******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In Re Applications of PCS 2000, L.P. For Broadband Block C Personal Communications Systems Facilities ) ) ) File Nos. 00414-CW-L-96 ) 00418-CW-L-96 ) 00419-CW-L-96 ) 00421-CW-L-96 ) 00422-CW-L-96 ) 00425-CW-L-96 ) 00426-CW-L-96 ) 00427-CW-L-96 ) 00428-CW-L-96 ) 00429-CW-L-96 ) 00432-CW-L-96 ) 00433-CW-L-96 ) 00434-CW-L-96 ) 00437-CW-L-96 ) 00438-CW-L-96 MEMORANDUM OPINION AND ORDER Adopted: January 22, 1997 Released: January 22, 1997 By the Commission: TABLE OF CONTENTS Par. I. INTRODUCTION 1 II. BACKGROUND 2 III. DISCUSSION 9 A. WILLOWRUN PETITION 10 1. Standing 10 2. Equity Ownership 12 3. Misrepresentation 14 4. Hearing and Disclosure 18 5. Partnership Issues 21 B. EASTON AND SDE TRUST PETITIONS 24 1. Standing 25 2. Fifth Amendment Claim 32 3 Request for Hearing 34 C. AMENDED APPLICATION AND WAIVER 37 D. ALLEGED EX PARTE VIOLATION 44 IV. CONCLUSION 46 V. ORDERING CLAUSES 48 I. INTRODUCTION 1. By this Memorandum Opinion and Order, we resolve Petitions to Deny filed against the original and amended applications of PCS 2000, L.P. (PCS 2000) for fifteen Broadband C Block Personal Communications Services (PCS) licenses. In a companion order, we have issued a Notice of Apparent Liability for Forfeiture (NALF) against PCS 2000 for misrepresentations made by Anthony T. Easton, a former Chief Executive Officer and Director of the applicant. Because PCS 2000 has removed all individuals who may have been responsible for the misrepresentations from its organization, we conclude that PCS 2000's applications, as amended, may be granted. Accordingly, we deny the petitions. II. BACKGROUND 2. PCS 2000 is a limited partnership established under the laws of Delaware. At the time the C block auction commenced, PCS 2000 was comprised of a general partner, Unicom, and 1,641 limited partners. Unicom held a 25 percent equity interest in PCS 2000, and the limited partners held the remaining 75 percent interest. Anthony Easton was the Chief Executive Officer and a director of Unicom. Easton's wife, Susan, owned a 38.6 percent beneficial interest in Unicom's stock, which was held in the Susan D. Easton Trust (SDE Trust). Quentin Breen, another Unicom director, and Breen's two daughters all held interests in Unicom through three separate trusts. Breen held 19.6 percent of Unicom through the Breen Family Trust, while his daughters each held 9.5 percent respectively through the KHB and MEB Trusts. 3. On January 23, 1995, during Round 11 of the C Block Auction, Anthony Easton -- who was registered through Romulus Telecommunications, Inc. (Romulus) as a bidding agent for PCS 2000 -- submitted an incorrect bid of $180,060,000 instead of $18,006,000 for the Norfolk, Virginia BTA. PCS 2000 withdrew this bid in Round 12. Upon discovering the bidding error, Unicom retained an independent counsel to investigate the circumstances surrounding the erroneous bid. Shortly thereafter, Romulus was removed from the bidding process and Javier Lamoso, president of Unicom, took over the day-to-day supervision of the bidding process. Unicom also obtained the resignations of Messrs. Easton and Breen. At the close of the auction, PCS 2000 was the high bidder in fifteen markets. On May 8, 1996, PCS 2000 filed long form applications, which were accepted for filing and placed on public notice on May 31, 1996. During this same period, the Wireless Telecommunications Bureau initiated an investigation of the the erroneous bid and PCS 2000's representations to the Commission regarding the bid. 4. On June 18, 1996, the ownership structure of PCS 2000 was changed through the sale by Unicom of its 25 percent general partnership interest in PCS 2000 to a newly-formed company, Super Tel, for $100,000. SuperTel's ownership structure was identical to Unicom's, except that the 36.6 percent Unicom interest formerly held by the SDE Trust was instead held by Richard Reiss, CEO of SuperTel. Thus, the sale to Supertel divested the SDE Trust of its interest in PCS 2000. PCS 2000 also repurchased three limited partnership interests held by Breen, totalling 0.115 percent. 5. Petitions to deny were filed against the original PCS 2000 applications by WillowRun, L.P. (WillowRun), a limited partner holding fourteen limited partnership interests in PCS 2000, and Susan Easton (Easton). WillowRun argued that: (1) PCS 2000 was not eligible to participate in the C Block auction because Unicom did not hold 25 percent of the equity in PCS 2000; (2) PCS 2000 made misrepresentations to the Commission during the auction; and (3) PCS 2000 failed to take corrective measures upon discovering the misrepresentation. WillowRun also argued that PCS 2000 concealed these facts from the Commission and otherwise violated its fiduciary obligation to its limited partners. WillowRun urged the Commission to deny the application, or alternatively, to hold a hearing to adjudicate these issues. 