UNITED STATES DISTRICT COURT
NextiraOne, LLC ("NextiraOne," or "defendant"), a limited liability company organized and existing under the laws of Delaware with its principal place of business in Houston, Texas; defendant's counsel; and the United States Department of Justice, by and through the United States Attorney's Office for the District of South Dakota and the Antitrust Division of the Department of Justice (hereinafter "the United States"), hereby submit the following Plea Agreement to the United States District Court pursuant to Rule 11(c)(1)(B) of the Federal Rules of Criminal Procedure ("Fed. R. Crim. P.").
Rights of Defendant
1. The defendant understands its rights:
Agreement to Plead Guilty and Waive Certain Rights
2. The defendant knowingly and voluntarily waives the rights set out in Paragraph 1(b)-(f) above. The defendant also knowingly and voluntarily waives the right to file any appeal, any collateral attack, or any other writ or motion, including but not limited to an appeal under 18 U.S.C. § 3742, that challenges the sentence imposed by the Court if that sentence is consistent with or below the recommended sentence in Paragraph 10 of this Plea Agreement, regardless of how the sentence is determined by the Court. This agreement does not affect the rights or obligations of the United States as set forth in 18 U.S.C. § 3742(b). Pursuant to Fed. R. Crim. P. 7(b), the defendant will waive Indictment and plead guilty at arraignment to a one-count Information to be filed in the United States District Court for the District of South Dakota. The Information will charge the defendant with wire fraud in violation of 18 U.S.C. § 1343.
3. NextiraOne agrees that the elements of the charged offense are as follows:
Wire Fraud -
4. NextiraOne, pursuant to the terms of this Plea Agreement, will make a factual admission of guilt to the Court in accordance with Fed. R. Crim. P. 11, as set forth in Paragraph 5 below.
Factual Basis for Offense Charged
5. Had this case gone to trial, the United States would have presented evidence sufficient to prove the following facts:
Possible Maximum Sentence
6. The defendant understands that the statutory maximum penalty which may be imposed against it upon conviction for a violation of 18 U.S.C. § 1343 is a fine in an amount equal to the greatest of:
7. In addition, the defendant understands that:
8. The defendant understands that the Sentencing Guidelines are advisory, not mandatory, but that the Court must consider the Guidelines in effect at the time of the offense, along with other factors set forth in 18 U.S.C. § 3553(a), in determining and imposing sentence. The defendant understands that the Guidelines determinations will be made by the Court by a preponderance of the evidence standard. The defendant understands that although the Court is not ultimately bound to impose a sentence within the applicable Guidelines range, its sentence must be reasonable based upon consideration of all relevant sentencing factors set forth in 18 U.S.C. § 3553(a).
9. The defendant stipulates that the Sentencing Guidelines would be calculated as follows, and that it will not ask for any other adjustment or reduction in the offense level or for a downward departure of any kind, including for its continuing cooperation:
For Wire Fraud:
10. Pursuant to Fed. R. Crim. P. 11 (c)(1)(B), the United States agrees that it will recommend, as the appropriate disposition of this case, that the Court impose a sentence within the applicable Guidelines range requiring NextiraOne to:
The United States and the defendant jointly submit that this Plea Agreement, together with the record that will be created by the United States and the defendant at the plea and sentencing hearings, and the further disclosure described in Paragraph 11, will provide sufficient information concerning the defendant, the crime charged in this case, and the defendant's role in the crime to enable the meaningful exercise of sentencing authority by the Court under 18 U.S.C. § 3553. The United States and defendant agree to request jointly that the Court accept the defendant's guilty plea and impose sentence on an expedited schedule as early as the date of arraignment, based upon the record provided by the defendant and the United States, under the provisions of Fed. R. Crim. P. 32(c)(1)(A)(ii) and U.S.S.G. § 6A1.1. The Court's denial of the request to impose sentence on an expedited schedule will not void this Plea Agreement.
The parties agree that there exist no aggravating or mitigating circumstances of a kind, or to a degree, not adequately taken into consideration by the U.S. Sentencing Commission in formulating the Sentencing Guidelines justifying a departure pursuant to U.S.S.G. §5K2.0. The parties agree not to seek or support any sentence outside the Guidelines range nor any Guidelines adjustment for any reason that is not set forth in this Plea Agreement. In view of all the facts and circumstances of this case, including NextiraOne's continuing cooperation with the United States, the parties agree that the recommended sentence is reasonable.
