[Federal Register Volume 79, Number 53 (Wednesday, March 19, 2014)]
[Notices]
[Pages 15339-15341]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-06082]


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FEDERAL COMMUNICATIONS COMMISSION

[DA 14-249]


Notice of Suspension and Commencement 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 (the ``Bureau'') debars Bryan J. Cahoon 
from the schools and libraries universal service support mechanism (or 
``E-Rate Program'') for a period of three years.

[[Page 15340]]

The Bureau takes this action to protect the E-Rate Program from waste, 
fraud, and abuse.

DATES: Debarment commences on the date Mr. Bryan J. Cahoon receives the 
debarment letter or March 19, 2014, whichever date comes first, for a 
period of three years.

FOR FURTHER INFORMATION CONTACT: Joy M. Ragsdale, Attorney Advisor, 
Federal Communications Commission, Enforcement Bureau, Investigations 
and Hearings Division, Room 4-C330, 445 12th Street SW., Washington, DC 
20554. Joy Ragsdale may be contacted by telephone at (202) 418-1697 or 
by email at [email protected]. If Ms. Ragsdale is unavailable, you 
may contact Ms. Theresa Cavanaugh, Chief, Investigations and Hearings 
Division, by telephone at (202) 418-1420 and by email at 
[email protected].

SUPPLEMENTARY INFORMATION: The Bureau debarred Mr. Bryan J. Cahoon from 
the schools and libraries service support mechanism for a period of 
three years pursuant to 47 CFR 54.8. Attached is the debarment letter, 
DA 14-249, which was mailed to Mr. Cahoon and released on February 24, 
2014. 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 email http://www.bcpiweb.com.


Federal Communications Commission.
Theresa Z. Cavanaugh,
Chief, Investigations and Hearings Division, Enforcement Bureau.
February 24, 2014

DA 14-249

SENT VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED AND EMAIL

    Mr. Bryan J. Cahoon
Register Number 95443-038
FMC Devens
Federal Medical Center
P.O. Box 879
Ayer, MA 01432

Re: Notice of Suspension and Initiation of Debarment Proceedings FCC 
Case No. EB-IHD-13-00010969

