4. The Testimony and Motion to Admit

The parties reached settlement before the start of evidentiary hearings in this proceeding and, as a consequence, the testimony of the parties has not yet been made a part of the record. On July 26, 2010, CPSD served Opening Testimony of Nora Y. Gatchalian (public version) and Testimony of Nora Y. Gatchalian (confidential version). Ms. Gatchalian is a Public Utilities Regulatory Analyst V and the author of the Staff Report for CPSD. On September 7, 2010, Americatel served prepared Rebuttal Testimony by the following:

o Testimony of Robert Felgar. Mr. Felgar is General Counsel for Americatel.

o Testimony of Nermin Selimic. Mr. Selimic is Executive Vice President of Marketing and Business Development for Americatel.

o Testimony of William R. Schulte. Mr. Schulte is offered as an expert, formerly head of the predecessor division to CPSD, hired to evaluate Americatel's culpability in this proceeding, including an analysis of CPSD's investigation.

CPSD served Reply Testimony from Ms. Gatchalian (confidential version) on September 29, 2010. CPSD did not serve the "confidential" versions of Ms. Gatchalian's Opening or Reply testimony under seal, nor did it file any Motion to File Testimony Under Seal.

On March 29, 2011, the Settling Parties filed a joint motion for admission of public versions of the testimony, solely for purposes of consideration of the proposed settlement. They requested admission of the testimony by Nermin Selimic, William R. Schulte, and Robert Felgar submitted by Americatel. They also asked for admission of the opening testimony of Nora Gatchalian including CPSD's Supplemental Staff Report and Ms. Gatchalian's rebuttal testimony including attachments 1 and 3. No opposition to the request was filed. The Settling Parties' motion is granted as set forth in Attachment B. The record in this proceeding shall consist of all filed documents, including the Staff Report, and the testimony identified in Attachment B. The matter is submitted as of April 1, 2011.

4.1. Gatchalian Opening Testimony

Ms. Gatchalian's (public) opening testimony consisted of affirming her authorship of the Staff Report which was filed with the OII and provision of a supplemental report that detailed CPSD interviews with some California customers who claimed not to have received a promised refund and included a data response from Americatel. CPSD concluded that Americatel had not made all necessary credits or refunds and made findings and recommendations to impose special conditions on Americatel to improve compliance with §2890(a) and address the issues in the supplemental report. The confidential version included an attachment to Americatel's data response which identified customer inquiries made between March and December 2009 and included customer specific information.

4.2. Felgar Testimony

Mr. Felgar's testimony included sponsorship of several data responses by Americatel which described the qualifications of the company's former sales executive (Mr. Krauss) who hired Bravo, the company's due diligence prior to retaining Bravo, essential provisions to the marketing agreement to assure that Bravo complied with state and federal law and to eliminate any incentive for fraudulent sales, Americatel's activities monitoring Bravo, actions taken to determine Bravo's fraud, the nature of the fraud, actions taken to issue credits and refunds to make customers whole, and other actions by Americatel in response to the fraud. Mr. Felgar asserted that Americatel exercised due diligence, reacted properly, provided consumers with full credit even if they did not complain, and voluntarily disclosed the problem to the Commission.

4.3. Selimic Testimony

Mr. Selimic's (public) testimony included sponsorship of several data responses by Americatel, a description of Americatel's services and marketing practices, its positive relationship with regulators, dispute of CPSD's "cramming" description, an account of Americatel's due diligence in hiring Mr. Krauss, an explanation of how Americatel worked with Bravo and responded to the discovery of fraud, an itemized discussion of several customer credits at issue, adoption of a new billing system to avoid future billing problems, an explanation for some credit delays, agreement with CPSD's recommendations for corrective measures to prevent future billing errors, denial of any financial benefit to Americatel from the billing errors, and dispute over CPSD's recommended audit of the credits given. Attached to the Selimic testimony was a Report on Tariff Compliance for Americatel issued by the Florida Public Service Commission in 2007. The confidential version included documentation of Americatel's follow-up on specific customer complaints.

4.4. Schulte Testimony

Mr. Schulte's testimony included his opinion that the Staff Report was flawed because it (a) failed to include evidence of mitigation and the existence of exculpatory facts and/or evidence, (b) shaded facts to support the Staff Report's conclusions, (c) ignored evidence of Americatel's due diligence before retaining Bravo, including placement of certain provisions in the marketing agreement, and (d) excluded facts about monitoring of Bravo's marketing activities. In addition, he asserted that (a) one time billing errors cannot legally be characterized as "cramming," (b) CPSD's own limited telephone survey of 18 customers is insufficient to support the Staff's supplemental conclusions, (c) Americatel responded promptly to customer complaints under the circumstances, (d) Americatel appropriately investigated the actions of both Bravo and its own employees, (e) Americatel had suspended use of face-to-face marketing, (f) Americatel had already integrated several CPSD recommendations into its operating protocols, and (g) no fines or sanctions should be imposed.

4.5. Gatchalian Reply Testimony

Ms. Gatchalian's (public) reply testimony responds to the testimony of Americatel's witnesses. For example, Ms. Gatchalian defends the conclusions of the Staff Report and supplemental report, and disputes legal and factual conclusions of the Americatel witnesses. Testimony at pages 12 - 23 includes references to customer home telephone numbers which have been redacted pursuant to Commission practice. The testimony also includes two of four attachments: (1) data responses by Americatel, and (3) Americatel letter to CAB. The confidential version of her testimony included attachments: (2) copies of consumer complaints filed with CAB and (4) a CD-ROM containing AT&T billing statements for numerous Americatel customers from May through July 2010.