6. In her petition to deny, Easton sought to prevent PCS 2000 from divesting her ownership interest in the applicant held through the SDE Trust. Easton contended that she should be allowed to retain her interest in PCS 2000 regardless of any allegations against Anthony Easton, and that efforts to remove the trust as a beneficial owner were illegal and contrary to the public interest. 7. On July 2, 1996, PCS 2000 filed an amended Form 600 reflecting the replacement of Unicom by SuperTel as managing partner. Although the amendment constituted a substantial change in ownership that would normally be prohibited as untimely, PCS 2000 requested that the Commission accept the amended application on the grounds that the amendment was intended to protect the integrity of the applicant by removing principals who may have engaged in misconduct. PCS 2000 alternatively argued that the Commission should waive the rule prohibiting major amendments to PCS applications, on the grounds that the purpose of the rule would not be served in this instance. 8. Following the filing of PCS 2000's amended application, a separate petition to deny was filed by the SDE Trust. Like the Easton petition, the SDE Trust petition challenged the removal of the trust from PCS 2000's ownership structure. The SDE Trust asserted that the sale of Unicom's partnership interest to SuperTel significantly reduced the value of the trust's stockholdings. The Trust also argued that Commission approval of PCS 2000's new ownership structure without a prior hearing would constitute an illegal taking of the trust's property without due process. III. DISCUSSION 9. Having reviewed the applications, amendments, and pleadings filed in this matter, we deny the WillowRun, Susan D. Easton, and the SDE Trust Petitions. We conclude that petitioners' have failed to establish standing to challenge the subject applications, and that even when considered together with the entire record compiled in this proceeding, there are no substantial and material questions of fact that would warrant a hearing. We further conclude that the public interest will be served by acceptance and grant of PCS 2000's amended applications. A. Willow Run Petition 1. Standing 10. We first address the issue of whether WillowRun has standing to file a petition to deny against PCS 2000. Section 309(d)(1) of the Communications Act and Section 24.830(a)(3) of the Commission's rules require petitioners to allege sufficient facts to demonstrate that grant of the subject applications would cause them to suffer a direct injury. Petitioners must also demonstrate a causal link "between the claimed injury and the challenged action." To demonstrate this causal link, petitioners must establish that: (i) "these injuries fairly can be traced to the challenged action;" and (ii) "the injury would be prevented or redressed by the relief requested." 11. Based on the facts alleged by WillowRun in its petition, we conclude that WillowRun has not met the requirements of standing. WillowRun contends, in substance, that if the licenses are granted to PCS 2000, its limited partnership investment will be in jeopardy and subject to corporate waste at the hands of a general partner who has demonstrated a lack of "truthfulness and reliability." While the allegation that WillowRun's investment will be harmed is sufficient to establish a direct injury, WillowRun has failed to indicate how the likelihood of harm would be redressed by the denying of licenses to PCS 2000. Thus, WillowRun has failed to establish a causal link between the alleged injury and the challenged action. Nevertheless, insofar as WillowRun raises allegations regarding PCS 2000's fitness and eligibility to hold PCS licenses, we will address the substantive allegations submitted by WillowRun as part of our independent public interest analysis. 2. Equity Ownership 12. WillowRun contends that PCS 2000's general partner, Unicom, does not hold 25 percent of the equity in the applicant, rendering PCS 2000 ineligible to participate in the C Block auction. WillowRun bases this allegation on the fact that neither PCS 2000's Partnership Agreement nor the offering memorandum to its investors states that the general partner has 25 percent equity ownership of PCS 2000. WillowRun then concludes that because PCS 2000 did not highlight its general partner's 25 percent equity ownership in its securities filings, the general partner must not actually own 25 percent of PCS 2000's equity. 