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FCC Proposes First E-rate Service Provider Debarment

The Federal Communications Commission August 21 formally proposed debarring John Angelides, chief executive officer of Connect2 Internet Networks Inc., following his May 22, 2003 conviction on charges of conspiracy to defraud the United States.

In April, the Commission put in place procedures for debarring for three years individuals or companies found guilty of criminal violations or held civilly liable for fraud or other acts growing out of the E-rate program.

In moving to debar Angelides, the Commission said that he had admitted, among other things, to selling E-rate products to schools by imposing 100 percent of the cost on the E-rate program. Under program rules, applicants are required to pay their share of the cost of E-rate-eligible products or services, which is a minimum of at least 10 percent. The Commission said Angelides had admitted to:

  1. falsely representing to the schools that they could participate in the program at no cost to them;
  2. falsely representing to fund administrators and government investigators that the schools would pay or had paid their unsubsidized share; and
  3. falsifying documents, as well as attempting to persuade school administrators not to reveal evidence to government investigators, in order to conceal the scheme.

Under the rules, Angelides is suspended from program participation immediately. He can contest the suspension or its scope, but the Commission said "such requests, however, will not ordinarily be granted." Angelides is scheduled to be sentenced in federal court in New York in September.

In a separate action, the Commission also proposed debarring another Connect2 employee, Oscar Alvarez, who was convicted on May 20, 2003, on charges that he attempted to persuade two school administrators not to reveal evidence to FCC auditors who were conducting an official investigation of Connect2.

Meanwhile, federal prosecutors in San Francisco filed felony bid rigging charges Aug. 19 against a former employee of a Fresno electric contractor in connection with networking and Internet access work performed in the West Fresno Elementary School District, according to a report published in the Fresno Bee.

According to the Bee, the government alleged that Duane Maynard conspired with others to ensure that his employer would be the only bidder and that other conspirators would receive work as subcontractors. Maynard's employer was not named in the charges. Maynard declined to comment to the Bee, other than to confirm that he had worked for Howe Electric Co.

According to the Bee account, the school district had been troubled by financial irregularities for several years, and last year state officials stepped in to take over its operations and appoint a new superintendent. The district has not applied for E-rate discounts since the 2000 funding year, according to Schools and Libraries Division records.

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