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ETI Sound Systems, Inc

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Released: May 11, 2012

Federal Communications Commission

DA 12-360

Before the

Federal Communications Commission

Washington, D.C. 20554

)
In the Matter of
)
File No.: EB-10-SE-052
)
ETI Sound Systems, Inc.
)
Acct. No.: 0021561014
)
)

FRN: 201232100021
)

ORDER

Adopted: May 11, 2012

Released: May 11, 2012

By the Chief, Enforcement Bureau:
1.
In this Order, we adopt the attached Consent Decree entered into between the
Enforcement Bureau (Bureau) of the Federal Communications Commission (Commission) and ETI
Sound Systems, Inc. (ETI). The Consent Decree resolves and terminates the Bureau’s investigation into
ETI’s compliance with Section 302(b) of the Communications Act of 1934, as amended (the Act),1 and
Sections 2.803, 2.1203, 15.19, 15.21, and 15.105 of the Commission’s rules (Rules)2 pertaining to the
marketing of digital radio frequency devices, including guitar amplifiers, CD/MP3 players, and active
speaker systems.
2.
The Bureau and ETI have negotiated the Consent Decree that resolves this matter. A
copy of the Consent Decree is attached hereto and incorporated herein by reference.
3.
After reviewing the terms of the Consent Decree and evaluating the facts before us, we
find that the public interest would be served by adopting the Consent Decree and terminating the
investigation. In the absence of new material evidence relating to this matter, we conclude that our
investigation raises no substantial or material questions of fact as to whether ETI possesses the basic
qualifications, including those related to character, to hold or obtain any Commission license or
authorization.
4.
Accordingly,

IT IS ORDERED

that, pursuant to Sections 4(i) and 503(b) of the Act,3
and Sections 0.111 and 0.311 of the Commission’s Rules,4 the Consent Decree attached to this Order

IS
ADOPTED

.


1 47 U.S.C. § 302a(b).
2 47 C.F.R. §§ 2.803, 2.1203, 15.19, 15.21, 15.105.
3 47 U.S.C. §§ 154(i), 503(b).
4 47 C.F.R. §§ 0.111, 0.311.

Federal Communications Commission

DA 12-360
5.

IT IS FURTHER ORDERED

that the above-captioned investigation

IS

TERMINATED.

6.

IT IS FURTHER ORDERED

that a copy of this Order and Consent Decree shall be
sent by first class mail and certified mail, return receipt requested, to Avi El-Kiss, Vice President, ETI
Sound Systems, Inc., 3383 Gage Avenue, Huntington Park, CA 90255, and to Martin L. Stern, Counsel to
ETI Sound Systems, Inc., K&L Gates LLP, 1601 K Street, N.W., Washington, D.C. 20006.
FEDERAL COMMUNICATIONS COMMISSION
P. Michele Ellison
Chief, Enforcement Bureau
2

Federal Communications Commission

DA 12-360

Before the

Federal Communications Commission

Washington, D.C. 20554

)
File No.: EB-10-SE-052
In the Matter of
)
)
Acct. No.: 0021561014
ETI Sound Systems, Inc.
)
)
FRN: 201232100021

CONSENT DECREE

The Enforcement Bureau of the Federal Communications Commission and ETI Sound Systems,
Inc., by their authorized representatives, hereby enter into this Consent Decree for the purpose of
terminating the Enforcement Bureau’s investigation into possible violations of Section 302(b) of the
Communications Act of 1934, as amended,5 and Sections 2.803, 2.1203, 15.19, 15.21, and 15.105 of the
Commission’s rules6 pertaining to the marketing of digital radio frequency devices, including guitar
amplifiers, CD/MP3 players, and active speaker systems.

I.

DEFINITIONS

1.
For the purposes of this Consent Decree, the following definitions shall apply:
(a)
“Act” means the Communications Act of 1934, as amended, 47 U.S.C. § 151 et
seq.

