Attachment 2002LRT motion for c

2002LRT motion for c

MOTION submitted by "LRT"

Motion For Correction, Clarification and Retraction

2002-07-22

This document pretains to SAT-LOA-19971222-00212 for Application to Launch and Operate on a Satellite Space Stations filing.


»rmaks




                                                                     BEFORE THE

               FEDERAL COMMUNICATIONS COMMISSIONayg 92 2007
                                         W        NGTON D.C. 20554



         In the Matter of                                                File No.39—SAT—P/LA—98;Call Sign $2332




                                                  Ni snz ns 2 N yz
                                                                         IBFS File No.SAT—LOA—1997122—0208
                                                                         File No.40—SAT—P/LA—98;Call Sign $2333
         Lockheed Martin Corporation                                     IBFS File No.SAT—LOA—1997122—0206
                                                                         File No.41—SAT—P/LA—98;Call Sign $2334
                                                                         IBFS File No.SAT—LOA—1997122—0212
         Authority to Construct, Launch,                                 File No.42—SAT—P/LA—98; Call Sign $2335
         and Operate a Ka—Band Satellite                                 IBFS File No.SAT—LOA—1997122—0211
         System in the Fixed—Satellite Service                           File No. 43—SAT—P/LA—98; Call Sign $2336
                                                                         IBFS File No.SAT—LOA—1997122—0213


                   MOTION FOR CORRECTION, CLARIFICATION AND RETRACTION


                 Litigation Recovery Trust ("Petitioner" or "LRT"), on behalf of its members and its
         associated entities‘, hereby submits the instant MOTION FOR CORRECTION,
         CLARIFICATION AND RETRACTION . On July 5, 2002, the Commission issued an
         Order on Reconsideration ("Order") in response to a Petition for Reconsideration ("LRT
         Petition") filed by LRT in the above—captioned proceeding in which the Commission, as
         an initial matter, has authorized the grant of the applications of Lockheed Martin
         Corporation ("Lockheed") to launch and operate a satellite system in geostationary—
         satellite orbit to provide fixed—satellite services in the Ka—band." In a separate order, the
         International Bureau assigned Lockheed Martin‘s satellites to the 129° W.L., 51° E.L.,




         ‘ Litigation Recovery Trust represents the rights and claims of certain individuals, and includes
         the following entities: Committee to Restructure the International Satellite Organizations
         ("CRISO") and Digital Conversion Organization("DCO"). The instant filing is part of LRT‘s
         continuing corporate performance and governance monitoring and assessment program.

         > In the Matter of Lockheed Martin Corporation, Order and Authorization, DA 01—1688, File No.
         39—SAT—P/LA—98 et al. (Int‘l Bur. rel. August 3, 2001) (Lockheed Martin Ka—band Authorization).


99° E.L., and 151.5° E.L. orbital locations.© Lockheed Martin opposed the LRT Petition
for Reconsideration.



        The Commission stated that LRT‘s Petition also raised issues that it has sought
to address in a set of companion orders* involving Lockheed and its subsidiary, Comsat
Corporation ("Comsat"). The Commission acted on LRT‘s Petition in this proceeding as
part of that set of rulings.


                                              1.   _Summary



        LRT views the Order and companion rulings as having been designed,
intentionally or unintentionally, to overlook, disregard and in some instances
erroneously dismiss evidence of ilegality on the part of Lockheed and Comsat. LRT
regards the illegal actions of Lockheed as more serious than the litany of the recently
discovered offenses of corporate wrongdoers. What makes the illegal and unethical
conduct of Lockheed so much worse is the fact that Lockheed is the country‘s largest
defense contractor and, as such, is expected to conduct its business dealings in an
exemplary fashion, in accordance with the highest ethical and legal standards. As
reflected in the Order, LRT‘s prior submissions herein and this Motion, Lockheed, either
directly or indirectly, through its subsidiaries, including Comsat, has repeatedly violated
these ethical standards and federal laws and Commission rules and regulations, and
accordingly should be severely sanctioned.


        For nearly two years, LRT has sought the intervention of the Commission to
sanction illegal conduct on the part of Lockheed. Unfortunately, as outlined below, the
Commission in its Order has overlooked; disregarded or erroneously dismissed evidence
of legal violations by Lockheed. Furthermore, the Order contains a number of material




8       In the Matter of Second Round Assignment of Geostationary Satellite Orbit Locations to
Fixed Satellite Service Space Stations in the Ka—Band, Order, DA 01—1693 (Inf‘l Bur. rel. August
3, 2001) (Second Round GSO Assignment Order).

* See In re Comsat—Lockheed Merger Proceeding, Order on Reconsideration, FCC Release 02—
197, July 5, 2002.("Comsat Merger Order"); In re Comsat Corporation Applications to Provide
Inmarsat Service (FCC Release 02—200); In re Litigation Recovery Trust, Petition for Declaratory
Ruling (FCC Release 02—199)                          .


errors, misstatements and omissions of vital evidence . This Motion is intended to
correct these serious errors and omissions.



       In addition, the Order at [] 8 includes an unsupported and improper admonition,
accusing LRT of misuse of Commission process. This censure is included in the Order,
notwithstanding the fact that, as confirmed in the Merger Order proceeding, it is LRT‘s
independent research that has found Comsat/Lockheed guilty of filing false information
with the Commission. Furthermore, as demonstrated herein and in prior pleadings in
this proceeding, Lockheed has systematically and repeatedly failed to comply with the
Commission‘s disclosure requirements, in violation of 47 CFR § 1.65. The Commission‘s
action in adopting the admonition infringes the Constitutional rights of free speech,
petition and due process of LRT members. LRT petitions for the immediate retraction of
the [ 8 admonition. Further, LRT should be commended for its continuing investigations
and research dedicated to public interest objectives concerning statutory and regulatory
violations by licensees, including Lockheed and Comsat.


