******************************************************** 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 ) WT DOCKET NO. 96-41 ) LIBERTY CABLE CO., INC. ) ) For Private Operational Fixed ) File Nos: Microwave Service Authorization ) 708777 WNTT370 and Modifications ) 708778, 713296 WNTM210 ) 708779 WNTM385 New York, New York ) 708780 WNTT555 ) 708781, 709426, 711937 WNTM212 ) 709332 (NEW) ) 712203 WNTW782 ) 712218 WNTY584 ) 712219 WNTY605 ) 713295 WNTX889 ) 713300 (NEW) ) 717325 (NEW) Appearances Robert L. Begleiter, Esq., Eliot L. Spitzer, Esq., Yang Chen, Esq., Robert L. Pettit, Esq., Bryan N. Tramont, Esq. and Vipul N. Nishawala, Esq. on behalf of Liberty Cable Co., Inc.; R. Bruce Beckner, Esq., Arthur H. Harding, Esq., Jill Kleppe McClelland, Esq. and Debra A. McGuire, Esq. on behalf of Time Warner Cable & Paragon Cable Manhattan Cablevision; Christopher A. Holt, Esq., James A. Kirkland, Esq., and Christopher J. Harvie, Esq., on behalf of Cablevision of New York City; and Joseph P. Weber, Esq., Katherine C. Power, Esq. and Mark L. Keam, Esq. on behalf of the Wireless Telecommunications Bureau. INITIAL DECISION OF ADMINISTRATIVE LAW JUDGE RICHARD L. SIPPEL Issued: February 27 , 1998 Released: March 6, 1998 PRELIMINARY STATEMENT 1. Liberty Cable Co., Inc. ("Liberty") is engaged in the business of distributing multichannel video programming utilizing facilities under Commission jurisdiction in the 18 GHz operational fixed microwave service. Liberty now participates in the delivery of video programming to approximately 30,000 subscribers in 150 buildings in Manhattan. Liberty has utilized the GHz service since 1991 for which it received 61 licenses. Liberty has filed for an additional 35 new licenses and 15 of those are the subject of this proceeding. HDO at Para. 2. None of the 15 licenses in question was ever granted. The Bureau has granted Liberty temporary authorizations to continue service to its customers while this case is in adjudication. Id. 2. The Commission questions the qualifications of Liberty to receive authorizations for private operational-fixed microwave service ("OFS") in light of the facts and circumstances concerning: (1) Liberty's unlawful hardwire interconnection of non-common systems without first obtaining a cable franchise; (2) Liberty's unauthorized activation of microwave facilities serving 19 buildings; (3) Liberty's misrepresentations or lack of candor in statements to the Commission related to conduct that was in violation of the Communications Act. Hearing Designation Order and Notice of Opportunity for Hearing, FCC No. 96-85, released March 5, 1996 ("HDO") reported at 11 F.C.C. Rcd 14133 (1996). Liberty's Venture Into OFS Spectrum 3. In 1991, the Commission amended its rules to permit private cable systems to access the OFS spectrum in the 18 GHz band. In re Part 94 of the Commission's Rules to Permit Private Video Distribution Systems of Video Entertainment Access to the 18 GHz Band, Report and Order, 6 F.C.C. Rcd 1270 (1991). That ruling permitted Liberty to send point-to- point transmissions from a single headend to multiple buildings using microwave antennas as receivers. It also enabled Liberty to use the 18 GHz band to expand its business. In the Spring of 1991, Liberty began to solicit new customers in other apartment buildings which were not owned by the Milsteins. Hardwired coaxial cable interconnects were used initially to service the buildings. In order to avoid local franchising laws while taking advantage of the OFS private cable system as a more efficient system for multichannel programming, Liberty aggressively sought FCC licenses for OFS microwave paths in direct competition with Time Warner and Cablevision, also parties to this proceeding. See Memorandum Opinion And Order, FCC 97M- 154 released September 11, 1997 (granting partial summary decision on hardwire interconnect issues). Time Warner And Cablevision (TWCV) Allegations 4. On January 9, 1995, Time Warner Cable of New York City and Paragon Cable Manhattan ("Time Warner") filed with the Commission a petition to deny or condition the grant of Liberty's application for OFS licenses which alleged that Liberty was unqualified to remain a Commission licensee. Time Warner alleged that Liberty was unlawfully operating a "cable system" in violation of the Communications Act and the Commission's cable television rules. Further, Time Warner alleged that Liberty lacked candor before the Commission because, in its license applications, Liberty claimed it was a private cable (SMATV) operator when, in fact, it was a "cable system" as defined by 47 U.S.C. 522(7). 5. Liberty opposed this pleading on January 24, 1995, claiming that it is eligible to be a licensee and it has filed all of its applications candidly and in good faith. On February 3, 1995, Time Warner filed a reply to this opposition, this time arguing that Liberty was obtaining OFS authorizations from the Commission under false pretenses because Liberty admitted in a New York federal district court that it was, in fact, a cable system by definition. Both parties filed additional petitions and oppositions with the Commission through May 17, 1995 arguing the question of the legality of hardwire interconnections and Liberty's related candor. 6. On May 5, 1995, Time Warner filed another document with the Commission, reporting for the first time that Time Warner discovered two buildings at which Liberty was providing point-to-point OFS transmission service without having obtained prior authorization from the Commission. On May 17, 1995, Liberty filed a response and, for the first time, admitted that it had prematurely activated OFS service to those two buildings. In this filing, Liberty also disclosed an additional thirteen buildings to which it was already providing OFS service without having obtained Commission authorization. Liberty advised that on May 4, 1995, and May 17, 1995, it had filed with the Bureau requests for special temporary authority ("STA") for all of these paths which had been prematurely activated. However, Liberty never filed any amendments to the pending STA requests to disclose the violations. 7. Time Warner later alleged that one of Liberty's employees, Mr. Behrooz Nourain, lacked candor before the Commission. On February 21, 1995, Liberty filed an affidavit of Mr. Nourain in the federal court litigation which stated, "I am advised that Time Warner has opposed Liberty's pending applications to the Federal Communications Commission for various 18 [GHz] microwave licenses." In Liberty's Surreply filed with the Commission on May 17, 1995, Mr. Nourain signed a declaration attesting to the truth of a statement contained therein that "Mr. Nourain was unaware of the petitions against Liberty's applications until late April of 1995." Because the two statements on their faces contradict each other, Time Warner argued that Liberty misrepresented itself to the Commission. 8. On September 5, 1995, Cablevision of New York City - Phase I ("Cablevision") joined the Liberty licensing proceeding by filing a petition to deny or condition the grant of Liberty's application for an OFS license in Riverdale, New York, which is a Cablevision franchise area. Current State Of Liberty's Authorizations 9. On June 9, 1995, the Chief of the Wireless Telecommunications Bureau's Microwave Branch ordered Liberty to explain the outstanding unlawful activations which had not been brought into compliance. On July 24, 1995, Liberty identified 4 additional buildings which were activated by Liberty prior to obtaining Commission authorization. That brought the total number of buildings prematurely activated in 1994-95 to 19. On August 14, 1995, Liberty submitted an Audit Report to the Bureau that was represented "to discover errors which occurred in Liberty's procedures and the reasons these errors occurred in a far more comprehensive, precise and accurate way than could any investigative ongoing." (Joint Motion Exh. 4 at 2.) Based on Liberty's presentations, including those of the Audit Report, on September 7, 1995, the Bureau granted "interim operating authority to operate the locations that are the subject of the 15 [STA] grants" in order to permit Liberty to serve its customers during the pendency of this proceeding. The grants, however, were conditioned on the Commission's resolution of the pending petitions to deny or "any other action the Commission may take against Liberty in light of its numerous violations of the Commission's Rules." The STAs were periodically renewed until March 4, 1996, the day prior to the release of the HDO. Liberty continues to provide OFS services through a successor to the 19 sites under temporary conditional authorization. Liberty seeks to obtain final authorization for all of its activated OFS microwave paths through this proceeding. Transfer Of Liberty Assets 10. Shortly before the release of the HDO, a substantial sale of Liberty's assets was made to an entity known as Freedom New York, L.L.C. ("Freedom"). As a result of the sale, Liberty now provides OFS microwave transmission to Freedom which in turn provides the programming services to Liberty's former customers. See Joint Motion at page i n.1. See also Bartholdi's Reply to Opposition to Request for Renewal of Special Temporary Authority filed on September 23, 1997 at page 4. The asset transaction came on the heels of this proceeding and raised questions of a transfer of control and whether Freedom should be made a party to this case as the real party-in-interest. See Memorandum Opinion And Order, FCC 96M-178, released July 16, 1996. Under an agreement entered into with Liberty, Freedom is now applying for licenses for microwave paths in its own right. Freedom acquired equipment and the use in perpetuity of microwave paths assigned to Liberty and is now the provider of the OFS microwave services. There has been no conclusive determination made that control has not in fact passed to Freedom. Liberty's President testified in May 1997, that at this time, Liberty is only maintaining the microwave network, is not engaged in any licensing activities, and has no knowledge of what licensing procedures Freedom is using. (Price, Tr. 2207.) DESIGNATED ISSUES 11. Evidence was taken on the following issues: I (a) To determine the facts and circumstances surrounding Liberty's operation of hardwire interconnected non-commonly owned buildings without first obtaining a franchise. (b) To determine whether Liberty has violated Section 1.65 of the Commission's Rules [47 C.F.R. 1.65] by failing to notify the Commission of its provision of service to interconnected, non-commonly owned buildings. (c) To determine whether based on [I](a) and (b) above, Liberty is qualified to be granted the above-captioned private operational fixed microwave authorizations. II (a) To determine the facts and circumstances surrounding Liberty's admitted violations of Section 301 of the Communications Act and Section 94.23 of the Commission's rules [47 U.S.C.  301 and 47 C.F.R. 94.23] by operating certain private operational fixed microwave [OFS] facilities without first obtaining Commission authorization. (b) To determine whether Liberty has violated Section 1.65 of the Commission's Rules [47 C.F.R. 1.65] by failing to notify the Commission of its premature operation of service in either its underlying applications or its requests for temporary authority. (c) To determine whether based on [II](a) and (b) above, Liberty is qualified to be granted the above-captioned private operational fixed microwave authorizations. III (a) To determine whether Liberty, in relation to its interconnection of non- commonly owned buildings and its premature operation of facilities, misrepresented facts to the Commission, lacked candor in its dealings with the Commission, or attempted to mislead the Commission, and in this regard, whether Liberty has violated Section 1.17 of the Commission Rules [47 C.F.R. 1.17]. (b) To determine whether based on [III](a) above, Liberty is qualified to be granted the above-captioned private operational fixed microwave authorizations. IV (a) To determine based on the evidence adduced in issues [I] through [III] above whether Liberty possesses the requisite character qualifications to be granted the above-captioned private operational fixed microwave authorizations for which it has applied and, accordingly, whether grant of its applications would serve the public interest, convenience and necessity. HDO at Para. 30. The Commission assigned to Liberty the burden of proceeding and the burden of proof. HDO at Para. 34. Procedural History 12. On July 15, 1996, the Wireless Telecommunications Bureau ("Bureau") joined Liberty in a Joint Motion For Summary Decision ("Joint Motion"). A combined opposition was filed on September 13, 1996, by Time Warner and Cablevision (collectively "TWCV"). Supplemental Memoranda were permitted and submitted on October 22, 1996. Candor and credibility hearings arising out of depositions and document discovery were held on January 13, 14, 15, 16, 21, 22, 1997, to determine whether Liberty had been less than candid with the Commission and whether Liberty could be trusted to be truthful as a licensee. Memorandum Opinion And Order FCC 96M-265, released December 10, 1996. Proposed Findings of Fact and Conclusions of Law were filed on February 28, 1997 and Reply Proposed Findings of Fact and Conclusion of Law were filed on March 7, 1997. 13. The last witness to testify on January 22, 1997, was Mr. Howard Barr, a partner at Pepper & Corazzini, Liberty's day-to-day communications counsel. After skirmishing on production and in camera inspection, it was determined through Mr. Barr's handwritten contemporaneous notes made during a telephone conversation with another Liberty attorney that there had been an advisory letter provided to Liberty in 1993 which warned Liberty's management against unlawful premature activations. (TWCV Exh. 51.) This discovery, initiated in open court, led to the production of a highly relevant document that should have been disclosed in the Joint Motion. At a minimum, it should have been produced in the first round of document production in June 1996. Discovery of the advisory letter prompted TWCV to file a motion for additional testimony that was supported by the Bureau. Memorandum Opinion And Order FCC 97M-63, released April 21, 1997. Limited additional discovery was permitted and a final hearing session was held on May 28 and 29, 1997. Supplemental Proposed Findings of Fact and Conclusions of Law were filed on June 11, 1997 and Reply Proposed Findings of Fact and Conclusions of Law were filed on June 23, 1997. 