7. Assignment of Proceeding
Geoffrey F. Brown is the Assigned Commissioner and Glen Walker is the ALJ and Presiding Officer in this proceeding.
1. This investigation is an outgrowth of D.03-02-066, which denied Clear World's application to provide local exchange service, imposed sanctions on the company, and directed further investigation by CPSD.
2. Christopher Mancuso organized most of the telephone companies operated by the Mancuso family.
3. Christopher Mancuso, with a partner from outside the family, formed NTC in 1989.
4. In February 1989, by D.98-02-029, the Commission fined NTC $1.2 million for slamming violations and required $335,000 in restitution to customers.
5. DLD was organized in 1995 with Joseph Mancuso as president and Michael Mancuso as general manager.
6. DLD in 1997 purported to become the agent of AmeriVision, a certified reseller of telephone services, for the sale of long distance service to the public under AmeriVision's tariffs.
7. Worldwide was incorporated in 1998 with Joseph Mancuso as chief executive officer and James Mancuso as agent for service of process.
8. Worldwide in August 1998 purportedly became the agent of WorldTel, a certified reseller of telephone services, for the sale of long distance service to the public under WorldTel's tariffs.
9. On February 4, 1999, the Commission's chief enforcement officer notified Worldwide that its sales under WorldTel's tariffs were unlawful and directed that such sales cease immediately.
10. Worldwide in February 1999 met with Commission staff, ceased the sale of telephone services, amended its agreement with WorldTel and filed an application for registration as a reseller in its own name.
11. Worldwide's application for reseller authority was never granted and was withdrawn in April 2002.
12. Clear World was incorporated on May 11, 1998 with Michael Mancuso as chief executive officer and James Mancuso as general counsel, and was authorized to resell long distance and local long distance service in D.98-08-056.
13. At the height of its business in 2003, Clear World had 750 employees generating 30,000 new orders a month in 32 states, with telemarketer operations in five California locations.
14. By November 2004, Clear World had closed all of its telemarketer offices except one in Santa Ana, had reduced headcount to 130 employees, and was showing a net loss in operating income.
15. In November 2004, Clear World reported that it had approximately 100,000 customers nationwide, with about 20,000 of them in California.
16. Christopher Mancuso served DLD, WorldWide and Clear World through two consulting companies he had incorporated, CCI and ITC.
17. In 1996, Christopher Mancuso negotiated a contract in which MCI provided discounted prices for underlying long distance service by combining the sales of the telephone companies owned by or associated with the Mancusos.
18. Christopher Mancuso in 1986 had been convicted of felony mail fraud and in 1987 served six months in prison.
19. Christopher Mancuso did not appear in this proceeding, and CPSD was unsuccessful in serving him with a subpoena requiring his appearance.
20. DLD's agreements with a billing aggregator and others identified DLD as a "reseller of long distance telecommunications services," and not as an agent for such services.
21. AmeriVision testimony and documents identified DLD as doing business as a reseller of long distance telecommunications services.
22. AmeriVision in 1998 notified DLD that their relationship would be terminated unless DLD obtained certification as a reseller.
23. Christopher Mancuso has never testified before the Commission on the subject of DLD sales.
24. James Mancuso and Michael Mancuso testified before the Commission on the subject of DLD sales but said such sales related to DLD's agency status.
25. SBC in 2003 received 14,000 PIC disputes (representing about 7,000 individual complaints) against Clear World.
26. SBC's "winback program" in PIC dispute matters was criticized by the Commission in D.04-12-053 for its potential to generate inaccurate reports of slamming.
27. A no-fault system governs PIC disputes, and customers who complain are switched back to their previous carrier without investigation of the complaint.
28. Six former employees of Clear World in Fresno and Los Angeles testified that they overheard other Clear World telemarketers make misrepresentations to potential customers.
29. Six former Clear World customers testified that they called SBC to complain that their long distance service had been switched by Clear World.
30. Verification tapes show that the six former Clear World customers confirmed the switch in service by Clear World.
31. A Latino Issues Forum expert was not aware at the time he stated his opinion that Clear World monitored calls of telemarketers, that all sales were confirmed in a verification process, or that a welcome letter was sent to new customers of Clear World.
32. A research group retained to interview 107 Latino customers was under the mistaken impression that a PIC dispute was a slam and was not aware that verification tapes were on file for all of the customers.
33. The only specific allegation of cramming concerned a Universal Service Charge of $22.44 on a customer's bill in April 2002, a month in which the customer had no charges for telephone calls. However, the charge actually related to the prior month's telephone calls instead of April calls.
34. Clear World telemarketers are required to undergo two days of training before they are permitted to make calls.
35. Clear World telemarketers are disciplined for significant departures from an approved sales script.
36. Clear World monitors the calls of its telemarketers.
37. All Clear World sales are confirmed by an independent third-party verifier.
38. A confirmation letter is mailed to each new Clear World customer explaining terms of service and providing a number to call if the customer has questions.
39. Applicants for telecommunications reseller authority are not required to disclose the identities of their consultants.