11. Subject to the ongoing, full, and truthful cooperation of the defendant described in Paragraph 13 and 14 of this Plea Agreement, and before sentencing in the case, the United States will fully advise the Court and the Probation Office of the fact, manner, and extent of the defendant's cooperation and its commitment to prospective cooperation with the United States' investigation and prosecutions, all material facts relating to the defendant's involvement in the charged offense, and all other relevant conduct.
12. The United States and the defendant understand that the Court retains complete discretion to accept or reject the recommended sentence provided in Paragraph 10 of this Plea Agreement. NextiraOne understands that, as provided in Fed. R. Crim. P. 11(c)(3)(B), if the Court does not impose the recommended sentence contained in this Agreement, it nevertheless has no right to withdraw its plea of guilty.
13. NextiraOne has cooperated with the United States' investigation and will continue to cooperate fully and truthfully with the United States in the prosecution of this case; the current federal investigations of violations of federal fraud, antitrust, and related criminal laws involving the sale of equipment and services funded by the E-rate Program; any other federal investigation resulting therefrom; and any litigation or other proceedings arising or resulting from any such investigation to which the United States is a party ("Federal Proceeding"). The cooperation provisions of this Plea Agreement, as set forth in Paragraphs 13-16, shall be limited to one (1) year from the date of this Plea Agreement being accepted by the Court.
14. The ongoing, full, and truthful cooperation of the defendant shall include, but not be limited to:
15. The ongoing, full, and truthful cooperation of each person described in Paragraph 14(b) above will be subject to the procedures and protections of this paragraph, and shall include, but not be limited to:
16. NextiraOne agrees not to intentionally provide false information to the Court, the Probation Office, Pretrial Services, or the United States; or fail to comply with any of the other promises it has made in this Plea Agreement.
17. NextiraOne has no current intention to participate in the E-rate Program. If, however, at any time within the five (5) year period following the date of execution of this Plea Agreement, NextiraOne decides to provide telecommunications goods or services intended to be funded by the E-rate Program, it shall give prior written notice to the FCC and provide high-level management oversight of NextiraOne's E-rate business. Such oversight shall include appointment of a Compliance Officer to monitor all aspects of NextiraOne's E-rate business, whose responsibilities shall include: (i) internal monitoring and audits to ensure compliance with E-rate application and bidding procedures and the absence of any hidden side agreements or undisclosed terms; (ii) implementation of a continuing education and training program for participation in the E-rate Program that shall cover the application process, competitive bidding, eligible E-rate services, the billing process, document retention, the service provider role, and such other areas as the Compliance Officer may consider appropriate; (iii) coordination with key executives in the company's accounting, finance, installations, legal, marketing, and sales units to ensure compliance with E-rate Program requirements; (iv) disclosure to NextiraOne's Chief Executive and Chief Financial Officers and its General Counsel, as well as the FCC's Officer of Inspector General, of any program violations, including any associated disciplinary action taken or recommended; and (v) periodic reports every six months concerning NextiraOne's compliance with the requirements set forth in this paragraph, to the FCC's Office of Inspector General. The oversight and reporting obligations set forth in this paragraph, as well as the cooperation provisions of paragraphs 13-16, shall apply to NextiraOne, its successors and assigns. If NextiraOne is acquired by another corporation or entity ("Acquiring Company") and NextiraOne is (i) maintained as a separate legal entity by the Acquiring Company, and (ii) any E-rate Program activities of NextiraOne are maintained solely within NextiraOne, the oversight and reporting obligations set forth in this paragraph shall not apply to the Acquiring Company or any parent, subsidiary, sister company, affiliate, legal entity, or business unit (other than NextiraOne) of the Acquiring Company. If NextiraOne is legally merged into or with another legal entity, the oversight and reporting obligations set forth in this paragraph, as well as the cooperation provisions of paragraphs 13-16, shall apply to such merged entity, including NextiraOne, its successors and assigns, but shall not apply to any parent, subsidiary, sister company, or affiliate of such merged entity.