13. We find no evidence in the record to support WillowRun's contention regarding insufficient equity ownership by the general partner. The mere absence of a statement "highlighting" equity ownership is not sufficient to create a substantial and material question of fact. Moreover, other provisions of PCS 2000's Partnership Agreement indicate that PCS 2000 has complied with the Commission's requirements for maintaining 25 percent equity in the general partner. For example, in the case of partnerships and other non-corporate entities, the Commission has identified the following indices of equity ownership: "(a) the right to share in the profits and losses, and receive assets or liabilities upon liquidation, of the enterprise pro rata in relationship to the designated entity's ownership percentage and (b) the absence of opportunities to dilute the interests of the designated entity (through capital calls or otherwise) in the venture." PCS 2000's partnership agreement meets these criteria by providing that the general partner shall participate in 25 percent of the profits, losses, and distributions, including distributions upon liquidation. Finally, WillowRun rebuts its own eligibility argument by submitting an unsigned opinion letter from its own accountant which states that "the General Partners are entitled to 25% of the equity of the partnership." 3. Misrepresentation 14. The primary allegation in WillowRun's petition is that PCS 2000's general partner is responsible for several misrepresentations that disqualify the applicant from holding PCS licenses. First, WillowRun alleges that the applicant misrepresented its designated status as a minority-owned business in its FCC Form 175. Second, WillowRun charges that PCS 2000, through its bidding agent, Anthony Easton, made false statements on the day of its mistaken bid by blaming the FCC computers for its bidding error. Third, WillowRun contends that PCS 2000's January 26, 1996 bid withdrawal waiver request contained misrepresentations intended to deceive the Commission. Fourth, WillowRun maintains that PCS 2000's February 14, 1996 letter to the Commission lacked credibility. 15. WillowRun also maintains that PCS 2000 did not take adequate corrective measures to remedy Mr. Easton's misrepresentation. WillowRun contends that Mr. Easton's knowledge as director is imputed to the general partner under principles of corporate law. WillowRun also argues that upon discovery of the incorrect bid and subsequent alleged misrepresentation by Mr. Easton, the general partner failed to take corrective measures mandated in Teleprompter Cable Systems, 40 F.C.C.2d 1027 (1973). WillowRun further states that the subsequent substitution of SuperTel for Unicom as PCS 2000's general partner "does not relieve the [general partner] of liability for the acts of officers, directors and agents of Unicom." 16. As discussed in the NALF, we agree with WillowRun that Mr. Easton, while an officer and registered bidding agent of PCS 2000, intentionally misrepresented facts to the Commission and otherwise lacked candor before the Commission. In the NALF, we also determined that PCS 2000 is ultimately responsible for the misrepresentations made by Mr. Easton and that the misrepresentations made here were "not insignificant." In the NALF, we further stated that while the Commission does not know the extent of Mr. Breen's involvement in the deception, we believe that the facts appear to demonstrate that Mr. Breen was aware of Mr. Easton's wrongdoing and failed to report those actions or take any other action to correct Mr. Easton. We also agree with WillowRun that under principles of corporate and agency law, Mr. Easton's misrepresentations are imputable to PCS 2000. Such imputed conduct, however, does not necessarily preclude the grant of a license to the applicant. Instead, the Commission must weigh whether mitigating factors exist that affect the applicant's qualifications. 17. In light of the circumstances, we believe that PCS 2000 made significant efforts to remedy Mr. Easton's misrepresentation and that a forfeiture is therefore the more appropriate means of redress. Specifically, upon learning of Easton's misrepresentations to the Commission, PCS 2000 expeditiously undertook remedial steps to remove Messrs. Easton and Breen, from all positions held within PCS 2000. PCS 2000 also eliminated the former ownership interests that Messrs. Easton and Breen held prior to its restructuring with SuperTel. As stated in the NALF, we do not believe that disqualification in this instance is warranted where the applicant took aggressive steps to remove from ownership and control positions those responsible for the misrepresentations. 4. Hearing and Disclosure 18. WillowRun argues that if PCS 2000's applications are not denied outright, the Commission should conduct a hearing regarding PCS 2000's alleged misrepresentations. We find that the allegations made by the Petitioners do not raise a substantial question of material fact and therefore do not warrant a hearing. As discussed in the NALF, there are no unresolved questions of fact with respect to the misrepresentations made by Mr. Easton. The relevant facts are not in dispute and the issue can be disposed of based on these uncontested facts. Most significantly, as PCS 2000 notes, because Mr. Easton no longer holds any attributable interest in the applicant, there is no need to conduct a hearing on the issue of whether Mr. Easton's character reflects adversely on PCS 2000's qualifications to hold a license. Accordingly, we find that WillowRun's allegations, when considered in light of the totality of the evidence produced, do not raise a substantial and material question of fact. Therefore, pursuant to Section 1.2108 of the Commission's rules, we deny WillowRun's request for a hearing. 