                          2. Regquest for Corrections and/or Clarifications




       This pleading seeks the adoption of necessary and appropriate corrections and
clarifications so that the reissued, corrected Order can be submitted by LRT for proper
review by the U.S. Court of Appeals. Consequently, expedited action on this Motion is
respectfully requested.




           A.   Order Erroneously Finds the LRT Petition to be Procedurally Defective



       The Commission states at [ 6 of the Order that "LRT fails to show how it interests
have been adversely affected by "the International Bureau‘s authorization of Lockheed
Martin‘s Ka—band application." Order, [ 6. The Commission also observes as follows:


        LRT does not show it is either a customer of Lockheed Martin or Comsat or a
       potential competitor in the provision of communications services. Nor does LRT
       show that it is a public interest representative acting beyond the interests of its


        members and their ongoing dispute with Comsat arising from the operation of
        BelCom °.

The Commission‘s conclusions are erroneous and directly contradict the specific
positions taken by LRT in its Petition and Reply to Opposition submitted herein.


        As was made abundantly clear in its filings in this proceeding®, LRT is in fact
functioning "as a public representative acting beyond the interest of its members."
Specifically, from the outset, LRT has been acting on behalf of all parties with a direct or
indirect interest in the Commission‘s authorization of new Ka Band satellite systems to
Lockheed. This group of interested parties includes competing applicants, carriers,
vendors, customers with an interest in the satellite facilities available for licensing to
Lockheed in this proceeding.


        LRT made its expanded interest quite explicit in its pleadings, a fact which has
been erroneously overlooked or disregarded by the Commission in its Order.


        In its Petition, LRT outlined in detail the repeated and continuing failures of
Lockheed to comply with the Commission‘s disclosure requirements‘. LRT noted that
Lockheed had failed to properly amend its applications to reference facts and
information derived from various other proceedings in which it and Comsat were
involved. These other proceedings are addressed in detail below.


        In its Opposition, Lockheed,‘rather than addressing LRT‘s substantive
allegations, sought to make iight of the litany of deliberate failures of the company to
comply with the Commission‘s disclosure regulations by stating:


        "But even if that were not the case, any suggestions that Lockheed Martin was
        intentionally withholding information from the FCC is absurd given the fact that
        the same Bureau was acting on both applications." Lockheed Opposition.




° BelCom, Inc, was a company founded and operated by LRT members and which was acquired
by Comsat in May 1993 and subsequently closed by Lockheed in December 2001.

© See LRT Petition for Reconsideration; LRT Reply to Opposition to Petition for Reconsideration

‘ See 47 CFR § 1.65


This statement fails to address the key matter at iséue, the rules assure disclosure to all
interested parties—not just the Commission.


        The purpose of the Commission‘s disclosure requirements set forth in Section
1.65 Rules (47 CFR §1.65) is to inform the Commission, the public, and concerned
parties of material changes in the application.©     LRT‘s expressed interest in participating
in this proceeding hasbeen in assuring that the "public and all concerned parties, " i.e.
all parties participating in the Ka Band license proceeding, and all parties interested in
the outcome, be provided adequate notice of the character qualifications (or lack thereof)
of Lockheed®. The failure of Lockheed to comply with the disclosure rules of the
Commission directly affected all such parties.


        As all parties and legal practitioners participating in Commission proceedings
fully recognize, the Section 1.65 disclosure requirements have been established by the
Commission to assure that applicants provide all relevant and current information for
review by the Commission staff and the other parties participating in individual
proceedings. In its Opposition, Lockheed deliberately chose to overiook the fact that the
company‘s failure to properly amend its applications with updated information affected
those other parties participating in the subject proceeding. The Commission failed to
address this blatant error on the part of Lockheed.


        The Lockheed Ka—band Applications were contested by other parties.
Specifically, three applicants in second—round Ka—band proceeding filed petitions to deny
the Second—Round Lockheed application."" The failure of Lockheed to amend its
applications to include information directly related to its character qualifications



8 See Pinelands, Inc. and BHC Communications, Inc., 7 FCC Red 6058, 6064 n. 25 (1992);
WPIX, Inc., 33 FCC 2d 782, 783—84 (1972).

° See LRT Reply to Opposition to Petition For Reconsideration, pp 4—5

10     Pacific Century Group, Inc., Petition To Deny Or Condition Grant Of Authorizations, filed
May 21, 1999 (°PCG Petition"), Pegasus Development Corporation, Consolidated Petition to
Deny, filed May 21, 1999 ("Pegasus Consolidated Petition"); Consolidated Petitions To Dismiss,
Deny or defer Of Hughes Communications Galaxy, Inc. and Hughes Communications, Inc., filed
May 21, 1999 ("Hughes Consolidated Petition"). We address all issues relating to the assignment
of orbit locations, financial qualifications, and two—degree spacing in the Second Round GSO
Assignment Order released today.


foreclosed any reasonable opportunity, which the contesting parties might have had to
raise additional objections concerning Lockheed‘s unfitness to receive the subject
license grants‘‘.


