IV. Background of Worldwide, Clear World
and the Mancusos

Clear World is owned by Michael Mancuso (90%), James Mancuso (5%), and Joseph Mancuso (5%). In addition, Christopher Mancuso provides services to Clear World. Joseph Mancuso is the father of James, Michael and Christopher Mancuso. Therefore, examination of the fitness of Clear World to provide telecommunications services in California necessitates a look at the actions of these men in connection with this application, and before. Such examination necessarily requires an examination of Worldwide, because the Mancusos owned and operated Worldwide, which did business with Clear World. We shall begin with background on Worldwide.

Worldwide

Worldwide was incorporated by Christopher Mancuso, and owned by Joseph Mancuso. James Mancuso was its general counsel.

Worldwide entered into an agreement with World Tel Services, Inc. (WTS), a certified interexchange reseller, to use WTS's tariffs and operating authority for which WTS would receive a fee. All operations were to be performed by Worldwide. At that time, WTS had no operations.

Worldwide's services were marketed by World Technologies Marketing, Inc. (WorldTech) whose officers were Christopher Mancuso and Jerry Ballah.¹ Worldwide's long distance minutes, and office functions such as billing, service provisioning, and data entry, were provided by Clear World.

CSD's² director wrote a letter, dated February 4, 1999, to Worldwide saying that Worldwide was providing service without a CPCN, and that its arrangement with WTS was not permitted. Worldwide subsequently amended its agreement with WTS, and filed Application (A.) 99-04-042 for registration as an interexchange service reseller.

On April 25, 2002, Worldwide filed a motion to withdraw its application, and said that it was no longer operating in California. By Decision (D.) 02-06-045, Worldwide's application was dismissed. In addition, it was ordered to appoint a custodian of records, and preserve its existing corporate documents for possible use in this proceeding. Joseph Mancuso is the custodian of records for Worldwide.

Clear World

By D.98-08-056, Clear World was authorized to resell interexchange services. On September 25, 2001, Clear World filed the instant application for a CPCN to resell local exchange services.

In October 1998, Clear World acquired all of the assets of American Electronics Corporation (AEC), which did business as Discount Long Distance (DLD), including customers and customer lists.³ The Clear World acquisition of AEC/DLD had been in the works for 18 months prior to that date.

Clear World loaned Mancuso, L.L.C. $450,000 in late 2001. The money was to be used to buy a house for Christopher Mancuso. The loan is still outstanding.

Christopher Mancuso

In about 1983-84, Christopher Mancuso started a company called Commonwealth Business Systems (Commonwealth). Commonwealth provided consulting services to sales and marketing companies. One of Commonwealth's customers was Culture Farms, Inc. (Culture Farms), a company for which Christopher Mancuso ultimately served as vice president. Culture Farms was a "Ponzi scheme" involving the sale of milk cultures that were purportedly used for cosmetics.⁴ Christopher Mancuso eventually pled guilty to mail fraud in connection with his Culture Farm activities, and was incarcerated.

During the time Christopher Mancuso was in prison, he received over $300,000 from Reed Slatkin, allegedly to pay his bills and consolidate his debts. The Culture Farms bankruptcy trustee filed a petition in February 1987 in the High Court of Justice of the Isle of Man, seeking return of those monies. The petition implicates Christopher Mancuso and Commonwealth as well as Ronald Rakow. The Petition alleges that $300,000 was transferred to Rakow in July 1985, and that an identical sum was paid to Reed Slatkin in September 1985.

Almost six months after being released from prison in 1987, with Slatkin as an early investor, and his Culture Farms associate Jerry Ballah as a later director of marketing, Christopher Mancuso formed National Telephone & Communications, Inc. (NTC). NTC started operations in early 1989. Christopher Mancuso was initially on the NTC board of directors, but resigned when it went public. The investors did not want Christopher Mancuso to be an officer or director because, according to Christopher Mancuso, of his felony conviction. Among his responsibilities at NTC was putting together its marketing network.

In early 1992, Christopher Mancuso sold a controlling interest in NTC to Incomnet Communications Corporation (Incomnet). After the sale, he worked on finding NTC a new carrier agreement and developing the marketing program. Christopher Mancuso was not, in this post-Incomnet period, an employee of NTC, but a consultant working under a contract between NTC and AEC/DLD. In 1996, the consulting contract between NTC and AEC/DLD became a contract between Christopher Mancuso's company, Communications Consulting Inc, (CCI), and NTC.