19. In addition to its request for a hearing, WillowRun, relying on Bilingual, requests that the Commission release and make public the results of its investigation. We are making public the results of our investigation with the release of our NALF simultaneously with this Memorandum Opinion and Order. Further, WillowRun's attorney, Julian P. Gehman, filed a Freedom of Information Act ("FOIA") request for Commission records concerning PCS 2000. Mr. Gehman's FOIA request was granted in part and denied in part, and Mr. Gehman has sought review of that decision. In response, PCS 2000 asserts that various portions of the record should be withheld pursuant to various FOIA exemptions. These matters are currently pending before the Commission. 20. Finally, WillowRun seeks an extension of time beyond the release of the investigation results for commenting on PCS 2000's long-form application. WillowRun had an adequate opportunity to comment on the disputed issues, and fully participated in the various PCS 2000- related proceedings. In fact, when PCS 2000 filed its amended application, WillowRun had a second opportunity to express its concerns regarding PCS 2000 qualifications, but chose not to do so. Accordingly, we will deny WillowRun's request for additional time. 5. Partnership Issues 21. In its petition, WillowRun seeks redress of certain concerns on behalf of PCS 2000's limited partners. First, WillowRun suggests that the Applicant made inadequate disclosure of key terms of the securities offering. WillowRun states that PCS 2000's disclosure in the Confidential Memorandum did not state that the General Partner owns 25 percent of the equity of the Applicant or that Mr. Easton was CEO of the General Partner, whereas documents submitted to the SEC and FCC made such disclosures. Second, WillowRun alleges that a management compensation provision in the Partnership Agreement creates an incentive for the General Partner to "obtain and sell licenses merely in order to convert 25 [percent] of the LP's paid-in capital to the coffers of the GP." Third, WillowRun claims that the General Partner acted ultra vires, and thus breached its fiduciary duties to the limited partners, by rescinding the management compensation provision without consent of the limited partners. 22. PCS 2000 responds that allegations of breach of fiduciary duty are not pertinent to the licensing process. PCS 2000 also avers that the offering and disclosure to the limited partners was in compliance with Regulation D of the Securities and Exchange Commission. PCS 2000 notes that the Partnership Agreement explicitly permits rescission of terms -- such as the management compensation provision -- to the extent the limited partners are not materially and adversely affected. 23. In reviewing WillowRun's claims, we adhere to the proposition that "the purpose of the [Communications] Act is to protect the public interest rather than to provide a forum for the settlement of private disputes." The issues raised by WillowRun pertain to their rights as limited partners to seek redress against the general partner under the partnership agreement. The Commission is not an Article III court, and therefore does not generally consider claims involving the adjudication of private rights. In the past, we have declined to adjudicate allegations of breach of fiduciary duty, monetary harm, or similar disputes involving partnership and shareholder rights. We continue to believe that issues that relate to private transactions involving the exercise of business judgment are best resolved by courts of competent jurisdiction. Accordingly, we will not consider the private claims raised by WillowRun. B. Easton and SDE Trust Petitions 24. Susan Easton petitioned to deny PCS 2000's original applications based upon the alleged injuries she suffered as a result of her trust (SDE Trust) losing its ownership interests in the applicant. Subsequently, the Susan D. Easton Trust (SDE Trust) petitioned to deny PCS 2000's amended applications based upon the same injury. Both Ms. Easton and the SDE Trust are represented by the same counsel. Because the allegations in the Easton petition are duplicated and elaborated upon in the Trust petition, we address the petitions jointly. 1. Standing 25. In support of its claim to standing, the Trust asserts that it has suffered an injury in fact as a result of Unicom's sale of its partnership interest in PCS 2000 to SuperTel, which has caused the value of the Trust's Unicom stock to fall from $5,000,000 to $36,000. The Trust also asserts that a causal nexus exists between its injury and the challenged action, on the grounds that (1) the SuperTel transaction was undertaken by Unicom board members at the urging of the Commission staff, and (2) Commission approval of PCS 2000's amended application would be tantamount to condoning the actions that injured the Trust. The Trust argues that the appropriate test for standing is not whether injury will result directly from the grant of the amended applications but rather whether the Trust "will suffer cognizable injury if the Commission grants the relief expressly sought by those amendments." 