    Dear Mr. Cahoon:
    The Federal Communications Commission (Commission) has received 
notice of your conviction for fraud and theft of federal funds in 
violation of 18 U.S.C. 666(a)(1)(A) in connection with the federal 
schools and libraries universal service support mechanism (E-Rate 
program).\1\ Consequently, pursuant to 47 CFR 54.8, this letter 
constitutes official notice of your suspension from participating in 
activities associated with the E-Rate program. In addition, the 
Enforcement Bureau (Bureau) hereby notifies you that the Bureau will 
commence E-Rate program debarment proceedings against you.\2\
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    \1\ Any further reference in this letter to ``your conviction'' 
refers to your guilty plea in United States v. Cahoon, Criminal 
Docket No. 1:13-cr-10188-RWZ-1, Plea Agreement (D. Mass. filed June 
28, 2013) (Plea Agreement).
    \2\ 47 CFR. 54.8; 47 CFR 0.111 (delegating to the Bureau 
authority to resolve universal service suspension and debarment 
proceedings). The Commission adopted debarment rules for the E-Rate 
program 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 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; Rural Health Care 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), (a)(5), (c), (d), (e)(2)(i), (e)(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 [E-Rate program]'' from 
receiving the benefits associated with that program.\3\ The 
statutory provisions and Commission rules relating to the E-Rate 
program are designed to ensure that all E-Rate funds are used for 
their intended purpose.\4\ Sections 54.503 and 54.504 of the 
Commission's rules provide that an eligible entity must seek 
competitive bids for all services eligible for support and must 
comply with all applicable state and local competitive bidding 
requirements.\5\ Furthermore, the E-Rate program requires applicants 
to solicit services based on a fair and open competitive bidding 
process.\6\
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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\ NEC-Business Network Solutions, Inc., Notice of Debarment 
and Order Denying Waiver Petition, 21 FCC Rcd 7491, 7493, para. 7 
(2006).
    \5\ 47 CFR 54.503, 54.504(a)(1)(vi); see Federal-State Joint 
Board on Universal Service, CC Docket No. 96-45, Report and Order, 
12 FCC Rcd 8776, 9078-80, paras. 480-81 (1997) (subsequent history 
omitted) (finding that without competitive bidding requirements, the 
applicant may not receive the most cost-effective services); see 
also Lazo Technologies, Inc., Order on Reconsideration, 26 FCC Rcd 
16661, 16664, para. 7 (2011).
    \6\ 47 CFR 54.503(a). The Commission has upheld Universal 
Service Administrative Company (USAC) decisions that found 
applicants and service providers violated the Commission's fair and 
open competitive bidding requirements and E-Rate program rules. See 
Request for Review of the Decision of the Universal Service 
Administrator by Ysleta Independent School District, El Paso, Texas, 
Federal-State Joint Board on Universal Service, Changes to the Board 
of Directors of the National Exchange Carrier Association, Inc., SLD 
Nos. 321479, CC Docket Nos. 96-45, 97-21, Order, 18 FCC Rcd 26407, 
26408-09, paras. 1-4 (2003); see also Request for Review of 
Decisions of the Universal Service Administrator by MasterMind 
Internet Services, Inc., Federal-State Joint Board on Universal 
Service, Order, 16 FCC Rcd 4028, 4032-33, para. 10 (2000).
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    On June 28, 2013, you pleaded guilty to one count of fraud and 
theft of federal funds in connection with the E-Rate program while 
employed both as the Director of the Information Technology 
Department (IT Department) for the City of Lawrence, Massachusetts 
and also as a city subcontractor through your company, 
Networks@Home, LLC (Networks@Home).\7\ As head of the IT Department, 
your responsibilities included preparing requests for proposals, 
reviewing and identifying the lowest qualified bids submitted in 
response to requests for proposal, as well as submitting final 
proposals to the City of Lawrence's IT Purchasing Department to 
certify compliance with Massachusetts's procurement laws.\8\
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    \7\ See Plea Agreement at 1, 17; United States v. Cahoon, 
Criminal Docket No. 1:13-cr-10188-RWZ-1, Information at 1 (D. Mass. 
filed June 19, 2013) (Information); see also United States 
Attorney's Office, District of Massachusetts, News, Former Lawrence 
IT Director Pleads Guilty to Fraud and Theft, Aug. 14, 2013, at 
http://www.justice.gov/usao/ma/news/2013/August/CahoonBryanPleaPR.html (Press Release).
    \8\ Information at 2.
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    From early 2008 through December 2009, the City of Lawrence 
received federal grants of over $76 million, including approximately 
$2.3 million in E-Rate funds, to improve the network and 
technological infrastructure of the city's schools and libraries.\9\ 
During that same period, you orchestrated a scheme to circumvent the 
state's procurement requirements that provided bidding information 
and instructions to your friends and business associates, who were 
awarded at least eight contracts with the city totaling 
$178,555.\10\
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    \9\ Id. at 3.
    \10\ Id. at 3-5.
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    You also hired friends and associates to perform cabling and 
rewiring work for the city as interns for the IT Department and 
then, through Networks@Home and another company for which 
Networks@Home was a subcontractor, billed the City of Lawrence for 
that work at inflated rates.\11\ As a result, the city was double-
billed for the same work.\12\ At least a portion of the funds that 
your friends and business associates and Networks@Home received as a 
result of these schemes were E-Rate program funds.\13\
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    \11\ Id. at 2-3, 13-16.
    \12\ Id. at 5.
    \13\ Id. at 13-14.

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[[Page 15341]]

    On December 17, 2013, the United States District Court for the 
District of Massachusetts sentenced you to serve 12 months and a day 
in prison followed by a one-year period of supervised release.\14\ 
In addition, the court ordered you to pay $465,000 in restitution 
and a $100 special assessment.\15\
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    \14\ United States v. Cahoon, Criminal Docket No. 1:13-cr-10188-
RWZ-1, Judgment at 2-3 (D. Mass. filed Dec. 17, 2013).
    \15\ United States v. Cahoon, Criminal Docket No. 1:13-cr-10188-
RWZ-1, Order of Restitution (D. Mass. filed Dec. 17, 2013). This 
restitution order includes $333,306.49 payable to USAC.
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    Pursuant to section 54.8(b) of the Commission's rules,\16\ upon 
your conviction for theft of E-Rate funds, the Bureau is required to 
suspend you from participating in any activities associated with or 
related to the E-Rate program, including the receipt of funds or 
discounted services through the E-Rate program, or consulting with, 
assisting, or advising applicants or service providers regarding the 
E-Rate program.\17\ Your suspension becomes effective upon either 
your receipt of this letter or its publication in the Federal 
Register, whichever comes first.\18\
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    \16\ 47 CFR 54.8(a)(4); see Second Report and Order, 18 FCC Rcd 
at 9225-27, paras. 67-74.
    \17\ 47 CFR 54.8(a)(1), (d).
    \18\ Second Report and Order, 18 FCC Rcd at 9226, para. 69; 47 
CFR 54.8(e)(1).
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    In accordance with the Commission's suspension and debarment 
rules, you may contest this suspension or the scope of this 
suspension by filing arguments, with any relevant documents, within 
thirty (30) calendar days of your receipt of this letter or its 
publication in the Federal Register, whichever comes first.\19\ Such 
requests, however, will not ordinarily be granted.\20\ The Bureau 
may reverse or limit the scope of a suspension only upon a finding 
of extraordinary circumstances.\21\ The Bureau will decide any 
request to reverse or modify a suspension within ninety (90) 
calendar days of its receipt of such request.\22\
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    \19\ 47 CFR 54.8(e)(4).
    \20\ Id.
    \21\ 47 CFR 54.8(f).
    \22\ Second Report and Order, 18 FCC Rcd at 9226, para. 70; 47 
CFR 54.8(e)(5), (f).
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II. Initiation of Debarment Proceedings