(b)
“Adopting Order” means an order of the Bureau adopting the terms of this Consent
Decree without change, addition, deletion, or modification.
(c)
“Bureau” means the Enforcement Bureau of the Federal Communications
Commission.
(d)
“Communications Laws” means collectively, the Act, the Rules, and the published
and promulgated orders and decisions of the Commission to which ETI is subject
by virtue of its business activities, including but not limited to, the Equipment
Marketing Rules.
(e)
“Commission” and “FCC” mean the Federal Communications Commission and all
of its bureaus and offices.
(f)
“Compliance Plan” means the compliance obligations, program, and procedures
described in this Consent Decree at paragraph 9.
(g)
“Covered Employees” means all employees and agents of ETI who perform, or
supervise, oversee, or manage the performance of, duties that relate to ETI’s
responsibilities under the Equipment Marketing Rules.


5 47 U.S.C. § 302a(b).
6 47 C.F.R. §§ 2.803, 2.1203, 15.19, 15.21, 15.105.

Federal Communications Commission

DA 12-360
(h)
“Digital Device” means an unintentional radiator device or system as defined in
Section 15.3(k) of the Rules.7
(i)
“Effective Date” means the date on which the Bureau releases the Adopting Order.
(j)
“Equipment Marketing Rules” means Section 302(b) of the Act8 and Sections
2.803, 2.1203, 15.19, 15.21, and 15.105 of the Rules9 and other Communications
Laws governing the marketing of radio frequency devices within the United States
and its territories.
(k)
“ETI” means ETI Sound Systems, Inc., d/b/a B-52 Professional, d/b/a Boutique
Amps Distribution, and its predecessors-in-interest and successors-in-interest.
(l)
“Investigation” means the investigation commenced by the Bureau’s July 9, 2010
letter of inquiry10 regarding whether the marketing of certain Digital Devices by
ETI complies with the Equipment Marketing Rules.
(m) “Operating Procedures” means the standard, internal operating procedures and
compliance policies established by ETI to implement the Compliance Plan.
(n)
“Parties” means ETI and the Bureau, each of which is a “Party.”
(o)
“Rules” means the Commission’s regulations found in Title 47 of the Code of
Federal Regulations.

II.

BACKGROUND

2.
Pursuant to Section 302(b) of the Act11 and Sections 2.803, 2.1203, 15.19, 15.21, and
15.105 of the Rules,12 certain Digital Devices may not be marketed in the United States unless the devices
comply with the applicable technical standards as well as the administrative requirements relating to
equipment labeling and consumer disclosure. ETI markets Digital Devices such as guitar amplifiers with
built-in digital signal processors, CD/MP3 players, and active speaker systems. These Digital Devices are
unintentional radiators subject to authorization via the Commission’s equipment verification procedures.13
3.
On July 9, 2011, the Bureau’s Spectrum Enforcement Division issued a letter of inquiry
(LOI) to ETI, directing ETI to submit a sworn written response to a series of questions relating to ETI’s
manufacture, importation, and marketing of its Prodigy CD/MP3 players, its Matrix active speaker
system, and its Rebel and Renegade guitar amplifiers.14 ETI responded to the LOI on September 8, 2010


7 Id. § 15.3(k).
8 47 U.S.C. § 302a(b).
9 47 C.F.R. §§ 2.803, 2.1203, 15.19, 15.21, 15.105.
10 See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division, Enforcement Bureau, Federal
Communications Commission, to Avi El-Kiss, Vice President, ETI Sound Systems, Inc. (File No. EB-10-SE-052;
July 9, 2010).
11 47 U.S.C. § 302a(b).
12 47 C.F.R. §§ 2.803, 2.1203, 15.19, 15.21, 15.105.
13 Id. § 15.101.
14 See supra note 6.
2

Federal Communications Commission

DA 12-360
(LOI Response).15 In its LOI Response, ETI provided detailed information about the product lines that
require testing and authorization, noting however that it primarily markets non-digital sound system
devices that are not subject to the Commission’s equipment authorization procedures.16 ETI also stated
that it had undertaken a top-to-bottom review of its equipment authorization compliance.17 The Bureau
and ETI executed tolling agreements to toll the statute of limitations.18

III.