26. PCS 2000 asserts that the Trust lacks standing because it has not demonstrated that grant of the amended applications would be the cause of injury or harm to the Trust. PCS 2000 claims that "existing former ownership positions simply do not in themselves convey standing." Furthermore, PCS 2000 contends that the claims raised by the Trust are private business disputes that should be litigated in local court rather than before the Commission. 27. With regard to standing, we find that the Trust's allegation that the SuperTel transaction has caused it financial harm is sufficient to satisfy the first requirement of standing, demonstration of an "injury of direct, tangible or substantial nature." However, we conclude that the Trust has failed to establish a causal nexus between the injury and the amended applications challenged here. The alleged harm to the Trust was caused by Unicom's sale of its partnership interest in PCS 2000 to SuperTel -- an internal corporate event that occurred prior to the filing of PCS 2000's amended application. To establish causation, petitioner must demonstrate that the injury would not occur (or would be mitigated) if the Commission denied the applications. The Trust has failed to demonstrate how denial of the applications would result in the restoration of its interest. 28. In the Telephone and Data Systems, Inc. v. FCC case, in which the court stated that "injurious private conduct is fairly traceable to the administrative action contested in the suit if that action authorized the conduct or established its legality." The Trust alleges that grant of the amended application meets this standard because it would establish the legality of the SuperTel transaction. In that case, the petitioner had an option to purchase a majority interest in a cellular system licensee, and appealed a Commission decision to grant a majority shareholder a conditional permit to construct and operate cellular communications services. Specifically at issue was whether the petitioner had standing where the Commission had declined to abrogate a supermajority clause with the cellular licensee's minority shareholders. The court concluded that the petitioner had standing because the disputed supermajority clause had allowed the majority shareholder to form a contract with a third party that infringed on the petitioner's option. 29. We find the Trust's reliance on TDS to be misplaced. In TDS, the court granted standing because the Commission's decision "affirmatively upheld the legality of the very [contractual] provisions whose exercise has inflicted injury on [the plaintiff]." In the present case, however, our review of PCS 2000's amended application is confined to whether the amendment is allowable under Commission rules (or by waiver) and whether PCS 2000 is qualified to be a licensee in light of its revised ownership structure. Our decision on these issues does not turn on review of the corporate actions taken by Unicom prior to the filing of the amended application. The issue raised by the Trust -- whether Unicom's divestiture of its interest in PCS 2000 violated the Trust's rights as a Unicom shareholder -- is a private dispute outside the scope of our inquiry. Regardless of whether we grant or deny PCS 2000's applications, the validity of the Trust's claim is not affected. 30. The Trust also relies on TDS for the proposition that a petitioner does not have to prove that the Commission can redress all of its claims in order to establish standing. The Trust's analogy fails however, because unlike the Trust, the petitioner in TDS had established direct harm and the requisite causal nexus between the subject agency's action and the alleged harm inflicted. Furthermore, in TDS, the court recognized that while it could not be certain the petitioner would prevail if the court overturned the subject order, "[TDS] cannot prevail unless we do so." The court concluded that the petitioner's prospects for obtaining a remedy would be unavailing but for the court's decision to vacate the subject order. The redress sought by the Trust in this instance, however, would not be foreclosed if the relief it presently seeks is not granted. 31. For the aforementioned reasons, we conclude that Easton and the Trust lack standing. Nevertheless, insofar as the petitioners raise allegations regarding PCS 2000's fitness and eligibility to hold PCS licenses, we will address their substantive allegations as part of our independent public interest analysis. 