         In the final analysis, it must be recognized that the rules are the rules, even for
large and powerful companies such as Lockheed. Disclosure of all material matters
affecting licensee character qualifications is critical to the proper review and evaluation
of applications by the Commission and other interested parties. Intentional and repeated
failures to comply with these regulations cannot be explained away in an arrogant
flourish by Lockheed lawyers as "absurd" objections. ‘*


        The failure of the Commission to properly recognize LRT‘s clearly announced
intent and purpose in participating in this proceeding constitutes error on the part of the
agency.


        LRT requests that the Order be corrected to reflect the fact that LRT was in fact
functioning as a public interest representative, acting beyond the interests of its
members, in taking part in the subject proceeding. The finding that the LRT Petition was
procedurally defective should be deleted.


              B. The Order Fails to Cite Lockheed‘s Failure to Amend its Applications
                to Reference an Ongoing Criminal Proceeding Involving Its Subsidiary


        In the Order, the Commission references a companion order it adopted denying
LRT‘s Petition for Reconsideration of the Commission‘s authorization of Lockheed


‘‘ At the time LRT filed its Petition herein, it was participating in another proceeding before the
International Bureau involving Comsat‘s attempted assignment of certain mobile satellite
communications licenses to Telenor, SA. In that proceeding. outside counsel for Comsat served
LRT with amendments, updating the subject applications. It is noted that the attorneys
representing Comsat in the Telenor proceeding were different from those participating in the Ka—
band proceeding. Comsat‘s actions in the Telenor proceeding complied with the Commission‘s
rules. Lockheed‘s actions in the KA—band proceeding failed to meet these required standards.

2 in fact, the above—referenced comment of Lockheed reflects either a total misunderstanding of
the Commission‘s licensing procedures or a caviler disregard and disrespect for the process
itself. In either case, such conduct is unacceptable and representative of the conduct of Lockheed
and Comsat involving their continued fundamental failure to comply with the Commission‘s rules,
regulations and policies.


 acquisition of Comsat. In the Merger Order‘®, the Commission addressed and rejected
 LRT‘s allegations that Comsat is not a qualified Commission licensee because of the
. "EMS matter," which involved Comsat/Lockheed‘s filing of false information and the
failure to disclose other information concerning certain criminal and civil law matters
 brought against Comsat‘s Florida subsidiary, Electromechanical Systems, Inc. (°EMS").


        In the Order, the Commission found that Comsat complied with disclosure rules
in notifying the Commission of the EMS matter, noting further: .


        LRT does not, in this proceeding, provide any new factual information that would
        persuade us to reach a different decision on the content of this proceeding.
        Moreover, the circumstances surrounding the EMS matter were a matter of
        public record and known to the Commission when the International Bureau
        granted the Lockheed Martin Ka—band application. The International Bureau‘s
        action came over a year after Comsat informed the Commission of the plea
        agreement on the EMS case, and Lockheed Martin otherwise properly reported
        its acquisition of Comsat in this proceeding. Order ([7, emphasis added.

                The Commission‘s ruling is in error as it directly violates 47 CFR § 1.65.
Under Section 1.865(a), applicants must disclose inaccuracies in pending applications "as
promptly as possible and in any event within 30 days" whenever:                (1) information
furnished in the pending application "is no longer substantially accurate or complete in all
significant respects"; or (2) "there has been a substantial change as to any other matter
which may be of decisional significance in a Commission proceeding involving the
pending application.""" Recently, in addressing the compliance requirements under
Section 1.65, the Commission has observed that


        Section 1.65 imposes an affirmative obligation on regulated entities to inform the
        Commission of the facts needed to fulfill its duties. Our decisions rely heavily on
        the completeness and accuracy of applicants‘ submissions because we do not
        have the resources to verify independently each and every representation made
        in the thousands of pages submitted to us each day. In re AT&T Wireless
        Services, Inc..File No. EB—O2—TS—018 Washington, DC                 NAL/Acct,. No.
        200232100002 FRN 0006—1660—29, NOTICE OF APPARENT LIABILITY FOR
        FORFEITURE Released: May 20, 2002.



13      In re Lockheed Martin Corporation and Comsat Corporation Applications for Transfer of
Control, Order and Authorization, File Nos. SAT—T/C—20000323—00078 et al., FCC 00—277, 15
FCC Red 22,910, Frratum, 15 FCC Red 23,506 (2000) ( Phase // Order).

* 47 C.F.R. § 1.65(a).


                 In the instant case, LRT ascertained that Lockheed had set about a
pattern of conduct designed to conceal information concerning the criminal plea
agreement of Comsat‘s Florida subsidiary. Specifically, on July 17, 2000, just days prior
to the Commission‘s approval of the Comsat—Lockheed Merger ("Merger"), Comsat‘s
Florida subsidiary, EMS executed a plea agreement with the U.S. Department of Justice,
in which it admitted to defrauding the U.S. Navy and obstructing justice. * Further, EMS
agreed to accept a five year sentence of probation and remit to the US Government $7.5
million in restitution. The company was also fined.


                LRT brought this serious matter to the attention of the Commission in its
Petition for Reconsideration of the Comsat Merger Order. LRT referenced both this
criminal plea agreement and a companion Federal False Claim Action‘" brought by the
Justice Department against Comsat.


