debarment 
determination. Inter-Tel may contest this suspension or the scope of 
this suspension by filing arguments in opposition to the suspension, 
with any relevant documentation. Inter-Tel's request must be 
received within 30 days after it receives this letter or after 
notice is published in the Federal Register, whichever comes 
first.\6\ Such requests, however, will not ordinarily be granted.\7\ 
The Bureau may reverse or limit the scope of suspension only upon a 
finding of extraordinary circumstances.\8\ Absent extraordinary 
circumstances, the Bureau will decide any request for reversal or 
modification of suspension within 90 days of its receipt of such 
request.\9\
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    \6\ Second Report and Order, 18 FCC Rcd at 9226, ] 70; 47 CFR 
54.521(e)(4).
    \7\ Second Report and Order, 18 FCC Rcd at 9226, ] 70.
    \8\ 47 CFR 54.521(e)(5).
    \9\ See Second Report and Order, 18 FCC Rcd at 9226, ] 70; 47 
CFR 54.521(e)(5), 54.521(f).
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II. Notice of Proposed Debarment

A. Reasons for and Cause of Debarment

    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.\10\ Based on the plea agreement upon which Inter-Tel's 
conviction is based, Inter-Tel pled guilty to mail fraud and other 
criminal offenses for activities in connection with its 
participation in the E-rate program with the San Francisco Unified 
School District (``SFUSD''). In connection with the mail fraud 
offense charged against Inter-Tel, the company admitted that it: (1) 
Assisted consultants in falsely describing equipment to be supplied 
to SFUSD, by hiding equipment not eligible for funding under the E-
rate program in order to have the program pay for it; (2) learned 
that consultants had submitted bills to the Universal Service 
Administrative Company (``USAC'') with inflated prices, and did 
nothing to inform USAC that the prices had been inflated by 
approximately $26 million above the amounts originally bid for the 
project; and (3) did nothing to disclose to the SFUSD superintendent 
or school board that the funding requests to USAC had been increased 
over the original amounts, that there were inflated estimates in the 
bid documents, or that equipment ineligible for funding had been 
hidden in documents submitted to USAC. In connection with the 
antitrust crime charged against Inter-Tel, the company admitted that 
it: (1) Participated in a conspiracy with one or more vendors of 
equipment and services related to telecommunications, Internet 
access and/or internal connections, with a purpose of suppressing 
and eliminating competition for E-rate projects; and (2) reached an 
agreement with its co-conspirators to frustrate the competitive 
process in the E-rate projects by allocating contracts and 
submitting fraudulent and non-competitive bids; and (3) submitted 
fraudulent and non-competitive bids in accordance with the 
conspiratorial agreement.\11\ These actions constitute the conduct 
or transactions upon which this debarment proceeding is based.\12\ 
Moreover, Inter-Tel's conviction on the basis of these acts falls 
within the categories of causes for debarment defined in section 
54.521(c) of the Commission's rules.\13\ Therefore, pursuant to 
section 54.521(a)(4) of the Commission's rules, Inter-Tel's 
conviction requires the Bureau to commence debarment proceedings 
against it.
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    \10\ Second Report and Order, 18 FCC Rcd at 9225, ] 66. 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 54.521(a)(6).
    \11\ See Inter-Tel Plea Agreement at 5-7.
    \12\ Second Report and Order, 18 FCC Rcd at 9226, ] 70; 47 CFR 
54.521(e)(2)(i).
    \13\ ``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.'' 47 CFR 
54.521(c). Such activities ``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 schools and libraries support mechanism 
described in this section (47 CFR 54.500 et seq.).'' 47 CFR 
54.521(a)(1).
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B. Debarment Procedures

    Inter-Tel 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.\14\ Absent extraordinary 
circumstances, the Bureau will debar Inter-Tel.\15\ Within 90 days 
of receipt of any opposition to Inter-Tel's suspension and proposed 
debarment, the Bureau, in the absence of extraordinary 
circumstances, will provide Inter-Tel with notice of its decision to 
debar.\16\ If the Bureau decides to debar Inter-Tel, its decision 
will become effective upon the earlier of Inter-Tel's receipt of a 
debarment notice or publication of the decision in the Federal 
Register.\17\
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    \14\ See Second Report and Order, 18 FCC Rcd at 9226, ] 70; 47 
CFR 54.521(e)(2(i), 54.521(e)(3).
    \15\ Second Report and Order, 18 FCC Rcd at 9227, ] 74.
    \16\ See id., 18 FCC Rcd at 9226, ] 70; 47 CFR 54.521(e)(5).
    \17\ 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 CFR 54.521(f).
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C. Effect of Debarment

    If and when Inter-Tel's debarment becomes effective, it will be 
prohibited from participating in activities associated with or 
related to the schools and libraries support mechanism for at least 
three years from the date of debarment.\18\ The Bureau may, if 
necessary to protect the public interest, extend the debarment 
period.\19\
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    \18\ Second Report and Order, 18 FCC Rcd at 9225, ] 67; 47 CFR 
54.521(d), 54.521(g).
    \19\ Id.
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    Please direct any responses to the following address: Romanda 
Williams, Federal Communications Commission, Enforcement Bureau, 
Investigations and Hearings Division, Room 4-C443, 445 12th Street, 
SW., Washington, DC 20554.
    If Inter-Tel submits its response via hand-delivery or non-
United States Postal Service delivery (e.g., Federal Express, DHL, 
etc.), please send the response to Ms. Williams at the following 
address: Federal Communications Commission, 9300 East Hampton Drive, 
Capitol Heights, MD 20743.
    If Inter-Tel has any questions, please contact Ms. Williams via 
mail, by telephone at (202) 418-1420 or by e-mail at 
[email protected]. If Ms. Williams is unavailable, you may 
contact Eric Bash by telephone at (202) 418-1188 and by e-mail at 
[email protected].

     Sincerely yours,

William H. Davenport,
Chief, Investigations and Hearings Division, Enforcement Bureau.

cc: Leo P. Cunningham, Esq., Wilson Sonsini Goodrich & Rosati; 
Michael F. Wood, Esq., United States Department of Justice, 
Antitrust Division; Kristy Carroll,

[[Page 5449]]

Esq., USAC.

[FR Doc. 05-1860 Filed 2-1-05; 8:45 am]
BILLING CODE 6712-01-P