2. Fifth Amendment Claim 32. The Trust argues that the Commission violated the Fifth Amendment by encouraging Unicom to transfer its general partnership interest in PCS 2000 to SuperTel. The Trust contends that during meetings between Mr. Lamoso and the Commission staff, the Commission staff "influenced" or "coerced" PCS 2000 into carrying out the transfer as a requirement for approval of its licenses. The Trust argues that such action by the staff rises to the level of state action under the Due Process Clause of the Fifth Amendment, entitling the Trust to notice and an opportunity to be heard before it can be deprived of property. 33. The Trust's Fifth Amendment argument is unfounded. Although meetings did occur between Commission staff and representatives of PCS 2000 prior to the filing of any petition to deny, the Commission staff did not influence PCS 2000 into changing its ownership structure to rid the general partner of the Trust. Nor did the staff make any commitment with regard to the treatment of PCS 2000's applications if the applicant took the action it did in connection with the SDE Trust. The Trust only speculates and its allegations are not supported by affidavit of any persons with personal knowledge thereof as required by Section 309(d)(1) of the Communications Act. Even assuming that Commission staff did suggest that PCS 2000 amend its ownership structure in this manner, the "[m]ere approval of or acquiescence in the initiatives of a private party is not sufficient to justify holding the State responsible for those initiatives . . . " Moreover, the Trust's own pleadings acknowledge that acquiescence by Commission staff to a transaction has no binding effect on the Commission. In short, the Trust has offered no evidence that Commission's meetings with the applicant rise to the level of "state action" that would entitle the Trust to relief under the Fifth Amendment. 3. Request for Hearing 34. The Trust also argues that the Commission has an equitable duty to redress the injury caused by its staff's alleged complicity in the removal of Ms. Easton's interest in PCS 2000. The Trust requests the Commission to enjoin SuperTel to return the general partnership interest in PCS 2000 to Unicom pending a hearing on several issues. First, the Trust argues that the Commission must conduct a hearing to decide whether there has been any disqualifying misconduct before it can rule on the SuperTel transaction. If there has been no wrongdoing, the Trust argues, then the ouster of the Trust's interest does not serve the public interest. 35. The Trust also seeks a hearing on the circumstances of the SuperTel transaction itself. The Trust argues that there is a question whether PCS 2000 fraudulently invoked the authority of the Commission in its attempt to force the Trust to sell its interest in Unicom, if, as alleged by PCS 2000, the Commission did not exert any influence on this decision. The Trust also contends that the trustee, Mr. Lamoso, did not adequately represent the interests of the Trust because his involvement in Unicom created "divided loyalties and a conflict of interest." 36. We have reviewed the Trust's arguments and find that its allegations do not raise a substantial and material question of fact that would warrant a hearing. First, we have determined in the NALF that Mr. Easton made misrepresentations, and that these misrepresentations are not disqualifying because Mr. Easton's interest in the applicant has been terminated. Thus, there is no need for a hearing on this issue. With respect to the SuperTel transaction, the Trust has failed to present evidence supported by affidavit that the applicant's conduct in this transaction was fraudulent or otherwise potentially disqualifying. PCS 2000 states that the SuperTel transaction was carried out by PCS 2000's principals in an effort "to permit its applications to be granted as quickly as possible." The Trust's assertion that this action was fraudulent is entirely speculative and without support in the record. Moreover, in response to the Trust's allegations that Mr. Lamoso had a conflict of interest, PCS 2000 submits Mr. Lamoso's certified statement that he attempted to resign as Trustee but his resignation was rejected, that Ms. Easton was represented by at least two law firms, and that he voted the shares of the SDE Trust against the SuperTel transaction. We conclude that the Trust has failed to raise any substantial and material issues of fact with respect to PCS 2000's qualifications, and that any claims it may have against the trustee or other parties are private claims that must be adjudicated elsewhere. Therefore, pursuant to Section 1.2108 of the Commission's rules, we deny the Trust's request for a hearing. C. Amended Application/Waiver 37. In addition to resolving the issues raised by the petitions to deny in this matter, we must determine whether PCS 2000's amendment changing its ownership structure is acceptable under our rules. Section 24.823 of the rules provides that a PCS application that is altered by a major amendment will be considered "newly filed," meaning that the application cannot be granted without an additional opportunity for competing applications to be filed. However, pursuant to Section 24.823(g)(3), the Commission may exempt the application from being treated as newly filed if the major amendment "reflects only a change in ownership or control found by the Commission to be in the public interest." 