Case Background
Staff of the
Florida Public Service Commission (Commission) opened this docket to initiate a
show cause proceeding against Q LINK WIRELESS LLC (Q LINK or Company) for
apparent violation of Commission Order No. PSC-2024-0201-PAA-TP. Q LINK is a provider of commercial mobile
radio service and offers prepaid wireless telecommunications services to
consumers as a wireless reseller. The company is regulated as a common carrier
pursuant to 47 U.S.C. § 153(11). Q LINK is a Limited Liability Company that was
organized in the State of Delaware on August 25, 2011, and is wholly-owned by
its parent, Quadrant Holdings Group LLC.
By Order No.
PSC-2024-0201-PAA-TP (ETC Order), the Commission designated Q LINK as an
Eligible Telecommunications Carrier (ETC) throughout Florida, pursuant to 47
C.F.R. § 54.201(c)(2020). Q LINK’s purpose in seeking its ETC
designation was to receive federal support for offering the Lifeline discount
to its low-income customers. As part of its petition seeking ETC designation,
the Company committed to follow applicable state and federal rules. It is
believed that Q LINK has approximately 15,429 Lifeline customers in Florida.
In its Petition for ETC designation, filed on April 16,
2024, Q LINK made various
representations to the Commission regarding its adherence with federal and
state regulations related to the Lifeline program:
a.
Q LINK, in its representations regarding “Prevention of
Waste, Fraud and Abuse,” indicated its “commitment to being a trusted steward
with public resources” and further discussed at length its
alleged steps to prevent such waste, fraud and abuse by employing a
“state-of-the-art proprietary fraud prevention system;”[5]
b.
Q LINK represented that “consistent with federal
regulations, [it] would not seek USF reimbursement for inactive subscribers and
will de-enroll any subscriber who has not used [its] Lifeline service as set
forth in 47 C.F.R. § 54.407(c)(2);”[6]
c.
Q LINK represented that “[a]n account will be
considered active if the authorized subscriber establishes usage, as ‘usage’ is
defined by 47 C.F.R. § 54.407(c)(2), during the specified time frame, currently
a period of thirty (30) days, or during the notice period set forth in 47
C.F.R. § 54.405(e)(3), currently a period of fifteen (15) days;”
d.
Q LINK represented that “[b]y this Petition, [it]
hereby asserts its willingness and ability to comply with the rules and
regulations that the Commission may lawfully impose upon the Company’s
provision of service contemplated by this Petition;”
e.
Q LINK represented that “100% of federal universal
service funds will flow through directly to Lifeline customers;” and,
f.
Q LINK stressed in its Petition, for a second time,
that it “remains committed to careful stewardship of the Lifeline program.”
On August 22,
2024, the United States commenced its criminal prosecution against Q LINK and
Issa Asad [CEO of Q LINK and owner of Q LINK’s parent company (QUADRANT)] with
the filing of an Information in the United States District Court, Southern
District of Florida. The Government charged both defendants
with “Conspiracy to Commit Offenses Against, and to Defraud, the United States
(18 U.S.C. § 371).” Further, Asad was charged with Money
Laundering (18 U.S.C. § 1957).
On October 15,
2024, Q LINK and Asad each admitted guilt and entered into Plea Agreements for conspiring
to defraud and commit offenses against the United States in connection with a
years-long scheme to steal over $100 million from the federal Lifeline program.,
Asad, in addition
to entering a guilty plea to the conspiracy to defraud the United States, also entered
a plea of guilty to laundering money from a separate scheme to defraud a
different federal program meant to aid individuals and businesses hurt by the
COVID-19 pandemic.
As part of their
Plea Agreements, Q LINK and Asad agreed to pay, jointly and severally, the sum
of $109,637,057.00 in restitution to the Federal Communications Commission
(FCC) no later than the time of their sentencing hearings (currently set for
January 15, 2025).
Asad separately
agreed to pay $1,758,339.25 in restitution to the U.S. Small Business Administration
and to a forfeiture judgment against him of at least $17,484,118.00.
Q LINK agreed in
its Plea Agreement that “it shall not participate in any program administered
by the FCC”[16] as of the date of sentencing, and further
agreed that it would “cooperate with the FCC in the transition of all customers
of any program administered by the FCC to other telecommunications providers.” The sentencing date is currently scheduled
for January 15, 2025.
