Appeal

The decision of the presiding officer, Administrative Law Judge (ALJ) Grau, was mailed on August 15, 2002. Pursuant to rule 8.2 of the Commission's Rules of Practice and Procedure, CPSD filed an appeal of the Presiding Officer's Decision (POD) on September 16, 2002. Respondents filed a response to the appeal on October 1, 2002.

CPSD's appeal contends that the POD fails to address whether Bucci evaded service in the ACI investigation and whether Bucci is an alter ego of Titan, fails to state what the Commission will require for proof of fitness in any future application, and errs in setting a fine based on Titan's ability to pay without considering whether Bucci may be able to pay a higher fine. In addition, CPSD notes that the POD does not prohibit Bucci from applying through the short form process and does not require Respondents to send a copy of any application for authority to the director of CPSD.

Respondents state that there can be no evasion of service when a party is not named in a proceeding and that the ACI situation, where a receiver was appointed, is a unique situation. Respondents further state that the OII intended to examine Bucci's relationship to Titan only to address any restitution to ACI customers. Respondents state the POD clearly requires Bucci to file a formal application and not use the short form process; they do not oppose CPSD's request that the Commission state fitness requirements for any future application, but fail to understand why they should send a copy of the application to the director of CPSD. Finally, Respondents do not understand CPSD's arguments concerning any error in setting the fine and find no support for the claim that Bucci should be ordered to pay any fine against Titan; Respondents contend these are vague assertions, which should be accorded little weight as provided in Rule 8.2(e).

CPSD's appeal is based on perceived discrepancies between this OII, the ACI OII, and the POD. We find no such discrepancies. In its Phase II brief addressing alter ego issues, CPSD stated that Bucci avoided exercising his due process rights; therefore, he could not claim he was deprived of them. (CPSD's Reply Brief, p. 5.) The POD considered CPSD's position and rejected it because Bucci was neither a named Respondent nor a party to the ACI proceeding. The ACI OII noted that staff confirmed that ACI's San Diego office was vacated and that all known business telephone numbers had been disconnected. A staff data request, addressed to Bucci, was returned, unable to forward. Staff further determined that ACI was operating under a receivership ordered by the court. The ACI OII did not name Bucci as a Respondent, and he declined to become informed about the proceeding. CPSD's attempt to serve Bucci with the ACI OII at his home address was not mandated; the ACI OII did not require that Bucci be served. Under the circumstances presented here, the POD found due process constraints precluded finding Bucci the alter ego of ACI.

Similarly, we opened this OII to determine whether Respondents should pay the restitution ordered in D.00-04-012, upon a finding that Bucci was the alter ego of ACI or Titan and that Respondents used money obtained from ACI to establish Titan, and should be fined for any violations resulting from the application process. In its appeal, CPSD first raises the issue of Bucci's ability to pay any ordered fines and concurrently acknowledges that there is no record on that issue. Because this proceeding is submitted, we decline to adopt CPSD's suggestion that we now develop a record on that issue. However, we have reviewed both the fine proposed in the POD and the rationale supporting it and have determined that the POD did not properly evaluate the Michigan Commission's sanctions against Bucci, as discussed above. Accordingly, we find an additional offense and increase the fine to reflect that additional offense.

CPSD is concerned that Respondents can reapply for authority without a specific standard to demonstrate fitness, including compliance with General Order 28's record retention requirements, and without serving any application for authority on CPSD. CPSD recommended in this proceeding that Respondents use the full application procedure for future authority, refer to this proceeding by number and subject matter in the body of that application, and send a copy of the application to the director of CPSD. Those requirements are reasonable and will be ordered herein. Any proceeding resulting from the filing of an application for authority will consider Titan's technical violations, ACI's more egregious consumer violations, and ACI's failure to preserve records in determining what conditions to impose on any future authority granted to Respondents. CPSD's contention that the POD fails to prohibit Bucci from applying for authority via the short form process lacks merit. The POD's Ordering Paragraph 5 requires Bucci or any entity with which he is associated to apply for authority by formal application. Except for the modifications adopted herein, CPSD's appeal lacks merit and is denied.