Six-Figure Fine for Failing to Focus on Former Felonies

Many FCC forms completed on a "routine" basis may need extra attention.

Anyone who fills in pretty much any FCC form should be familiar with the certifications required by those forms. Anyone who "signs" an FCC form (whether electronically or otherwise) must be familiar with them; more importantly, the signatory must be sure that the certification being made is accurate. Failure to do so can be a pricey mistake.

One common certification, for example, asks the licensee or applicant to verify that it hasn't engaged in certain types of misconduct that might disqualify the licensee/applicant from holding an FCC license. For example, FCC Form 314, used for the assignment of broadcast licenses, requires the proposed buyer to certify that:

[W]ith respect to the assignee and each party to the application, no adverse finding has been made, nor has an adverse final action been taken by any court or administrative body in a civil or criminal proceeding brought under the provisions of any law related to any of the following: any felony; mass media- related antitrust or unfair competition; fraudulent statements to another governmental unit; or discrimination.

In the same vein, all FCC applications require an "Anti-Drug Abuse Act Certification," indicating that the applicant is not "subject to denial of federal benefits pursuant to Section 5301 of the Anti-Drug Abuse Act of 1988, 21 U.S.C. Section 862." And, of importance to the Siemens Corporation, Question 50 to Form 601, which is used for applications for wireless licenses, asks whether "the Applicant or any party to this application, or any party directly or indirectly controlling the Applicant [has] ever been convicted of a felony by any state or federal court?"

Thanks to the fine-print-legalese nature of these certifications, it can be tempting not to bother to pay much attention to them. After all, the "correct" answer (usually, "yes") is obvious, a fact that tends to discourage careful consideration of the certification language.

Our friends at Siemens, though, have just brought us a cautionary tale, after failing to disclose on Form 601 that Siemens' parent company, as well as a subsidiary of that parent company, had pled guilty to multiple felonies. And for this oversight, Siemens has agreed to pay the government $175,000 in a consent decree with the Enforcement Bureau.

According to the decree, the parent company, Siemens AG, pleaded guilty to violating the Foreign Corrupt Practices Act (FCPA) back in 2008, while a subsidiary of a subsidiary of Siemens AG pleaded guilty to a single federal felony charge of obstruction of justice in 2007. Despite that, Siemens Corporation kept filing Form 601s (and also a few others) certifying that no party directly or indirectly controlling it had "ever been convicted of a felony."

Obviously, those certifications weren't accurate, a fact that didn't escape the attention of the Enforcement Bureau.The Bureau concluded that Siemens Corporation had violated Section 1.17(a)(2) of the FCC's rules, which prohibits applicants (among others) from providing any "material factual information that is incorrect or omit[ing] material information that is necessary to prevent any material factual statement that is made from being incorrect or misleading."

While $175,000 may seem steep, it could have been worse. False statements made intentionally could be determined to constitute misrepresentation, which is among the most serious of all potential offenses in the FCC's book. Presumably, Siemens convinced the Bureau that its inaccurate certifications were a result of an unintended oversight rather than an intent to deceive - in other words, the type of inadvertent inaccuracy that Section 1.17 is intended to reach. After all, as we have seen, it can be easy not to pay enough attention to the specifics of the FCC's certifications. And within a company the size of Siemens, it may also be possible that some people in some parts of the company may not be aware of goings-on in other parts (although in this case that may not be an entirely credible explanation, since the felony pleas in question resulted in $800,000,000 in penalties and were, thus, likely known to most in the organization).

The moral of our tale? Any licensee, applicant or other party subject to the FCC's jurisdiction must look under the covers and in the closets throughout their corporate structure to ensure that there is no missing information that would be pertinent to certifying that responses to the FCC are true and accurate.