14. On September 16, 1997, while the "last" round of pleadings were under consideration by the Presiding Judge, Liberty produced the Audit Report dated August 14, 1995, which until then had been the subject of federal court litigation. See discussion of Internal Audit Report below. The information in that report is highly relevant to the findings and conclusions of this proceeding. The parties filed their further Supplemental Proposed Findings of Fact and Conclusions of Law on November 19, 1997, and further Supplemental Proposed Reply Findings of Fact and Conclusions of Law on December 2, 1997. Partial Summary Decision 15. The issues above that are related to hard wire interconnects have been decided by partial summary decision. Memorandum Opinion And Order, FCC 97M-154, released September 11, 1997. Liberty will pay a forfeiture in the amount of $80,000 for admitted violations of the Act [47 U.S.C. 522(7) (defining "cable system") and 47 U.S.C. 541(b)(1)(cable operators may not provide cable services without a franchise)] by failing to obtain a local franchise for hard wire interconnected cable systems constructed between non- commonly owned or controlled buildings in New York City and for failing to disclose the violations under Section 1.65 in applications for modification of microwave service that would replace the hardwire systems. Id. The law on "cable systems" was in a state of flux, there were no procedures in place to obtain franchises, and Congress accepted the Commission's recommendation to further narrow the definition of "cable systems" that are subject to franchises. See HDO at Para. 12 (Telecommunications Act of 1996 now exempts service from local franchise where a facility does not use any public right of way). Under the circumstances, it could not be determined that Liberty had intentionally violated the law on "cable systems" and franchises. Id. Nor could Liberty be found to have deceived the Commission in view of disclosures made in a local enforcement proceeding and Liberty's court action for declaratory judgment to which the Commission became a party. Tardy disclosure eventually was made and Liberty admitted violating the Cable Act and the Commission's Rules [47 C.F.R. 1.65] for the late disclosures. Liberty agreed to pay the forfeiture. Id. There was no granting of a license in the resolution of the hard-wire issues by forfeiture . Reliability And Credibility Of Testimony 16. In May and June 1996, Liberty made key personnel available and Time Warner and Cablevision took nineteen depositions. Thereafter, as a result of discovery of a key memorandum that was authored in February 1995, and produced in June 1996, a second waive of depositions was authorized for key witnesses. Order 96M-188, released July 29, 1996. The parties were permitted to file supplemental memorandums in October 1996. In those supplemental pleadings it was disclosed: the Bureau has some concerns that Mr. Price [Liberty's President] may not have been fully candid in this deposition---. See Bureau's Supplemental Comments filed October 22, 1996. That observation by Bureau trial counsel raised serious doubt as to the credibility of a key witness whose deposition and affidavit testimony is relied upon by Liberty and the Bureau. 17. After multiple hearing sessions, it is clear that summary decision no longer is suitable as the procedure for terminating this case. See Summary Decision Procedures, 34 F.C.C. 2d 485, 487-488 (1972). The issues on premature OFS microwave activations and related misrepresentations cannot be summarily decided because of their dependency on credibility and candor issues that permeate Liberty's non-disclosures, inadequate disclosures and the explanations made in related testimony. But the Joint Motion's record will be used in this Initial Decision where uncontested or basic fact findings can be made. The parties have been placed on notice of these procedures. Order FCC 97M-64, released April 21, 1997 and Order 97M-79, released May 6, 1997 (Presiding Judge will take appropriate notice of the record that has been compiled in connection with the Joint Motion For Summary Decision). See 47 C.F.R. 1.361 (other proof of official record). 18. The findings and conclusions below relate to the evidence on Liberty's unlawful activations of OFS paths and the inconsistent sworn statements of Mr. Behrooz Nourain, a key employee, relating to the OFS paths. FINDINGS OF FACT Identity Of Key Persons 19. Liberty and the buildings serviced for microwave video distribution are owned and controlled by Mr. Howard Milstein, his brother Mr. Edward Milstein, and a cousin who is inactive in the business, Mr. Philip Milstein. (H. Milstein, Tr. 512.) Mr. Howard Milstein, the most senior executive officer, has advanced degrees in law and business and varied business interests. (H. Milstein, Tr. 508-510.) He estimates that in 1995 he spent only about ten to fifteen percent of his time on Liberty matters. (H. Milstein, Tr. 511-512.) Mr. Edward Milstein assists Mr. Howard Milstein in the management and marketing aspects of the business and on special projects. Mr. Edward Milstein has no supervisory or consultive responsibilities with respect to OFS licensing. (E. Milstein, Tr. 1615-16.) To keep apprised of Liberty's business developments, Mr. Howard Milstein met regularly with his subordinates each Thursday afternoon to discuss new installations of OFS facilities. (H. Milstein, Tr. 522-523.) 20. Mr. Peter Price ("Price"), Liberty's President and Chief Operating Officer, was responsible for running the day-to-day operations of Liberty in all aspects. (H. Milstein, Tr. 513.) From Liberty's expansion in 1991 to the present, Mr. Price managed Liberty's day- to-day business. Mr. Price has a degree from an accredited law school. Joint Motion at 7. Mr. Price supervised outside counsel, including its FCC licensing law firm, Pepper & Corazzini, Washington, D.C. The employees reporting to Mr. Price included Mr. Anthony Ontiveros ("Ontiveros"), Director of Operations and Mr. Behrooz Nourain ("Nourain"), Director of Engineering. (H. Milstein, Tr. 514.) Mr. Bruce McKinnon ("McKinnon"), a senior subordinate of Mr. Price, was at one time in charge of day-to-day operations as Executive Vice President and Chief Operating Officer. Mr. McKinnon was the officer in charge of installations of buildings that contracted with Liberty for OFS service. Mr. McKinnon left Liberty in May 1993. (H. Milstein, Tr. 522.) 21. The mid-town executive offices of Messrs. Howard and Edward Milstein, Mr. Price and Mr. McKinnon were at a different location from Mr. Nourain. (Nourain, Tr. 2215-16.) "Behrooz is in another office substantially uptown from us." (Price, Tr. 1377.) The primary responsible officer for Liberty's licensing in the relevant period was Mr. Price. Mr. Price was alleged to be the first executive level officer to learn about the unauthorized activations. (Joint Motion at 7-9.) As the most senior executive responsible for Liberty's day- to-day operations, Mr. Price was at all times in an excellent position to be fully knowledgeable of OFS activations and related licensing. 22. Mr. Michael Lehmkuhl ("Lehmkuhl") is an associate attorney at Pepper & Corazzini who prepares and files applications for OFS licenses and STAs. Ms. Jennifer Richter ("Richter") is a former associate attorney who had performed the same services prior to Mr. Lehmkuhl from April 1992 to July 1994. (Richter, Tr. 1998-2003.) Mr. Todd Parriott ("Parriott") is a former associate who preceded Ms. Richter. Mr. Howard Barr ("Barr") is a partner at Pepper & Corazzini who is senior to Mr. Lehmkuhl with respect to the firm's representation of Liberty. 23. Mr. Joseph Stern ("Stern") was a consultant who preceded Mr. Nourain as the person responsible for Liberty's licensing. (H. Milstein, Tr. 515; Price, Tr. 1350, Joint Motion at 9.) Mr. Lloyd Constantine ("Constantine") was responsible for the conduct of an audit of Liberty's licensing and activation practices and the subsequent preparation and submission to the Commission of the Audit Report. (See "Constantine Affidavit," Joint Motion Exh. 4.) 24. Liberty used the services of Comsearch, a Washington, D.C. technical consulting firm. Comsearch provided the engineering and coordination with existing users of the 18 GHz frequency to insure against interference with other transmissions. (Joint Motion at 9.) Comsearch was a technical firm that was used by Mr. Nourain and by Mr. Lehmkuhl to coordinate clearance from interference with other microwave systems on the paths identified by Liberty for licensing. Comsearch received inventory reports from Ms. Richter and Mr. Lehmkuhl. (TWCV Exh. 3.) The Internal Audit Report 25. On August 4, 1995, the Bureau required Liberty to furnish the results of a Liberty initiated internal audit report ("Audit Report" or "Report"). (TWCV Exh. 28.) It was to be submitted under Section 308(b) of the Act [47 U.S.C. 308(b)]. Liberty submitted the Audit Report on August 14, 1995, under a claim of confidentiality. (TWCV Exh. 67.) Liberty contends it was forthright with the Commission in its Audit Report and relies on the Report as support for granting the license applications which are in question. See Joint Motion at 19-20, 55 and Jt. Exh. 4 at Para. 4. Liberty also relies on the Audit Report as a basis for representing to the Commission that it now has a reliable system in place which will prevent a reoccurrence of premature activations. The Bureau's counsel had seen the Report prior to this proceeding and considered it to have relevant information. The Report was seen for the first time in this proceeding on September 16, 1997. There was attached to the Report the advisory letter of Ms. Richter and a detailed memorandum of instruction from Mr. Stern to Mr. Nourain. Liberty now takes the position that its Report is unnecessary for reaching a decision in this case. See Reply to Supplemental Proposed Findings of Fact and Conclusions of Law dated June 23, 1997 at 26-27. Liberty's disclaimer of the Audit Report's nonrelevance is not accepted. The Joint Motion refers to the Audit Report five times to show that Liberty will be a candid and reliable licensee in the future. (See Joint Motion at 19, 45, 47, 53 and 55.) The Joint Motion states that "Stern did not give Nourain a written memorandum detailing the application process." (Joint Motion at 13.) That statement, based on Stern's deposition, is flatly contradicted by the Audit Report. The refusal to make available the Audit Report for use in this proceeding would have created an adverse inference against Liberty on all of the issues relating to the premature activations of OFS microwave paths. The Audit Report was highly relevant evidence that was being withheld until late in the proceeding. 26. After engaging in prolonged litigation over a claim of privilege, Liberty produced the Audit Report on September 16, 1997, and it was received in evidence on November 5, 1997. (TWCV Exh. 67; Tr. 2353-57.) Upon review, it was perfectly clear that the Report always had relevance to the issues. The Bureau repeatedly confirmed that the Audit Report contains highly relevant information and that it should be produced by Liberty for use as evidence in this case. See Wireless Telecommunications Bureau's Proposed Findings of Facts and Conclusions of Law, February 28, 1997 at Paras. 114, 130. The Commission ruled more than a year ago that Liberty failed to establish that the Report was entitled to confidential treatment. In re Liberty Cable Company, Inc., 11 F.C.C. Rcd 2475, released January 26, 1996. The Court of Appeals affirmed the Commission and held that Liberty's "challenges to the Commission's order were without merit." Bartholdi Cable Company, Inc. v. F.C.C., 114 F.3d 274 (D.C. Cir. 1997). The Court of Appeals also found that the Audit Report was a "comprehensive report" that "contains a description of Bartholdi's [Liberty's] internal business and licensing operations ... [and] the history of management breakdown that led to the premature activations." Bartholdi Cable Co., Inc. v. F.C.C., supra at 278. By Orders of the Court of Appeals dated September 10, 1997, a request for rehearing and suggestion for rehearing en banc were denied and Liberty had no excuse for withholding it. 27. Without the Audit Report it would not be possible to adequately test Liberty's conclusory arguments with respect to the Report's significance in this case. Memorandum Opinion And Order, FCC 96M-265, released December 10, 1996 at 4. See also Memorandum Opinion And Order, FCC 97M-63, released April 21, 1997 at 6, n.8 and Memorandum Opinion And Order, FCC 97M-12, released January 31, 1997 at n.4. There was a motivation to utilize litigation in order to keep it out of this proceeding as long as possible. The significance of the information contained in the Audit Report is apparent from its comprehensive nature as found by the Court of Appeals. It is certainly far more comprehensive than the Joint Motion. Its significance is heightened by its disclosure for the first time of a total of 93 unauthorized path activations by Liberty since 1992, far exceeding the 19 charged in the HDO. 28. A Prehearing Conference was held on November 5, 1997, where it was ruled that in view of Liberty's manifest intent to continue to litigate adverse ruling on privilege, there was no public interest to be served by permitting further discovery and the resulting additional delay. (Tr. 2384-86; 2396-2401.) The Audit Report was received in evidence as TWCV Exh. 67. (Tr.2357.) A final pleading cycle ending on December 2, 1997, was set to permit proposed findings and conclusions on the Audit Report as evidence. See Order FCC 97M-185, released November 10, 1997. 