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conviction or civil judgment and knowledge by the Commission. Commission of the wrongful acts underlying a criminal conviction or civil judgment is not the trigger for debarment.86 Therefore, as applied to NEC, its May 27, 2004 conviction (which took place after the effective date of the rules) is the relevant cause for its debarment rather than the conduct underlying that conviction.

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32. NEC requests that the Commission toll the suspension procedures contained in section 54.421(e)(1)-(e)(4) of our rules pending resolution of its waiver petition. The purpose of those procedures is to protect the integrity of the E-Rate program by excluding bad actors from participation during the time required for the Commission to provide such entities with notice of the reasons for debarment and an opportunity for them, and any party contracting with them, to contest the debarment or the scope of debarment.88 We find that these proceedings regarding NEC's petition for waiver have achieved those purposes and satisfied the suspension procedure requirements. NEC and any party contracting with NEC received notice and opportunity to contest any potential debarment, or the scope thereof, when the waiver petition was released for public comment on July 7, 2004.89 NEC has availed itself of that opportunity, filing four substantive pleadings on the issue, all of which are considered herein. Because NEC requested a stay of the suspension in order that it be heard and because NEC and other interested parties have in fact received notice and have been heard, we find that the suspension procedures have been satisfied and we reject NEC's request that those procedures be tolled, to the extent that such request is not moot, by adoption of this decision.

33. We find that this debarment action is effective as to NEC-Business Network Solutions, Inc., including any and all of its successors and assigns." NEC suggests debarment should be limited to NEC-Business Network Solutions, Inc., and not its successors and assigns." We conclude, however, that the debarment must apply to the company's successors and assigns to protect the integrity of the E-Rate program and to ensure that debarment has its intended effect.

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34. Based on the foregoing and to protect the public interest, including the investments made by American consumers to benefit this nation's deserving school children, NEC-Business Network Solutions, Inc., including its successors and assigns, is hereby debarred from the E-Rate program for six months, effective upon the earlier of receipt of this Notice or its publication in the Federal Register.." During the period in which NEC will serve its debarment, NEC, including its successors and assigns, is prohibited from all 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."93 We will continue to take appropriate actions in future cases as warranted by the particular circumstances to protect the integrity of the program.

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We note, and NEC acknowledges in its pleadings, that the terms of its plea agreement with DOJ subject any NEC successor organization to the Special Conditions of Probation. See NEC Waiver Petition at 8; NEC Plea Agreement, Exhibit A, Special Conditions of Probation, ¶ 19.

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35. Accordingly, IT IS ORDERED, pursuant to section 54.521 of the Commission's rules, 47 C.F.R. § 54.521, that NEC-Business Network Solutions, Inc., including its successors and assigns, IS DEBARRED from the schools and libraries universal service support mechanism for six months, effective upon the earlier of receipt of this Notice of Debarment or publication in the Federal Register.

36. IT IS FURTHER ORDERED that the Universal Service Administrative Company shall review with heightened scrutiny NEC's applications submitted during the first two funding years upon its re-entry into the E-Rate program.

37. IT IS FURTHER ORDERED that the Universal Service Administrative Company shall conduct automatic annual audits on NEC's E-Rate activities during the first two funding years upon its reentry into the E-Rate program.

38. IT IS FURTHER ORDERED, pursuant to sections 1 and 4(i) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151 and 154(i), and section 1.3 of the Commission's rules, 47 C.F.R. § 1.3, that the Petition for Waiver of Section 54.521 of the Commission's Rules, filed by NEC-Business Network Solutions, Inc., on May 27, 2004, IS DENIED, as described herein.

39. IT IS FURTHER ORDERED that the Enforcement Bureau staff shall send, by certified mail/return receipt requested, a copy of this Notice of Debarment and Order Denying Waiver Petition on the release date to Richard Rubin, Thelen Reid & Priest LLP, Counsel to NEC-Business Network Solutions, Inc., 701 Pennsylvania Avenue, N.W., Suite 800, Washington, DC 23004-2608.

40. IT IS FURTHER ORDERED that the Enforcement Bureau staff shall send, via email, a copy of this Notice on the release date to Richard Rubin, rrubin@thelenreid.com, and James A. Stenger, įstenger@thelenreid.com, Counsel to NEC-Business Network Solutions, Inc.

