IV. PROCEDURAL BACKGROUND AND SUMMARY OF STAFF'S REVIEW.
Decision 03-02-066 denied Clear World's Application 01-09-040 for a CPCN to operate as a provider of resold local exchange telecommunications service within the State of California. The Commission concluded that "Clear World is not fit to provide local exchange services." Id., Conclusion of Law 24 and Ordering Par. 1.
In D.03-02-066 (Ordering Paragraph 6), we directed that the Consumer Protection and Safety Division (CPSD) and Legal Division:
...shall review the record in this proceeding and any related matters bearing upon the fitness of Clear World, its officers, directors, owners and affiliates to operate under a Certificate of Public Convenience and Necessity and shall recommend whether an Order Instituting an Investigation (OII), pursuant to Rule 14 and Public Utilities Code §1701 should be issued by the Commission.
Decision 03-02-066 made a number of findings and conclusions about the Mancusos, on which the denial of Clear World's Application 01-09-040 was based, including but not limited to the following acts which Staff claims should remain relevant to our fitness analysis:
* submission of a false statement to the Commission;12
* submission of an altered document to the Commission;13
* concealment of affiliate Worldwide's true address;14
* failure to make Worldwide's records available to the Commission, in violation of D.02-06-045;15
* misleading and slamming of identified Clear World customers;16
* failure to keep Clear World's books and records in accordance with the Uniform System of Accounts (USOA) in violation of D.98-08-056;17
* failure to fully cooperate with CPSD in its investigation;18 and
* violation of Rule 7.1 of the Commission's Rules of Practice and Procedure (violation of ex parte rules).19
D.03-02-066 left several questions relating to the Mancusos' fitness undeveloped or unanswered in that proceeding, including:
1. Did the Mancusos use DLD to engage in the unauthorized sale of telephone service without obtaining a CPCN from the Commission?20
2. Did the Mancusos sell long-distance services through Worldwide, again without a CPCN (and did Clear World aid and abet such sales)?21
3. What was the extent of slamming engaged in by Clear World? (Slamming is the unauthorized transfer of presubscribed telephone customers from one carrier to another);22 and
4. What has been the extent of Christopher Mancuso's participation in Clear World, its predecessor DLD, and its affiliate Worldwide Telecommunications?23
The Staff Reports published today collectively answer the first two questions (regarding the sale of unlicensed service) in the affirmative. In addition, Staff finds a persistent pattern of slamming at DLD and Clear World; indeed, slamming complaints against Clear World increased by some measures after the Commission issued D.03-02-066.
Staff also obtained new documents indicating that Christopher Mancuso was a primary actor in DLD, Clear World, and Worldwide, and that both James and Michael Mancuso participated in the operation of these entities. Staff alleges that the new documents also demonstrate the falsity of statements made by James and Michael Mancuso under oath, statements about the circumstances of Clear World's inception, the activities of its predecessor-in-interest DLD, and Christopher Mancuso's role in both utilities (see discussion, infra).
Staff also reports that Clear World failed to submit the "complete and comprehensive" audit ordered in D.03-02-066 (Ordering Paragraph 3), that Clear World and DLD may have failed to fully remit required public interest surcharges and user fees to this Commission, and that the transfer of customers from DLD to Clear World occurred without the required P.U. Code Section 854 filing at the Commission.
Staff maintains that the Commission's findings in D.03-02-066 - augmented by the additional evidence presented in the Staff reports - provide a compelling record for revocation of Clear World's CPCN. In ordering this Investigation, we hope to resolve these issues, and to determine what remedies or sanctions, if any, are appropriate vis a vis Clear World and its management.
The Commission also will examine the role of other utilities and billing agents in facilitating the Mancusos' unlicensed sale of telephone service in California. See Part VIII of this Order. One of these companies - Amerivision Communications, Inc. (U-5244) - realized that it was "essentially hiding [DLD] as a company from regulatory agencies and government scrutiny."24 According to Staff, MCI WorldCom25 may also have been aware of DLD's status as an unlicensed telephone company, and was certainly aware of a high incidence of slamming complaints against DLD and Clear World. SR I at § XVI(A). To assure a complete record, we include WorldCom, Amerivision, and certain billing aggregators26 as additional Respondents in this Investigation,27 and direct them to cooperate with Staff in providing disclosure of all facts related to the issues raised in this OII.
12 D.03-02-066, Conclusion of Law 3 13 Id., Conclusion of Law 13.14 Id., Conclusion of Law 4.
15 Id., Conclusion of Law 6. 16 Id., Conclusions of Law 7-12. 17 Id., Conclusion of Law 15. 18 Id., Conclusion of Law 17. 19 Id., Conclusion of Law 21. 20 Id., Mimeo at 25-26, and Findings of Fact 11, 17-18, 96-101. 21 Id.; see, e.g., id., Findings of Fact 32-35. 22 Id., Mimeo at 15-20, Finding of Fact 74. 23 Id., see: Findings of Fact 85 and 90 (Clear World's alteration of letter "to conceal the reference to Christopher Mancuso as founder"); Findings 13-16 (Christopher's conviction for mail fraud in connection with "ponzi scheme"); Finding 103 (Clear World's payments of over $5.275 million to Christopher's company ITC); Findings 18 and 26 (Christopher's admitted activities on behalf of Clear World and its predecessor DLD). 24 SR I at § VII, and Att. 32. 25 MCI WorldCom operated under U-5011, U-5378, U-5253 and U-5278, and was known as WorldCom during most periods relevant to this Investigation, and will be so referenced herein. 26 Specifically referenced is BCI Acquisition LLC, and its recently merged components Billing Concepts, Inc. (BCI), ACI Billing Services Inc., and Hold Billing Services (HBS). SR I at XVI(D); see P.U. Code §§ 2889.9 (jurisdiction over billing aggregators), 2890, and 2890(f) (definition of "billing agent"). 27 We also include Ironwood Communications, apparent successor in interest to NTC/Incomnet (U#5173), which according to Staff was a member - along with Amerivision and DLD - of the "consortium buying arrangement" described below.