29. The Audit Report is represented to the Commission, the Bureau and the Presiding Judge to be an accurate representation of the facts known to Liberty's counsel as of August 14, 1995. (Tr. 2362, 2381.) It was prepared in order to account for the 19 unauthorized OFS activations that are cited in the HDO. The Report was accompanied by a Declaration of Liberty's President affirming to the Commission that the Report contains the "results of Liberty's internal audit." (TWCV Exh. 67.) The Report was represented to be a comprehensive and accurate assessment of the events as of the date that the Audit Report was submitted to the Commission. (Tr. 2377. ) The Report had been represented in the Joint Motion as "comprehensive, precise and accurate." (L/B Exh. 4 at 2.) The attorneys conducting the investigation had "complete access to Liberty's books and records and an unfettered and unlimited opportunity to interview all Liberty personnel, officers, and outside - retained counsel" and "thousands of documents were reviewed." (TWCV Exh. 29 at Para.5-6.) The Report was submitted in response to a Bureau request under 308(b) of the Act. The Report is a statement by Liberty's agents concerning matters within the scope of an agency relationship (attorneys retained to conduct investigation and prepare Report) and therefore constitutes an admission by a party-opponent. FRE 801(d)(2). For these reasons, the Audit Report is found to be reliable evidence of the fact that in 1992-94, there were multiple unauthorized activations of OFS paths in addition to the 19 cited in the HDO (Tr. 2381). Highly Relevant Evidence Withheld In An Avoidance Of Complete Discovery And Disruption Caused By Withholding Evidence 30. Liberty was assigned the burden of proof. HDO at Para. 34. The argument for summary decision is that Liberty negligently failed to detect 19 path activations in 1994-95. Yet Liberty deliberately withheld significant documentary evidence concerning activations. The most recent and the most significant document disclosed is the Audit Report (TWCV Exh. 67) which was strategically withheld under a waived assertion of the attorney-client privilege. The Report had been furnished to the Bureau before designation for hearing in order to convince the Bureau to authorize the activations. When that effort did not succeed and the case was set for hearing, Liberty withheld the Report for use as evidence. The motivation to keep the Audit Report from the fact-finder is evident. The Audit Report disclosed 74 additional premature activations. It identified a senior employee, Mr. McKinnon, as a person who probably knew of premature activations. (TWCV Exh. 67 at 18.) The Audit Report concluded that Mr. Nourain, Mr. Ontiveros, Mr. McKinnon and Ms. Richter also probably knew there were illegal activations. (TWCV Exh. 67 at 11, 13, 15.) As a direct result of lengthy litigation which finally ended in September 1997, significant leads could not be followed up without further interminable delays and interlocutory appeals. And none of the substantial questions raised in the Audit Report concerning the knowledge of activations on the part of Mr. Nourain, Mr. McKinnon or Ms. Richter could be conclusively determined. (TWCV Exh. 67; Audit Report at 6, 12 [McKinnon interpreted a test license as authority to prematurely activate]; Audit Report at 10 [Nourain believes he told Mr. Price that approvals may not be received on time]; Audit Report at 11 [McKinnon appears to have been aware from Nourain that buildings were prematurely activated]. 31. Liberty also failed to disclose in a timely fashion other key documents which were prepared by Liberty's outside counsel for the purpose of warning, monitoring and assuring that there would be no premature microwave activations. Evidence was withheld until discovered in the course of the hearing, reviewed in camera, ordered to be produced, testified to in depositions, and finally presented as exhibits through their authors and recipients who were examined in open court. Although these documents would be needed to test Liberty's denials of knowledge, they were not readily produced and there was never any explanation offered other than a simple oversight. (Lehmkuhl, Tr. 1293-94.) Mr. Lehmkuhl's February 24 Inventory 32. Mr. Lehmkuhl had prepared an inventory of the universe of Liberty's licenses and pending applications as of February 24, 1995. (L/B Exh. 1; Lehmkuhl, Tr. 1058-59.) Such inventories were prepared and furnished to Liberty as a standing practice. (Lehmkuhl, Tr. 1059.) The inventory contained four sections on pending applications, granted licenses, transmit location information, and the station and path information for each transmitter site. (L/B Exh. 1.) It had been prepared two months before the "late April" date that Liberty declared in the Constantine Affidavit and in the Joint Motion to be the earliest date that its officers knew of the microwave activations. (Joint Motion at 17.) The inventory was addressed to Mr. Price and Mr. Nourain. It contained information from which it could readily be determined by comparison with Liberty's Weekly Reports (TWCV Exh. 1) that prematurely activated paths had pending (not granted) license applications. Liberty was first required to produce discovery documents on April 15, 1996. See Order FCC 96M-53, released March 20, 1996 (15,000 documents produced). The Lehmkuhl inventory had been furnished to a third- party, Comsearch, which was hired to coordinate new paths. (Nourain, Tr. 620.) Yet, Liberty withheld the document from discovery on a clearly unmerited assertion of the attorney-client privilege. After an in camera inspection, the document was ordered to be produced. It became available to the parties for the first time on June 27, 1996. See Order FCC 96M-164, released June 27, 1996. Mr. Nourain's April 26 Memorandum 33. Mr. Nourain prepared a memorandum on Wednesday, April 26, 1995. (TWCV Exh. 35.) Mr. Nourain prepared his memorandum at the request of Mr. Edward Milstein after Mr. Nourain had spoken with Mr. Milstein and Mr. Price about activations. (TWCV Exh. 35; Nourain, Tr. 819, 821.) Mr. Nourain listed the site for which STAs had been filed. (Nourain, Tr. 822.) As he wrote the memorandum, Mr. Nourain knew that all but two of the facilities listed in the document were receiving service without authorization. (Nourain, Tr. 826-29; TWCV Exhs. 30, 35.) Mr. Price testified that he learned of the unauthorized activations from Mr. Nourain's memorandum. (Price Tr. 1362-64; 1373.) The document did not qualify for inclusion in any log of documents claimed to be privileged. Yet this document was not produced until January 13, 1997, six months after the filing of the Joint Motion and on the first day of the credibility hearings when Mr. Nourain was scheduled to testify. (Tr. 492-500.) There was no justification for its late production. Mr. Lehmkuhl's April 28 Inventory 34. Mr. Lehmkuhl prepared an inventory on Friday, April 28, 1995. (TWCV Exh. 34.) Mr. Nourain had requested Mr. Lehmkuhl to prepare it after Mr. Nourain acknowledged learning of the premature activations. (TWCV Exh. 34; Nourain Tr. 648.) The inventory constituted clear evidence that OFS paths had been prematurely activated before receipt of authorizations. (Nourain , Tr. 749-50.) Mr. Price acknowledged that Mr. Lehmkuhl's inventory disclosed the applications for OFS authorizations that had not been granted. (Price, Tr. 1386.) Mr. Lehmkuhl warned that future STAs probably would not be granted in view of pending Time Warner petitions to deny but advised that STAs still should be applied for due to the "seriousness of the situation." (TWCV Exh. 34.) Despite its significance, the document was not disclosed until January 6, 1997, eight months after the HDO was issued and one week before the commencement of the hearings. The document had not been identified in Liberty's log of documents that were claimed to be privileged. There was no reason stated why the document was not found in April 1996, when a document search had been made. The document was reported to have been found fortuitously by Mr. Lehmkuhl on the eve of the hearing as he was preparing for his testimony set for January 18, 1997. (Lehmkuhl, Tr. 1292-94; 1317.) There was no justification for its late production. Ms. Richter's 1993 Letter 35. The earliest dated and most highly relevant document which Liberty failed to produce in discovery was the last document to be uncovered. It was produced over objection in the course of the cross-examination of Mr. Howard Barr on January 28, 1997. The Richter letter, which was being kept from this proceeding by Liberty, was attached as a significant document to the Audit Report of August 1995. (TWCV Exh. 67.) In April 1993, Ms. Richter wrote a letter to Mr. McKinnon "to detail the parameters within which construction and operation of new paths and new stations is permissible." (TWCV Exh. 51.) The two-page letter was not identified on Liberty's log of documents claimed to be privileged. After an in camera review, the document was ordered to be produced on a finding of waiver. Order FCC 97M-14, released February 5, 1997. Notes written on the letter in Liberty's files reflect that it was directed to Mr. Nourain who in turn forwarded it to Mr. Price and asked Mr. Price for guidance. The self-evident significance of the Richter letter required yet another round of depositions of Ms. Richter, Mr. McKinnon, Mr. Nourain and Mr. Price and the additional hearing testimony of Ms. Richter, Mr. Nourain and Mr. Price in May 1997. In September 1997, it was learned through the Audit Report that Ms. Richter, without being identified by name, probably became aware that services had been activated without authorization. (TWCV Exh. 67, Audit Report at 11.) Newly Discovered Documents Prompted Changes In Testimony 36. Despite a representation in the Constantine Affidavit and the Joint Motion that the unauthorized activations were first discovered in "early April", during the first deposition phase of this case in May 1996, Messrs. Howard and Edward Milstein, Peter Price and Behrooz Nourain each testified that they may have first learned of the premature activations in early May 1995 through allegations made in Time Warner's May 5 petition to deny. (H. Milstein Depo. Tr. 28; E. Milstein Depo. Tr. 41; 44-45; Price Depo. (5/28) Tr. 95-97; Nourain Depo. (5/29) Tr. 77.) But when confronted in their January 1997 courtroom testimony with the February 24 and April 28 Lehmkuhl inventories and the Nourain Memorandum of April 26, these recollections became focused on the earlier dates of April 26 and April 28. (H. Milstein, Tr. 517-518; E. Milstein, Tr. 1623-24; Price, Tr. 1362-64, 1417-18; Nourain, Tr. 645-646.) It is inexplicable how these executives and key employee could have been uncertain of April 26 and April 28, 1995, when they were first deposed in May 1996. The Milsteins and Mr. Price were knowledgeable of the Audit Report which had been submitted to the Commission in August 1995, a document that was represented to be the definitive presentment of the facts and circumstances of the unlawful activations. By the time they were deposed in May 1996, Liberty's officers would at least have read the Constantine Affidavit and probably the Audit Report to refocus and be sure of the date of "late April 1995." With the benefit of the Audit Report, the Richter letter, the Lehmkuhl inventories and the Nourain memorandum, in addition to the Constantine Affidavit, these witnesses could have been fully prepared to give much more truthful and accurate deposition testimony in May 1996. If the document were timely produced, all parties would have been focused on late April 1995 at the depositions. Inconsistencies In Key Documents And Testimony 37. The Joint Motion was submitted before there was any discovery or disclosure of highly relevant documentary evidence: Mr. Stern's memorandum, Ms. Richter's letter, Mr. Lehmkuhl's inventories, Mr. Nourain's memorandum, none of which were disclosed in the Joint Motion. These documents were in the possession of Liberty and counsel throughout this proceeding. The Joint Motion is premised on Liberty's promised but totally unsupported reliability to comply with Commission regulations. It is also premised on an unproven propensity to be forthcoming with the Commission before events occur. Liberty and the Bureau asked the Presiding Judge to summarily agree with their predictive conclusions without ever seeing the Stern memorandum, the Richter letter, the Lehmkuhl inventories, Nourain's memorandum, and the comprehensive Audit Report. 38. This reckless or intentional withholding of highly relevant evidence must be considered in context. All parties have recognized throughout this proceeding that the date on which Mr. Price was informed of unauthorized activations is a highly significant pivotal fact. Yet in his depositions used in support of the Joint Motion Mr. Price testified inconsistently. He first claimed to have learned of unauthorized activations in January 1995 or "somewhere in that area" and that he was first informed by counsel. (Price Depo. at 93-94; L/B Exh. 9.) He then changed his deposition testimony to April 1995, but named counsel as the source through a conversation and not a memorandum. (Price Depo. at 95; L/B Exh. 9.) At the hearing he testified that the date was April 1995 and that the source was Mr. Nourain's memorandum of April 26, 1995. (Price, Tr. 1416-19.) The testimony of Mr. Price has failed to establish conclusively when he knew and how he was first informed of unauthorized activations. 39. Mr. Lehmkuhl testified in direct examination that his memorandum was "an inventory of the state of Liberty's licenses." (Lehmkuhl, Tr. 1059.) He testified that no one at Liberty had asked for the inventory but that Pepper & Corazzini had a "standing practice [to] issue these inventories to Liberty." (Id.) He testified that he thought that he had furnished Liberty with one other pre-April inventory "very early on" and that he thought that in preparing the inventories he had reviewed Ms. Richter's earlier inventories of April 6, 1993. (Id. and TWCV Exhs. 3 and 4.) Mr. Lehmkuhl stated that it took six hours to prepare the inventory of February 24, 1995, and that the reason for preparing that inventory was his receipt of new computer software that contained a new database. (Lehmkuhl, Tr. 1061.) He believed that his inventory was an improvement over earlier ones because it included the public notice acceptance dates, the date on which licenses were granted, the number of days that applications were pending, the type of application [license or STA], and in some instances the FCC file number. (Lehmkuhl, Tr. 1060.) He testified that he did not discuss this inventory with anyone at Liberty (other than "administratively") in February, March or April 1995; that he never discussed the substance of the inventory with anyone at Liberty; and that he never attempted to discuss the inventory with anyone. (Lehmkuhl, Tr. 1061.) That no one at Liberty who had a responsibility for activations knew the substance of the law firm's inventories is too incredible to accept as a finding. 