18. Following the entry of its guilty plea pursuant to the Plea Agreement, NextiraOne agrees not to commit or attempt to commit any crimes before sentence is imposed.
19. NextiraOne agrees that this Plea Agreement and the attached Exhibits "A", and "B", contain all of the promises and agreements between it and the United States, and it will not claim otherwise in the future.
20. NextiraOne agrees that this Plea Agreement binds the United States Department of Justice, excepting the Tax Division only, but does not bind any other federal, state, local, or Tribal agency.
United States' Agreement
21. Upon acceptance of the guilty plea called for by this Plea Agreement and the imposition of the recommended sentence, and expressly conditioned upon the cooperation requirements of Paragraph 13-15 of this Plea Agreement, the United States agrees not to file, prosecute, or seek any further criminal charges against the defendant, or its affiliated entities, or their successors, for any act or offense committed by NextiraOne prior to the date of this Plea Agreement involving the E-rate Program. The nonprosecution terms of this paragraph do not apply to individuals, civil matters of any kind, to any violation of federal tax or securities laws, or to any crime of violence. NextiraOne has entered into a separate civil Settlement Agreement with the United States which is attached as Exhibit "B" to this Plea Agreement.
22. The United States recommends that the appropriate sentence in this case should be as set forth in Paragraph 10 above, unless the defendant violates the terms and conditions of this Plea Agreement.
23. The defendant understands that it may be subject to administrative action by federal, state, local, or tribal agencies other than the United States Department of Justice, Antitrust Division, based upon the conviction resulting from this Plea Agreement, and that this Plea Agreement in no way controls what action, if any, other agencies may take. The Division agrees that, if requested, it will advise the appropriate officials of any governmental agency, whether federal, state, local or tribal, considering any administrative, criminal, or civil action, of the fact, manner, and extent of the cooperation of the defendant and its affiliated entities and successors as a matter for that agency to consider before determining what action, if any, to take, and will advise as to the lack of involvement of NextiraOne Federal, LLC, a subsidiary of NextiraOne which operates as a separate company, in the conduct leading to this guilty plea.
Representation by Counsel
24. NextiraOne confirms that it has had adequate time to discuss this case, the evidence, and this Plea Agreement with legal counsel, and that its counsel has provided it with all the legal advice that it requested regarding the nature of the charge, any possible defenses to the charge, and the nature and range of possible sentences.
25. NextiraOne confirms that its decision to enter a guilty plea is made knowing the charges that will be brought against it, any possible defenses, and the benefits and possible detriments of proceeding to trial. NextiraOne's decision to enter into this Plea Agreement and to tender a plea of guilty is freely and voluntarily made and is not the result of force, threats, assurances, promises, or representations other than the representations contained in this Plea Agreement. The United States has made no promises or representations to the defendant as to whether the Court will accept or reject the recommendations contained in this Plea Agreement.
Violation of Plea Agreement
26. The defendant agrees that, should the United States determine in good faith, during the period that any Federal Proceeding is pending, that the defendant or any of its affiliated entities or successors have failed to provide full and truthful cooperation, as described in Paragraph 13-15 of this Plea Agreement, or has otherwise violated any provision of this Plea Agreement, the United States will notify counsel for NextiraOne in writing by personal or overnight delivery or facsimile transmission and may also notify counsel by telephone of its intention to void any of its obligations under this Plea Agreement (except its obligations under this paragraph), and NextiraOne and its affiliated entities and successors shall be subject to prosecution for any federal crime of which the United States has knowledge, including, but not limited to, the substantive offenses relating to the investigation resulting in this Plea Agreement. The defendant and its affiliated entities agree that, in the event that the United States is released from its obligations under this Plea Agreement and brings criminal charges against the defendant or its affiliated entities or successors for any offense referred to in Paragraph 21 of this Plea Agreement, the statute of limitations period for such offense will be tolled for the period between the date of the signing of this Plea Agreement and six (6) months after the date the United States gave notice of its intent to void its obligations under this Plea Agreement. NextiraOne, however, may seek Court review of any determination made by the United States under this Paragraph to void any of its obligations under the Plea Agreement.
