The Prepaid Press - December 15, 2007 - (Page 8)

GENERAL PREPAID December 15 · 2007 - 8 REGULATORY RUNDOWN by Ed Maldonado FCC Enforcement, SEC Cracks Down, VoIP Hacking, & Wireless Regulation 1. FCC Enforcement Action: CPNI requirements apply to all. 2. Telemarketing - FCC to Extend NAT’L DoNot-Call Registry Beyond 5-Year Period. 3. Common Carriers - SEC: GlobeTel Executive Doctored $119 Million in False Invoices. 4. Wireless Carrier Regulation – Politicians and Consumer Group stymie Unicell acquisition. 5. Prepaid VoIP Hacking – National Coverage to Longstanding Prepaid Reseller Dilemma. 6. VoIP & Wireless Carriers - 911 Modernization & Public Safety Act of 2007 now in Senate. impact some of the procedures used by those who depend upon outbound telemarketing of service. Comment may be made online to the FCC under Notice of Proposed Rulemaking Docket FCC 07-203 through the Electronic Comment Filing Systems at http://www.fcc. gov/cgb/ecfs/ the future. Answers and Afﬁrmative Defenses from Monterosso and Vargas are initially due on December 11, 2007. 4. Wireless Carrier Regulation – Politicians and Consumer Group stymie Unicell acquisition. November 20, 2007 (Washington, DC) The Federal Communications Commission received requests from the Department of Homeland Security, Department of Justice and the FBI asking that each agency be given more time to review national security, law enforcement and public safety implications regarding the proposed merger of cellular giant Verizon with regional independent Unicell. Statements from the various agencies involved all characterize the review extension as “routine”, however, they come as the latest chapter in a growing consumer/political brouhaha over what future technologies may be available to Vermont wireless consumers. Leading the charge to freeze the Unicell merger are Vermont Governor Jim Douglas, U.S. Senator Bernie Sanders (I-Vt.), and The Vermont Public Interest Research Group, a nonproﬁt consumer and environmental advocacy organization founded in 1972, and approximately 20,000 strong in members and activists. All are calling for conditions that would require Verizon Wireless to provide universal coverage of the state, allow Unicel customers to exchange their phones for comparable Verizon handsets, and commit to national pricing standards and reasonable roaming rates for the state. At odds is the future of GSM technology, now used by Unicell, and Verizon’s extended network based CDMA technology. It is feared by Politicos and consumers alike that Unicell’s merger into Verizon would result in an abandonment of GMS technology development in Vermont. In a letter to the FCC, Senator Bernie Sanders outlined the dilemma of the proposed sale from the consumer’s perspective: if Verizon is the only cellular phone company serving the state, GSM would essentially disappear and subscribers of AT&T and other wireless companies that use GSM would be unable to use their phones within the state. There may be merit to the good Senator’s contentions when considering the competitive development of GSM by some independent wireless providers. What is clear is that local pressure in the State of Vermont has now hit Washington, DC, and the issue is not likely to be sloughed off easily without attracting some attention. Industry players would be wise to watch the progress of this proposed merger not only as to the future of GSN/CDMA development in Vermont, but the ability of consumers to mobilize regulatory opposition to proposed technology and network mergers and/or changes. 3. Common Carriers - SEC: GlobeTel Executive Doctored $119 Million in False Invoices. November 21, 2007 (Miami, Florida) The Securities and Exchange Commission ﬁled securities fraud charges against Joseph J. Monterosso and Luis E. Vargas, two former executives at GlobeTel Communications Corporation, a publicly owned carrier headquartered in Ft. Lauderdale, Florida. Civil Action No. 07-61693, filed in the Southern District of Florida, alleges that Monterosso and Vargas created $119 million in fake invoices and caused GlobeTel to overstate its revenue for two years. Speciﬁcally it is alleged that Monterosso and Vargas created hundreds of false invoices that made it appear that GlobeTel’s three wholly-owned subsidiaries, Centerline Communications, LLC (“Centerline”), Volta Communications, LLC (“Volta”), and Lonestar Communications, LLC (“Lonestar”) bought and sold telecom “minutes” with other wholesale telecom companies. The SEC found that there were no such transactions and the two of GlobeTel subsidiaries, Volta and Lonestar, actually did no such business at all. Centerline, the third GlobeTel subsidiary, also reported millions of dollars in business with Monterosso’s and Vargas’ own private company, Carrier Services, Inc., which also did not occur. Probably the most troublesome of the allegations is that SEC believes that Monterosso and Vargas created hundreds of false invoices from technical data they obtained from their friends in the telecom industry and they did not act alone. This may extend the SEC investigation and this lawsuit to others in the industry not directly involved with GlobeTel. The SEC’s investigation is still open and ongoing even though the complaint has been ﬁled. In the end, it is alleged that Monterosso and Vargas provided invoices and the technical data to the company’s auditors and caused GlobeTel to report $119 million in false revenue. This revenue accounted for approximately 80 percent of the revenue GlobeTel reported between the third quarter of 2004 and the second quarter of 2006, equating to four out of every ﬁve dollars that the company reported. On May 8 and June 29, 2007, GlobeTel filed Forms 8-K announcing that it would restate ﬁnancials for 2004 through 2006 to eliminate about $120 million in revenue. On November 2, 2007, the company ﬁled a restated Form 10KSB for 2004 in which the company reduced its annual revenue by $17.68 million. The SEC complaint alleges violation of Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Sections 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5, 13b2-1 and 13b2-2, and that, Monterosso and Vargas aided and abetted violations of Sections 10(b), 13(a), and 13(b)(2)(A) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, and 13a-13. The SEC has sought a permanent injunction, disgorgement with prejudgment interest and civil penalties and to permanently bar Monterosso and Vargas from acting as an ofﬁcer or director of a public company in 1. FCC Enforcement Action: CPNI requirements apply to all. November 29, 2007 (Washington, DC) The Federal Communication Commission Enforcement Bureau has issued a Notice of Apparent Liability against Dialaround Enterprises, Inc. pursuant to section 64.2009(e) of the Commission’s rules for violations of CPNI reporting. The Docket, EB-06-TC-3543, was opened after a Letter of Inquiry by the Enforcement Bureau requested copies of CPNI certiﬁcates and statements for the past ﬁve (5) years. In response, Dialaround Enterprises responded claiming that it “does not have access to any CPNI,” but that it ﬁled its recent certiﬁcate out of an abundance of caution. The Enforcement Bureau sent a supplemental LOI asking why the requirements of Section 64.2009(e) of the Rules do not apply. Dialaround’s explanations were not persuasive and the Enforcement Bureau initiated a forfeiture action. As CPNI certiﬁcations and statements are due in January of 2008, it prudent for all carriers to review Section 64.2009(e) as it applies to all Section 214 Authorized carriers and/or all common carriers. Section 64.2009(e) requires that a telecommunications carrier must have an ofﬁcer, as an agent of the carrier, sign a compliance certiﬁcate on an annual basis stating that the ofﬁcer has personal knowledge that the company has established operating procedures that are adequate to ensure compliance with FCC rules. The carrier must also provide a statement with the certificate explaining how its operating procedures ensure compliance. Anything less can result in investigation or enforcement actions by the FCC. Keep this in mind as you ﬁle your 2008 CPNI compliance certiﬁcates and statements. It’s an important issue and the FCC is enforcing it. carriers have been totally unaffected by hackers or the cascade-effect of a hijacked network terminating large volumes of termination by and through multiple carriers. According to the Top 10 Security Threats of 2008 Report by McAfee Avert Labs, attacks on security vulnerabilities in VoIP networks doubled between 2006 and 2007, and is expected to increase another 50% by 2008. The problem is well know among industry players and not likely to go away any time soon. The November 10th and 21st broadcasts of “America’s Most Wanted” featured Edwin Andres Pena, a Hacker operating out of Newark, New Jersey and Miami, Florida (two hotspots for prepaid calling card carriers and resellers). The gist of his criminal ventures was that he targeted weaker reseller networks, hijacked the network to mask his trafﬁc termination, and sold the traffic to other resellers at discounts for cash. Pena was arrested in 2007 and charged for his hacking and was expected to serve a maximum of 22 years in jail. However, Pena jumped his $150,000.00 USD bond and is now a fugitive. He is believed to have ﬂed the country and may now be working out of Latin America. Pena is a legal resident of the U.S. and has a social security number that can be used in transactions. Authorities believe that Pena has resumed his hacking of VoIP networks again. Since the likely victims of his hacks and purchasers of his hacked trafﬁc are likely to be VoIP resellers and carriers transacting on a prepaid basis, it would be wise to review the America’s Most Wanted proﬁle for Edwin Andres Pena at http://www.amw.com/fugitives/ brief.cfm?id=49218. If anyone is likely to run into Pena, it is likely to be someone in the prepaid resale VoIP arena. Tips may be made through th http://www.fcc.gov/cgb/ecfs/ http://www.fcc.gov/cgb/ecfs/ http://www.amw.com/fugitives/brief.cfm?id=49218 http://www.amw.com/fugitives/brief.cfm?id=49218