40. Mr. Price testified in his direct testimony that he had no knowledge of unauthorized activations before April 1995. (Price, Tr. 1360.) He testified that he had no list and no knowledge of when particular buildings had received Commission authorization to activate whether through the grant of licenses or STAs. (Price, Tr. 1360-61.) Mr. Price testified: It was my assumption based upon the procedure I requested and what other people had told me that operations was keeping a list of buildings that were activated and coordinating the licensing of those buildings with counsel in Washington. (Price, Tr. 1361.) Neither substantial nor reliable evidence supports Mr. Price's assumptions. Mr. Price attended weekly staff meetings at which all departments reported. (Price, Tr. 1361.) Those meetings were concerned with marketing matters and scheduling for construction related to the installation of the OFS paths. (Price, Tr. 1361-62.) Mr. Price testified that through Mr. Nourain's memorandum of April 26, 1995, he could independently detect a "gap there between the turning on of service and the obtaining of authority." (Price, Tr. 1363-64; 1420.) There is no reason given why Mr. Price did not reach the same conclusion in February. He testified on direct that he probably received Mr. Lehmkuhl's inventory of February 24, 1995, but he did not recall ever reading it and he has no present recollection about the document. (Price, Tr. 1434.) He testified that it was his practice to send such documents to Mr. Nourain. But he never called Mr. Nourain to discuss such items. (Price, Tr. 1437.) There is an unexplained inconsistency in the significance that Mr. Price attributed to Mr. Nourain's memorandum of April 26 and the complete ignoring of Mr. Lehmkuhl's earlier memorandum and detailed inventory of February 24. Mr. Price was able to detect unauthorized activations by seeing the buildings and microwave paths on April 26, 1995, but he could not or would not make the same connection in February 1995 through Mr. Lehmkuhl's memorandum and inventory. From a review of the February inventory, it could have been determined by Mr. Price or anyone else at Liberty who was familiar with the buildings to be serviced that by February 24, 1995, at least six paths had been prematurely activated at: 25 W. 54th Street - February 6, 1995; 114 E. 72nd Street - January 30, 1995; 433 E. 56th Street - December 27, 1994; 639 West End Avenue - February 14, 1995; 35 West end Avenue - January 3, 1995; and 441 E. 92nd Street - January 23, 1995. (Compare pending applications in L/B Exh. 1 and Table I below.) This variance in the timing of Mr. Price's exercise of care to detect unauthorized activations on two different occasions cannot be explained by stating that he looked at the later Nourain memorandum in April and readily saw the premature activations but that he did not in the same or similar manner consider the February memorandum and inventory which was addressed to him by Mr. Lehmkuhl or the earlier inventories of Ms. Richter and Mr. Parriott. Unauthorized Activations Were Too Numerous To Deny Knowledge 41. From 1991 to 1994, Liberty held (and still holds) 43 OFS licenses and filed applications for 35 additional licenses. Time Warner and Cablevision filed petitions to deny those applications. The Bureau granted Special Temporary Authorities (STAs) which allowed Liberty to operate under pending applications for 120 days beginning on September 7, 1995. Successive extensions of the STAs were granted through March 7, 1996. The HDO granted Liberty uninterrupted operating authority which allows it to continue providing service to customers until there is a resolution of the issues. HDO at Para. 21. See In re Request of Liberty Cable Co., Inc. for Special Temporary Authority for Private Operational Fixed Microwave Radio Service in New York, New York, 11 F.C.C. Rcd 4070 (1996). Liberty admits that it prematurely activated OFS service to 19 buildings. See Joint Motion at ii. Liberty also admits that the premature activations arose from a failure on the part of Liberty to supervise its engineer, Behrooz Nourain, a key employee who was given the responsibility and authority for OFS microwave activations. See Joint Motion at iii. Facts not disclosed in the Joint Motion but determined through the recent production of the Audit Report establish that since 1993 there were a total of 93 unauthorized premature activations and that on 36 occasions the activations were made before application was made for a license or STA. 42. The premature activations began simultaneously with the employment of Mr. Nourain in April 1992. The microwave network had been set up by Mr. Stern when Mr. Nourain took over as Director of Engineering. (Nourain Depo. Tr. 21.) According to Mr. Stern, Mr. Nourain rejected instruction because he felt himself to be sufficiently familiar with Commission procedures. (Stern Depo. Tr. 70-71.) Mr. Stern testified that he did not provide Mr. Nourain with written instructions on the application process. (Stern Depo. Tr. 73.) See also Joint Motion at 13. The Milstein brothers, Mr. Price and Mr. McKinnon took no measures to assure that Mr. Nourain was prepared to independently deal with FCC licensing. By virtually writing his own job description, Mr. Nourain considered his job to be only that of coordinating frequencies. He believed that all responsibilities with respect to licensing were handled by outside counsel who had that expertise. (Nourain Depo. Tr. 52-53.) He believed that Pepper & Corazzini had the responsibility to obtain Commission authorizations prior to activations. (Nourain Depo. Tr. 67-68.) 43. Coordination between licensing and activation was not a priority for Mr. Nourain. Nor was coordination supervised by Liberty's counsel who prepared and filed the applications. The record shows that Mr. Nourain signed his signature in blank to 35 applications for licenses and sent them to Pepper & Corazzini for completion and filing. (Nourain Depo. Tr. 44-45; Lehmkuhl Depo. Tr. 70.) Mr. Lehmkuhl may have reviewed and filed as many as 100 applications in that manner. (Lehmkuhl Depo. Tr. 13.) Mr. Price, who was physically removed from Mr. Nourain in his mid-town office, failed to supervise Mr. Nourain to assure that licenses were obtained before activating microwave paths. Five paths were activated before applications were even filed. The Nineteen Unauthorized Activations 44. Substantial and reliable evidence establishes that for ten months between July 11, 1994, and April 24, 1995, Liberty activated 19 OFS microwave paths before receiving any authority from the Commission. HDO at Para. 7 and Appendix A. The following chart is a recapitulation of the building locations, dates of applications filings, and dates of unauthorized activations: (TWCV Exh. 30; HDO at Appendix A.) TABLE I Comsearch Days Between Frequency Comsearch FCC File CoordinationLicense STA Activation Report and Number Address Report Application Request Date Activation 708778 35 W. End Ave. 11/16/94 12/22/94 5/4/95 1/3/95 48 days 708779 639 W. End Ave. 11/16/94 12/22/94 5/4/95 2/14/95 90 days 441 E. 92nd St./ 1/12/95 2/21/95 5/4/95 1/16 or 1/23/95 4 or 11 days 1775 York Ave. 767 Fifth Ave. 9/26/94 11/7/94 5/4/95 4/12 or 4/17/95 198 or 203 days 1295 Madison Ave. 7/3/95 7/17/95 7/24/95 7/27 or 7/28/94 38 E. 85th St. 7/3/95 7/17/95 7/24/95 7/18/94 708780 564 First Ave. 9/26/94 11/7/94 5/4/95 1/3 or 1/11/95 99 or 107 days (NYU) 545 First Ave. 9/26/94 11/7/94 5/4/95 1/3 or 1/23/95 99 or 119 days (NYU) 200 E. 32nd St. 2/16/95 3/23/95 5/4/95 3/27/95 39 days 708781 30 Waterside Plaza 1/12/95 2/21/95 5/4/95 3/15/95 62 days 430/440 E. 56th St. 7/3/95 7/17/95 7/24/95 7/11/94 433 E. 56th St. 12/21/94 1/31/95 5/4/95 12/27/94 6 days 114 E. 72nd St. 11/17/94 11/23/94 5/4/95 1/30/95 74 days 524 E. 72nd St. 9/26/94 11/7/94 5/4/95 11/16/94 51 days 709332 25 W. 54th St. 10/13/94 11/23/94 5/4/95 2/6/95 116 days 712203 380 Rector Place 7/3/95 7/17/95 7/24/95 10/12/94 712218 16 W. 16th St. 1/12/95 2/21/95 5/4/95 3/28/95 75 days 712219 6 E. 44th St. 1/12/95 2/21/95 5/4/95 4/12 or 4/19/95 90 or 97 days 2727 Palisades Ave. 2/16/95 3/24/95 5/19/95 4/24/95 67 days 45. Table I tracks the 19 buildings at which paths providing programming to occupant-customers were unlawfully activated. The data show that activations were effected after the passage of as little as 4 days to as many as 198 days from the finalizing of Comsearch reports. There is no pattern of same or similar times for the activations upon which any assumptions of authorizations could be based. The Lehmkuhl memorandum of April 28 accounts for 12 of the 19 sites. (TWCV Exh. 34.) It also shows the petitions to deny that are pending as to each site and that the latest petition was filed on April 17, 1995. (Id.) The first allegation in a Time Warner pleading that Liberty had made unauthorized activations was May 5, 1995. (Time Warner's Reply to Liberty's Opposition to a Time Warner Petition to Deny; see Surreply, TWCV Exh. 18.) It is clear from the weight of the credible evidence that management did not learn of these activations through any pending petitions to deny. Liberty and its counsel responsible for filings had sufficient information on April 28, 1995, of at least 12 of the 19 locations of unauthorized activations to make timely disclosure to the Commission. Mr. Price, in consultation with Liberty's attorneys who were on the conference call of April 28, 1995, made a decision to withhold prompt disclosure to the Commission of those 12 activations. Liberty deliberately failed to disclose the activations in a timely manner in filings made with the Commission after Mr. Price admittedly knew of the violations and made no disclosures of the activations "as promptly as possible" under 1.65. Liberty's Irresolute Management 46. It was learned through the Audit Report that the 19 unauthorized activations in Table I were the tip of the iceberg. Since 1992, when Liberty first began using the OFS spectrum, Liberty prematurely activated an additional 74 paths. (TWCV Exh. 67, Chart 3 and Table II below. ) The aggregated 93 illegal activations account for about 75% of Liberty's total activations which means that Liberty operated illegally in three out of every four of its OFS activations. Even worse, Liberty initiated service on 36 of the prematurely operated paths, approximately 40%, prior to filing an application. (TWCV Exh. 67, Exh. B [Charts 2 and 3]). And during all that time until late April 1995, Liberty asserts that not one of its principals knew that any of the activations were made without Commission authorization notwithstanding the influx of inventories from Pepper & Corazzini. 47. Liberty's managerial method of licensing compliance involved sending memoranda but stopped short of active involvement. This total vacuum of concern for licensing permeated despite a Memorandum dated February 26, 1992, from Mr. Price to Mr. McKinnon which recognized a need for establishing some systematized accounting for the licensing of microwave paths. Mr. Price wrote to Mr. McKinnon: In order to accurately audit what licenses Liberty has requested and which have been provided, I have asked Joe Stern to analyze the procedure. ---. Once Joe [Stern] has audited our list of applications against the licenses received and set up a maintenance procedure going forward, we can bring the function into Liberty as an Engineering Department responsibility. We are clearly not ready for that step, so in the meantime I will ask Stern Communications to coordinate the function with Todd Parriott and advise us on a weekly basis in the form of a standardized report. [Emphasis added.] (L/B Exh. 3.) A copy of the Memorandum was directed to Mr. Parriott, an associate at Pepper & Corazzini who preceded Ms. Richter and Mr. Lehmkuhl. Mr. McKinnon was asked whether he had requested "Pepper & Corazzini to set up a procedure for Liberty for the handling of applications." He answered: "I do not remember having any type of procedure like that with Pepper & Corazzini." (McKinnon Depo. at Tr. 23.) Mr. Price's Memorandum of February 26, 1992, either went unnoticed or, as is more likely to be the case, was simply not implemented because no one cared. In eight days of hearings there was no explanation offered. 48. On April 20, 1993, less than one year after Mr. Stern turned over licensing responsibilities to Mr. Nourain, Ms. Jennifer Richter, who succeeded Mr. Todd Parriott as Liberty's licensing attorney, provided Liberty with very specific legal advice in a letter entitled "Construction and Operation of New Microwave Paths." (TWCV Exh. 5.) As to what prompted the letter, Ms. Richter testified that in conversations with Mr. Nourain she had become concerned about his lack of understanding of OFS licensing procedures. (Richter Tr. 2035-36, 2042.) She wrote in a letter to Mr. McKinnon (that ultimately reached Mr. Price) that the purpose of the letter was "to detail the parameters within which construction and operation of new paths and new stations is permissible." (TWCV Exh. 51.) Ms. Richter advised that equipment can be erected on a building prior to a grant but that new paths could not be activated until an authorization is granted. (Id.) Mr. Price acknowledges that he received the letter and that he read it (Price Tr. 2167.) But Mr. Price did nothing to counsel Mr. Nourain on Ms. Richter's advice. (Price Tr. 2168-69.) The Richter letter of April 1993 received the same treatment as the earlier Price memorandum of February 1992, i.e., no follow-up to assure authorized activations. 49. Rather than implementing Mr. Price's 1992 memorandum, Liberty's executives recklessly disassociated themselves entirely from any concern with whether or not microwave activations had been authorized. Executive offices were physically located in another part of Manhattan. Mr. Nourain was left to his own devices to construct Liberty's microwave network and was made to work long hours with little support. (Nourain, Tr. 612, 616-617, 681; Ontiveros, Tr. 1691.) Mr. Nourain merely assumed that either licenses or STAs were in place at the time of activation. (Nourain Depo. Tr. 74, 90.) Liberty was most anxious to activate paths as quickly as possible. Weekly meetings that were held in the executives' offices on Thursdays where only marketing results and new activations were reported. (Price, Tr. 1386, 1413, 1575; Ontiveros, Tr. 1691.) Mr. Nourain was never invited, never attended and licensing issues were never a topic of discussion. (Nourain Depo. 54, Price, Tr. 1361-62.) Misrepresentations In The Joint Motion Uncovered By The Audit Report 50. In his previous employment, Mr. Nourain had relied on in-house counsel for the legal filings with the Commission while he was concerned only with the technical engineering work. His duties expanded considerably at Liberty from his prior employment. While the timing and lack of Nourain's instruction at hiring was a constant refrain in this case, Liberty had misrepresented in the Joint Motion: Stern did not give Nourain a written memorandum detailing the application process. (Stern Depo/TWCV Exh. at 73.) (Joint Motion at 13.) But Mr. Stern had sent a memorandum to Mr. Nourain dated June 16, 1992, entitled "FCC Licensing - Transfer Of Information." (TWCV Exh 67, Exh. E.) Mr. Stern reported in the memorandum that he had reviewed the history of Liberty's licensing activities with Mr. Nourain and exchanged files so that Mr. Nourain had copies of all FCC licenses. The memorandum also warned that FCC licenses had been "lost at Liberty at least three times" and Mr. Stern urged that copies of licenses be consolidated. Mr. Stern gave very specific advice: As you are aware, coordination is not required for minor changes, but is required for adding frequencies. Similarly, modification filings for minor changes can be done by letter. Details should be checked with your attorney in each case. Mr. Stern reviewed with Mr. Nourain the "process of coordination and license applications," including the use of Comsearch for frequency interference/clearance and a recommendation to use a Washington based attorney for submittal and follow-up. Mr. Stern directed copies of his memorandum to Messrs. Price, McKinnon and Ontiveros. (TWCV Exh. 67, Exh. E.) Because of the lateness of Liberty's document production in this case, Mr. Stern was unable to be questioned on the memorandum. 