Federal Communications Commission Enforcement Bureau Investigations and Hearings Division 445 12th Street, SW, Suite 4-C330 Washington, D.C. 20554 January 9, 2008 DA 08-50 VIA CERTIFIED MAIL RETURN RECEIPT REQUESTED AND FACSIMILE (404-872-1622) Mr. Arthur R. Scott c/o Seth D. Kirschenbaum, Esq. Davis Zipperman Kirschenbaum & Lotito 918 Ponce de Leon Avenue, N.E. Atlanta, GA 30306-4212 E-Mail: skirschenbaum@dzkl.com Re: Notice of Debarment, File No. EB-07-IH-7304 Dear Mr. Scott: Pursuant to section 54.521 of the rules of the Federal Communications Commission (the “Commission”), by this Notice of Debarment you are debarred from the schools and libraries universal service support mechanism (or “E-Rate program”) for a period of three years.1 On October 18, 2007, the Enforcement Bureau (the “Bureau”) sent you a Notice of Suspension and Initiation of Debarment Proceedings (the “Notice of Suspension”).2 That Notice of Suspension was published in the Federal Register on November 6, 2007.3 The Notice of Suspension suspended you from the schools and libraries universal service support mechanism and described the basis for initiation of debarment proceedings against you, the applicable debarment procedures, and the effect of debarment.4 Pursuant to the Commission’s rules, any opposition to your suspension or its scope or to your proposed debarment or its scope had to be filed with the Commission no later than thirty (30) calendar days from the earlier date of your receipt of the Notice of 1 See 47 C.F.R. §§ 0.111(a)(14), 54.521. 2 Letter from Hillary S. DeNigro, Chief, Investigations and Hearings Division, Enforcement Bureau, Federal Communications Commission, to Mr. Arthur R. Scott, Notice of Suspension and Initiation of Debarment Proceedings, 22 FCC Rcd 18617 (Inv. & Hearings Div., Enf. Bur. 2007) (Attachment 1). 3 72 Fed. Reg. 62647 (November 6, 2007). 4 See Notice of Suspension, 22 FCC Rcd at 18618-19. Arthur R. Scott January 9, 2008 Page 2 of 2 Suspension or publication of the Notice of Suspension in the Federal Register.5 The Commission did not receive any such opposition. As discussed in the Notice of Suspension, you pled guilty to and were convicted of conspiracy to defraud the United States and bribery, in violation of 18 U.S.C. §§ 371 and 666(a)(1)(B), for activities in connection with your participation in the E-Rate program involving the Atlanta Public Schools (“APS”).6 You conspired with others, including your wife Evelyn Myers Scott, to enter into an E-Rate contract on behalf of APS in return for personal payoffs.7 In addition, you admitted to taking bribes intending to be influenced and rewarded in connection with the APS E-Rate project.8 Such conduct constitutes the basis for your debarment, and your conviction falls within the categories of causes for debarment under section 54.521(c) of the Commission’s rules.9 For the foregoing reasons, you are hereby debarred for a period of three years from the debarment date, i.e., the earlier date of your receipt of this Notice of Debarment or its publication date in the Federal Register.10 Debarment excludes you, for the debarment period, from 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.”11 Sincerely, Hillary S. DeNigro Chief Investigations and Hearings Division Enforcement Bureau cc: Aaron M. Danzig, Esq., Assistant United States Attorney Kristy Carroll, Esq., Universal Service Administrative Company (via e-mail) 5 See 47 C.F.R. § 54.521(e)(3) and (4). That date occurred no later than December 6, 2007. See supra note 3. 6 See Notice of Suspension, 22 FCC Rcd at 18618. 7 See id. The Bureau also debars Mrs. Evelyn Myers Scott from the E-Rate program. See Letter from Hillary S. DeNigro, Chief, Investigations and Hearings Division, Enforcement Bureau, Federal Communications Commission, to Mr. Evelyn Myers Scott, Notice of Debarment, DA 08-49 (Inv. & Hearings Div., Enf. Bur. rel. Jan. 9, 2008). 8 See id. 9 Id. at 18618; 47 C.F.R. § 54.521(c). 10 See Notice of Suspension, 22 FCC Rcd at 18619. 11 See 47 C.F.R. §§ 54.521(a)(1), 54.521(a)(5), 54.521(d); Notice of Suspension, 22 FCC Rcd at 18619. Attachment 1 Federal Communications Commission Enforcement Bureau Investigations and Hearings Division 445 12th Street, SW, Suite 4-C330 Washington, D.C. 20554 October 18, 2007 DA 07-4336 VIA CERTIFIED MAIL RETURN RECEIPT REQUESTED AND FACSIMILE (404-872-1622) Mr. Arthur R. Scott c/o Seth D. Kirschenbaum, Esq. Davis Zipperman Kirschenbaum & Lotito 918 Ponce de Leon Avenue, N.E. Atlanta, GA 30306-4212 E-Mail: skirschenbaum@dzkl.com Re: Notice of Suspension and Initiation of Debarment Proceedings, File No. EB-07-IH-7304 Dear Mr. Scott: The Federal Communications Commission (“FCC” or “Commission”) has received notice of your conviction for conspiracy to defraud the United States and bribery in violation of 18 U.S.C. §§ 371 and 666(a)(1)(B) in connection with your participation in the schools and libraries universal service support mechanism (“E-Rate program”). 