FCC Proposes Significant Fines for Alleged ACP and Federal Wire Fraud Statute Violations

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The FCC has issued a Notice of Apparent Liability for Forfeiture and Order Initiating Removal Proceeding (NAL) proposing a penalty of $16,971,253 against City Communications, Inc. (City) for allegedly willfully and repeatedly violating FCC rules related to the Emergency Broadband Benefit (EBB) Program, the Affordable Connectivity Program (ACP), and the federal wire fraud statute, from at least January 2022 to August 2023.  The FCC has also issued an NAL proposing a penalty of $14,021,293 against Tone Communication Services LLC (Tone) for similar alleged violations that occurred from at least July 2022 through June 2023. 

City and Tone allegedly: (1) sought and received EBB and ACP funding support for subscribers that were improperly enrolled in such programs; (2) enrolled these subscribers with fake or false identifying information; (3) improperly received millions from the EBB and ACP; (4) falsely and repeatedly certified in their reimbursement requests to the FCC and the Universal Service Administrative Company that they were in compliance with the FCC’s rules; and (5) submitted reimbursement requests via interstate wires in apparent violation of the federal wire fraud statute. 

Furthermore, the FCC’s Enforcement Bureau (Bureau) found that City and Tone apparently: (1) violated ACP rules governing the transfer of subscriber benefits from one provider to another; (2) made willful and repeated misrepresentations to the FCC in their applications and election notices to participate in the EBB and ACP, and to the Bureau during its investigation; and (3) failed to respond to the Bureau’s Letters of Inquiry

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