    In addition to requiring your immediate suspension from the E-
Rate program, your conviction is cause for debarment as defined in 
section 54.8(c) of the Commission's rules.\23\ Therefore, pursuant 
to section 54.8(b) of the Commission's rules, your conviction 
requires the Bureau to commence debarment proceedings against 
you.\24\
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    \23\ ``Causes for suspension and debarment are 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). Associated 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.'' Id. 
54.8(a)(1).
    \24\ Id. 54.8(b).
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    As with the suspension process, you may contest the proposed 
debarment or the scope of the proposed debarment by filing arguments 
and any relevant documentation within thirty (30) calendar days of 
receipt of this letter or its publication in the Federal Register, 
whichever comes first.\25\ The Bureau, in the absence of 
extraordinary circumstances, will notify you of its decision to 
debar within ninety (90) calendar days of receiving any information 
you may have filed.\26\ If the Bureau decides to debar you, its 
decision will become effective upon either your receipt of a 
debarment notice or publication of the decision in the Federal 
Register, whichever comes first.\27\
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    \25\ Second Report and Order, 18 FCC Rcd at 9226, para. 70; 47 
CFR 54.8(e)(3).
    \26\ Second Report and Order, 18 FCC Rcd at 9226, para. 70; 47 
CFR 54.8(e)(5).
    \27\ 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. Id. 
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 E-Rate program for three years from the date of 
debarment.\28\ The Bureau may set a longer debarment period or 
extend an existing debarment period if necessary to protect the 
public interest.\29\
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    \28\ Second Report and Order, 18 FCC Rcd at 9225, para. 67; 47 
CFR 54.8(d), (g).
    \29\ 47 CFR 54.8(g).
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    Please direct any response, if sent by messenger or hand 
delivery, to Marlene H. Dortch, Secretary, Federal Communications 
Commission, 445 12th Street, SW., Room TW-A325, Washington, DC 20554 
and to the attention of Joy M. Ragsdale, Attorney Advisor, 
Investigations and Hearings Division, Enforcement Bureau, Room 4-
C330, Federal Communications Commission, 445 12th Street, SW., 
Washington, DC 20554 with a copy to Theresa Z. Cavanaugh, Division 
Chief, Investigations and Hearings Division, Enforcement Bureau, 
Room 4-C330, Federal Communications Commission, 445 12th Street, 
SW., Washington, DC 20554. All messenger or hand delivery filings 
must be submitted without envelopes.\30\ If sent by commercial 
overnight mail (other than U.S. Postal Service (USPS) Express Mail 
and Priority Mail), the response must be sent to the Federal 
Communications Commission, 9300 East Hampton Drive, Capitol Heights, 
Maryland 20743. If sent by USPS First Class, Express Mail, or 
Priority Mail, the response should be addressed to Joy Ragsdale, 
Attorney Advisor, Investigations and Hearings Division, Enforcement 
Bureau, Federal Communications Commission, 445 12th Street, SW., 
Room 4-C330, Washington, DC 20554, with a copy to Theresa Z. 
Cavanaugh, 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 
your response via email to Joy M. Ragsdale, [email protected] and 
to Theresa Z. Cavanaugh, [email protected].
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    \30\ See FCC Public Notice, DA 09-2529 for further filing 
instructions (rel. Dec. 3, 2009).
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    If you have any questions, please contact Ms. Ragsdale via U.S. 
postal mail, email, or by telephone at (202) 418-1697. You may 
contact me at (202) 418-1553 or at the email address noted above if 
Ms. Ragsdale is unavailable.

 Sincerely yours,

Theresa Z. Cavanaugh
Chief
Investigations and Hearings Division
Enforcement Bureau

cc: Johnnay Schrieber, Universal Service Administrative Company (via 
email) Rashann Duvall, Universal Service Administrative Company (via 
email) William F. Bloomer, United States Attorney's Office, District 
of Massachusetts (via email)
[FR Doc. 2014-06082 Filed 3-18-14; 8:45 am]
BILLING CODE 6712-01-P