Christopher Mancuso negotiated NTC's take-or-pay contracts with MCI WorldCom, Inc. (WorldCom) starting in 1992, culminating in a $1 billion contract in 1996. The contract called for discounts if NTC hit a certain level of sales. To achieve the required sales levels, NTC used various subaccounts. In addition to the main NTC account with WorldCom, there were other accounts under the NTC contract, including an NTC/Amerivision account, and an Amerivision/DLD account.⁵ The Amerivision/DLD subaccount 182806 is the same as the Clear World/DLD subacount 182806 under which Clear World operates. AEC/DLD purchased long-distance services from Amerivision that, in turn, purchased its time under the NTC contract.

Christopher Mancuso, through CCI, provided carrier negotiation, product development, and strategic marketing analysis to AEC/DLD as early as 1993, and then began providing those services to Clear World when it acquired the assets of AEC/DLD in 1998. He also performed consulting services for NTC, Amerivision, and Worldwide.

In September 1997, the Commission instituted Investigation 97-09-001 into NTC because of the high numbers of slamming complaints made against it. The matter was resolved by D.98-02-029, as modified in D.98-12-008, which approved a settlement that included restitution of approximately $335,000 to consumers, and $1.2 million in fines and costs. D.98-02-029 effectively prohibited Christopher Mancuso, as a prior officer or director, from ever again having an officer or director role at NTC.

In 1997, Ballah and Christopher Mancuso decided to buy NTC.⁶ Christopher Mancuso received commitments of $20 million and $10 million from Reed Slatkin and WorldCom, respectively, for the planned purchase. WorldCom subsequently backed out.

To avoid problems with this Commission, Christopher Mancuso decided to resort to a ruse. Describing the ruse, he stated that:

"We knew we were going to have a 120-day period between putting the deal together and getting the shareholders to agree to it. In that 120 days we had to get creative about how the company was going to be operated because technically the PUC rules said that Mancuso and Ballah could not do what effectively the board had agreed to let us do."⁷

Subsequently, the deal fell through.

Christopher Mancuso and Ballah then started Worldwide, and created WorldTech to sell long-distance services for Worldwide. The efforts to form Worldwide, and the negotiations between Worldwide and WorldTech, involved Ballah, and Christopher, James, Michael and Joseph Mancuso.

Christopher Mancuso negotiated an agreement between WTS and Worldwide that allowed Worldwide to sell long-distance service under WTS's name. Worldwide essentially licensed WTS's tariffs and operating authority. Worldwide's sales were made through the marketing services of WorldTech.

From 1985 forward, Christopher Mancuso had financial interactions with Slatkin, peaking with a $2.6 million check from Slatkin to Christopher Mancuso's Mancuso, L.L.C. in 1999.⁸ At about that time Christopher Mancuso loaned $250,000 to Clear World, without a promissory note or loan agreement to memorialize it.

In February 2000, Christopher Mancuso arranged for a Swiss telephone number for Slatkin that could be used to deceive investors in Slatkin's Ponzi scheme ⁹into thinking that they were reaching a Swiss institution, where their money was invested, when in fact the telephone actually rang in Slatkin's Santa Barbara garage. Slatkin is now in prison.

Christopher Mancuso's company, International Telecommunications Consulting, L.L.C. (ITC), provides carrier negotiations and bill auditing to Clear World.¹⁰

James Mancuso

James Mancuso is the secretary and general counsel for Clear World, and general counsel for Worldwide.

As discussed above, during the time Christopher Mancuso was in prison, James Mancuso received over $300,000 in checks from Slatkin for the benefit of Christopher Mancuso in 1986 and 1987. The checks were written to Trojan Financial, a company controlled by James Mancuso.

James Mancuso formed Mancuso LLC, and assisted it in a substantial legal settlement involving Slatkin.

Michael Mancuso

Michael Mancuso is the president, chief executive officer, and treasurer of Clear World. He also worked at NTC, Incomnet, Amerivision, and managed DLD on a daily basis.

Joseph Mancuso

Joseph Mancuso owned AEC/DLD and Worldwide. He also owns five percent of Clear World.