38. PCS 2000 acknowledges that its amendment changing the general partner of PCS 2000 from Unicom to SuperTel constitutes a major amendment that would ordinarily cause the application to be dismissed as untimely filed. However, PCS 2000 contends that it is entitled to an exemption under Section 24.823(g)(3) because its change in ownership is in the public interest. PCS 2000 argues that the public interest is served because those who allegedly engaged in misconduct regarding its mistaken bid have been removed from the management and ownership of PCS 2000, thus protecting the interests of its investors. In addition to maintaining its eligibility as a Commission licensee, PCS 2000 also contends that the restructuring will afford women and minorities beneficial ownership of 83.3 percent of Supertel, the applicant's general partner. Lastly, PCS 2000 points out that if its amendment were treated as newly-filed and thus dismissed as untimely, deployment of PCS in the 15 markets won by PCS 2000 "would be substantially delayed." 39. In the alternative, PCS 2000 seeks a waiver of the general cut-off rule of Section 24.823(g). PCS 2000 argues that the underlying purpose of the rule would not be served by applying it to PCS 2000's application. To lend support to this argument, the applicant states that the rules was "designed to enforce strict filing deadlines to prevent major amendments to improve applicant's comparative position or to allow a whole new party to 'step into the shoes' of the original applicant where mutually exclusive applications were filed during a limited filing 'window.'" PCS 2000 argues that in the instant situation, the amended applications were not submitted during a filing window subject to competing, mutually exclusive applications. Instead, because PCS 2000 had already won the auction, there were no other similarly situated applicants that could be subject to comparative consideration. PCS 2000 also notes that (1) the transaction does not raise unjust enrichment issues pursuant to Section 24.711(c) because that provision applies to licenses, not applications; (2) the ownership change does not raise license transfer issues under Section 24.839(d) because the applicant as newly restructured meets the eligibility criteria under 24.709; and (3) the transaction raises no issues under Section 24.829 because the ownership changes do not arise from a settlement among competing applicants, but rather from an effort to resolve a dispute among the Applicant's own equity owners. 40. The Trust opposes PCS 2000's request for a Section 24.823(g)(3) exemption. The Trust argues that the exemption is only available where the Commission has previously approved the change in ownership. The Trust also cites case precedent that permits an exemption from the major amendment rule "only if the amendment arose from a transfer of control of an operating business that was undertaken for a 'legitimate business purpose' other than acquiring pending applications." In this instance, the Trust argues, "PCS 2000 is not in operation, and the SuperTel transaction was undertaken solely to acquire pending applications." 41. We conclude that PCS 2000's amendment meets the requirements of Section 24.823(g)(3). The language of the exemption is derived from former Section 22.23(g)(3) of the Commission's cellular rules. In the leading case applying Section 22.23(g)(3), Air Signal International Inc., we articulated a two-pronged standard for determining when a major change of ownership will not be treated as a newly filed application: (1) whether the change of ownership was made to effect a legitimate business purpose, and (2) whether the change in ownership is in the public interest. 42. With respect to the first prong, the record indicates that the primary purpose of the change in ownership was to remove Messrs. Easton and Breen from the ownership structure of PCS 2000. While this action was undoubtedly motivated by concern that Easton and Breen may have made misrepresentations to the Commission or otherwise lacked candor, potentially jeopardizing PCS 2000's applications, we believe the applicant's efforts to cure this problem fall within the "legitimate purpose" prong of the test. As discussed above, our policies with respect to licensee misconduct are designed to encourage applicants and licensees to take appropriate corrective measures when such misconduct occurs, including removal of those responsible for the violation. 