51. By contrast, Liberty willingly disclosed early in the case the self-serving memorandum of Mr. Price that was written in the same time frame, February 26, 1992, instructing Mr. McKinnon on an internal licensing system to be implemented and coordinated with outside counsel. (L/B Exh. 2.) There was absolutely no justification for Liberty, the party advancing summary decision, to have withheld Mr. Stern's memorandum of June 1992, which contains the terms under which he passed the licensing duties to Mr. Nourain and which contradicts the unqualified factual representation that "Stern did not give Nourain a written memorandum detailing the application process." Notwithstanding Stern's written instructions, from 1992 to 1995, Liberty was engaged in a pattern of activating paths without awaiting Commission authorizations and in nearly one half of such instances, the paths were activated before licenses were filed. (TWCV Exh. 67, Exh. B (Charts 2, 3).) That did not happen merely because of an oversight in providing Nourain with instructions when he was hired. Mr. McKinnon's Role In Activations 52. Time Warner offered into evidence the McKinnon deposition of June 5, 1996 as TWCV Exh. 41 and his deposition of May 14, 1997 as TWCV Exh. 53. Mr. McKinnon was employed by Liberty from 1991 to May 1993 as Executive Vice President and Chief Executive Officer. (TWCV Exh. 41 at 5.) He was responsible for the company's day-to-day operations that included installation of cable and the activation of cable video in new buildings. (Id.) Mr. McKinnon and those who were involved in activations knew that they must wait until licenses were actually received from the Commission before activation. (TWCV Exh. 41 at 9.) Mr. McKinnon testified that during his tenure there was never a path activated without a Commission license. (TWCV Exh. 41 at 13.) He also testified that he had no knowledge of any unauthorized activations. (TWCV Exh 53 at 23.) However, the Audit Report reflects that during Mr. McKinnon's tenure at Liberty there were 23 paths illegally activated and 19 of those were activated before applications were filed. (TWCV Exh. 67, Exh. B at Chart 3.) Contrary to Mr. McKinnon's testimony, the Audit Report also concludes that "Mr. McKinnon was aware from Mr. Nourain that some buildings were being activated without a specific FCC license or STA." (TWCV Exh. 67 at 11-12.) Mr. McKinnon was held out by Liberty as a CEO which is equivalent to the position of "principal" in a corporate organization. 53. On February 26, 1992, Mr. McKinnon received Mr. Price's memorandum which was used by Liberty as evidence in this case and was included as an attachment to the Audit Report. (L/B Exh. 2; TWCV Exh. 67, Exh. D.) Mr. Price instructed Mr. McKinnon to focus on planning, installation and operation of the microwave system while leaving licensing to Mr. Stern and Mr. Parriott. (Id.) The Price memorandum is relied on by Liberty as evidence that Mr. Price had established a policy of accounting for licenses or STAs before activations. But Mr. McKinnon testified that he saw the "thrust of the memo" to be only an instruction to leave the expertise on engineering and FCC licensing to Mr. Stern. (TWCV Exh. 41 at 20.) There was no procedure established for Pepper & Corazzini to monitor licenses and the timing of activations. (TWCV Exh. 41 at 23-24.) Mr. McKinnon signed all FCC applications which he received in completed form from the law firms. (TWCV Exh. 41 at 27-28.) Mr. McKinnon testified that taking into account the lag times resulting from preinstallation sales and construction, "getting the FCC licenses --- wasn't a major issue for us." (TWCV Exh. 41 at 26.) But the actual receipt of licenses from the FCC was a "big deal" and the subject of much discussion at regular weekly meetings. (TWCV Exh. 41 at Tr. 29-30.) And there never were any assumptions made during Mr. McKinnon's tenure that after the passage of an estimated period of time there would automatically be authorizations. (TWCV Exh. 41 at Tr. 30-31.) The Audit Report concluded that "Mr. McKinnon was aware from Mr. Nourain that some buildings were being activated without a specific FCC license or STA." (TWCV Exh. 67, Audit Report at 11.) The Audit Report also found that Mr. McKinnon believed that until FCC applications were granted, Liberty's activations were covered by a Hughes Aircraft experimental authorization. (Id., Audit Report at 12.) Liberty's assertion that no principal of Liberty knew of a premature activation is rejected in light of the scope of activations while McKinnon was with Liberty and the admission as to Mr. McKinnon in the Audit Report. Management's Probable Knowledge Or Suspicion Of Unlawful Activations 54. Based on his faulty time-line assumptions, Mr. Nourain activated microwave services for Liberty without first obtaining Commission authorization. (Joint Motion at 15.) The Joint Movants describe a totally ineffective, noncompliant and disassociated protocol that was used by Liberty with disastrous results: (1) Mr. Nourain informed no one within Liberty when the Comsearch clearance process had been completed; (2) Pepper & Corazzini was not receiving copies of the grants from the Commission; (3) Mr. Nourain did not advise Pepper & Corazzini when he was activating a building; (4) Pepper & Corazzini never confirmed with Liberty that there were no unauthorized activations; and (5) no one knew at any given time the progress of the licensing procedure from frequency coordination through application to Liberty's commencement of service. (Joint Motion at 14-15.) Until April 26-27, 1995, when the unauthorized activations were acknowledged by Mr. Price, there was a reckless disregard on the part of Mr. Price by insulating himself from all available information about premature activa- tions and by ducking the written warning of Ms. Richter. This environment of denial created by Mr. Price further solidified Mr. Nourain's belief that he was doing the company's work by activating paths without the actual receipt of authorizations. He testified that "we decided" to activate customers before licensing was completed and with FCC licenses pending and the customer contracts in place "[t]he business has to go up [but] I didn't decide it." (Nourain Depo. Tr. 75-76.) These conclusions of Mr. Nourain, the person who was closest to the activations, are corroborated by information provided by Mr. Nourain to the auditing attorneys that he "believes that he told Mr. Price that the Company was rushing and might not get approvals on time." (TWCV Exh. 67, Audit Report at 10) and supported by the evidence of systematic activation since 1992 of 93 paths without authorization. See Table II below. Activations Were Highly Labor Intensive And Were Not Made In A Vacuum 55. The activations required receiving approval from management. There were three engineers involved: microwave engineer (Nourain); structural engineer (Rosenwasser & Grossman); and construction engineer (National Microwave). Mr. Nourain designed the system to assure that energy was not drained from one path to another as new paths were added to a transmitter. Drawings were prepared by Mr. Nourain and furnished to the structural and construction engineers who then prepared their own designs. (Nourain, Tr. 672-677.) From the date that Mr. Nourain calculated that he would have an approval, it would take from one month to three months to complete all external engineering needed for activation. (Nourain, Tr. 677.) All engineering was to have been completed by Nourain's estimated authorization date. (Nourain, Tr. 678.) The engineering cost of an activation was estimated at $25,000 per path. (Nourain, Tr. 680.) This process was extremely labor intensive for Mr. Nourain who considered himself to have been overworked, without help, up to 60 hours per week. (Nourain, Tr. 681.) Mr. Nourain did not activate buildings in a vacuum without receiving direction from Liberty's principals. Coordination of activations with marketing was paramount. (Nourain, Tr. 684.) Activation decisions were made at weekly meetings of Liberty's marketing executives. These executives told Mr. Nourain when to activate. Someone at the executive level (Price would be a prime candidate) must have known of Mr. Nourain's licensing methodology because Nourain provided essential input to the activation decisions that were being made at the executive level. Otherwise, Liberty was acting in total denial of licensing and was treating the Commission as a regulatory myth. Nourain's Disassociated Modus Operandi 56. Mr. Nourain was encouraged by senior management to activate paths as customers were aggressively signed up for Liberty's video services. (Nourain Depo. Tr. 75-76; Price, Tr. 1397-99; and TWCV Exh. 67, Audit Report at 12.) By his own estimate, Mr. Nourain spent only 3% of his time on licensing. (Nourain, Tr. 613.) This left 97% of his time to plot new paths and activate them. In such a work environment that was created, permitted and unsupervised by senior management, Mr. Nourain was relying on his own seat-of- the-pants time estimates with disastrous results. Outside counsel saw the risks at an early stage. Shortly after Mr. Nourain was hired, Ms. Richter foresaw problems based on contemporaneous licensing experiences and conversations with Mr. Nourain. She wrote in April 1993 to alert Liberty's senior management in the clearest terms of potential licensing concerns while simultaneously preparing a carefully prepared letter that was intended to protect Pepper & Corazzini. (TWCV Exh 51 and Richter, Tr. 2041, 1051.) 57. Notwithstanding Ms. Richter's categorical advice and warning, Mr. Nourain rationalized an unreal time line based on how long he estimated it would take Mr. Lehmkuhl to apply for and act on license and STA applications. The application process began with Mr. Nourain contacting Comsearch with location coordinates. Comsearch would research the data for interference with existing stations and forward a prior coordination notice to Mr. Lehmkuhl. (Nourain, Tr. 621; Lehmkuhl, Tr.1028, 1030.) There was a thirty day notification period to allow existing licensees to object to any interferences. (Lehmkuhl, Tr. 1031.) When Comsearch alerted Mr. Lehmkuhl through a supplemental showing that it had completed its interference study and that there were no objections, Mr. Lehmkuhl would prepare a license application. (Nourain, Tr. 621, 628, 694-95; Lehmkuhl, Tr. 1032, 1077.) Mr. Nourain expected that the application would be filed as soon as possible after the Comsearch clearance was obtained. (Nourain, Tr. 630.) Mr. Lehmkuhl coordinated with Mr. Nourain as he prepared the application but only to assure accuracy of the technical data. (Lehmkuhl, Tr. 1030-31, 1074-75.) To further expedite the process, Pepper & Corazzini arranged to receive from time to time presigned blank application forms from Mr. Nourain. (Lehmkuhl, Tr. 1033- 34, 1080, 1099; Barr, Tr. 1821; Nourain, 629, 631-632.) Mr. Lehmkuhl would file anytime up to two weeks of receipt of the final Comsearch clearance report. (Lehmkuhl, Tr. 1067.) In 1995, Mr. Nourain assumed, without any verification, that Mr. Lehmkuhl simultaneously filed STA requests with license applications. (Nourain, Tr. 645.) Mr. Nourain also assumed (without stating the basis for the assumption) that the Bureau would act on the applications for STA and license "within a few days, a week -- a week or so." (Nourain, Tr. 645.) Mr. Nourain testified that he acted "under the assumption that all these STAs were granted." (Id.) (Nourain, Tr. 641.) Mr. Barr, Mr. Lehmkuhl and Ms. Richter have testified that not one of them knew (and evidently never asked) about Mr. Nourain's compliance methodology. (Barr, Tr. 1888; Lehmkuhl, Tr. 1331-32; Richter, Tr. 2077-78.) 58. Mr. Nourain testified that never would a path be activated without a Commission authorization. (Tr. 2282.) But he admitted that he never actually knew whether he had an authorization in hand prior to activating a path. (Nourain, Tr. 2242-43; 2324-28.) Ms. Richter advised Mr. Nourain in her letter that it takes about 30 days for Mr. Nourain, Comsearch and Ms. Richter to prepare an application and it was taking from 60 to 120 days to process the applications at the Commission. (TWCV Exh. 51.) Mr. Price also was made aware of those time estimates when he received and read his copy of the Richter letter. Yet despite the clarification of the preparation and processing times and the warning in Ms. Richter's letter about a concern she had for Mr. Nourain's compliance, there was never any monitoring of Mr. Nourain's activations by Liberty's management. The fact of the highly significant Richter letter and the advice that she had imparted to Mr. Price well before April 1995 was never disclosed in initial discovery or explained in the Joint Motion, a particularly damaging omission by the side that was assigned the burden of going forward and the burden of proof. 59. The evidence of record shows that before and since Ms. Richter's 1993 warning, Mr. Nourain had been illegally activating microwave paths. Shortly after Mr. Nourain's discussions with Ms. Richter that prompted Richter's letter (TWCV Exh. 51), Liberty activated four microwave facilities prior to or concurrent with the filing of applications. As an illustration, Liberty's records show that it began to install customers at 33 W. 67th Street in June 1993, with installation completed by June 30, 1993. (TWCV Exh. 14.) The application to add 33 W. 67th Street as a new path from One Lincoln Plaza was signed on June 11, 1993. (TWCV Exh. 66.) The application reflects a filing stamp of June 16, 1993. (TWCV Exh. 66.) Therefore, given the thirty day notice requirement, an application filed on June 16, 1993, could not have been granted in June 1993 when the path was activated. Similarly, installation of customers at 69th Street began in May 1993 and application to add a path to that address was filed on May 21, 1993. (TWCV Exh. 14 Att. E.) Installation of customers at 55th Street commenced in May 1993, and the application to add paths was filed on May 21, 1993. (TWCV Exh. 14 Att. F.) An installation of customers at the Sutton Place address began in June 1993 and the application to add a path was filed on June 16, 1993. (TWCV Exh. 14 Att. G.) Mr. Nourain never verified that he had an authorization in hand at the time of the activations. (Nourain, Tr. 2242-43; 2324-28.) Yet at that time, Ms. Richter was advising Mr. Nourain that he needed a Commission authorizations in hand before activating. (Richter, Tr. 2078.) Mr. Nourain never told Ms. Richter that he was assuming authorizations based on his estimated time line and Ms. Richter never advised using assumptions in lieu of in-hand authorizations. (Richter, Tr. 2077-78.) But it is evident from the tenor of her letter of April 1993 that she saw a serious risk of premature activating of paths. 