40. Staff lacks sufficient information to determine whether Clear World underpaid or overpaid state and federal surcharges.
41. Stephens, Reidinger, certified public accountants, conducted a required audit of Clear World.
42. Clear World produced more than 5,000 pages of documents in response to CPSD data requests, and it offered to make available for copying all documents stored in its warehouse.
43. The Commission's Executive Director delegated his authority to CPSD to examine utility witnesses under oath.
1. DLD operated as a reseller of long distance service without certification by this Commission in violation of Pub. Util. Code § 1001 or § 1013(a).
2. Christopher Mancuso in 1997 knew or should have known that DLD's operation was contrary to Commission regulations.
3. Worldwide operated as a reseller of long distance service without certification by this Commission in violation of Pub. Util. Code § 1001 or § 1013(a).
4. The record does not show a violation of Pub. Util. Code § 2114 or of the Commission's Rule 1 in testimony regarding DLD sales.
5. PIC disputes standing alone are not proof of slamming.
6. While hearsay testimony is admissible in administrative hearings, it cannot without corroboration be the basis of a finding that slamming occurred.
7. The evidence of record is insufficient to demonstrate that Clear World systemically engaged in slamming in violation of Pub. Util. Code § 2889.5.
8. There is no evidence that demonstrates cramming by Clear World.
9. Neither the Public Utilities Code nor Commission regulations require an applicant for reseller authority to disclose the identities of its consultants.
10. Clear World violated Pub. Util. Code § 854 in 1998 when it purchased DLD's assets without first obtaining Commission approval.
11. There is insufficient evidence to determine whether Clear World overpaid or underpaid federal and state surcharges in 2002 or 2003.
12. CPSD has not shown duplicity by Clear World and its CPA firm in carrying out the audit requirements of D.03-02-066.
13. CPSD has not presented persuasive evidence of non-compliance with business record disclosure requirements of the Public Utilities Code.
14. CPSD has collected and compiled evidence in this case in full compliance with governing statutes.
15. Pub. Util. Code § 1013(h) authorizes a fine of up to $20,000 per day, multiplied by the number of days in which the violation occurred, for violation of Pub. Util. Code § 1001 or § 1013(a).
16. The Commission should determine the extent of a fine under Pub. Util. Code § 1013(h) pursuant to the guidelines in D.98-12-075.
17. A fine totaling $100,000 should be imposed for two violations of Pub. Util. Code § 1001 or § 1013(a) and for one violation of Pub. Util. Code § 854.
18. Clear World should be directed to serve an annual compliance report on the Director of the Telecommunications Division for the years 2005, 2006 and 2007.
19. The appeals filed by CPSD and Latino Issues Forum should be denied.
IT IS ORDERED that:
1. Clear World Communications Corporation (Clear World) is fined $100,000 for (i) violation of Pub. Util. Code § 1001 or § 1013(a) in the unauthorized sale of long distance service through two of its predecessor companies, American Electronics Corporation doing business as Discount Long Distance (DLD), and Worldwide Telecommunications Corporation, and (ii) violation of Pub. Util. Code § 854 in the 1998 purchase of the assets of DLD without Commission authorization.
2. The penalty imposed by Ordering Paragraph 1 is due and payable to the State of California General Fund within 90 days of the date of this decision. Proof of payment shall be served on the service list and shall be provided to the Director of the Telecommunication Division within five days of payment.
3. All other allegations brought against Clear World by the Consumer Protection and Safety Division (CPSD) are dismissed.
4. Clear World's allegation that CPSD investigatory techniques were unlawful is dismissed.
5. Clear World is directed to file an annual compliance report on or before December 31 in the years 2005, 2006 and 2007. The compliance report, to be served on the Director of the Telecommunications Division, shall be certified by two officers of Clear World and shall state in detail (1) the names of all shareholders, officers and consultants of the company during the year; (2) the company's dealings, if any, with Christopher Mancuso or any entity controlled by or associated with Christopher Mancuso during the year; (3) the number of PIC disputes filed against the company in California or attributable to California customers during the year as compared to the number of PIC disputes filed against the company the preceding year; (4) the number of complaints alleging slamming filed during the year with this Commission and with the Federal Communications Commission, and the disposition of each such complaint; (5) the number of new California customers added by Clear World, and the number of California customers lost by Clear World, during the year; (6) the amount of surcharges paid by Clear World during the year; and (7) a description of Clear World's program during the year to ensure compliance with Pub. Util. Code § 2889.5. The compliance report shall be accompanied by documents that will permit the Commission to verify the data supplied in the report.
6. The Director of the Telecommunications Division is directed to report to the Commission any deficiencies in operations or customer service that the division detects in Clear World's compliance reports, with recommendations for corrective action.
7. The appeals filed by CPSD and the Latino Issues Forum are denied.
8. Investigation 04-06-008 is closed.
This order is effective today.
Dated June 16, 2005, at San Francisco, California.
MICHAEL R. PEEVEY
President
GEOFFREY F. BROWN
SUSAN P. KENNEDY
DIAN M. GRUENEICH
JOHN A. BOHN
Commissioners