                In filing its Petition in this proceeding, LRT noted that Lockheed had failed
to file an amendment to its series of pending applications in order to provide proper
notice of the criminal conviction. Furthermore, while not referenced in LRT‘s prior
pleadings   herein,    it is   obvious that     Lockheed violated        not only the disclosure
requirements under 47 CFR § 1.65, but also failed to update its Form 312 Satellite
Space Station Applications in accordance with processing policies. *‘


                EMS was made the subject of a federal grand jury investigation beginning
in January 1999 and executed the plea agreement with the Justice Department on July
17, 2000. Lockheed merged with Comsat on August 3, 2000.                    It then had 30 days to
amend its Form 312 Applications and file a proper notice for the purpose of complying




© See Plea Agreement of EMS entered in USA v. Flectromechanical Systems, Inc., Criminal No.
8:00—CR—00253 in the US District Court, Middle District of Florida (Tampa Division)) ("US v.
EMS"). See also, Order [ 8.

18 United States ex rel. Beattie et al v. Comsat Corporation et al Case No. (1996CVO0966) ("LWSA
v Comsat").

‘ The reporting requirement under FCC Form 312 is as follows:
      39. Is the applicant, of any person directly or indirectly controlling the applicant, currently a
      party in any pending matter referred to in the preceeding (sic) two items [questions 37 and
      38 related to criminal matters and anti—competitive conduct]? If yes, attach as an exhibit an
      explanation of the circumstances. FCC Form 312, ques. 39, emphasis added.


with Rule 1.65 to provide information concerning its acquisition of Comsat and the EMS
criminal plea matter.


                 Based on the information set forth in the Order, it appears that, to this
day, Lockheed has not properly amended its Ka Band applications‘". The participants in
this proceeding have never been notified that (1) Lockheed acquired Comsat, and in so
doing, took control of a company that days prior to its merger with Comsat executed a
criminal plea agreement and (2) Lockheed subsequently failed to comply with the
requirements of Section 1.65 by filing a timely amendment concerning the criminal
plea."

         The purpose of section 1.65 is to inform the Commission, the public, and
concerned parties of material changes in pending applications."" Moreover, section 1.65
imposes an affirmative obligation on regulated entities to inform the Commission of the
facts needed to fulfill its duties. As one court has stated, [the Commission is not
expected to ‘play procedural games with those who come before it in order to ascertain
the truth."""                                                                                     '

         The Order should be corrected to reference Lockheed‘s repeated violations of 47
USC § 1.65 in not properly submitting updated information in its pending applications
concerning its acquisition of Comsat and the EMS criminal proceedings and plea
agreement.




® Section 1.65 requires applicants to notify the Commission of substantial changes "as promptly
as possible and in any event within 30 days." The 30—day time limit is the maximum amount of
time that an applicant is allowed before it must file its notification, absent "good cause." 47
C.F.R. § 1.65(a).

 The EMS criminal plea agreement was executed on July 17, 2000. A timely Section 1.65 notice
would have had to be filed by August 16, 2000. No such filing was made. Furthermore, it appears
that none of Lockheed‘s Form 312 applications have ever been amended to include current
information. (Form 312, qustion 39; Instructions, p. 2, Current Information.)

*° gee Pinelands, Inc. and BHC Communications, Inc., Memorandum Opinion and Order, 7 FCC
Red 6058, 6064 n.25 (1992); WPIX, Inc., Memorandum Opinion and Order, 33 FCC 2d 782, 783—
84, para. 3 (1972).

* RKO General, Inc. v. FCC, 670 F.2d 215, 229 (D.C. Cir. 1981) (internal citations omitted).


                       C. The Order Erroneously References a "Public Record"
                                   Exception to 47 CFR § 1.65


         The Commission explains away Lockheed‘s failure to amend its applications by
observing that "the circumstances surrounding the EMS matter were a matter of public
record." This finding of the Commission is clearly in error.


        After extensive research, LRT has found that reports concerning the execution of
the EMS plea agreementwere carried in three newspapers in the United States". And
of the three reports, the‘one in the Washington Post failed to report the full facts."*
Comsat also included a concealed reference to the EMS matter in filing its last 10 Q
Report with the U.S. Securities and Exchange Commission."" Therefore, in reality, there
was no "public record" of the EMS matter as that term is generally accepted.


        However, the paucity of press and other reports notwithstanding, Section 1.65
does not include a "public record" exception in any event. For the Commission to include
such a reference is in error.



        The disclosure rules are intended to assure that applicants properly update their
filings to make certain that all information contained is both accurate and current for the
proper review and assessment by the Commission and all other interested parties. For


* The Tampa Tribune, St. Petersburg (Fla) Times and Washington Post. See LRT Petition for
Reconsideration of Comsat Merger Order, pp. 8—10.

* The Washington Post reported the EMS matter without referencing the criminality of the
conduct as follows:
             Comsat ..... said the earnings were affected by a $7.5 million reserve related to an
             investigation of Comsat‘s Electromechanical Systems Inc. by the U.S. Attorney‘s
             Office in Tampa. Last week, Electromechanical System pleaded guilty to
             overcharging the government for work on a contract to refurbish U.S. Navy radar
             pedestals n ship. The company agreed to pay the government $7.5 million.
             Washington Post, July 25, 2000, p.E04, emphasis added.