60. Mr. Nourain activated without authorizations even after he had read Ms. Richter's letter and brought it to Mr. Price's attention. (TWCV Exh. 51: "Peter: pls. review and advise. BN 4/28/93.") Mr. Nourain testified that he had brought the letter to his attention because he wanted Mr. Price to know about the licensing process. (Nourain, Tr. 2272.) Mr. Nourain also wanted Mr. Price to be aware of the Commission's application timelines and wanted to inform Mr. Price that STAs would be filed. (Nourain, Tr. 2273-74; 2331-32.) Clearly, Mr. Nourain wanted Mr. Price to know about all of the concerns of counsel and he wanted advice on how he should proceed. Mr. Price received and read the letter. He called Ms. Richter but they only talked about STAs and, incredibly, nothing was said about activation compliance; that subject simply was not discussed. (Richter, Tr. 2062; Price, Tr. 2170, 2191, 2193-94, 2199; TWCV Exh. 61.) Mr. Price told Ms. Richter in that conversation to file STAs as a matter of course when applications for licenses were filed. (Richter, Tr. 2062.) Ms. Richter followed Mr. Price's instruction and confirmed her utilization of STAs in a letter to Mr. Price dated May 25, 1993. (TWCV Exh. 62; Richter, Tr. 2062-63.) According to Ms. Richter, no one at Liberty expressed any concern about inadvertent activation. (Richter, Tr. 2047.) The evidence of activations in Table I and Table II establish that even after receipt of the Richter letter, Mr. Nourain steadfastly continued his unauthorized activations. Price Was Ignoring The Obvious 61. Mr. Price knew full well the duty of a licensee to comply fully with the Act and Commission regulations and the concomitant duty to be at all times truthful, candid and forthcoming in dealing with the Commission. He had meaningful information at his fingertips since 1993 which he either ignored or avoided. He received data through weekly internal Installation Progress Reports to compare with Mr. Lehmkuhl's Memorandum of February 1995. Mr. Price called for Installation Progress Reports on February 23, 1995 (Joint Oppositions Supplemental Exh. 1) and again on March 2, 1995 (Joint Opposition Supplemental Exh. 2). In both Reports six buildings that are identified in the HDO as having unauthorized paths reflect their "status" as "complete." There was no separate line on the Report that identified the status of Commission applications or license grants. On August 1, 1996, Mr. Price was deposed on the contents of his two Reports. He testified that the word "complete" meant the completion of whatever phase of installation the building happened to be and it did not mean that full installation had been completed. (Price, Tr. 168-169.) When presented with the self-evident contradiction between Mr. Lehmkuhl's memorandum of February 24, 1995, which showed that an application for 433 E. 56th was "pending," and the Installation Progress Report of February 23, 1995, which reported the status of that project to be "complete," Mr. Price testified that he never made that comparison and that it was unlikely that anyone at Liberty would have made such a comparison before May 1995 (Price, Tr. 174-178.) Such evidence establishes that Mr. Price was wilfully and recklessly failing to utilize available information that would readily detect premature activations as early as April 1993. A Pattern Of Premature Activations That Existed Well Before April 1995 Put Price On Notice Of Nourain's Methodology 62. The full scope of the unauthorized activations was not known in this proceeding until September 1997, when Liberty finally produced its long awaited Audit Report. (TWCV Exh. 67.) On August 14, 1995, the Commission had been advised: As previously disclosed to the Commission, 19 paths are currently unlicensed but have all received prior coordination. In addition, Liberty's counsel's investigation revealed that, at various times, transmission over other paths was commenced prior to receiving specific FCC authorization; all these paths now have all necessary licenses. (TWCV Exh. 67 - Audit Report's forwarding letter of Liberty's counsel.) The investigation was a review of "documentation related to the initiation and operation of service to each of the 126 buildings served by 18 GHz connection." (TWCV Exh. 67 at 3.) Based on path activation information on related charts, the Report concludes that "numerous instances occurred in which microwave path service was initiated before receiving specific FCC authorization [and it] appears that this occurred numerous times from 1992 through the fall of 1994 although each of those paths is now authorized by the Commission." (Id. at 4.) 63. The data show that from June 1992 to August 1995, there were 93 paths activated without authorization. (TWCV Exh. 67, Exh. B [Charts 2 and 3].) Table II set forth below was derived from Charts 2 and 3 of the Audit Report to show that out of the 74 unauthorized activations that were not specified in the HDO, there were 32 activations before an application even was filed with the Commission. The sheer weight of this data show that on May 17, 1995, Liberty misrepresented itself to the Commission: [i]t has been Liberty's pattern and practice to await a grant of either a pending application or request for STA prior to making a microwave path operational. (TWCV Exh. 18 at 3.) Liberty's compiled transactional data show a pattern of just the opposite. TABLE II Activation Application Months/Days Address Date Filed Hiatus 35 East 85th Street 7/18/94 7/17/95 12 Liberty Terrace/380 Rector Place 10/12/94 7/17/95 9 Andover/1675 York Avenue 6/2/92 7/16/92 1.5 345 East 52nd Street 7/28/92 11/6/92 4 420 East 51st Street 6/25/92 10/30/92 4 Random House/201 East 50th Street 10/1/92 10/30/92 29 days Phoenix/160 East 65th Street 9/10/92 10/30/92 1 125 West 55th Street 9/1/92 10/30/92 1.5 45 East 72nd Street 9/25/92 10/30/92 1 Parker Meridien Hotel 9/1/92 10/30/92 1.5 Henderson House/535 East 86th St. 10/5/92 1/7/93 3 Lincoln Plaza/44 West 62nd Street 10/14/92 10/30/92 16 days 19 East 88th Street 12/21/92 1/8/93 18 days 111 East 30th Street 12/21/92 1/8/93 18 days 175 East 74th Street 3/9/93 4/1/93 1 812 Fifth Avenue 3/9/93 4/1/93 1 400 East 59th Street 2/11/93 4/1/93 2 510 East 86th Street 2/1/93 4/1/93 2 90 Riverside Drive 3/16/93 4/1/93 16 days 108 East 82nd Street 6/20/94 7/15/94 1 302 East 88th Street 4/28/93 5/13/93 15 days 911 Park Avenue 4/7/93 5/13/93 1 200 East 89 Street 8/23/93 11/22/93 3 333 East 57th Street 12/27/93 1/12/94 16 1001 Fifth Avenue 1/4/94 1/12/94 8 days 140 East 72nd Street 3/14/94 3/22/94 8 days 211 East 51st Street 5/3/94 7/15/94 2 860 U.N. Plaza 4/18/94 7/15/94 3 Riva Pointe/600 Harbor Boulevard 8/10/94 8/24/94 14 days 142 East 71st Street 8/3/94 8/25/94 22 days 71 East 77th Street 8/10/94 8/25/94 15 days Park Central Hotel/870 Seventh Ave. 7/1/94 8/24/94 1.5 (Compiled from Audit Report, Exh. B, Charts 2-3, TWCV Exh. 67.) 64. An analysis of Liberty's pattern and practices in Table II concludes that from June 1992 to October 1994, there was an average hiatus between activations and applications of approximately 2.43 months. (See Table II above.) These are significant time lags between activations and filings that were occurring over two years. It cannot be accepted that all of these time lags could have been missed, particularly during the one year period (April 1992 - May 1993) when Mr. Nourain was being supervised by Mr. McKinnon, Liberty's Executive Vice- President and Chief Operating Officer. (McKinnon Depo. 6/5/96 at 27-30.) The inference that some principal at Liberty must have known or suspected before April 1995 is amply supported by the weekly Thursday meetings held to discuss planned installations and activations that were attended by Messrs. Howard and Edward Milstein, Mr. Price, and, until May 1993, Mr. McKinnon. (TWCV Exh. 14, E. Milstein, Tr. 1618; Price, Tr. 1441-42.) The inferences of knowledge is further supported by the intensity and costs incident to path activation as described above. The information also was ascertainable through the periodic licensing inventories that listed the status of the applications and the activations. (TWCV Exhs. 34, 58, 59; L/B Exh. 1.) The only evidence offered to negate knowledge are self-serving denials of Liberty's principals, agents and employees. In view of the pattern of premature activations detailed in the Audit Report and the doubt expressed by the Bureau about Mr. Price's credibility, Mr. Price's testimony is not sufficiently persuasive to carry the motion. His testimony that he knew or suspected no illegal activations notwithstanding the warning of Ms. Richter, the flow of inventory information that was sent to him and the weekly activation meetings will not be accepted as reliable evidence. It cannot be found as a fact on this record that Mr. Price never knew of or suspected any of the 93 unauthorized activations before late April 1995. Business Records Provided Sufficient Warnings And Notice Of Nourain's Activations 65. In March 1993, Ms. Richter began to compile an inventory of Liberty's microwave licenses. Mr. Nourain knew of her work. (Richter, Tr. 2014-15; Nourain, Tr. 2216.) A billing entry for Ms. Richter's services for Liberty on March 16, 1993, reflected "work on license inventory." (TWCV Exh. 60.) Ms. Richter identified a telecopier message to Mr. Nourain of even date that recorded the forwarding of a draft inventory of licenses. (TWCV Exh. 58.) The inventory listed paths which were already licensed or for which an application was pending. (Richter, Tr. 2016-17; TWCV Exh. 58.) On March 16, 1993, Ms. Richter and Mr. Nourain were discussing which paths to delete as inactive and Ms. Richter wanted Mr. Nourain to review the inventory for accuracy. (Richter, Tr. 2017-19.) Mr. Nourain was able to ascertain which paths were no longer necessary by reviewing the licenses. (Nourain, Tr. 2221-22; 2224-26.) Therefore, as early as 1993, Mr. Nourain was receiving detailed reports from Ms. Richter from which it easily could be determined that activations were being made prematurely. 66. By a simple comparison of Liberty business records with Ms. Richter's draft inventory of March 16, 1993, which she asked Mr. Nourain to review, it is evident that addresses for customer installation at several locations (TWCV Exh. 14) were not identified as licensed paths (TWCV Exh. 58). For example, business records show installation/ activation "complete" in March - April 1993 for paths at 175 E 74th St., 812 5th Avenue and 400 E 59th Street. (TWCV Exh. 14 at 5.) The Audit Report shows that these paths were activated one month before applications were filed. (TWCV Exh. 67, Exh. B, Chart 3 and Table II above.) Two years before the Report, Ms. Richter's draft inventory of licensed activations that was sent to Mr. Nourain on March 16, 1993 identified these addresses as "future paths." (TWCV Exh. 58 at 16.) Ms. Richter testified that these paths were identified in her finalized inventory of April 6, 1993, as non-licensed paths which had applications pending. (TWCV Exh. 3 at 13; Richter, Tr. 2073-75.) It is apparent from the findings of the Audit Report and by reference to Liberty's business records that these three paths were activated in March 1993, before applications were filed. (TWCV Exh. 67, Exh. B, Chart 3; TWCV Exh. 3 at 13.) There even was a "system diagram" attached to the Richter draft inventory that graphically identified the paths as "future" paths. (TWCV Exh. 58 at 16.) Anyone at Liberty concerned with activating paths who looked reasonably close at these records would have been warned of premature activations or, at least would have suspected that there were questions that required inquiry at the source. Data That Was Furnished To McKinnon That Could Have Exposed Unlawful Activations 67. On April 6, 1993, Ms. Richter forwarded to Mr. McKinnon, Mr. Nourain and Mr. Michael Roth of Comsearch a finalized "inventory of 18 GHz authorizations currently licensed to Liberty Cable Co." (TWCV Exh. 3.) In a companion letter to Mr. McKinnon, with copies to Mr. Nourain and Mr. Roth, Ms. Richter advised: The new inventory was prepared in consultation with Behrooz [Nourain] and Michael Roth of Comsearch. I have already found that the inventory greatly increases the efficiency with which I prepare Liberty's applications, and I trust it will have the same effect on Behrooz and Mr. Roth. Indeed, the mere act of preparing the inventory opened up a dialogue among the three of us that brought about a distinctly greater understanding of the Liberty system. Behrooz and I were able to scrutinize the licenses as originally authorized, as opposed to how they have developed, and determine which paths need to be moved and which should be deleted. The inventory will be updated with each new application filed on Liberty's behalf, and I will periodically provide updated copies to Behrooz, Mr. Roth and yourself. In this way we can ensure that everyone has a full understanding of what Liberty is trying to accomplish, which should increase efficiency and eliminate guesswork. (TWCV Exh. 59.) Mr. McKinnon testified on May 14, 1997, that he had never received Ms. Richter's inventory. (TWCV Exh. 53 at Tr. 14-15.) Mr. McKinnon recalls receiving the cover letter to the inventory (TWCV Exh.59) which he assumed to be merely a commendation of Mr. Nourain's work. (TWCV Exh. 53 at Tr. 17-18.) The cover letter of April 6, 1993, did not refresh his recollection of having received the inventory which was an enclosure. (Id.) Mr. McKinnon's inability or unwillingness to recall a key document that was directed to him by counsel and in which he should have been extremely interested raises doubt about his credibility and reliability as a source of evidence. 