27. The defendant understands and agrees that in any further prosecution of it or its affiliated entities or successors resulting from the release of the United States from its obligations under this Plea Agreement, because of the defendant's or its affiliated entities' or successors' violation of the Plea Agreement, any documents, statements, information, testimony, or evidence provided by it, its affiliated entities or successors, or current officers and employees of it or its affiliated entities or successors, to attorneys or agents of the United States, federal grand juries, or courts, and any leads derived therefrom, may be used against it or its affiliated entities in any such further prosecution. In addition, the defendant unconditionally waives its right to challenge the use of such evidence in any such further prosecution, notwithstanding the protections of Rule 410 of the Federal Rules of Evidence.
Entirety of Agreement
28. This Plea Agreement constitutes the entire agreement between the United States and the defendant concerning the disposition of the criminal charge in this case. This Plea Agreement cannot be modified except in writing, signed by the United States and the defendant.
29. This Agreement has been authorized, following consultation with counsel, by the sole Manager of NextiraOne, as set forth in the certified resolution attached as Exhibit "C" to this Plea Agreement and is incorporated herein.
30. The undersigned attorneys for the United States have been authorized by the Attorney General of the United States to enter this Plea Agreement on behalf of the United States.
31. A facsimile signature shall be deemed an original signature for the purpose of executing this Plea Agreement. Multiple signature pages are authorized for the purpose of executing this Plea Agreement.
I have fully explained to my client all of the rights that a criminal defendant possesses and all of the terms of this Plea Agreement. In my opinion, my client understands all of the terms of this Plea Agreement and all the rights it is giving up by pleading guilty, and, based on the information now known to me, its decision to plead guilty is knowing and voluntary.
GUARANTEE OF PAYMENT OF FINE AND RESTITUTION
In consideration of the attached Plea Agreement between the government and NextiraOne, LLC, and due to the financial condition of the latter, Platinum Equity, LLC, (NextiraOne's parent company), knowingly and voluntarily agrees that it will act as guarantor to the United States for payment of the criminal fine and restitution amounts imposed on NextiraOne, LLC, pursuant to the attached Plea Agreement. Acknowledgment of the aforesaid guarantee of the criminal fine and restitution amounts is confirmed by Platinum's authorized representative signing this document. As guarantor, Platinum agrees that, notwithstanding the fact that it did not engage in any of the conduct described in the referenced Plea Agreement, in the event that NextiraOne fails to make payment as set forth in the Plea Agreement (for whatever reason, including but not limited to, bankruptcy or dissolution of NextiraOne, or any other event that would prevent payment by NextiraOne of the fine or restitution imposed by the United States District Court for the District of South Dakota in this matter), Platinum shall cure any such delinquent payment or restitution amount (as defined by 18 USC § 3572 (h)) by NextiraOne, LLC within thirty (30) days of the date the fine or restitution amount became delinquent and will make such payment in accordance with the terms of the sentence imposed by the District Court pursuant to the attached Plea Agreement. Under 18 USC 3572(i), a fine or payment of restitution is in default if a payment is delinquent for more than 90 days, and that within 30 days after notification of the default, the entire amount of the fine or restitution is due.
The undersigned attests that he or she is authorized to enter into this guarantee on behalf of Platinum Equity.
This Settlement Agreement (Agreement) is entered into by the United States of America, acting through the United States Department of Justice and on behalf of the Federal Communications Commission (FCC) (collectively, the United States); and NextiraOne, LLC (NextiraOne), through their authorized representatives. The parties listed in this Paragraph are hereinafter collectively referred to as the Parties.
As a preamble to this Agreement, the Parties agree to the following:
A. NextiraOne is a limited liability company organized and existing under the laws of Delaware with its principal place of business in Houston, Texas. NextiraOne does business in South Dakota, among other states. NextiraOne does not operate as a common carrier. NextiraOne was originally known as Williams Communications Solutions (WCS).
B. E-rate is a program created by Congress in the Telecommunications Act of 1996 and administered by the Universal Service Administration Corporation (USAC) for the FCC. Under E-rate, the FCC typically reimburses providers of internet access, internal connections, and telecommunications services for discounts they provide to schools and libraries.