** Comsat in its last 100 Report of quarterly earnings filed with the US Securities and Exchange
Commission, Comsat included the following statement:" The results for the second quarter and
first six months of 2000 included the establishment of a $7.5 million reserve related to an
investigation by the U.S. Attorney‘s Office in Tampa of Electromechanical Systems, Inc., a
subsidiary located in Largo, Florida. " Clearly, no reference to the criminal plea was included in
the financial summary. This notice could have been interpreted that the Comsat subsidiary was
the victim of the fraud, not the perpetrator. See http://www.secinfo.com/dSAKe.5266.htm




                                                 10


the Commission to cite a "public record" exception to Rule 1.65 is an error and would
deny interested parties equal access to accurate and timely information.


         The Order should be amended to correct the Commission‘s erroneous reference

to the public record exception to Rule 1.65.


                   D. Order Includes Erroneous References to Disclosure Notices

                              Filed by Lockheed in this Proceeding



         The Order references the fact that Comsat " informed the Commission of the plea
agreement on (sic) the EMS case, and Lockheed Martin otherwise properly reported the
acquisition of Comsat in this proceeding."


        This statement is also erroneous.


        The Comsat disclosure statement in the form of a letter came more than 30 days
following the execution of the EMS criminal plea agreement and was executed by a
company attorney. The said letter "amendment" was not timely filed and was not signed
by an officer as required by the Rules."" In addition, the filing of the attorney‘s letter in
the Lockheed—Comsat Merger Proceeding would have no legal effect and would be a
nullity in the instant proceeding. To be effective, a separate, properly executed
amendment would have to be submitted for each application pending in this
proceeding."° The Commission‘s reference to properly or improperly filed amendment
documents in another proceeding is in error.




* It is noted that under the Commission‘s rules (Part 1) and the filing and certification instructions
to Form 312, in the case of corporations, amendments to FCC applications are required to be
signed by officers. Attorneys can file only where officers are absent and unavailable to execute
the amendment. Based on the information included in the Commission‘s Order, it appears that
attorney Bender‘s letter did not constitute a property filed amendment. This would constitute
separate grounds for rejecting Comsat‘s proffered filing. This would also constitute an additional
rule violation by the companies.

* Amendments can incorporate other filings by reference (Form 312, Instructions, p 1.) However,
a properly filed document would have to be filed in this proceeding in order to include the cross
reference. Based on the information in the Order, Lockheed did not follow this required procedure
in the present case.



                                                  11


        The Order should be corrected to state that Lockheed did not properly comply
with the Commission‘s notice requirements as set forth in 47 CFR § 1.65 and Form 312.
Lockheed failed to file an amendment stating that it had acquired Comsat and its
subsidiaries, including EMS. Further, it failed to provide notice that as of August 3, 2000,
it assumed control over a Comsat subsidiary that had pleaded guilty to defrauding the
U.S. Defense Department and obstructing justice. No such amendments were filed with
the Commission or served upon the other parties to this proceedings.


        These rule violations should be referred to the Enforcement Bureau.




             3. Request For Retraction of Ruling Infringing LRT‘s Constitutional Rights




        In the Order at [ 8, the Commission references Comsat/Lockheed‘s claims that
LRT and/or its members‘ primary aim in bringing the instant action is "to harass Comsat
and its successors and/or assigns by abusing the Commission‘s processes in order to
cause Comsat and its successors and/or assigns to capitulate to LRT and/or its
members‘ demands for compensation relating to a long ago corporate dispute"" involving
the LRT members and Comsat." The Commission then undertook the unusual and
highly prejudicial action of issuing the following warning:

        We hereby expressly warn LRT and/or its members that they may face summary
        dismissal of their pleadings or the alternative procedure of prior screening of their
        pleadings should they file abusive or harassing pleadings with the agency. Order
        8.

        The findings by the Commission are unfounded, erroneous and highly prejudicial.
Indeed, as noted in the Order they are based on the representations of Lockheed and
Comsat, two companies that have admitted to filing false information with the




* As the Commission has been informed in the Lockheed—Intelsat transfer proceeding (IB Docket
No. 02—87), the referenced "corporate dispute" continues. LRT has secured a critical affidavit
establishing that the "long ago" Comsat orchestrated law suit was based upon fraud. Actions are
being pursued by LRT on the state and federal level to annul prior judgments and sanction those
companies and officers and agents responsible for perpetrating the fraud upon the courts.



                                              12


Commission"". Most importantly, the admonition violates the fundamental Constitutional
rights of LRT and its members. Accordingly, LRT petitions for the immediate retraction of
1[ 8 in its entirety.


          First and foremost, the LRT filings against Comsat have from the outset had the
sole purpose of seeking the intervention of the Commission to sanction illegal conduct
on the part of Comsat, and later Lockheed. It is also noted that not all of the actions to
which LRT has been a party were commenced by LRT. Indeed, two of the key
proceedings — declaratory relief actions involving Comsat‘s compliance with the Satellite
Act— were commenced in 1996 by the Commission on its own motion, following the
submission of letters of inquiry by LRT."° Such Commission actions, a highly unusual
circumstance, without question reflected the staff‘s judgment that the allegations raised
by LRT against Comsat were material, substantive and serious. Further, other actions in
which LRT has participated were brought by customers and competitors of Comsat."°


          In fact, each and every petition filed by LRT in this and other referenced
proceedings has been based firmly on its conclusions, following diligent research and
study, that Comsat and Lockheed have engaged in conduct constituting serious
violations of federal law and Commission rules and policies.


          For over six years, LRT has sought the Commission‘s intervention against
Comsat and later Lockheed. Over this period, LRT has found that its pleadings have
been required to remain on file literally for years before being reviewed and adjudicated
by the Commission. Other requests have been summarily rejected by the staff."" One
LRT action, a rule making petition seeking the adoption of a rule to prohibit Comsat®*


* See Comsat Merger Order, double numbered fn.29 [second].

