Money manager Mario Gabelli must pay $130 million to resolve civil fraud charges involving FCC spectrum auctions, the Manhattan U.S. Attorney’s office said Thurs. A Justice Dept. complaint named Gabelli and 38 others as parties to an alleged scheme to misuse the FCC designated-entity (DE) process in auctions 1995-2000. Gabelli set up bogus companies to bid as DEs in auctions limited to small businesses, or to qualify for bidding credits and favorable financing in others, DoJ said. The companies “existed only on paper solely to certify that they met the FCC’s eligibility rules,” DoJ said. A company Gabelli owns has applied to bid in the Aug. AWS auction, outraging FCC Comr. Adelstein. DoJ charged that none of those Gabelli set up as small businesses “possessed any relevant telecommunications experience or knowledge,” nor did they control their companies. Those were controlled by Gabelli, who later transferred some licenses to 3rd parties at substantial profit, the complaint said. The govt. charged Gabelli and his affiliates with violating the False Claims Act, saying they unjustly enriched themselves by submitting false certifications of eligibility to the FCC. Lawyer R.C. Taylor filed the original suit under the False Claims Act’s whistleblower provisions, entitling him to $32.2 million of the recovery. FCC Chmn. Martin said Thurs. the FCC probably is powerless to bar investor Mario Gabelli from participating in future spectrum auctions. “I think that the settlement itself encompasses the actions the government will take against him,” Martin said after the agency’s agenda meeting. “I think the government committed in the settlement that they wouldn’t take any other action.”
AT&T agreed to pay the U.S. govt. $2.9 million to settle claims that it improperly charged fees to govt. customers, a violation of its contract with GSA. DoJ said that during 1998-2001 AT&T Communications passed through Presubscribed Interexchange Carrier Charges (PICCs), fees long distance companies pay local carriers to help defray the cost of maintaining local lines. The allegations arose from a suit by a whistleblower who would be eligible to receive some of the settlement. AT&T said this is “an old case” predating the merger with SBC and the company settled because it “felt it was more important to focus on the future and not spend money litigating issues that arose more than 7 years ago.”
House and Senate hearings, new whistleblower rules and a special prosecutor are needed to deal with the National Security Agency (NSA) electronic surveillance scandal, former Vice President Al Gore said Mon. Speaking in D.C. at an event honoring the late Martin Luther King, Gore called the date especially pertinent, because the govt. wiretapped the civil rights leader for years.
France’s data protection agency completed rules to help U.S.-listed companies, including communications services providers, comply with the anonymous whistleblower requirements of the Sarbanes-Oxley Act while respecting French privacy laws. The Dec. guidelines from the Commission nationale de l'informatique et des libertes (CNIL) appear to signal a “serious effort to compromise and accommodate the goals” of the U.S. law, said Alan Raul, an attorney with Sidley Austin Brown & Wood LLP. Nevertheless, multinationals eyeing whistleblower hotlines still face a patchwork of European data protection laws, said Axel Spies, a European attorney with Swidler Berlin.
With several major U.S. and Canadian MSOs starting or expanding their VoIP rollouts in the fall, the cable industry’s IP telephony customer count easily surged past 2.5 million as 2005 drew to an end. At the same time, total N. American cable telephony subscribers, including those served by either circuit-switched or VoIP technology, passed the 5 million mark, according to the latest statistics from Kinetic Strategies Inc.
VIENNA, Austria -- Harmonization of international regulation on IT security isn’t happening, said Michael Colao, dir.-Information Management at Dresdner Kleinwort & Wasserstein, during a panel discussion at the RSA Security Conference here. “There are many talks about harmonizing, but we just don’t see the fruits from it,” Colao told us. There were, he said, regional attempts at greater harmonization in the Asia-Pacific but even EU-wide harmonization hasn’t worked out, and the U.S. is going its own way.
Evertec agreed to pay $4.8 million to settle allegations that the company violated the False Claims Act and agreed to cooperate with a govt. investigation related to its E-Rate participation. The company, formerly known as GM Group, also said it would develop an ethics and compliance program, the U.S. Attorney’s Office, Northern Dist., Cal., said Fri. The govt. alleged the company claimed funds for goods and services that weren’t eligible for E-Rate funding while acting as a subcontractor to Video Network Communications on a project in Highland Park School Dist., Mich. 2001-2002. The govt. also said GM Group falsely filed a similar claim in connection with projects at Academia Cristo Rey and Colegio Santisimo Rosario in Puerto Rico 2000-2004. No E-Rate funds were given to the company for the Puerto Rico projects, officials said.
The RTNDA joined forces with other news media groups to protest recent rulings ordering fines and possible jail sentences for reporters who refuse to reveal their sources. In the most recent case, the judge in the Wen Ho Lee trial held 5 reporters in contempt for refusing to identify their sources. Lee, a former nuclear weapons scientist, is seeking the identities of the reporters’ sources. The judge imposed a $500-per-day fine on each reporter. That ruling is being appealed. The case and others “could make whistleblowers less likely to come forward in the future and would mean the public would not get information it should have,” said RTNDA Pres. Barbara Cochran.
Two consumer groups said a new survey on the media consumption habits of American consumers showed that the FCC used faulty reasoning in deciding to loosen restrictions on ownership of local media. Consumers Union (CU) and the Consumer Federation of America (CFA) said their telephone survey showed that newspapers were more than twice as important to consumers for local news and information than the FCC had concluded in its media ownership proceeding. “Clearly, the FCC has no earthly idea what consumers really do,” CU Senior Policy Dir. Gene Kimmelman said.
MCI announced Tues. it had retained law firm Gibson, Dunn & Crutcher to review “competitor claims” that it fraudulently mishandled call routing and access fees (CD July 29 p1). Responding to one particularly sensitive allegation, MCI said it was confident it had handled secure govt. calls properly.