In a Factual
Proffer, Q LINK admitted that
[It]
conspired with others, including Asad and Director of Customer Relations #1, to
submit and cause to be submitted false and fraudulent claims to the FCC
Lifeline program for customers who were not using their cellphones according to
the FCC usage rules. The Defendant and others conspired to mislead and trick
the FCC into thinking customers were using their cellphones by manufacturing
cellphone activity to pass off as usage and by engaging in coercive marketing
techniques to get people to remain Q Link customers.”
For instance, as
discussed in the Q Link Factual Proffer, its employees took “cellphone numbers of
the Defendant’s customers who were not using their phones and placed outbound
calls by temporarily swapping the customer’s electronic serial number (“ESN”) assigned
to the physical cellphone for the ESN number of a cellphone in the Defendant’s
shipping department.” This scheme was carried out roughly
between 2013 and 2016 so that the cellphone records of a customer would reflect
an outbound call, and thus would have created “usage” as required by the FCC
for reimbursement.
Around March
2020, Asad and Q LINK devised an automated script for its customers that falsely
warned “Hello, your Medicaid, Foodstamp and Lifeline benefits are about to get
cancelled.” Customers were then directed to press 1 to
indicate that they wished to remain enrolled in the noted programs.
Other practices
implemented by Q LINK included using
auto-dialers
to originate a high volume of outbound calls from [Q LINK] to customers who were
not using their cellphones to trick them into answering the phone to assent to
[Q LINK’s] Lifeline services, including using the local area codes not facially
associated with [Q LINK] and spoofing [the customers’] own cellphone numbers to
deceive customers into thinking that [Q LINK’s] representative were (sic) was
not on the other end . . . in order to trick and mislead customers into
pressing a button to agree to remain Q Link customers so that the Defendant
could keep billing the Lifeline program.
Other Q LINK
business practices included ensuring that customers could not cancel online,
but had to call Q LINK on the phone, with company representatives employing
different scripts intended to prevent customers from cancelling.
Q LINK was aware
as early as 2014 that the FCC was investigating it regarding customer usage
issues. Between 2015 and 2021, Q LINK provided to
the FCC records of manufactured cellphone activity for those customers who were
not meeting usage requirements – even including activity for phones for
customers who were “so fed up” with Q LINK that they had turned over their
phones to the FCC.
Other fraudulent
business activity included trying to pass off records of unchecked voicemails
as answered voice calls (hence creating “usage”), as well as changing the name
of a header on a spreadsheet from “‘voicemail’ to ‘voice’ to leave the FCC with
the false impression that the call records contained voice calls.”
Importantly, as
of October 15, 2024, Q LINK admitted that it “has continued to bill the FCC
Lifeline program up until the present, including for customers that Q Link
should have stopped billing because the customers were not using their
cellphones.”
Issue 1 is
staff’s recommendation regarding Q LINK’s apparent violation of its ETC Order arising
from its admitted fraud against the Lifeline program and as a result it no longer
being in the public interest for Q LINK to be designated as an ETC in Florida.
The procedure
followed by the Commission in dockets such as this is to consider the
Commission staff’s recommendation and determine whether the alleged facts
warrant requiring the entity to respond. If the Commission agrees with staff’s
recommendation, the Commission issues an Order to Show Cause (Show Cause
Order). A Show Cause Order qualifies as an administrative complaint by the
Commission against the entity as required by Section 120.60(5), Florida Statutes (F.S.). If the Commission issues a Show Cause
Order for Issue 1, then for Q LINK to potentially keep its ETC designation in
the State of Florida, it must provide a written response to the Commission
within 21 days, disputing the factual allegations set forth in the Show Cause
Order, and requesting a hearing pursuant to Sections 120.569 and 120.57, F.S.
If the Company requests a hearing, a further proceeding would be scheduled
before the Commission makes a final determination on the matter.
If Q LINK fails
to timely respond to the Show Cause Order, then it would be deemed to have
admitted the factual allegations contained in the Show Cause Order. The
Company’s failure to timely respond would also constitute a waiver of its right
to a hearing. If the Company does not timely respond, a final order would be
issued imposing the sanctions set out in the Show Cause Order.
If a final order
is issued regarding Issue 1, then Q LINK’s ETC status would be revoked in the
state of Florida, and the Company would no longer be able to offer the Lifeline
discount to its customers in Florida. Q LINK would also be prohibited from
receiving monetary support from the Universal Service Fund for its Lifeline
customers in Florida.
The Commission
has jurisdiction pursuant to Sections 364.10(2), 364.285, and 364.335, F.S.; 47
C.F.R. § 54.201; 47 C.F.R. § 54.400 – 54.423; and, Rule 25.4.0665, F.A.C.