* See in the Matter of Comsat Corporation, et al., Memorandum Opinion and Order, FCC 97—
422, 13 FCC Red 2714, 2726 ("Consolidated Order)(1998), recon. denied, 15 FCC Red 19,516
(2000).

°° 1d.
*‘ Over the last two years, successive requests for subpoenas to access Comsat and Lockheed
documents filed by LRT with the Chief of the International Bureau have been summarily rejected.

* Comsat spun off the stock of its entertainment businesses, including the movie distribution
business in June 1997.


                                                13


from continuing its open channel distribution of pornographic movies to one million hotel
rooms throughout the US, has remained on file before the Commission since December
29, 1995, without any agency action"".


        It is true that LRT members have certain commercial disputes with Comsat and
Lockheed, but under the cirecumstances obtaining in this case, this fact should not and
cannot be considered by an impartial administrative agency such as the Commission as
it reviews the allegations at issue.   Absent evidence to the contrary, the motivations of
LRT—should not and cannot be a relevant factor in the Commission‘s decision making
process, as it reviews the serious allegations of wrongdoing raised against Comsat and
Lockheed by LRT. Such motivations, absent proof to the contrary, cannot be cited in
support of an ad hoc admonition to forestall the continued exercise of fundamental
Constitutional rights by LRT members.—


        Having said this, LRT is most concerned with the language used in the
Commission‘s Orders. As an initial matter, one is confronted with the Commission‘s use
of derogatory language in referring to LRT and its members. At (| 9 of the Comsat
Merger Order, for example, the Commission includes a reference to "LRT and its
confederates." This represents a direct attack against the good name, reputation and
standing of LRT and its members. This language is patently offensive and, in LRT‘s
view, reflects a clear anti—LRT bias and bent of mind on the part of the Commission.


        Furthermore, and of primary concern, one must consider the entire contents of «[
8 in the Order. Here, the Commission accepts the baseless and unsupported allegations
of Comsat and Lockheed that LRT‘s actions in seeking the independent intervention of
the agency should be found to constitute a misuse of Commission process to harass the
companies. The Commission then has included an admonishment of L'RT——warning it
against the submission of further pleadings.




* Ten days ago, LRT forwarded a letter to Chairman Powell and the other Commissioners
requesting that attention be given to LRT‘s pending hotel movie rule making petition, which seeks
a rule requiring that open access to such indecent movies previously distributed by Comsat be
restricted through "lock—box" channel selectors so as to protect American children and families.




                                                14


         What is truly incredible to LRT is the fact that the Commission voted to undertake
this unusual, offensive and damaging action against LRT, notwithstanding the fact that in
other proceedings, it found Comsat/Lockheed guilty of filing false information with the
agency in an effort to conceal the licensee status of EMS, and required that the matter
be referred for further action to the Enforcement Bureau."" This remedial action against
Comsat, a government sponsored licensee, came solely as a result of the continuing
research of and public interest filings made by LRT and submitted to the Commission.


         For the Commission to find Comsat/Lockheed guilty of filing false information
based on LRT‘s pleadings and then to admonish LRT for harassing the companies as a
result of the submission of evidence by LRT is illogical, unsupportable, prejudicial and
illegal. The improper admonishment of LRT by the Commission constitutes a direct and
serious infringement of the First Amendment rights of free speech and petition and the
right of due process of LRT and its members.


        LRT regards this as a very serious matter. LRT has been unjustly accused and
improperly judged guilty of misusing Commission process, based on nothing more than
the bare, unsupported accusations of Comsat/Lockheed. It must be properly noted that
based on findings in other proceedings, LRT‘s accusers are confessed corporate felons,
former distributors of pornography and, as established in this Motion, repeated violators
of Commission rules and regulations. They have admitted to filing false information with
the Commission.



        In comparison, for their part, LRT members have been victimized by
Comsat/Lockheed executives, who, using their corporate offices, have abused
government process and power, stolen property and services, engaged in coercion and




* The Commission notes in double numbered footnote 29 [second] that the referral to the
Enforcement Bureau comes after the statute of limitation has expired. In LRT‘s view, this
represents further evidence of the staff‘s anti—LRT bent of mind. LRT provided the evidence on
which the Comsat rule violation is based over a year ago. However, the staff purposely avoided
dealing with the matter until July 1. This action came, according to the Commission, beyond the
state of limitations, thereby benefiting Comsat/Lockheed. Such a delay in this instance has
obviously denied a just outcome, as it will not be possible to issue a fine or forfeiture order
against Comsat/Lockheed, unless the Commission finds, as LRT urges, that the statute of
limitations should be tolled as a result of the fraudulent conduct of Comsat/Lockheed.



                                                15


intimidation and obstructed justice by concealing and filing false and fraudulent
information. These practices are illegal and unethical and cannot be tolerated.


        Lockheed, from the time it merged with Comsat, has refused all efforts by LRT to
explore the various serious issues involved in this dispute, choosing rather to proceed
with abusive legal proceedings."" This type of stonewalling and abuse of legal process is
exactly the type of illegal and unethical conduct and malfeasance by corporate officers,
which the White House®® and the Congress are presently acting to police and
eliminate.""