TERMS OF AGREEMENT

4.

Adopting Order

. The Parties agree that the provisions of this Consent Decree shall be
subject to final approval by the Bureau by incorporation of such provisions by reference in the Adopting
Order.
5.

Jurisdiction

. ETI agrees that the Bureau has jurisdiction over it and the matters
contained in this Consent Decree and that the Bureau has the authority to enter into and adopt this
Consent Decree.
6.

Effective Date; Violations

. The Parties agree that this Consent Decree shall become
effective on the Effective Date as defined herein. As of the Effective Date, the Adopting Order and this
Consent Decree shall have the same force and effect as any other order of the Commission. Any violation
of the Adopting Order or of the terms of this Consent Decree shall constitute a separate violation of a
Commission order, entitling the Commission to exercise any rights and remedies attendant to the
enforcement of a Commission order.
7.

Termination of Investigation

. In express reliance on the covenants and representations
in this Consent Decree and to avoid further expenditure of public resources, the Bureau agrees to
terminate the Investigation. In consideration for the termination of the Investigation, ETI agrees to the
terms, conditions, and procedures contained herein. The Bureau further agrees that in the absence of new
material evidence, the Bureau will not use the facts developed in this Investigation through the Effective
Date, or the existence of this Consent Decree, to institute on its own motion any new proceeding, formal
or informal, or take any action on its own motion against ETI concerning the matters that were the subject
of the Investigation. The Bureau also agrees that in the absence of new material evidence it will not use
the facts developed in this Investigation through the Effective Date, or the existence of this Consent
Decree, to institute on its own motion any proceeding, formal or informal, or take any action on its own
motion against ETI with respect to ETI’s basic qualifications, including its character qualifications, to be
a Commission licensee or to hold Commission licenses or authorizations.
8.

Compliance Officer

. Within thirty (30) calendar days after the Effective Date, ETI shall
designate a senior corporate manager with the requisite corporate and organizational authority to serve as
Compliance Officer and to discharge the duties set forth below. The Compliance Officer shall be
responsible for developing, implementing, and administering the Compliance Plan and ensuring that ETI
complies with the terms and conditions of the Compliance Plan and this Consent Decree. In addition to
the general knowledge of the Communications Laws necessary to discharge his/her duties under this
Consent Decree, the Compliance Officer shall have specific knowledge of the Equipment Marketing


15 See Letter from Avi El-Kiss, Vice President, ETI Sound Systems, Inc., to Marlene H. Dortch, Secretary, Federal
Communications Commission (Sept. 8, 2010).
16 LOI Response at 2.
17 Id. at 2-3.
18 See, e.g., Tolling Agreement Extension, File No. EB-10-SE-052, executed by and between John D. Poutasse,
Acting Chief, Spectrum Enforcement Division, Enforcement Bureau, Federal Communications Commission, and
Martin Stern, K&L Gates LLP, Counsel to ETI Sound Systems, Inc. (Jan. 4, 2012).
3

Federal Communications Commission

DA 12-360
Rules prior to assuming his/her duties. The initial Compliance Officer as of the Effective Date will be
Avi El-Kiss, Vice President, ETI. ETI represents and warrants that, as of the Effective Date, Mr. El-Kiss
is ETI’s only Covered Employee, as such term is defined herein.
9.

