Federal Communications Commission DA 97-230
Before the
FEDERAL COMMUNICATIONS COMMISSION 
Washington, D.C. 20554
In the Matter of
Interstate Savings, Inc. 
d/b/a ISI Telecommunications
Apparent Liability for Forfeiture
File No. ENF-95-14
NAL/Acct. No. 516EF0004
MEMORANDUM OPINION AND ORDER
Adopted: March 10, 1997; Released: March 11, 1997
By the Chief, Common Carrier Bureau:
I. INTRODUCTION
1. We consider herein a Reply to Notice of Apparent Liability for Forfeiture filed by 
ISI Telecommunications ("ISI"). On August 18, 1995, the Common Carrier Bureau ("Bureau") 
issued a Notice of Apparent Liability for Forfeiture ("NAL"),' finding that ISI had willfully 
violated Commission rules and orders by changing the primary interexchange carrier ("PIC") 
designated by Knicely & Cotorceanu, P.C. ("K&C") without K&C's authorization.2 Based on 
the following reasons, we rescind the proposed forfeiture amount.
D. BACKGROUND
2. In the ISI NAL, we reviewed information obtained in connection with an informal 
complaint filed by K&C3 and found that ISI apparently changed or caused a local exchange 
carrier to change the PIC for K&C's telephone line without K&C's authorization through the use
1 Interstate Savings. Inc. d/b/a ISI Telecommunications, 10 FCC Red 10877 (Com. Car. Bur. 1995) ("/S/
NAL").
: The practice of changing a customer's PIC without the customer's authorization is commonly referred to 
as "slamming."
3 See Knicely & Cotorceanu, P.C., Informal Complaint No. IS-95-11136.
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Federal Communications Commission DA 97-230
of an apparently forged letter of agency ("LOA").4 We ruled that ISI thereby willfully violated 
the Commission's rules governing unauthorized PIC conversions5 and that its conduct warranted 
a forfeiture of forty thousand dollars ($40,000).6
3. On October 18, 1995, ISI filed a response requesting the Commission to rescind 
the proposed forfeiture ("Response"). In its Response, ISI argues that its management had no 
prior knowledge of the slamming incident and that a "rogue" employee was the individual 
responsible for forging K&C's LOA. ISI argues that it could not have acted willfully for 
purposes of assessing a forfeiture pursuant to Section 503(b)(l)(B) of the Communications Act 
of 1934, as amended,7 because it had no knowledge that this employee converted K&C's 
telephone line without K&C's authorization. ISI also informed the Bureau that it filed for 
Chapter 11 bankruptcy protection in February 1994 and claimed that any additional expenses or 
fines would adversely impact ISI's ability to make payments under its proposed Chapter 11 plan 
of reorganization.8 ISI converted to Chapter 7 liquidation on June 4, 1996 and John T. Carroll, 
III, was appointed trustee of the ISI estate.9
4 757 NAL, 10 FCC Red at 10879. An LOA is a document, signed by the customer, that states that the 
customer has selected a particular carrier as that customer's primary long distance carrier. Investigation of 
Access and Divestiture Related Tariffs, 101 FCC 2d 911. 929 (1985) (Allocation Order), reconsideration denied. 
102 FCC 2d 503 (1985); Policies and Rules Concerning Unauthorized Changes of Consumers' Long Distance 
Carriers, CC Docket No. 94-129. Report and Order, 10 FCC Red 9560 (1995) (Report and Order).
5 See 47 C.F.R. § 64.1150; Policies and Rules Concerning Long Distance Carriers, 7 FCC Red 1038 
(1992) (PIC Change Order), reconsideration denied, 8 FCC Red 3215 (1993); Allocation Order, Investigation of 
Access and Divestiture Related Tariffs, Phase 1,101 FCC 2d 935 (1985) (Waiver Order); Report and Order.
6 Id. We have advised carriers that we view slamming through the use of forged LOAs to be particularly 
egregious and have proposed substantial fines against carriers found to have committed this practice. See. e.g., 
Long Distance Services, Inc., DA-2101 (rel. Dec. 17, 1996) ($80,000 proposed forfeiture for using forged LOAs 
to slam consumers); Excel Telecommunications, Inc., DA-96-1009 (rel. June 21, 1996) ($80.000 forfeiture for 
using forged LOAs to slam consumers). We have entered into consent decrees with carriers who agree to take 
additional steps to prevent slamming and who agree to make a voluntary payment to the Treasury. See MCI 
Communications Corporation, 11 FCC Red 12630 (Com. Car. Bur. 1996); Nationwide Long Distance. Inc., DA- 
97-6 (rel. Jan. 24, 1997).
7 47U.S.C. § 503(b)(l)(B).