68. In addition to avoiding significant data, the Audit Report concluded that Mr. McKinnon mistakenly believed that until FCC applications were granted, Liberty's operations were covered by an experimental authorization of Hughes Aircraft. Mr. Price shared that belief. (TWCV Exh. 67 at 12.) On April 20, 1993, Ms. Richter had confirmed that there was a history of activations under that test authority but warned against its use for commercial service: If you have constructed a new station or new path and want to test the equipment, you can request the use of Hughes' experimental License. I believe Liberty has used the Experimental License in the past. As you may know, some private cable operators were using Hughes' Experimental License to serve subscribers while their station applications were pending. Hughes feels this behavior is in contravention of its authority under the license, and for this reason, Hughes is reluctant to permit operators the use of the Experimental License except in rare circumstances. If you would like to obtain the use of hughes' Experimental License for specific paths, we should discuss it further. (TWCV Exh. 51.) But neither Mr. McKinnon nor Mr. Price knew whether any preauthorization activations were made under the Hughes testing authority. Both understood that no fees could be charged for programming under testing authority. (TWCV Exh. 67 at 12-13.) Mr. Stern had earlier advised Messrs. Price and McKinnon in January 1992, that Liberty could not provide service to customers under the test authority. (TWCV Exh. 67, Exh. 3 at 3-4.) There has been no claim asserted by Liberty that any of the 19 paths had been activated in reliance on the testing authority. However, when Mr. McKinnon was in charge of operations there were 23 paths illegally activated. (TWCV Exh. 67, Exh. B, Chart 3.) None of those 23 activations were shown to be related to the Hughes testing authority and there is no evidence of premature activations that were erroneously made as testing services provided without charge. Price Ignored Data And Rejected Ms. Richter's Prescient Warning 69. On April 3 and April 13, 1993, Ms. Richter had telephone discussions with Mr. Nourain on the subject of the "construction and operation of paths that [had] not been granted" (TWCV Exh. 61; Richter, Tr. 2037-39.) These conversations prompted Ms. Richter to write her letter of April 20, 1993, to Mr. McKinnon in which she advised that the conversations between her and Mr. Nourain on "when it is permissible for Liberty to construct and operate new microwave paths and stations, and when it is not" gave both persons "pause." (TWCV Exh. 51.) The letter reflects a need felt by Ms. Richter to advise in writing that the operation of microwave paths is "only permissible when the FCC has granted [Liberty] authorization to do so." (Id.) Mr. McKinnon testified in his deposition that he had never received the April 20 letter because he was preparing to leave Liberty at that time. (TWCV Exh. 53 at Tr. 21-22.) Mr. Nourain sent a copy of the letter to Mr. Price with a notation on the copy: "Peter: Pls. review and advise. B.N. 4/28/93." (Id.) The "pause" experienced by Ms. Richter can be discerned readily from the above analysis of her contemporaneous inventory that she had just completed and forwarded to Liberty of which an elemental review would show the probability, if not the certainty, that those paths installed at 175 E. 74th Street, 812 Fifth Avenue and 400 E. 59th Street had been activated before applications were filed and before authorizations were granted. Ms. Richter testified that she had hoped that her letter "would concern somebody" and that she wanted to receive a reaction from a responsible person at Liberty. (Richter, Tr. 2046.) That would be expected since Ms. Richter was expressing clearly her concern that Mr. Nourain's confusion could lead to activation of an unauthorized path. (Richter, Tr. 2035, 2048.) She further testified that no one at Liberty expressed a reciprocal concern to her about inadvertent activation. (Richter, Tr. 2047.) Mr. Nourain testified that he knew that Mr. McKinnon was about to leave the company in May 1993 and he [Mr. Nourain] wanted Mr. Price to know about the licensing situation. Mr. Nourain also wanted Mr. Price to be informed about the timeliness spelled out by Ms. Richter in her letter and to be aware that STAs would be filed by Liberty in order to overcome the delay that Liberty believed it was experiencing in receiving authorizations. (Nourain, Tr. 2273-74; 2331-32.) An officer of a corporate licensee in Mr. Price's position would reasonably conclude that there was a serious potential problem on premature activations to be investigated, corrected and monitored. (Nourain, Tr. 2272.) 70. Ms. Richter had used indirect (but perfectly clear) language in her letter which Mr. Price believes provides cover for his strategy of denial and avoidance. Mr. Price was asked to recount his conversations with Ms. Richter about her "pause" as communicated in her April 20 letter. Mr. Price's testimony in open court was vague and at times evasive. He began by stating that due to recent events (assumedly this proceeding) the letter "probably crossed my desk." (Price, Tr. 2167.) He testified that it was rare for him to receive documents from Mr. Nourain. (Price, Tr. 2168-69.) But he did have a recollection of having read the letter. (Price, Tr. 2187.) On April 28, 1993, the same date that Mr. Nourain forwarded a copy, Mr. Price spoke on the telephone with Ms. Richter. (Price, Tr. 2170; TWCV Exh. 61.) Mr. Price said that his focus was on that portion of the letter which advised on using STAs and that he concluded from reading the letter that it was concerned with timeliness in filing STAs. (Price, Tr. 2171.) Mr. Price testified in the impersonal third person that "operations would deal with counsel," the timeliness of STA applications and authorizations. (Price, Tr. 2172.) It was not a practice or procedure for the up-town operations group (Messrs. Nourain and Ontiveros) to report to Mr. Price as the STA authorizations were obtained for the effected paths. (Price, Tr. 2172.) In the absence of such reporting, Mr. Price tried to avoid responsibility by keeping himself out of the authorization/activation loop. He testified that Ms. Richter's "pause" which was communicated in her letter did not give him any concern that Mr. Nourain might have acted or might later act in a manner that was inconsistent with Commission rules. (Price, Tr. 2173.) Mr. Price testified that in view of Mr. McKinnon's imminent departure in May 1993, he understood or believed that in forwarding the letter with a notation to please advise, Mr. Nourain was merely seeking approval of the STA procedures that were outlined in the letter. (Price, Tr. 2179.) Yet Mr. Price did not even recall speaking with Mr. Nourain in April- May 1993 about STAs. (Price, Tr. 2180.) Nor does he recall sending a copy of the April 20 letter to Messrs. Howard or Edward Milstein because Mr. Price "didn't think it was anything exceptional that required yet another step." (Price, Tr. 2188.) The explanation of Mr. Price is a response to only half of the Richter letter. Mr. Price testified on behalf of Liberty that even though he was a senior corporate executive, he was merely routinely approving counsel's procedures for filing STA requests and nothing more. (Price, Tr. 2190.) Mr. Price never gave Mr. Nourain advice on any aspect of the letter. He believed that by speaking with Ms. Richter and approving the filing of STAs he had fulfilled all that was required of him as Liberty's President and that he was being responsive to Mr. Nourain without acknowledging and addressing the request for advice. (Price, Tr. 2191-92.) Mr. Price's rationale, if believed, was not a mere act of simple negligence. From his testimony it must be concluded that Mr. Price intentionally or recklessly avoided the obvious meaning and the dire implications of Ms. Richter's "pause" and Mr. Nourain's "please advise". 71. In addition to offering an explanation that was lacking credibility, Mr. Price was evasive in answering questions about the "pause" experienced by Ms. Richter. When specifically directed to that portion of the letter, Mr. Price answered that it was the detailed information contained in the letter's several paragraphs that gave the pause: " --- the timeliness of getting the licenses and how we would ensure that we would not cause any delay to the buildings we had made commitments to." He was exclusively focused on business results and not concerned with licensing compliance: I presumed that the whole letter was explaining what gave her pause and what she thought we should do to give her more confidence that we should get what we needed on a timely basis. [Emphasis added.] (Price, Tr. 2193.) When asked what he said in his conversation with Ms. Richter to get clarification on the "pause" paragraph of the letter (a paragraph which makes no mention of STAs) Mr. Price answered: "she didn't say in this letter, nor do I gather anything in here that talks about unauthorized activation." (Price, Tr. 2194.) Mr. Price's presumption was that if Ms. Richter had unauthorized activations in mind she would have come right out and stated that or that she would have specifically confronted Mr. Price about it. (Price, Tr. 2194.) Mr. Price was adamant on the subject: I did not know at that time, in April 1993, that we were operating paths or activating paths in an unauthorized manner. I did not have conversations with Behrooz Nourain on the subject. I didn't gather from this letter at all that I should have conversations with him that, even hinted at it, after writing to me and talking to me I would have done something about it. But, your Honor, I did not know. (Price, Tr. 2195.) [Emphasis added.] Counsel for Liberty vigorously objected to the line of questioning and in fairness to the witness, the Presiding Judge left the subject with Mr. Price's unsatisfactory answer. (Tr. 2196-98.) It is unsatisfactory because that answer overlooks the fact that the subject of Mr. Nourain's understanding of the timeliness for obtaining authorization before activations had been questioned by Ms. Richter in the first paragraph of her letter and that Mr. Nourain had specifically asked -- not just "hinted" -- for, "advice" on the subject from Mr. Price, Liberty's President. With a deliberate or reckless abandonment of any concern for licensing, Mr. Price left Mr. Nourain without any feedback or inquiry about his (Mr. Nourain's) concerns or procedures. 72. Mr. Price was asked to focus on the meaningful first paragraph of Ms. Richter's letter which stated: In order to ensure that everything Liberty does is in strict accordance with the rules, and to ensure that your competitors are given no ammunition against you, I am writing this letter to detail the parameters within which construction and operation of new paths and new stations is permissible. (TWCV Exh. 51.) Mr. Price could not recall discussing with Ms. Richter what it was that would give ammunition to competitors. (Price, Tr. 2201.) Mr. Price concluded that the April 20 letter did not provide him with any new information that he did not already possess and that the first paragraph of the letter did not set off any mental alarms. (Price, Tr. 2206.) Ms. Richter's dire message was warning Mr. Price that there would be illegal activations under the system of checks and balances used at Liberty. It was not until April 1995, two years after Ms. Richter's warning and following a pattern of multiple premature activations, that Mr. Price admitted to having acquired an actual knowledge of unauthorized activations. Liberty's Damage Control: Avoid Fully Informing And Stonewall This Proceeding 73. Mr. Nourain testified that before April 26, 1995, he became informed by an internal communication, believed to be a fax message, that there had been unauthorized activations. (Nourain, Tr. 645.) Mr. Nourain then prepared his April 26 memorandum after he had spoken with Mr. E. Milstein and Mr. Price. (Nourain, Tr. 819, 821; TWCV Exh. 35.) Mr. Price testified on direct that when he saw Mr. Nourain's memorandum he concluded that "there was a gap there between the turning on of service and the obtaining of authority." (Price, Tr. 1363-64.) "[I]t didn't take great genius" to determine from Mr. Nourain's memorandum that there had been unauthorized service. (Price, Tr. 1373, 1374-75.) This information was so important that Mr. Price discussed it with multiple outside counsel in a conference call that had earlier been scheduled by Mr. Price for the late afternoon of April 27, 1995, allegedly to discuss a Time Warner petition to deny. (Price, Tr. 1365; 1372; 1376.) But at that time Time Warner had not yet focused on or specified unauthorized activations and so the reason for the call was more likely to discuss a strategy of disclosure with multiple counsel. By the time Mr. Price made his conference call to the attorneys, Mr. Barr had received a copy of Mr. Nourain's memorandum. (Barr, Tr. 1847-48, 1858, 1860, 1943.) It was disclosed in the hearing for the first time that there had been a decision made in that conference call to not immediately inform the Commission of the activations. The reason given was an acknowledged fear of Time Warner's reaction to what Liberty would disclose, and embarrassment to the company for not being able to explain how the illegal activations had occurred. (Price, Tr. 1368-69; 1383.) Evidently, it was not considered an option to report immediately to the Commission what was known at the time, with a promise to update details as they were learned. Facts or justification about the decision of April 27 to defer notification to the Commission was not mentioned anywhere in the Joint Motion. The Joint Motion asserts, inaccurately and misleadingly, that discovery of the unauthorized activations was due to "ongoing litigation over Time Warner's petition to deny." (Joint Motion at 17.) But based on the record after hearing the testimony, it must be concluded that the first discovery of the activations by Liberty's executives officers was due to the Nourain memorandum of April 26 which, among other decisionally significant documents, was inexplicably and unjustifiably omitted from the Joint Motion. 74. On April 27, 1995, when he was deciding to defer informing the Commission of the known unauthorized activations, Mr. Price also was seeking legal advice in the conference call, on when and how he should contact subordinate employees to determine facts. (Price, Tr. 1372-73.) While considering the next steps to take, on the following Monday, Mr. Price received Mr. Lehmkuhl's inventory dated April 28, 1995, that had been requested by Mr. Nourain and which was addressed to Mr. Price and Mr. Nourain. (TWCV Exh. 34.) This was another key document that was neither produced in the initial round of discovery nor discussed in the Joint Motion. The significance of Mr. Lehmkuhl's information was recognized by Mr. Price as being on a par with Mr. Nourain's earlier memorandum. Mr. Price noted that by placing Mr. Lehmkuhl's analysis of April 28 together with Mr. Nourain's report of April 26 confirmed not only that Time Warner's petitions were holding up the grants of the licenses but also that paths had been activated without authorization. (Price, Tr. 1363, 1386.) Yet despite such clear understanding of the facts by Mr. Price in late April, none of the information about the unlawful activations that were known to Mr. Price, to Mr. Lehmkuhl and to Mr. Barr were disclosed in the multiple May 4 STA applications which were represented to be in "technical order." (TWCV Exh. 17.) 