Discussion
of Issues
Issue 1:
Should the Commission order Q LINK to show cause, in
writing, within 21 days from the issuance of the order, why its ETC status in
Florida should not be revoked for apparent violation of Order No. PSC-2024-0201-PAA-TP,
due to its admitted fraud against the Lifeline program and it no longer being
in the public interest for Q LINK to be designated as an ETC in Florida?
Recommendation:
Yes, Q LINK should be ordered to show cause, in
writing, within 21 days from the issuance of the order, why its ETC status in
Florida should not be revoked for apparent violation of Order No. PSC-2024-0201-PAA-TP,
due to its admitted fraud against the Lifeline program and it no longer being
in the public interest for Q LINK to be designated as an ETC in Florida. If the
Company’s ETC status is to be revoked, staff recommends ordering the Company to
immediately cease accepting new Lifeline applicants in Florida as of the date
of the final order. Staff also recommends that any final order indicate that
the Company’s ETC status shall be revoked 30 days after issuance of the final
order to provide time for affected customers to be advised of the need to
change Lifeline carriers and to effect such transition. (Augspurger, Farooqi, Fogleman,
Day, Deas)
Staff Analysis:
Law
State commissions have the primary responsibility for
performing ETC designations. In Florida, the Commission has the jurisdiction to
designate wireless carriers as ETCs to participate in the federal Lifeline
program. 47
C.F.R. Section 54.201(c), provides that:
Upon request and consistent with the public interest,
convenience, and necessity, the state commission may, in the case of an area
served by a rural telephone company, and shall, in the case of all other areas,
designate more than one common carrier as an eligible telecommunications
carrier for a service area designated by the state commission, so long as each
additional requesting carrier meets the requirements of paragraph (d) of this
section. Before designating an additional eligible telecommunications carrier
for an area served by a rural telephone company, the state commission shall
find that the designation is in the public interest.
47 C.F.R. § 54.407(c) provides that Lifeline providers
that do not assess and collect a monthly fee from its subscribers: (1) shall
not receive universal service support until the subscriber activates the
service, and (2) shall only continue to receive universal service support for
subscribers who have used the service within the last 30 days.
In addition to the responsibility for performing ETC
designations, the Commission also possesses the authority to revoke ETC
designations for the failure of an ETC’s compliance with any conditions imposed
by the state. The FCC
has found that individual state commissions are qualified to determine what
information is necessary to ensure that ETCs are in compliance with applicable
requirements, including state-specific ETC eligibility requirements.
Pursuant to Section 364.285(1),
F.S., the Commission may impose upon any entity subject to its jurisdiction a
penalty of not more than $25,000 for each such day a violation continues, if
such entity is found to have refused to comply with or to have willfully
violated any lawful rule or order of the Commission, or any provision of Chapter
364, F.S. Each day a violation continues is treated as a separate offense. Each
penalty is a lien upon the real and personal property of the entity and is
enforceable by the Commission as a statutory lien.
As an alternative to
the above monetary penalties, Section 364.285(1), F.S., provides that the
Commission may amend, suspend, or revoke any certificate issued by the
Commission for any such violation. Part of the determination the
Commission must make in evaluating whether and how to penalize a company is
whether the company willfully violated the order, rule, or statute. Section 364.285(1), F.S., does not define what it is to
“willfully violate” an order, rule, or statute. Willfulness is a question of
fact.[32] The plain meaning of "willful"
typically applied by the Courts in the absence of a statutory definition, is an act or omission that is done
“voluntarily and intentionally” with specific intent and “purpose to violate or
disregard the requirements of the law.”
“It is a common maxim, familiar to all minds that
‘ignorance of the law’ will not excuse any person, either civilly or
criminally.” In
making similar decisions, the Commission has repeatedly held that certificated
companies are charged with the
knowledge of the Commission’s orders, rules, and statutes, and that the intent
of Section 364.285(1), F.S., is to penalize those who affirmatively act in
opposition to those orders, rules, or statutes.[35]
In other words, a company cannot excuse its violation because it “did not
know.”
In recommending a monetary penalty or a form of
certificate suspension or revocation, staff reviews prior Commission orders
concerning the company at issue. While Section 364.285(1), F.S., treats each
day of each violation as a separate offense with penalties of up to $25,000 per
offense, the general purpose of imposing monetary penalties is to obtain
compliance with the Commission’s orders, rules, or statutes.
