Client Alert

The FCC has announced that it has debarred a husband and wife – Arthur R. Scott and Evelyn Myers Scott – from further participation in the e-rate program.

Both pled guilty to charges of bribery and conspiracy to defraud the government. They admitted that they had entered into an e-rate contract with a vendor on behalf of the Atlanta Public Schools in return for payments to a consulting firm they owned. At the same time, as agents of the Atlanta Public Schools, they accepted nearly $32,000 as a reward in connection with the Atlanta Public Schools’ participation in the e-rate program. The total amount of loss and restitution that they were found to have owed to the e-rate program resulting from their criminal misconduct was over $300,000.

Their suspension bars them from participating in any activities associated with or related to the e-rate funding mechanism, including consulting with, advising or assisting applicants or service providers regarding the e-rate program. The initial period of debarment is three years, although the Commission cautions that it has the right to extend the period if necessary to protect the public interest.

The scope of the Scotts' activities is not entirely clear from the Commission's report. (The FCC does not conduct proceedings directly to suspend or debar individuals, but rather acts in response to criminal convictions or civil judgment based upon fraud, theft, embezzlement, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstructing justice and similar activities associated with the e-rate program.) It would appear, though, that the Scotts represented and were paid by both a vendor and a school system, which would constitute a clear conflict of interest and an opportunity, which they apparently took, to defeat the fairness of the bidding procedure for e-rate services.

While it is clear that no e-rate participant should have any further dealing with these two particular individuals for the next three years, the announcement serves as a general reminder of the importance of strictly observing the Commission’s rules for proper conduct. If you have any questions concerning any potentially troublesome situations you might face, please be sure to let us know.

If you have any questions or need additional information, please contact Peter Gutmann (email), or one of our Telecommunications, Cable & Broadcast attorneys.