Compliance Plan

. For purposes of settling the matters set forth herein, ETI agrees that it
shall within sixty (60) calendar days after the Effective Date, develop and implement a Compliance Plan
designed to ensure future compliance with the Communications Laws and with the terms and conditions
of this Consent Decree. With respect to the Equipment Marketing Rules, ETI shall implement the
following procedures:
(a)

Operating Procedures on Equipment Marketing

. Within sixty (60) calendar
days after the Effective Date, ETI shall establish Operating Procedures that the
Compliance Officer and any person who becomes a Covered Employee after the
Effective Date must follow to help ensure ETI’s compliance with the Equipment
Marketing Rules. ETI’s Operating Procedures shall include internal procedures
and policies specifically designed to ensure that all Digital Devices and other radio
frequency devices marketed by ETI comply with applicable technical standards,
have been properly authorized (via the certification, verification, or declaration of
conformity procedures, as applicable), and comply with the applicable
administrative requirements relating to equipment labeling and consumer
disclosure.
(b)

Compliance Manual

. Within sixty (60) calendar days after the Effective Date, the
Compliance Officer shall develop a Compliance Manual and distribute the
Compliance Manual to any person who becomes a Covered Employee after the
Effective Date, within thirty (30) calendar days after the date such person becomes
a Covered Employee. The Compliance Manual shall explain the Equipment
Marketing Rules and set forth the Operating Procedures that Covered Employees
shall follow to help ensure ETI’s compliance with the Equipment Marketing Rules.
ETI shall periodically review and revise the Compliance Manual as necessary to
ensure that the information set forth therein remains current and complete. ETI
shall distribute any revisions to the Compliance Manual promptly to any Covered
Employees.
(c)

Compliance Training Program

. Recognizing that the Compliance Officer is
required to have specific knowledge of the Equipment Marketing Rules under the
terms of paragraph 8 above, and given ETI’s representation that the Compliance
Officer is ETI’s only Covered Employee as of the Effective Date, the following
training obligations shall apply in the event that any person, in addition to the
Compliance Officer, becomes a Covered Employee at any time after the Effective
Date: (i) ETI shall establish and implement a Compliance Training Program on
compliance with the Equipment Marketing Rules and the Operating Procedures;
(ii) as part of the Compliance Training Program, Covered Employees shall be
advised of ETI’s obligation to report any noncompliance with the Equipment
Marketing Rules under paragraph 10 of this Consent Decree and shall be instructed
on how to disclose noncompliance to the Compliance Officer; (iii) any person who
becomes a Covered Employee at any time after the Effective Date shall be trained
pursuant to the Compliance Training Program within thirty (30) calendar days after
the date such person becomes a Covered Employee; and (iv) ETI shall repeat the
compliance training on an annual basis and shall periodically review and revise the
Compliance Training Program as necessary to ensure that it remains current and
complete and to enhance its effectiveness.
4

Federal Communications Commission

DA 12-360
10.

Reporting Noncompliance

. ETI shall report any noncompliance with the Equipment
Marketing Rules and with the terms and conditions of this Consent Decree within fifteen (15) calendar
days after discovery of such noncompliance. Such reports shall include a detailed explanation of (i) each
instance of noncompliance; (ii) the steps that ETI has taken or will take to remedy such noncompliance;
(iii) the schedule on which such remedial actions will be taken; and (iv) the steps that ETI has taken or
will take to prevent the recurrence of any such noncompliance. All reports of noncompliance shall be
submitted to the Chief, Spectrum Enforcement Division, Enforcement Bureau, Federal Communications
Commission, Room 3-C366, 445 12th Street, S.W. Washington, D.C. 20554, with a copy submitted
electronically to Neal McNeil at Neal.McNeil@fcc.gov and to Ricardo Durham at
Ricardo.Durham@fcc.gov.
11.