        Furthermore, in unjustly finding LRT has misused government process, the
Commission has jeopardized LRT members‘ proper standing as litigants, and seriously
prejudiced their rights to bring actions in other fora, including an appeal of the instant
ruling before the U.S. Court of Appeals.


        Accordingly, LRT petitions the Commission to retract {[ 8 in its entirety. LRT
requests that this retraction be undertaken on an expedited basis, so that the language
will be removed from the Order before LRT files its Petition for Review with the US Court
of Appeals.


        Finally, LRT requests that appropriate language be added to the Order properly
commending LRT for its continued vigilance and dedication in serving the public interest
by searching out and identifying conduct by Comsat and Lockheed and their
subsidiaries, which violates federal law and the Commission‘s rules and policies.


* Lockheed even refused a series of invitations extended by Rep. Sue W. Kelly (R—NY) to
discuss the issues involved.

°° Unethical business practices by corporate leaders amount to theft and fraud... We will defend
the rights and interests of every American worker and shareholder, and we will not accept
anything less than complete honesty." Radio Speech by President George W. Bush, July 20,
2002. http://www.whitehouse.gov/news/releases/2002/07/20020720.htm!l

37 Legislation currently pending before the 107" Congress seeks real—time corporate disclosures
of corporate information to protect investors; the return of funds to investors who have lost money
in the markets as a result of corporate malfeasance; increased criminal penalties for corporate
wrongdoing and increased powers for the Securities and Exchange Commission. See Opening
Statement of Rep. Michael G. Oxley (R—OH), Chairman House Committee on Financial Services.
House—Senate Conference Committee on Corporate Accountability Legislation, July 19, 2002



                                                16


        4. LRT‘s Requested Corrections and Clarifications Are in the Public Interest


        This Motion references a number of material rule violations by Lockheed,
including, among others, its failure to report the Comsat merger, its repeated failure to
report the pending criminal prosecution in its series of Form 312 applications and
amendments; and its failure to timely report the execution of the criminal plea
agreement with the Department of Justice. This constitutes evidence of continuing
conduct on the part of Lockheed involving misrepresentation and failure to disclose.


        The Commission in its 1990 modification of the character policy addressed the
relevant non—FCC misconduct that the Commission, at its discretion, may consider in
licensing decisions."" Under this policy, the Commission will consider a felony conviction
as relevant to a licensee‘s character qualifications and an indication of its propensity to
obey the law." The Commission also correctly will take into consideration mitigating
factors, such as willfuiness, frequency, correctness, and seriousness of the misconduct
as well as efforts to remedy the wrong and overall record of compliance with
Commission rules and policies.*

        The matters raised in this Motion clearly reflect a series of actions on the part of
Lockheed constituting serious violations of the Commission‘s rules in an effort to conceal
involvement of the company and its officers with EMS and its criminal activities. Comsat
and Lockheed have admitted to filing false information*‘ and, based on evidence
presented herein, have participated in a course of conduct designed to conceal and/or
misrepresent facts to the Commission. Such conduct on the part of licensees cannot be
tolerated.



        Over the years, in a continuing series of rulings, the Commission has observed
that fraud "is a subject area the Commission has traditionally considered to be pertinent



88      Modified Character Policy Statement at 3252.
39      1d.
a0      1d.
*‘ See Comsat Merger Reconsideration Order, double numbered fn 29 [second].



                                                 17


 to its evaluation of a licensee‘s character." Decision, 13 F.C.C.R. at 15,038. Commission
 regulations specifically forbid applicants from "mak{[ing] any misrepresentation or willful
 material omission bearing on any matter...." 47 C.F.R. § 1.17; see also 47 U.S.C. §
 312(a)(1). The Commission has found that a licensee‘s complete candor is important
 because "effective regulation is premised upon the agency‘s ability to depend upon the                V
 representations made to it by its licensees." Leflore Broad. Co. v. Commission, 636 F.2d
 454, 461 (D.C. Cir. 1980); see also Character Policy, 5 F.C.C.R. at 3253. Also, it is well
 recognized that the Commission may disqualify an applicant who deliberately makes
_ misrepresentations or lacks candor in dealing with the agency. See Swan Creek
 Communications, Inc. v. Commission, 39 F.3d 1217, 1221—24 (D.C. Cir. 1994); Garden
 State Broad. Ltd. v. Commission, 996 F.2d 386, 393—94 (D.C. Cir. 1993).


         Further, under section 1.17 of the Commission‘s rules, "[nlo applicant ... shall in
  .. any ... written statement submitted to the Commission ... make any misrepresentation
 or willful material omission bearing on any matter within the jurisdiction of the
 Commission."* The Commission has defined misrepresentation as an intentional
 misrepresentation of fact intended to decefi/e "" and has concluded that an intent to
 deceive is an essential element of a misrepresentation finding.** The Commission has
 also stated that intent is a factual question that may be inferred if other evidence shows
 that a motive or logical desire to deceive exists . . ."*" In the present case, one is
 presented with both the admission of filing false information and evidence of a continuing
 pattern of conduct involving repeated failures to disclose information to the Commission
 and other required parties.      The ultimate facts are often proved through cireumstantial
 evidence, as such evidence may be the only way of proving knowledge or intent."©


 247 C.FR. § 1.17.

 43 Silver Star Communications—Albany, Inc. 3 FCC Red 6342, 6349 (Rev. Bd. 1988).

 ** See Swan Creek Communications v. FCC, 39 F.3d 1217, 1222 (D.C. Cir. 1994).
 * Black Television Workshop, 8 FCC Red 4192, 4198, n. 41 (1993), recon. denied, 8 FCC Red
 8719 (1993), rev. denied, 9 FCC Red 4477 (1994), affd sub nom. Woodfork v. FCC, 70 F.3d 639
 (D.C. Cir. 1995) (affirming ALJ‘s finding that the record encompasses documents containing
 misrepresentations).