41. IT IS FURTHER ORDERED, pursuant to section 54.521 of the Commission's rules, 47 C.F.R. § 54.521, that this Notice SHALL BE PUBLISHED in the Federal Register.

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

Secretary

Re:

CONCURRING STATEMENT OF
COMMISSIONER MICHAEL J. COPPS

In the Matter of NEC-Business Network Solutions, Inc., File No. EB-03-IH-0738

No program may be doing more to close the digital divide for rural Americans and the economically disadvantaged than the E-Rate program. Indeed, there are many hard-working people in the Schools and Libraries Division, at the FCC and Justice Department, and elsewhere, who are to be commended for successfully bringing the Internet to our schools and libraries and for ensuring that waste, fraud and abuse are ferreted out. NEC-Business Network Solutions, Inc.'s (NEC) convictions and its six month debarment from the program is evidence of the joint effort underway to eliminate any wrongdoing from the E-Rate program. I therefore concur in today's Order.

However, as a general matter, I believe that a six month debarment period is often times little more than a slap on the wrist for companies engaged in efforts to defraud the E-Rate program of millions of dollars and, in the end, our children of the tools they need in the Digital Age. There were mitigating circumstances in this case, and the companion case of Inter-Tel Technologies, Inc., that support a shorter debarment period. However, a stronger penalty may have been warranted given the importance of the E-Rate program and the severity of NEC's actions.

Re:

SEPARATE STATEMENT OF

COMMISSIONER JONATHAN S. ADELSTEIN

CONCURRING

NEC-Business Network Solutions, Inc., Notice of Debarment and Order Denying Waiver
Petition, File No. EB-03-IH-0738, FCC 06-91 (June 21, 2006).

Since its inception, the universal service support mechanism for schools and libraries (commonly referred to as the E-rate program) has opened up a new world of learning and opportunity for millions of school children and library patrons. To ensure the continued success of the E-Rate program, we must remain committed to monitoring, auditing, reviewing and reinforcing the program. A critical part of our Commission oversight is the use of debarment, which prohibits bad actors from participating in the program. Accordingly, I support our decision in this Order to debar NEC from all involvement in the E-Rate program, our first such action against a corporate defendant.

I concur in, rather than approve, this Order because I would have supported a longer debarment period. The Commission's rules provide for a debarment period of three years, which may be extended to protect the public interest or reduced upon a finding of extraordinary circumstances. I note that the Department of Justice has encouraged the Commission to exercise our debarment policy in a way that encourages early and complete cooperation from defendants, and I recognize that the Commission may take into account payment of fines and restitution, the length of time that a provider has not participated, and most importantly a high degree of cooperation with law enforcement. Even weighing these factors, the six-month debarment period adopted in this Order falls short, given the scope and seriousness of the fraud-related activities in this case. Strong enforcement encourages compliance, and penalties should be substantial enough to constitute more than just a cost of doing business. In this case, a longer debarment period would have sent a stronger and clearer message that fraud will not be tolerated.

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By the Commission: Commissioners Copps and Adelstein concurring and issuing separate statements.

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1. This item debars Inter-Tel Technologies, Inc. ("Inter-Tel") from all activities associated with the schools and libraries universal service support mechanism, also known as the E-Rate program. Like NEC, whose conduct is addressed in the companion NEC Debarment Order released today, Inter-Tel pled guilty to and was convicted of serious fraud-related felonies against the E-Rate program. We find Inter-Tel's conduct merits a debarment period of at least three years, as our debarment rules contemplate, but, in light of several important factors, we will impose a debarment period of one year from the effective date of this Order. These factors include Inter-Tel's cooperation with the U.S. Department of Justice ("DOJ") during the investigation and prosecution of its wrongdoing, explained in a letter DOJ

NEC-Business Network Solutions, Inc., Notice of Debarment and Order Denying Waiver Petition, FCC 06-91 (the "NEC Debarment Order"). This case arises out of the same underlying federal criminal investigation as another debarment matter involving NEC-Business Network Solutions, Inc. (“NEC”).

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