43. We also conclude that allowing the change in ownership is in the public interest. As stated in the NALF, we have determined that the violations committed by Mr. Easton are not disqualifying because Mr. Easton's interest in the applicant has been terminated. We also agree with PCS 2000 that dismissal of the applications would delay the deployment of PCS in the fifteen markets in which PCS 2000 is the auction winner. Under the circumstances, we conclude that the public is better served by allowing PCS 2000 to proceed with development of its system and offering service to consumers. D. Alleged Ex Parte Violation 44. On January 26, 1996, PCS 2000 filed a request for waiver of the Commission's bid withdrawal penalty rule and, on February 21, 1996, amended its request. On July 26, 1996, it filed an emergency request for expedited action on the request. Subsequently, on September 24, 1996, WillowRun sent a letter to the Managing Director in which it alleged PCS 2000 violated the ex parte rules because the emergency request addressed the merits of PCS 2000's restricted application proceedings and WillowRun, a party to these proceedings, was not served with a copy of the emergency request. On the same day, WillowRun filed a motion for leave to file a late pleading and with it an opposition to PCS 2000's request for expedited action. PCS 2000 filed an opposition to WillowRun's motion on October 9, 1996, and on October 21, 1996, WillowRun replied. 45. On December 11, 1996, the Managing Director notified PCS 2000 and WillowRun of his determination that an ex parte violation had occurred, that an admonishment to PCS 2000 to be more careful in complying with the Commission's ex parte rules was warranted but that no other action was warranted in the circumstances. For the reasons stated therein, we conclude that the violation is not so serious as to implicate PCS 2000's qualifications to be a Commission licensee. Thus, we see no need to discuss the ex parte matter further. On December 20, 1996, the Bureau issued an order which separately resolved PCS 2000's request for waiver. In acting on PCS 2000's applications, we did not consider or rely upon the emergency request of PCS 2000. IV. CONCLUSION 46. Having reviewed the applications, amendments and pleadings filed in this matter, we conclude that grant of the subject applications, as amended, will serve the public interest, convenience, and necessity, and that the Petitioners have not sufficiently alleged facts establishing that the grant of the applications would be inconsistent with these goals and based on the entire record, there are no substantial and material questions of fact that would warrant further inquiry into PCS 2000's qualifications. Therefore, we deny the WillowRun, Susan D. Easton, and the Susan D. Easton Trust Petitions and grant PCS 2000's applications. 47. The grant of PCS 2000's applications is expressly conditioned on payment, within five (5) business days of the release of this Memorandum Opinion and Order, of the remaining portion of the 10 percent down payments due on each of the licenses. Payment of the remainder of the amount due on each license will be made in quarterly installments in accordance with Parts 1 and 24 of the Commission's rules. For each license granted, PCS 2000, L.P., will receive from the United States Department of Treasury an original note documenting its installment payment obligations and a security agreement commemorating the Commission's security interest in the license in the event of default. The notes and security agreements will include instructions on completing, signing, and the return of the documents to the Treasury Department. The grant of PCS 2000's applications is expressly conditioned on timely execution and return of the notes and security agreements in accordance with these instructions. The Bureau shall include these and other conditions on the licenses pursuant to the Commission's rules. V. ORDERING CLAUSES 48. Accordingly, pursuant to our authority under  309(d) of the Communications Act of 1934, as amended, 47 U.S.C.  309(d), IT IS ORDERED that the Petitions to Deny filed by WillowRun, Susan D. Easton, and the Susan D. Easton Trust, ARE DENIED and that the applications of PCS 2000, L.P., for Broadband PCS C block licenses listed in Appendix A attached hereto are GRANTED, subject to the conditions set forth above. This Memorandum Opinion and Order is effective upon release. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary APPENDIX A Applications of PCS 2000, L.P. for broadband PCS C block licenses. Market Call sign File Number Name B372 KNLF372 00414-CWL-96 PCS 2000, L.P. B028 KNLF733 00418-CWL-96 PCS 2000, L.P. B458 KNLF734 00419-CWL-96 PCS 2000, L.P. B258 KNLF735 00421-CWL-96 PCS 2000, L.P. B489 KNLF736 00422-CWL-96 PCS 2000, L.P. B250 KNLF737 00425-CWL-96 PCS 2000, L.P. B291 KNLF738 00426-CWL-96 PCS 2000, L.P. B050 KNLF739 00427-CWL-96 PCS 2000, L.P. B371 KNLF740 00428-CWL-96 PCS 2000, L.P. B134 KNLF741 00429-CWL-96 PCS 2000, L.P. B399 KNLF742 00432-CWL-96 PCS 2000, L.P. B303 KNLF743 00433-CWL-96 PCS 2000, L.P. B157 KNLF744 00434-CWL-96 PCS 2000, L.P. B365 KNLF745 00437-CWL-96 PCS 2000, L.P. B488 KNLF746 00438-CWL-96 PCS 2000, L.P.