1 Consequently, pursuant to 47 C.F.R. § 54.521, this letter constitutes official notice of your suspension from the E-Rate program. In addition, the Enforcement Bureau (“Bureau”) hereby notifies you that we are commencing debarment proceedings against you.2 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 schools and libraries support mechanism” from receiving the benefits 1 Any further reference in this letter to “your conviction” refers to your May 2, 2007 guilty plea and subsequent conviction of one count of conspiracy to defraud the United States and one count of bribery. United States v. Arthur R. Scott, Criminal Docket No. 1:07-CR-139-CC-01, Plea Agreement (N.D.Ga. filed May 2, 2007 and entered May 7, 2007) (“Scott Plea Agreement”); United States v. Arthur R. Scott, 1:07-CR- 139-CC-01, Judgment (N.D.Ga. filed and entered Oct. 2, 2007) (“Scott Judgment”). 2 47 C.F.R. § 54.521; 47 C.F.R. § 0.111(a)(14) (delegating to the Enforcement Bureau authority to resolve universal service suspension and debarment proceedings pursuant to 47 C.F.R. § 54.521). Mr. Arthur R. Scott October 18, 2007 Page 2 of 4 associated with that program.3 You pled guilty to conspiracy to defraud the United States and bribery for activities in connection with your participation in the E-Rate program.4 You admitted that while employed as Director of Operational Technology of the Atlanta Public Schools (“APS”), you conspired with others, including your wife Evelyn Myers Scott (“Myers Scott”), to enter into an E-Rate contract on behalf of APS in return for payments to the consulting firm owned by you and Myers Scott from the vendor.5 In addition, you admitted that you, as agent of APS, corruptly solicited, demanded, accepted and agreed to accept $37,917 in order to be influenced and rewarded in connection with APS’s participation in the E-Rate program. The loss and the restitution that you owed to the E-Rate program resulting from the criminal offenses was $300,176.10.6 Pursuant to section 54.521(a)(4) of the Commission’s rules,7 your conviction requires the Bureau to suspend you from participating in any activities associated with or related to the schools and libraries fund mechanism, including the receipt of funds or discounted services through the schools and libraries fund mechanism, or consulting with, assisting, or advising applicants or service providers regarding the schools and libraries support mechanism.8 Your suspension becomes effective upon the earlier of your receipt of this letter or publication of notice in the Federal Register.9 Suspension is immediate pending the Bureau’s final debarment determination. In accordance with the Commission’s debarment rules, you may contest this suspension or the scope of this suspension by filing arguments in opposition to the suspension, with any relevant documentation. Your request must be received within 30 days after you receive this letter or after notice is published in the Federal Register, whichever comes first.10 Such requests, however, will not ordinarily be granted.11 The Bureau may reverse or limit the scope of suspension only upon a finding of extraordinary circumstances.12 Absent 3 See Schools and Libraries Universal Service Support Mechanism, Second Report and Order and Further Notice of Proposed Rulemaking, 18 FCC Rcd 9202, 9225, ¶ 66 (2003) (“Second Report and Order”). 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 C.F.R. § 54.521(a)(6). 4 See generally United States v. Arthur R. Scott and Evelyn Myers Scott a/k/a Evelyn M. Myers, Criminal Docket No. 1:07-CR-139, Information (N.D.Ga.. filed Apr. 30, 2007 and entered May 3, 2007) (“ Scott and Myers Scott Information”); Scott Plea Agreement at 1. 5 Scott and Myers Scott Information at 1-9. See also Letter from Hillary S. DeNigro, Chief, Investigations and Hearings Division, Enforcement Bureau, to Evelyn M. Scott, DA 07-4335, dated October 18, 2007. 6 See Scott Judgment at 5; see also Scott Plea Agreement at 4. 7 47 C.F.R. § 54.521(a)(4). See Second Report and Order, 18 FCC Rcd at 9225-9227, ¶¶ 67-74 (2003). 8 Second Report and Order, 18 FCC Rcd at 9225, ¶ 67; 47 U.S.C. § 254; 47 C.F.R §§ 54.502-54.503; 47 C.F.R. § 54.521(a)(4). 9 Second Report and Order, 18 FCC Rcd at 9226, ¶ 69; 47 C.F.R. § 54.521(e)(1). 