If a company has
a pattern of noncompliance with an order, rule, or statute, or in particular if
the violation of an order, rule, or statute adversely impacts the public
health, safety, or welfare, then a monetary penalty may not be appropriate or
sufficient to address the situation. In such a case, the sanction should be the
most severe.
In this docket, staff’s informal investigation revealed
that the admitted fraud committed by Q LINK has included, amongst other
fraudulent practices, creating the appearance of customer usage of its service
to receive federal funding from the Lifeline program by falsifying and/or manipulating
records. Q LINK admitted on October 15, 2024, that it “has continued to bill
the FCC Lifeline program up until the present, including for customers that Q
Link should have stopped billing because the customers were not using their
cellphones.” Staff asserts
this activity is in direct violation of Order No. PSC-2024-0201-PAA-TP for
various reasons, as will be discussed below.
47 C.F.R. § 54.407(c)(2)(i)-(v) sets forth usage
requirements which would permit Q LINK to be reimbursed for offering Lifeline:
(2) After service
activation, an eligible telecommunications carrier shall only continue to
receive universal service support reimbursement for such Lifeline service
provided to subscribers who have used the service within the last 30 days, or
who have cured their non-usage as provided for in §
54.405(e)(3). Any of these activities, if undertaken by the subscriber,
will establish “usage” of the Lifeline service:
(i) Completion of an
outbound call or usage of data;
(ii) Purchase of
minutes or data from the eligible telecommunications carrier to add to the
subscriber's service plan;
(iii) Answering an
incoming call from a party other than the eligible telecommunications carrier
or the eligible telecommunications carrier's agent or representative;
(iv) Responding to
direct contact from the eligible communications carrier and confirming that he
or she wants to continue receiving Lifeline service; or
(v) Sending a text message.
Rule 25-4.0665, Florida Administrative Code (F.A.C.),
specifically addresses the Lifeline Assistance Program. As set forth in the
subject Rule, companies with ETC designations (which are issued by states)
“must offer Lifeline Assistance as prescribed by the Federal Communications
Commission in Title 47, Code of Federal Regulations, Part 54, Subpart E,
Universal Service Support for Low-Income Consumers, Sections 54.400 through
54.423 . . . which are hereby
incorporated into this rule by reference . . . .” (Emphasis added.) Hence,
a violation of the noted provisions of 47 C.F.R. § 54.407(c)(2)(i)-(v) is
likewise a violation of Florida law.
Staff believes that the admissions contained in the Plea
Agreement of Q LINK and its associated Factual Proffer, as well as the
admissions contained in the Plea Agreement and Factual Proffer of Asad, document
that it is no longer in the public interest for Q LINK to be designated as an
ETC in Florida. Staff recommends the penalty of revocation of Q LINK’s ETC
designation.
Factual Allegations
Q LINK submitted false and fraudulent claims to the
Universal Service Administrative Company (USAC) for Lifeline program
reimbursements for customers who were not using their cellphones according to
the FCC’s usage rules. The company conspired to mislead the FCC into thinking
customers were using their cellphones by manufacturing cellphone activity to
pass off as usage and by engaging in coercive marketing techniques to get
people to remain subscribed to its service. Q
LINK and Mr. Asad have entered pleas of guilty to these charges of fraud.
Conclusion
Q LINK has pleaded guilty to fraud
and violating federal Lifeline reimbursement rules. As a result, staff recommends
Q LINK is also in violation of its ETC Order issued by this Commission for the
following reasons:
·
47 C.F.R. §54.407(c)(2)(i)-(v) sets forth usage
requirements which would permit Q LINK to be reimbursed for offering Lifeline;
·
The usage requirements of 47 C.F.R.
§54.407(c)(2)(i)-(v) are incorporated into Rule 25-4.0665, F.A.C., by
reference. Thus a violation of any of any portion of 47 C.F.R. §§ 54.400 –
54.423 constitutes a violation of Rule 25-4.0665, F.A.C.;
·
In the ETC Order for Q LINK, the Commission
reiterated that Q LINK “asserts that it meets all applicable federal
requirements for designation as a Lifeline only ETC in Florida . . . and
asserts that, if approved, it will comply with . . . Rule 25-4.0665, Florida
Administrative Code (F.A.C.) which govern Lifeline service . . . .”
·
By its own admission, Q LINK has violated 47
C.F.R. §54.407(c)(2)(i) and, hence, has violated Rule 25-4.0665, F.A.C., due to
continuing “to bill the FCC Lifeline program up until the present, including
for customers that Q Link should have stopped billing because the customers
were not using their cellphones.”