Table of Contents Feed for the Digital Edition of The Prepaid Press - December 15, 2007

The Prepaid Press - December 15, 2007 GENERAL PREPAID 2007: Prepaid in Review New Prepaid Association? Contents A Funny Thing Happened on the Way to the Forum Regulatory Rundown: FCC Enforcement, SEC Cracks Down, VoIP Hacking, & Wireless Regulation The Legal Line WIRELESS Prepaid Wireless Roundup kajeet to Offer Horoscopes, Jokes and Trivia Redknee Extends Converged Billing Solution AT&T GoPhone Offers Roaming Option in Mexico Total Call Mobile Introduces Holiday Bonus Wireless in Brief INTERNATIONAL Spot Rates Keycorp to Distribute Hypercom in Canada International in Brief Mobile Communications in Latin America Gets a Leg Up TELECOM & TECHNOLOGY T&T in Brief Phone House Launches New Card Facebook Goes Mobile CVT and Total Call Settle IDT Lawsuit Wireline Capex Grows 7% in Third Quarter PAYMENTS Transcard Selected for Discover Payroll Cards Vesdia and MXT Card Services Form Alliance The Giving Tree Card Gives Back MasterCard Launches Prepaid Travel Card Payments in Brief 7-Eleven Pushes Video Games Capital One and NetSpend Merger Off i2c Launches New Release of Campaign Manager Prepaid Card Dispensing from ATMs Credit Card Design Competition Begins NRF Says Gift Cards Gaining Popularity EXTRAS Classifieds Contact Us Our Advertisers

The Prepaid Press - December 15, 2007

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