II. COMPANY BACKGROUND

OSP is a Nevada Domestic Limited Liability Company with its principal place of business listed at 1100 S. 10^th Street, Las Vegas, Nevada.¹⁰ The records of the Nevada Secretary of State indicate John G. Vogel is the sole officer and managing member of OSP. In response to Staff's inquiry, Mr. Vogel confirmed his role as the Managing Member of OSP.¹¹ In his e-mail response dated October 15, 2009, Mr. Vogel stated, "I, John Vogel, am and was the only member of OSP Communications, LLC."¹²

A. osp

1. OSP Provides Collect Call and Prepaid Phonecard Services

Based on the information that Staff received from OSP and its current billing aggregator (TBR), OSP provides operator collect call and prepaid phonecard services. According to Mr. Vogel, OSP provides "collect call servicing" initiated on July 1, 2007.¹³ When Staff questioned the meaning of the acronym "OSP," Mr. Vogel stated it stood for "Operator Service Provider."¹⁴ TBR provided a clearer description and stated, "OSP Communications is an operator service provider for collect calls and also offers calling card service."¹⁵ TBR, however, could not provide further details regarding OSP's calling card services except to say that OSP had provided the above description of OSP's services to TBR.¹⁶

In response to Staff's further request for a clearer description of its target customers,¹⁷ Mr. Vogel indicated OSP targeted prepaid calling card customers and that its service provided convenience to the prepaid card customers because they are allowed another calling option once their prepaid card minutes expire.¹⁸

Mr. Vogel stated:

Collect call option was printed on the back of the pre-paid calling cards, where customers were told if they run out of time they could use a toll free number to make calls. Details included toll free number, costs per minute, and customer service number if questions.¹⁹

Based on OSP's representations to TBR and Mr. Vogel's statement above, it appears OSP offered prepaid calling card services in addition to its collect call service.

According to Mr. Vogel, a majority of its customers used OSP's services from pay phones and their residences, and that OSP's charges included the following: $2.50 operator charge, $1.00 surcharge, $1.05 per minute, and 11% Universal Service Fund fee.²⁰

2. OSP's Marketing Strategy is Inherently Fraudulent

As to how customers could access OSP's collect call services, Mr. Vogel stated:

Customers would dial a toll free access number that was provided on the back of the debit card which was purchased from convenience store locations. The instructions on the back of the debit card would inform that if they no longer had any usage minutes left they could still place a collect call by dialing the toll free number. Upon calling the toll free access number, they would be prompted to enter a destination number to be called and prompted to speak their name. The switching platform would then place a call to the desired destination and inform the answering party that had a collect call from, (play the originator's recorded name), and ask them to press "1" to accept the call or deny the call. If accepted the parties would be connected and end party would be billed.²¹

Based on Mr. Vogel's explanation above, it appears that there was only one option, number one ("1"), for a caller to press to either accept or deny the call. Ostensibly, because of the way OSP set up the prompt, the caller is billed even if the caller denied the collect call. This platform is inherently fraudulent and therefore, likely resulted in millions of dollars in unauthorized charges.

3. OSP Is Purportedly No Longer In Operation

Mr. Vogel informed Staff that OSP has been closed since the first quarter of 2009,²² and that it has ceased all business operations since May/June 2009.²³ Staff has received information from AT&T that it stopped receiving billing data from OSP's billing aggregator on or about April 4, 2009.²⁴ In addition, Verizon stated that it last processed billing charges on behalf of OSP in April 2009.²⁵ AT&T's and Verizon's assertions are consistent with the information provided by OSP's billing aggregator, which shows no billed revenues on behalf of OSP subsequent to April 2009 (see Table 4 below).