·
Further, due to the admitted fraud against the
Lifeline program, staff believes that it is no longer in the public interest
for ETC designation to be extended to Q LINK.
Accordingly, staff recommends
that the Commission order Q LINK to show cause, in writing, within 21 days from
the issuance of the order, why its ETC designation should not be revoked for
apparent violation of Commission Order No. PSC-2024-0201-PAA-TP, due to, at a
minimum, its violation of the Lifeline reimbursement provisions of 47 C.F.R. § 54.407(c)(2)(i)
and, hence, Rule 25-4.0665, F.A.C., and because it is no longer in the public
interest for Q LINK to be designated as an ETC.
Staff recommends that the order
incorporate the following conditions:
1.
This Show Cause Order is an administrative complaint by
the Florida Public Service Commission, as petitioner, against Q LINK WIRELESS
LLC, as respondent.
2.
Q LINK shall respond to the Show Cause Order within 21
days of service on the Company, and the response shall reference Docket No. 20240146-TP,
Initiation of show cause proceeding against Q LINK WIRELESS LLC for apparent
violation of Order No. PSC-2024-0201-PAA-TP.
3.
Q LINK has the right to request a hearing to be
conducted in accordance with Sections 120.569 and 120.57, F.S., and to be
represented by counsel or other qualified representative.
4.
Requests for hearing shall comply with Rule
28-106.2015, F.A.C.
5.
Q LINK’s response to the Show Cause Order shall
identify those material facts that are in dispute. If there are none, the
petition must so indicate.
6.
If Q LINK files a timely written response and makes a
request for a hearing pursuant to Sections 120.569 and 120.57, F.S., a further
proceeding will be scheduled before a final determination of this matter is
made.
7.
A failure to file a timely written response to the Show
Cause Order will constitute an admission of the facts alleged herein, and a
waiver of the right to a hearing on this issue.
8.
In the event that Q LINK fails to file a timely
response to the Show Cause Order, a final order will issue which will:
a. Require
Q LINK to immediately cease accepting new Lifeline applicants in Florida as of
the date of the final order;
b. Require
Q LINK to provide a spreadsheet of its existing Lifeline customers in Florida
to the Commission, including names, phone numbers, mailing addresses, and, if
available, email addresses within 3 days of the final order;
c. Direct
Q LINK to contact all of its existing Lifeline customers in Florida in writing within
7 days of the date of the final order and advise of the specific need for the
customer to select a new Lifeline carrier that is designated as either a
wireline or wireless ETC. This notice shall include the Lifeline contact list
on the Commission’s website located at: https://www.florida
psc.com/pscfiles/website-files//PDF/Utilities/Telecomm/Lifeline/Customer-CompanyContact-EN.pdf
d. Advise
Q LINK that a random sampling of Q LINK’s Lifeline customers in Florida will be
conducted by Commission staff approximately 15 days after issuance of the final
order to ascertain compliance by Q LINK with paragraph (c), above;
e. Direct
Q LINK to advise the Commission in writing within 10 days of the final order of
its compliance with paragraph (c), above;
f. Confirm
that in the event random sampling by Commission staff indicates that Q LINK has
failed to notify its Florida Lifeline customers as required, prior to the
sentencing hearing the prosecutor in the pending U.S. District Court criminal
proceeding will be notified of Q LINK’s apparent failure to assist in the
transition of customers to other Lifeline providers; and,
g. Revoke
Q LINK’s ETC status 30 days after the date of the final order.
Issue 2:
Should this docket be closed?
Recommendation:
If the Commission orders Q LINK to show cause as to
Issue 1 and Q LINK timely responds in writing to the Show Cause Order, this
docket should remain open to allow for the appropriate processing of the
response. If the Commission orders Q LINK to show cause as to Issue 1 and Q
LINK does not timely respond to the Show Cause Order, then the Commission
should issue a final order, and this docket should be closed after the time for
filing an appeal has run. If the Commission does not order Q LINK to show cause
as to Issue 1 then this docket should be closed. (Augspurger, Farooqi)
Staff Analysis:
If the Commission orders Q LINK to show cause as to
Issue 1 and Q LINK timely responds in writing to the Show Cause Order, this
docket should remain open to allow for the appropriate processing of the
response. If the Commission orders Q LINK to show cause as to Issues 1 and Q
LINK does not timely respond to the Show Cause Order, then the Commission
should issue a final order, and this docket should be closed after the time for
filing an appeal has run. If the Commission does not order Q LINK to show cause
as to Issue 1 then this docket should be closed.
