3. Settlement Agreement

The Settlement Agreement addresses the issues raised by CPSD's protest for Applicant's failure to disclose the regulatory history of the affiliated Kingstone company. The Settlement Agreement requires that Applicant file an amended application with more complete disclosures and pay a $6,500 fine, in three installments, to the California General Fund. As required by the Settlement Agreement, on March 5, 2012, Applicant filed an Amended Application. In the Amended Application, Kingstone stated that the two omissions were unintentional and explained why they occurred. With regard to the revocation of Krossland's CPCN, Kingstone explained that Jesse Ahn, president of Krossland, was not aware that the CPCN had been revoked due to a language barrier that caused him to misunderstand the Commission's compliance requirements. With regard to the Attorney General subpoena, Kingstone explained that it did not disclose this information in its Application because it did not believe that Krossland specifically was the subject of the California Attorney General's investigation, but rather that the Attorney General was conducting an inquiry into the underlying prepaid phone service providers whose cards Krossland distributed. Further, after responding to a subpoena from the Attorney General for information, Krossland was not contacted again, and believed that the matter was closed. Kingstone accordingly did not believe it was required to disclose this investigation in the Application. Kingstone expressed regret for the errors in its Application and is submitting an Affidavit from Kingstone's vice president attesting that the company has retained a regulatory consultant to assist with regulatory compliance matters once Kingstone receives its CPCN.

As discussed herein, while these concerns raise questions as to Applicant's overall fitness to provide telephone services in California and commitment to comply with all of the regulatory mandates, the Settlement Agreement satisfactorily resolves those concerns.