1 ISI filed for Chapter 11 protection in the United States Bankruptcy Court for the Eastern District 01' 
Pennsylvania, Bankruptcy Case No. 95-11365DWS.
Determining the status of the forfeiture is important in assessing any impact it may have on distribution of 
estate assets to other creditors. Because ISI converted to Chapter 7, the forfeiture would be considered a prepetition 
claim for purposes of distribution. See \ \ U.S.C. § 348 (d). As a prepetition claim, the forfeiture would compete 
for payment with all the other prepetition claims pursuant to the priority of payment provided in I) U.S.C. § 507.
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Federal Communications Commission DA 97-230
III. DISCUSSION
4. We will rescind the proposed forfeiture amount, albeit for reasons other than the 
justifications presented by ISI. Despite ISI's claim that it could not have acted willfully in this 
instance because it had no knowledge of the unauthorized conversion of K&C's phone line, it has 
long been established that the word "willfully," as employed in Section 503(b) of the Act, does 
not require a demonstration that ISI knew that it was acting unlawfully. Rather, this section 
requires only a showing that ISI knew it was doing the acts in question and that the acts were 
not accidental.10 The Act deems the acts or omission of an agent or other person acting for a 
common carrier to be actions of the carrier as well as that of the person." Section 217 states:
In construing and enforcing the provisions of this Act, the act, omission, or failure 
of any officer, agent, or other person acting for or employed by any common 
carrier or user, acting within the scope of his employment, shall in every case be 
also deemed to be the act, omission, or failure of such carrier or user as well as 
that of the person.12
Therefore, under the circumstances of this case, the willful act of ISI's employee, which resulted 
in the unlawful conversion of K&C's telephone service, is imputed to ISI, and we hold ISI fully 
responsible for its employee's action.
5. In assessing a forfeiture, however, we are required to take into account a number 
of factors, among them the ability to pay and such other matters as justice may require. 13 The 
Commission has generally given considerable weight to a respondent's bankruptcy status in 
determining whether a recision of a forfeiture is warranted. 14 Given the bankrupt status of ISI, 
we believe that it is appropriate to rescind the forfeiture against it. The appointment of the 
Chapter 7 trustee removes ISI from any involvement in the dissolution of business operations or 
the distribution of ISI assets. We believe that requiring the bankruptcy trustee to pay the 
forfeiture under these circumstances would diminish the size of the Chapter 7 estate and the 
amount of money available to other ISI creditors who have no connection to the slamming 
violation underlying the forfeiture and would therefore serve no public interest purpose.
10 See The Computer Force, 1 FCC Red 2687 (1992); Midwest Radio-Television. Inc., 45 FCC 1 137 
(1963).
" 5ee47U.S.C §217.
A.'. 
" 47 U.^."
14 Sue Dennis Elam. Trustee, 1 1 FCC Red 1137 (1996) (Commission rescinded a $25,000 Notice of 
Apparent Liability where a licensee's stations had been transferred to a trustee under Chapter 7 of the 
Bankruptcy Act); see also Diamond Broadcasting of California, Inc., \ 1 FCC Red 7388 (1996) (Commission 
rescinded a forfeiture issued against an entity that had been turned over to a receiver).
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Federal Communications Commission DA 97-230
6. We emphasize, however, that our decision to rescind the forfeiture in no way 
exonerates ISI for its unlawful actions. As indicated above, ISI committed a particularly egregious 
violation of the Commission's PIC-change rules when it caused the conversion of K&C's 
telephone service through the use of a forged LOA. We note that while the slamming violation 
in this instance occurred while ISI was in Chapter 11 reorganization, it subsequently converted 
to Chapter 7 liquidation, and thus will no longer continue to operate as a common carrier. We 
will not hesitate to scrutinize a carrier's compliance with the Act and our rules and orders while 
in bankruptcy and take enforcement action where appropriate, particularly if the carrier at issue 
plans to continue operation both during and after the Chapter 11 reorganization process.
IV. ORDERING CLAUSES
7. Accordingly, IT IS ORDERED pursuant to Section 504(b) of the Communications 
Act of 1934, as amended, 47 U.S.C. § 504(b), and Sections 0.91 and 0.291 of the Commission's 
rules. 47 C.F.R. §§ 0.91 and 0.291, that the proposed forfeiture of $40,000 issued to Interstate 
Savings. Inc. d/b/a ISI Telecommunications IS RESCINDED.
8. IT IS FURTHER ORDERED that a copy of this Memorandum Opinion and Order 
be sent by Certified Mail, return receipt requested, to John T. Carroll, III, Esq., Swartz, Campbell 
& Derweiler, 1601 Market Street, 34th Floor, Philadelphia, PA 19103.
FEDERAL COMMUNICATIONS COMMISSION
Regina M. Keeney
Chief, Common Carrier Bureau
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