B. entities associated with osp

1. Billing Aggregators: The Billing Resource, LLC (TBR) and The Billing Resource dba Integretel (Integretel)

TBR is a Delaware limited liability company with its principal place of business located at 302 Enzo Drive, Suite 162, San Jose, California 95138. TBR is a billing aggregator (or a billing agent)²⁶ and provides billing services to OSP through a process commonly referred to as third-party billing by local exchange carriers (LECs).²⁷ In this process, TBR contracts with LECs (or local telephone companies) to include OSP's collect call charges as a line item in the telephone bills that LECs send to their customers. After receipt of customers' payments, the LECs would pass to TBR the OSP related payments. TBR in turn would pass the payments, less its fees, to OSP. (See also Section IV. for additional discussion on third party billing.)

TBR took over Integretel as OSP's billing aggregator on or about October 9, 2008, when Technologies Solution purchased the operating assets of Integretel from Integretel's bankruptcy estate (see discussion below) and then transferred the assets to a newly formed separate entity it named The Billing Resource (TBR). According to TBR, it kept the name TBR for customers' and parties' convenience. TBR terminated its contract with OSP effective June 3, 2009.²⁸ (See discussion in Section V below regarding TBR's OSP investigations and current lawsuit over revenues collected on OSP billings held by TBR.)

Integretel is a California corporation with its principal place of business located at 5883 Rue Ferrari, San Jose, California 95138. Integretel also acted as OSP's billing aggregator from approximately June 1, 2007 to October 8, 2008.²⁹ According to TBR, on or about September 16, 2007, Integretel filed a voluntary petition for Chapter 11, Title 11 of the United States Code in the United States Bankruptcy Court for the Northern Division of California, San Jose Division (Case No. 07-52890-ASW). According to a declaration in a case discussed in Section V below, Integretel may also possess a significant amount of revenues it collected on OSP's behalf.

2. Underlying Carrier Purportedly Providing Dial Tone: EKC Telecom, Inc. (EKC)

EKC was a California corporation incorporated on July 27, 2005.³⁰ The California Secretary of State's website indicates EKC's current status as "suspended."³¹ The company was located at 3580 Wilshire Boulevard, Suite 1622, Los Angeles, CA 90010. Jin Ra was listed as EKC's president. Staff found no evidence that the Commission ever granted operating authority to EKC.

In response to Staff's data request, Mr. Vogel indicated EKC acted as its underlying carrier and submitted a copy of their contract.³² The contract, however, was mostly illegible³³ and Staff could not verify the services EKC provided to OSP. Staff thrice (on January 11, 2011, April 14, 2011 and May 6, 2011)³⁴ requested a legible copy, but Mr. Vogel could or did not produce one.³⁵ In reply to Staff's April 14, 2011 e-mail inquiry as to whether EKC would have a legible copy of the contract,³⁶ Mr. Vogel indicated EKC closed in 2009. Mr. Vogel also stated that the e-mail he sent to EKC's president came back undelivered and EKC's numbers have been disconnected.³⁷

In another e-mail request sent on May 6, 2011,³⁸ Staff asked OSP to submit a list and an explanation of the specific services that EKC provides or provided OSP in accordance with the EKC/OSP contract, including the records and reports that EKC provided OSP in the course of their contract. To date, Mr. Vogel has not replied to this request.

C. osp's sole officer john g. vogel is associated with numerous telecommunications companies, one of which was the subject of numerous cramming complaints for unauthorized collect calls

In the course of its investigation, Staff found Mr. Vogel, OSP's sole officer and managing member, held various positions and responsibilities in numerous telecommunications companies. For example, Mr. Vogel acted as the president, vice president, CFO and director of Link Systems, Inc. (Link),³⁹ a company that appeared to have also provided collect call services like OSP, based on the CAB complaints that Staff reviewed.⁴⁰ Additionally, CPSD investigated Link beginning September 2006 because of tens of thousands of cramming allegations reported by its billing aggregator, ILD, Telecommunications, Inc. (ILD). Subsequently, ILD suspended its billing for Link in January 2007 and the 2007 total complaints decreased considerably. (AT&T also informed CPSD it had stopped receiving Link billing from ILD in January 2007.)⁴¹ CPSD monitored the billing aggregator reports for several months to ensure Link was no longer billing California consumers, and then closed its investigation in June 2007 without further action.