 * Ned N. Butler and Claude M. Gray, D.B.A. The Prattville Broadcasting Co., Prattville, Ala.,
 Memorandum Opinion and Order, 5 FCC 2d 601, 603—604 (Rev. Bd. 1966) (internal citations
 omitted). In criminal cases, where the burden of proof is higher, the D.C. Circuit has recognized
 that {iIntent may, and generally must, be proved circumstantially . . .," United States v. Jackson,


                                                 18


        The Commission correctly considers misrepresentation to be a serious
violation,*" as its entire regulatory scheme "rests upon the assumption that applicants
will supply [the Commission] with accurate information.""° For this reason, applicants
before the Commission are held to a high standard of Candbr and forthrightness."


        The conduct referenced herein is unacceptable on the part of any licensee, but
clearly is beyond the pale for Lockheed, the nation‘s largest defense contractor, which
must be expected to comply with the highest ethical and legal standards. It cannot be
permitted to take part in such deceptive practices.


        Clearly, based on the continuing misconduct of Lockheed, the public interest will
be served by correcting, clarifying and rescinding the Order as requested in this Motion.
This is especially the case in view of the recent attention directed to corporate fraud and
deception by the Administration and the Congress, following the Enron and related
scandals. All government regulators must be vigilant, and aggressively search out and
sanction all illegal conduct and corruption on the part of corporations and their senior
officers.    This is just such a case.



513 F.2d 456, 461 (D.C. Cir. 1975) (footnotes omitted), and has stated that it does not distinguish
between "direct and circumstantial evidence in evaluating the sufficiency of the evidence." United
States v. Lam Kwong—Wah, 924 F.2d 298, 303 (D.C. Cir. 1991), cert. denied, 506 U.S. 901, 113
S.Ct. 287, 121 L.Ed.2d 213 (1992).

*‘ Fox Television Stations, Inc., Memorandum Opinion and Order, 10 FCC Red 8452, 8478, para.
B0 (1995).
* Policy Regarding Character Qualifications in Broadcast Licensing, 102 FCC 2d 1179, 1210,
para. 58 (1986) (subsequent history omitted) ("Character Policy Statement"). "‘The integrity of
the Commission‘s processes cannot be maintained without honest dealing by regulated
companies." See id., 102 FCC 2d at 1211, para. 61. "Regardless of the factual cireumstances of
each case, misrepresentation to the Commission is always an egregious violation." Forfeiture
Policy Statement, 12 FCC Red at 17098, para. 21. The Commission may treat even the most
insignificant misrepresentation as an event disqualifying a licensee from further consideration.
Character Policy Statement, 102 FCC 2d at 1210, para. 60. See also Forfeiture Policy Statement,
12 FCC Red at 17098, para. 21.

* WHW Enterprises Inc., v. FCC, 753 F.2d 1132, 1138 (D.C. Cir. 1985) (upholding Commission
sanctions against license applicant for misrepresentation); Sea Island Broadcasting Corp. of S.C.,
60 FCC 2d 146, 147, para. 3 (1976) ("The Commission insists on complete candor from its
licensees and where . . . that candor has been found lacking in response to official Commission
inquiries, the Commission has terminated the license."), affd, Sea Island Broadcasting Corp. of
S.C. v. Federal Communications Commission, 627 F.2d 240 (D.C. Cir. 1980).



                                                19


   forced liquidation of all communications assets of Comsat and Lockheed, with all
   proceeds to be transferred to a Digital Conversion Fund to be administered by
   trustees appointed by the Commission, for the purpose of financing, through
   loans and/or grants, the digital upgrade of transmission facilities of qualifying
   small market, public and minofity owned television stations and cable systems.
   We also find reason to determine whether the members of Comsat and
   Lockheed former and current senior management and agents violated their
   public trust, and, if so, we will adopt orders permanently prohibiting their
   participation in the management of companies, which directly or indirectly control
   licenses issued by the Commission, and to order appropriate fines and
   forfeitures.




                                                  Respectfully submitted,

                                                 /s,/w“am L. W              .———
                                                 Wime{%fi elyfi%
                                                 Trustee
                                                 Litigation Recovery Trust
                                                 515 Madison Avenue Suite 2306
July 22, 2002                                    New York, New York 10022—5402




                                        21


                               CERTIFICATE OF SERVICE


I, William L. Whitely, hereby cerflfy that I have this 22nd day of July, 2002 directed that
the foregoing MOTION FOR CORRECTIONS, CLARIFICATIONS AND RETRACTIONS
be forwarded via Email, Federal Express or US Mail, postage prepaid, to the following:

                                   Rosemary C. Harold
                                  Wiley, Rein & Fielding
                                    1776 K Street, NW
                                  Washington, DC 20006

                         Attorney for Comsat, Lockheed Martin,




                                         Jim Ball,
                            Associate Bureau Chief for Policy
                          Federal Communications Commission
                                   445   12 Street, SW
                                 Washington, DC 20554




                                                           William L. Whltely




                                            22





Document Created: 2014-12-31 14:16:00
Document Modified: 2014-12-31 14:16:00

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