75. On May 4, 1995, Liberty filed 14 applications for STAs that related to the paths that were operating without authorization. (See Appendix A to HDO.) There was no disclosure in the applications of the fact that the activations of the paths were unauthorized. (TWCV Exh. 17.) On May 5, 1995, Time Warner reported two more unauthorized activation sites. On May 17, 1995, Liberty admitted to activating the additional paths. (TWCV Exh. 18.) But an STA request filed two days later on May 19, 1995, relating to a path at 2727 Palisades Avenue, also failed to disclose the unauthorized activations that were known to Liberty at that time. (TWCV Exh. 18 at 2.) An internal investigation was not commenced by Liberty until June 1995. (L/B Exh. 4.) On July 13, 1995, Mr. Price ordered a further status report and discovered four more instances of premature activations. (TWCV Exh. 23.) On July 17, 1995, Liberty filed applications for licenses for the errant paths. (TWCV Exh. 25.) On July 25, 1995, Liberty followed up by filing requests for STAs in which the premature activations were disclosed. (TWCV Exh. 27.) Joint Motion at 20. Liberty suspended billings for the paths that were prematurely activated until the licensing matter was resolved by the Commission. Messrs. Price, Ontiveros and Nourain were reprimanded (no bonuses) and an after-the-fact compliance program promising to observe and verify was adopted. Liberty designated Mr. Andrew Berkman ("Berkman"), its in-house counsel, as Compliance Officer to certify to an FCC license check list. Mr. Berkman is to carry out the written procedures of not approving commencement of a service until he has verified that the Commission has stamped "granted" on a pending application. (TWCV Exh. 67.) Mr. Price, as Bartholdi's President, no longer supervises Mr. Nourain who now is Freedom's employee. Delayed And Misleading Disclosures "Owing To The Seriousness Of The Situation" 76. On April 28, 1995, Mr. Lehmkuhl advised Liberty that a Time Warner petition that appeared in the public notice of January 9, 1995, was directed against all OFS applications of Liberty but did not apply to those most recently filed on March 23, 1995. (TWCV Exh. 34.) However, there had been incorrect emission designators assigned by Comsearch to license applications filed on March 21, 1995, and these would need to be corrected and be subjected to a second public notice. (Id.) There was a resulting delay in obtaining licenses because of the need to change incorrect designators and to republish the public notices. But rather than mitigate premature activations any such delays should have increased Liberty's diligence. Those delays went unnoticed because of a lack of communication between Mr. Lehmkuhl and Mr. Nourain. Awareness of the licensing gap was so pronounced that Mr. Barr and Mr. Lehmkuhl inquired of the Bureau staff about the availability of STAs for "all pending applications that have been filed more than two months ago," i.e., February 1995 and before. The Bureau advised that because those earlier applications were subject to a petition to deny, they would not qualify for STAs. Nevertheless, Mr. Barr and Mr. Lehmkuhl felt that "such a request should be made owing to the seriousness of the situation." (TWCV Exh. 34.) Since Mr. Lehmkuhl and Mr. Barr knew that the threat of economic loss would not serve as a basis for STA relief, the "serious situation" could only have been the unlicensed microwave activations. Messrs. Lehmkuhl and Barr knew that if the premature activation of paths were disclosed on May 4, there would be no chance for STA clearance and therefore candid disclosure presented a quandary for counsel and for Liberty. Mr. Barr and Mr. Lehmkuhl followed through on their advice by filing on May 4, 1995, the 14 STA applications to cover unauthorized activations that existed at One Lincoln Plaza, Normandie Court, Windsor Court, Bristol Plaza, 767 Fifth Avenue, 99 battery park, and 335 Madison Avenue. (TWCV Exh. 17.) The unauthorized activations intentionally were not disclosed. Misleading Pleading And Applications 77. In multiple STAs prepared by Mr. Lehmkuhl after April 26, 1995, Liberty misleadingly advised the Commission that its applications were "in technical order." That disclosure is misleading and lacks candor because technical compliance implies, at a minimum, fundamental licensing compliance before activation. (Id.) In view of the regulatory function of an STA to authorize activations on short notice, truth and accuracy are prime concerns and carry an added importance to the licensing process. The Rule leaves nothing to chance. It specifically requires that an STA request: must contain full particulars as to the proposed operation including all facts sufficient to justify the temporary authority sought and the public interest therein." 47 C.F.R. 101.31. [Emphasis added.] Liberty failed to meet these basic requirements. Through a deliberate choice made by Liberty, there was no disclosure made to the Commission of the most significant of regulatory facts, i.e.; that multiple STAs were being sought for paths that already had been activated without authorizations. Instead, the STAs misleadingly used prospective language of a "need for service" and urged that any delay "would seriously prejudice the public interest." (TWCV Exh. 17 at 3.) Each filing is analyzed below in the context of an overall deliberate plan to keep information from the Commission. May 4 STAs 78. Mr. Nourain signed an STA application that was prepared by Mr. Lehmkuhl for an OFS station at 20 West 64th Street. The original application had been filed on November 7, 1994, to add four new microwave paths. The application states: Grant of the application has been severely hampered because of processing delays and because of the petition to deny filed by Time Warner of New York and Paragon Cable of Manhattan (collectively "Time Warner"). (TWCV Exh. 17 at 3.) In requesting an STA, Liberty merely notes that it must convert buildings from Time Warner's service to Liberty service where customers had opted to switch to Liberty. Liberty must deliver the services within 30 days or loose the business to Time Warner which would be contrary to the policy encouraging new competition to counter the market power of established cable systems. Liberty makes its argument as follows: Since Liberty's applications are in technical order, and since Time Warner has not challenged Liberty's application on a technical basis, -- , Liberty submits that the institution of an STA as requested herein is very much in the public interest and should be granted immediately. (TWCV Exh. 17 at 5.) The same argument was applied in each of the 14 STA applications that were filed on May 4. Also, in misleading fashion the future tense was used, i.e., "will operate." There was no disclosure of ongoing unauthorized activations of which Liberty management, and Mr. Nourain, and Liberty's counsel had full knowledge on April 28, 1995, a date which was four business days and one weekend before the filing date of May 4. As found above, Mr. Price, with advice from the several legal counsel who were advising Liberty, determined that disclosure to the Commission was to be deferred in Liberty's interest. Therefore, at least one Liberty principal had knowledge of the misleading and candorless multiple disclosures of May 4. May 17 Surreply 79. On May 5, 1995, Time Warner filed its reply to an opposition of Liberty to a Time Warner petition. Time Warner identified facilities at 639 W. End Avenue and 1775 Fifth Avenue which are listed in Appendix A of the HDO as providing microwave service without the required license. Liberty filed a surreply on May 17, 1995, which admitted that it had activated the two facilities. (TWCV Exh. 18 at 1-2.) Liberty also disclosed unauthorized activations at 13 additional facilities: 35 W.End Avenue; 767 Fifth Avenue; 564 First Avenue; 545 First Avenue; 200 E. 32nd Street; 30 Waterside Plaza; 433 E. 56th Street; 114 E. 72nd Street; 524 E. 72nd Street; 25 W. 54th Street; 16 W. 16th Street; 6 E. 44th Street; and 2727 Palisades Avenue. (Id.at 2; compare Appendix A of HDO.) 80. The surreply pleading was signed and affirmed by Messrs. Price and Nourain. Liberty admitted that it had activated microwave service at two sites at 639 West End Avenue and 1775 York Avenue and that applications for authorizations were pending. (TWCV Exh. 18.) Liberty stated in justification that it had "traditionally sought special temporary authority" to operate pending Commission approval of license applications and represented that it has been "Liberty's pattern and practice" to either receive a grant or request an STA prior to activation. (Id.) Liberty offered the following explanation: [A]pplication for each of the above-referenced sites has exceeded the norm due to the frequency coordinator's use of incorrect emission designators. Mr. Nourain, perhaps inadvisably, assumed grant of the STA requests, which in his experience had always been granted within a matter of days of filing, and thus rendered the paths operational. To compound the situation, the administration department failed to notify Mr. Nourain that grant of Liberty's applications was being held up indefinitely as a result of the Time Warner petitions. Mr. Nourain was unaware of the petitions against Liberty's applications until late April of 1995. Thus, without knowledge that his actions were in violation of the Commission's rules, and without intent to violate those rules, Mr. Nourain commenced operation prior to grant. (TWCV Exh. 18 at 3.) There was no disclosure of the detailed information about additional paths which Liberty had activated prior to May 17, information which Mr. Barr had received from the April 26 Nourain memorandum (TWCV Exh. 35) and Mr. Lehmkuhl's April 28 inventory (TWCV Exh. 34.) The Bureau did not have the information about those activations because on April 27, 1995, Mr. Price had decided not to disclose that information until some later date. However, the disclosure on May 17 was not merely incomplete and lacking in candor. It was misleading to represent that STAs were always granted "within a matter of days." (Nourain, Tr. 640.) It was a misrepresentation to represent to the Commission that it was Liberty's "practice" to have a license grant or STA authorization prior to activating paths because, as disclosed in the Audit Report, there were 93 instances of premature activations since Liberty began offering service in the OFS spectrum. It also was a misrepresentation to state that except for the two site activations reported by Time Warner on May 5, Liberty was never found to be operating in violation of the Commission's rules. (TWCV Exh. 18 at 2.) That representation is false and directly at odds with Mr. Price's knowledge of unauthorized activations that he reported to counsel on April 27, 1995, and which Mr. Lehmkuhl confirmed on April 28, 1995. May 19 STA 81. The Palisades Avenue episode was a uniquely flagrant event because it presented Liberty with a myriad of missed opportunities to disclose the premature activation of the facility. Liberty had filed an application on March 24, 1995, as a modification to add an OFS path to provide a service to Palisades Avenue from the "Century Station" located at 2600 Netherlands Avenue. (TWCV Exh. 38.) On May 19, 1995, Liberty filed an STA request for the microwave facility at 2727 Palisades Avenue. Liberty used the same infirm disclosure as the May 4 STA request while omitting the fact that unauthorized activation had already occurred at the same facility. This facility was never subjected to a Time Warner petition to deny. (TWCV Exhs. 38, 40; Lehmkuhl, Tr. 1274-77.) The May 19 request failed to report that service had already been activated on April 24, nearly a month before the STA request and only four days after activation. Also, there was no disclosure made that after-the-fact authorization was being sought for Palisades Avenue. This was another instance of Liberty's lack of candor with the Commission. May 23 Amendment 82. On May 23, 1995, Liberty applied for an amendment to add an additional path from the Century Station to a receive site at 4525 Henry Hudson Parkway. The application included a schematic diagram indicating that an application for Palisades Avenue was still pending. (TWCV Exh. 39 at 9.) But Liberty did not disclose that the path to 2727 Palisades Avenue was already in operation without authorization. (Id.). On the very next day, May 24, 1995, Liberty filed an amendment to the May 19 STA request for Palisades Avenue in order to include the OFS path for Henry Hudson Parkway. (TWCV Exh. 39; Lehmkuhl, Tr. 1271-72.) Liberty requested that the May 24 STA amendment be considered a part of the original May 19 request. (TWCV Exh. 39 at 1; Lehmkuhl, Tr. 1271-72.) In another missed opportunity for truth and accuracy, Liberty did not disclose the fact that the Palisades Avenue facility was already activated. (Lehmkuhl, Tr. 1273.) Later, on May 26, 1995, Liberty filed a reply to Time Warner's opposition to the May 4 STA requests. Liberty failed to mention the fact that 15 of the facilities for which it was seeking STA relief (14 in the May 4 applications plus Palisades Avenue) were already in operation. (TWCV Exh. 19.) This pleading was repetitious in its failure to fully disclose significant information. July 17 License Application 83. On July 17, 1995, Liberty filed applications for four new locations: 1295 Madison Avenue,; 38 E. 85th Street; 430/440 E. 56th Street; and 380 Rector Place. (TWCV Exh. 25.) These facilities are listed in Appendix A of the HDO. The facilities were in operation on July 17 when the applications were being filed. Mr. Lehmkuhl prepared Liberty's license applications. (Lehmkuhl, Tr. 1193-94; TWCV Exh. 25.) Mr. Nourain and Mr. Barr reviewed the license applications prior to filing. (Nourain, Tr. 884-85; Lehmkuhl, Tr. 1193-94; TWCV Exh. 25.) The license applications lacked candor by failing to disclose that Liberty was already operating the microwave paths for which it was requesting licenses. (TWCV Exh. 25.) On July 24, 1995, Liberty filed STA requests urging the Commission to authorize activation that contained only minimal conclusory disclosure that certain paths were already activated. (TWCV Exhs. 27, 30.) Other Nondisclosures Of Activations 84. On July 12 and July 24, 1995, Liberty again amended the Palisades Avenue STA request to include additional receive sites at 3001 Henry Hudson Parkway, 3875 Waldo Avenue and 2500 Johnson Avenue. (TWCV Ex.40.) Liberty disclosed that its original May 19 STA request was still pending and that authority was required in order to operate the requested facilities until the grant of the underlying license. (TWCV Exhs. 40, 43.) But there was no disclosure of the fact that the facility at Palisades Avenue was operating without authorization. 85. The Bureau issued a Section 308(b) request on June 9, 1995, which required Liberty to provide more detailed information about Liberty's unauthorized activations. (TWCV Exh. 20.) The letter stated that the information was relevant to the pending STA requests and required that Liberty furnish the Bureau with "the date each unauthorized path was placed in preparation as well as the number of subscribers currently being served by each new path." (Id.) On June 16, 1995, Mr. Barr submitted a response on behalf of Liberty and Mr. Price provided a cover letter. (TWCV Exh. 21 and L/B Exh. 3.) Mr. Barr listed only the same unauthorized facilities that had been disclosed in the May 17 Surreply. (TWCV Exh. 18.) There was no disclosure of the 4 additional activations which were the subject of Liberty's license applications filed on the following day, July 17, 1995, for the paths that were operating without authorization after Liberty's May 17 surreply. (TWCV Exh. 25.) At no time did Liberty supplement its June 16 response to the Section 308 letter to reveal the 4 additional unauthorized activations. Liberty's Affirmative Defense 86. There were 13 facilities that were prematurely activated after a license application had been filed. (HDO at App. A and Table I.) A number of those applications were the