Staff also noted Mr. Vogel was associated with Global Access LD, LLC (Global), which was granted authority by the Commission through Decision 04-02-043⁴² to operate as a switchless reseller of inter-Local Access and Transport Area (LATA) and intra-LATA telecommunications services (to the extent authorized by Decision 94-09-065). However, Global failed to comply with Commission filing requirements and consequently the Commission revoked its operating authority through Resolution T-17228,⁴³ dated November 20, 2009.

Mr. Vogel also served as the manager of True LD, LLC (True), which is a prepaid calling card service provider that registered with the Utah Department of Commerce⁴⁴ and Arizona Corporation Commission.⁴⁵ True and STi Prepaid, LLC filed an application with the Federal Communications Commission to transfer True's assets related to the provision of prepaid calling card services to STi Prepaid.⁴⁶ This demonstrates Mr. Vogel's experience with prepaid calling cards.

Table 1 below⁴⁷ list the telecommunications companies associated with Mr. Vogel that Staff has been able to find thus far. Through associations with these entities, Staff believes Mr. Vogel acquired knowledge and familiarity with the operations and practices of the telecommunications industry, including third party billing by local exchange carriers. As explained in greater detail below (see Section IV), Staff believes OSP and Mr. Vogel took advantage of the third party billing process, which the Court in FTC v. Inc21.com Corp, supra, described as "fraud friendly."⁴⁸

Table 1

Entities Associated with John G. Vogel

	Name of Entity	State	John Vogel's Role
1	Biznet USA, Inc.	AZ	President/CEO
2	CCI Communications, Inc.	AZ	Owner
3	Creative Communications, Inc.	AK	Director
4	Communications Worldwide Network, Inc.	AZ	Secretary
5	Enlace Communications International Inc.	AZ	President/CEO
6	Global Access LD, LLC (U-6855)	UT	Not indicated
7	Hola Latino Tarjeta Telefonica Prepagada	AZ	Not indicated
8	La Conexion Internacional, Inc.	AZ	Secretary
9	Link Systems, Inc.	AZ	President/CEO
10	Telplex, Inc.	AZ	Statutory Agent
11	True LD, LLC	AZ	Manager

Source: Lexis Nexis

¹⁰ Attachment 1 (Printout of information from the State of Nevada website: https://nvsos.gov).

¹¹ Attachment 2 (OSP Response, received March 8, 2011, to CPSD Data Request No. 4 dated January 11, 2011).

¹² Attachment 3 (OSP Response dated October 15, 2009 to CPSD Data Request No. 1.0 dated October 12, 2009).

¹³ Id.

¹⁴ Attachment 2 (OSP Response, received March 8, 2011, to CPSD Data Request No. 4 dated January 11, 2011).

¹⁵ Attachment 4C (Copies of TBR letters to CPUC Consumer Affairs Branch). Attachments with "C" after the attachment number indicates that the attachment contains confidential material.

¹⁶ Attachment 5C (TBR e-mail Response dated April 1, 2011).

¹⁷ Attachment 2 (CPSD Data Request No. 4 dated January 11, 2011).

¹⁸ Ibid. (OSP Response received on March 8, 2011 by CPSD).

¹⁹ Id.

²⁰ Id.

²¹ Id.

²² Attachment 3 (OSP Response dated Oct 15, 2009 to CPSD Data Request No. 1.0 dated October 12, 2009). Staff, however, found information on the website of the Nevada Secretary of State that states OSP remains an active company. (See Attachment 1 for a printout of information from the State of Nevada website: https:nvsos.gov).

²³ Attachment 6 (OSP e-mail Response dated February 2, 2011).