C. NextiraOne is entering a plea of guilty to a one count felony Information charging NextiraOne with wire fraud in violation of 18 U.S.C. § 1343, in connection with NextiraOne's participation in the E-rate program. The guilty plea is being entered in a matter captioned United States of America v. NextiraOne, LLC No. CR 06-___ (filed in the District of South Dakota, April ___, 2006). A copy of the plea agreement in that matter is attached hereto as Exhibit A (hereinafter the Plea Agreement).
D. The United States contends that it may have certain civil claims against NextiraOne under the False Claims Act, the common law, and other causes of action for NextiraOne's conduct in connection with certain USAC Funding Request Numbers (FRNs) for the funding year 2001 of the E-rate program (from July 1, 2001 through June 30, 2002) listed in Exhibits B and C to this Agreement, including submitting and causing to be submitted false claims for payment by: (1) engaging in non-competitive bidding practices; (2) claiming and receiving E-rate funds for goods and services that were ineligible for E-rate discounts; (3) providing materially false information to the United States regarding goods and services that were provided to schools and school districts under the E-rate program; (4) disregarding the requirement that all schools and school districts make co-payments to cover that portion of each funded E-rate project that was not paid for by E-rate discounts; (5) charging inflated prices on invoices and other documents provided to the United States to conceal some or all of the practices listed in this Paragraph. The conduct described in this Paragraph is referred to throughout as the Covered Conduct.
E. NextiraOne has entered into a separate agreement with the Oglala Nation Education Coalition (ONEC) to resolve claims that it or its affiliated schools may have had against NextiraOne regarding the participation of ONEC and NextiraOne and/or WCS, in the E-rate program, including the Covered Conduct and the matters set forth in the Plea Agreement.
F. This Agreement is neither an admission of liability by NextiraOne nor a concession by the United States that its claims are not well-founded.
G. To avoid the delay, uncertainty, inconvenience, and expense of protracted litigation of the above claims, the Parties reach a full and final settlement pursuant to the Terms and Conditions below.
III. TERMS AND CONDITIONS
1. NextiraOne agrees to compensate the United States $2,678,000 (hereinafter referred to as the Settlement Amount), as follows:
2. In the event that the District Court does not accept the Plea Agreement, and/or does not impose a sentence consistent with the Plea Agreement, the United States or NextiraOne may, each in its respective discretion, within five calendar days of the Court's dispositive action on the Plea Agreement, declare this Agreement null and void by written notice to the other party.
3. NextiraOne agrees to fully cooperate with the United States in any investigation or litigation related to its participation in the E-Rate Program. NextiraOne has represented to the United States that it has no information or evidence concerning any misconduct by its current or former employees in connection with any applications, contracts, bids, or transactions involving the District of Columbia Public Schools. However, it agrees to provide any such information or evidence to the United States should it subsequently obtain it.
4. Additional Releases
5. Notwithstanding any term of this Agreement, specifically reserved and excluded from the scope and terms of this Agreement as to any entity or person (including NextiraOne) are the following claims:
6. NextiraOne waives and shall not assert, in any criminal prosecution or administrative action relating to the Covered Conduct, any defenses that may be based in whole or in part on a contention that, under the Double Jeopardy Clause in the Fifth Amendment of the Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution, this Agreement bars a remedy sought in such criminal prosecution or administrative action. Nothing in this Paragraph or any other provision of this Agreement constitutes an agreement by the United States concerning the characterization of the Settlement Amount for purposes of the Internal Revenue Laws, Title 26 of the United States Code.
7. NextiraOne agrees that all costs (as defined by the Federal Acquisition Regulation 31.205-47) incurred by or on behalf of NextiraOne in connection with (a) the matters covered by this Settlement Agreement; (b) the Government's audits and investigations of the matters covered by this Settlement Agreement; (c) NextiraOne's investigation, defense of matters, and corrective actions relating to the Covered Conduct; (d) the negotiation of this Settlement Agreement; and (e) the payments made to the United States pursuant to this Settlement Agreement, shall be unallowable costs for government accounting purposes. NextiraOne shall separately account for all costs that are unallowable under this Settlement Agreement.
8. This Agreement is intended to be for the benefit of the Parties only. Except as expressly stated in Paragraph 4 above, the Parties do not release any claims against any other person or entity.