10 Second Report and Order, 18 FCC Rcd at 9226, ¶ 70; 47 C.F.R. § 54.521(e)(4). 11 Second Report and Order, 18 FCC Rcd at 9226, ¶ 70. 12 47 C.F.R. § 54.521(e)(5). Mr. Arthur R. Scott October 18, 2007 Page 3 of 4 extraordinary circumstances, the Bureau will decide any request for reversal or modification of suspension within 90 days of its receipt of such request.13 II. Initiation of Debarment Proceedings Your guilty plea to criminal conduct in connection with the E-Rate program, in addition to serving as a basis for immediate suspension from the program, also serves as a basis for the initiation of debarment proceedings against you. Your conviction falls within the categories of causes for debarment defined in section 54.521(c) of the Commission’s rules.14 Therefore, pursuant to section 54.521(a)(4) of the Commission’s rules, your conviction requires the Bureau to commence debarment proceedings against you. As with your suspension, you may contest debarment or the scope of the proposed debarment by filing arguments and any relevant documentation within 30 calendar days of the earlier of the receipt of this letter or of publication in the Federal Register.15 Absent extraordinary circumstances, the Bureau will debar you.16 Within 90 days of receipt of any opposition to your suspension and proposed debarment, the Bureau, in the absence of extraordinary circumstances, will provide you with notice of its decision to debar.17 If the Bureau decides to debar you, its decision will become effective upon the earlier of your receipt of a debarment notice or publication of the decision in the Federal Register.18 If and when your debarment becomes effective, you will be prohibited from participating in activities associated with or related to the schools and libraries support mechanism for three years from the date of debarment.19 The Bureau may, if necessary to protect the public interest, extend the debarment period.20 13 See Second Report and Order, 18 FCC Rcd at 9226, ¶ 70; 47 C.F.R. §§ 54.521(e)(5), 54.521(f). 14 “Causes for suspension and debarment are the 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.” 47 C.F.R. § 54.521(c). Such activities “include 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 schools and libraries support mechanism described in this section ([47 C.F. R.] § 54.500 et seq.).” 47 C.F.R. § 54.521(a)(1). 15 See Second Report and Order, 18 FCC Rcd at 9226, ¶ 70; 47 C.F.R. §§ 54.521(e)(2)(i), 54.521(e)(3). 16 Second Report and Order, 18 FCC Rcd at 9227, ¶ 74. 17 See id., 18 FCC Rcd at 9226, ¶ 70; 47 C.F.R. § 54.521(e)(5). 18 Id. 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. 47 C.F.R. § 54.521(f). 19 Second Report and Order, 18 FCC Rcd at 9225, ¶ 67; 47 C.F.R. §§ 54.521(d), 54.521(g). 20 Id. Mr. Arthur R. Scott October 18, 2007 Page 4 of 4 Please direct any response, if by messenger or hand delivery, to Marlene H. Dortch, Secretary, Federal Communications Commission, 236 Massachusetts Avenue, N.E., Suite 110, Washington, D.C. 20002, to the attention of Diana Lee, Attorney Advisor, Investigations and Hearings Division, Enforcement Bureau, Room 4-C330, with a copy to Vickie Robinson, Assistant Chief, Investigations and Hearings Division, Enforcement Bureau, Room 4-C330, Federal Communications Commission. If sent by commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail), the response should be sent to the Federal Communications Commission, 9300 East Hampton Drive, Capitol Heights, Maryland 20743. If sent by first-class, Express, or Priority mail, the response should be sent to Diana Lee, Attorney Advisor, Investigations and Hearings Division, Enforcement Bureau, Federal Communications Commission, 445 12th Street, S.W., Room 4-C330, Washington, DC, 20554, with a copy to Vickie Robinson, Assistant Chief, Investigations and Hearings Division, Enforcement Bureau, Federal Communications Commission, 445 12th Street, S.W., Room 4-C330, Washington, DC, 20554. You shall also transmit a copy of the response via email to diana.lee@fcc.gov and to vickie.robinson@fcc.gov. If you have any questions, please contact Ms. Lee via mail, by telephone at (202) 418-1420 or by e-mail at diana.lee@fcc.gov. If Ms. Lee is unavailable, you may contact Ms. Vickie Robinson, Assistant Chief, Investigations and Hearings Division, by telephone at (202) 418-1420 and by e-mail at vickie.robinson@fcc.gov. Sincerely yours, Hillary S. DeNigro Chief Investigations and Hearings Division Enforcement Bureau cc: Kristy Carroll, Esq., Universal Service Administrative Company (via e-mail) Aaron M. Danzig, Esq., Assistant United States Attorney