²⁴ Attachment 7C (AT&T Response dated June 17, 2010).

²⁵ Attachment 8C (Verizon Response dated March 10, 2011).

²⁶ A billing agent or a billing aggregator is any entity that provides billing services to service providers directly or indirectly through a billing telephone company. A billing telephone company is a telephone corporation pursuant to Section 234 that bills a subscriber for products and services. (Source: Decision 10-10-034, Attachment A, Revised General Order 168, Part 4, Rule 2.1, at p.1.).

²⁷ As an alternative to in-house billing, certain communications providers (or third party vendors) may choose to have the local exchange carrier (LEC) bill and collect for them for a fee. Typically, this process involves four entities: (1) LECs, (2) billing aggregators (also called "clearinghouses"), (3) third party vendors (such as OSP), and (4) customers. For a fee, the LECs allow preapproved third party vendors to place the charges for their products and services in the LECs' telephone bills. Although, these third party vendors' charges are generally listed separately from the LEC charges on the telephone bills, the "total amount due" presented to customers includes third party vendor charges. In this process, the billing aggregators act as "middle men" between the third party vendors and LECs and contract directly with these two parties to facilitate the placement of the third party vendors' charges onto the telephone bills sent by LECs to their customers. The LECs receive the customers' "total payments" which include the third party vendors' charges. After deducting their fees, the LECs pass the payments for the third party vendors' products or services to the billing aggregators, who in turn pass the payments to the third party vendors. Like the LECs, the billing aggregators would pass along the payments after they have deducted their service fees. (Source: FTC v INC.21.COM; http://ftc.gov/os/caselist/0923171/100930inorder.pdf)

²⁸ Attachment 9C (TBR Response dated May 10, 2010 to CPSD's Data Request No. TBR TEL277-001 dated April 1, 2010).

²⁹ Id. The contract between Integretel and OSP indicates a June 1, 2007 initial contract date.

³⁰ Attachment 12C (Printout of results of LexisNexis search about EKC Telecom, Inc.).

³¹ Attachment 13 (California Secretary of State document).

³² Attachment 10 (OSP Response to CPSD Data Request No. TEL-277-003 dated September 23, 2010).

³³ Ibid. (See Contract between OSP and EKC, Inc.).

³⁴ Attachment 2 (See CPSD Data Request No. 4 dated January 11, 2011); Attachment 11 (See CPSD , April 14, 2011 and May 6, 2011).

³⁵ Attachment 2 (OSP Response, received on March 8, 2011, to CPSD Data Request No. 4 dated January 11, 2011); OSP e-mail dated April 14, 2011 and April 15, 2011 to CPSP e-mail request dated April 14, 2011) On May 6, 2011, CPSD sent another follow up e-mail As of this writing, OSP has not provided a legible copy of the contract between OSP and EKC.

³⁶ Attachment 11 (Staff e-mail dated April 14, 2011).

³⁷ Ibid. (See OSP e-mail dated April 14, 2011).

³⁸ Ibid. (See CPSD e-mail dated May 6, 2011).

³⁹ Attachment 26C (AT&T e-mail Response dated March 4, 2011).

⁴⁰ Attachment 15 (Complaints against Link Systems).

⁴¹ Attachment 26C (AT&T e-mail Response dated March 4, 2011).

⁴² Attachment 16 (Copy of Decision 04-02-043).

⁴³ Attachment 17 (Copy of Resolution T-17228).

⁴⁴ Attachment 18 (Printout of information from Utah Department of Commerce).

⁴⁵ Attachment 19 (Printout of information from Arizona Corporation Commission).

⁴⁶ Attachment 20 (Printout of Public Notice from the Federal Communications Commission).

⁴⁷ Attachment 14C (Printout of the results of LexisNexis search).

⁴⁸ FTC v. Inc21.com Corp., supra,745 F. Supp. 2d 975, 982 (N.D. Cal. 2010).