9. NextiraOne warrants that payment of the Settlement Amount in the manner set forth in Paragraph III. 1 to this Agreement will not result in NextiraOne becoming insolvent within the meaning of 11 U.S.C. §§ 547(c) and 548 (a)(l)(B)(ii)(I). Further, the Parties expressly warrant that, in evaluating whether to execute this Agreement, the Parties (a) have intended that the mutual promises, covenants, and obligations set forth herein constitute a contemporaneous exchange for new value given to NextiraOne within the meaning of 11 U.S.C. §§ 547(c)(l), and (b) have concluded that these mutual promises, covenants, and obligations do, in fact, constitute such a contemporaneous exchange. Further, the Parties warrant that the mutual promises, covenants, and obligations set forth herein are intended to and do, in fact, represent a reasonably equivalent exchange of value which is not intended to hinder, delay, or defraud any entity to which NextiraOne is indebted to, or became indebted to, on or after the date of this transfer, all within the meaning of 11 U.S.C. § 548(a)(l).
10. NextiraOne agrees that this Settlement Agreement satisfies the requirements of the citation provision under subsections 503(b)(5)(A)-(B) of the Communications Act of 1934, as amended, 47 U.S.C. § 503(b)(5)(A)-(B), such that the FCC may issue a Notice of Apparent Liability against NextiraOne pursuant to 47 U.S.C. § 503(b)(4) if, after the Effective Date of this Agreement, NextiraOne engages in conduct of the type described as the Covered Conduct in Paragraph D of this Agreement.
11. The United States and NextiraOne shall each bear their own legal and other costs incurred in connection with this matter, including the preparation and performance of this Agreement.
12. All Parties represent that this Agreement is freely and voluntarily entered into without any degree of duress or compulsion whatsoever.
13. This Agreement is governed by the laws of the United States. The Parties agree that exclusive jurisdiction and venue for any dispute arising between and among the Parties under this Agreement shall be the United States District Court for the District of South Dakota.
14. This Agreement constitutes the complete agreement between the Parties with respect to civil and administrative monetary liability. This Agreement may not be amended except by written consent of the Parties.
15. The individuals signing this Agreement on behalf of NextiraOne represent and warrant that they are duly authorized by NextiraOne to execute this Agreement. The United States signatories signing this Agreement represent that they are signing this Agreement in their official capacities and that they are duly authorized to execute this Agreement.
16. This Agreement may be executed in counterparts, each of which constitutes an original and all of which constitute one and the same agreement.
17. This Agreement is binding on NextiraOne's successors, transferees, heirs, and assigns.
18. This Agreement is effective on the date of signature of the last signatory to the Agreement (Effective Date). Facsimiles of signatures shall constitute acceptable, binding signatures for purposes of this Settlement Agreement.
Exhibit A - Plea Agreement
Exhibit B- E-Rate Funds Disbursed on Behalf of Oglala Nation Education Coalition (BEN #222989) in Connection with Covered Conduct
Exhibit C- E-Rate Funding Requests Released by Service Provider NextiraOne LLC (SPIN #1430004436) (Pending or Previously Denied)
Exhibit D- FCC Form 474 Invoices Surrendered by NextiraOne LLC (SPIN #1430004436)
Exhibit E- Bureau of Indian Affairs Related E-Rate Applicants
Exhibit F- FCC Form 474 Invoices to be Paid to NextiraOne LLC (SPIN #1430004436)
Exhibit G- Remaining NextiraOne E-Rate Funding Requests which are Outside the Scope of this Agreement (Currently in Denial Status)
E-Rate Funds Disbursed on Behalf of
FCC Form 474 Invoices Surrendered by NextiraOne LLC (SPIN #143004436)
Bureau of Indian Affairs Related E-Rate Applicants
FCC Form 474 Invoices to be Paid to NextiraOne LLC (SPIN #143004436)
Remaining NextiraOne E-Rate Funding Requests
I, EVA M. KALAWSKI, being the duly elected and qualified Secretary of NextiraOne, LLC (the "Company"), a Delaware limited liability company, do hereby certify that Robert Buhay is Executive Vice President and Chief Financial Officer of the Company and as such has the authority to enter into any and all agreements on behalf of the Company.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the Company this 17th day of April, 2006.