Compliance Reports

. ETI shall file Compliance Reports with the Commission ninety
(90) calendar days after the Effective Date, twelve (12) months after the Effective Date, and twenty-four
(24) months after the Effective Date.
(a)
Each compliance report shall include a detailed description of ETI’s efforts during
the relevant period to comply with the terms and conditions of this Consent Decree
and the Equipment Marketing Rules. In addition, each Compliance Report shall
include a certification by the Compliance Officer, as an agent of and on behalf of
ETI, stating that the Compliance Officer has personal knowledge that ETI (i) has
established and implemented the Compliance Plan; (ii) has utilized the Operating
Procedures since the implementation of the Compliance Plan; and (iii) is not aware
of any instances of noncompliance with the terms and conditions of this Consent
Decree, including the reporting obligations set forth in paragraph 10 hereof.
(b)
The Compliance Officer’s certification shall be accompanied by a statement
explaining the basis for such certification and must comply with Section 1.16 of the
Rules19 and be subscribed to as true under penalty of perjury in substantially the
form set forth therein.
(c)
If the Compliance Officer cannot provide the requisite certification, the
Compliance Officer, as an agent of and on behalf of ETI, shall provide the
Commission with a detailed explanation of the reason(s) why and describe fully (i)
each instance of noncompliance; (ii) the steps that ETI has taken or will take to
remedy such noncompliance, including the schedule on which proposed remedial
actions will be taken; and (iii) the steps that ETI has taken or will take to prevent
the recurrence of any such noncompliance, including the schedule on which such
preventive action will be taken.
(d)
All Compliance Reports shall be submitted to the Chief, Spectrum Enforcement
Division, Enforcement Bureau, Federal Communications Commission, 445 12th
Street, S.W., Washington, D.C. 20554, with a copy submitted electronically to Neal
McNeil at Neal.McNeil@fcc.gov and to Ricardo Durham at
Ricardo.Durham@fcc.gov.
12.

Termination Date

. Unless stated otherwise, the obligations set forth in paragraphs 8
through 11 of this Consent Decree shall expire twenty-four (24) months after the Effective Date.


19 47 C.F.R. § 1.16.
5

Federal Communications Commission

DA 12-360
13.

Voluntary Contribution

. ETI agrees that it will make a voluntary contribution to the
United States Treasury in the amount of thirty-four thousand dollars ($34,000) (Voluntary Contribution),
such Voluntary Contribution to be made in four (4) quarterly payments (each an Installment Payment) of
Eight Thousand Five Hundred Dollars ($8,500). The first payment is to be made within thirty (30)
calendar day after the Effective Date, with remaining payments due on or before September 3, 2012,
December 3, 2012, and March 1, 2013. ETI acknowledges and agrees that upon execution of this
Consent Decree the Voluntary Contribution and each Installment Payment shall become a “Claim” or
“Debt” as defined in 31 U.S.C. §3701(b)(1).20 Upon an Event of Default, all procedures for collection as
permitted by law may, at the Commission’s discretion, be initiated. In addition, ETI agrees that it will
make the first and all subsequent Installment Payments in United States Dollars without further demand
or notice by the dates specified above. Installment Payments must be made by check or similar
instrument, payable in United States Dollars to the order of the Federal Communications Commission.
The payments must include the Account Number and FRN referenced in the caption to the Adopting
Order. Payment by check or money order may be mailed to Federal Communications Commission, P.O.
Box 979088, St. Louis, MO 63197-9000. Payment by overnight mail may be sent to U.S. Bank –
Government Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO 63101.
Payments by wire transfer may be made to ABA Number 021030004, receiving bank TREAS/NYC, and
Account Number 27000001. For payments by credit card, an FCC Form 159 (Remittance Advice) must
be submitted. When completing the FCC Form 159, enter the Account Number in block number 23A
(call sign/other ID), and enter the letters “FORF” in block number 24A (payment type code). ETI shall
also send electronic notification to Neal McNeil at Neal.McNeil@fcc.gov, Ricardo Durham at
Ricardo.Durham@fcc.gov, and Samantha Peoples at Sam.Peoples@fcc.gov on the date each payment is
made.
14.

Event of Default

. ETI agrees that an Event of Default shall occur upon the failure by
ETI to pay the full amount of any Installment Payment on or before the due date specified in this Consent
Decree.
15.

Interest, Charges for Collection, and Acceleration of Maturity Date

. Upon an Event
of Default under this Consent Decree, the then unpaid amount of the Voluntary Contribution shall accrue
interest, computed using the rate of the U.S. Prime Rate in effect on the date of the Event of Default, plus
4.75 percent, from the date of the Event of Default until payment in full. Upon an Event of Default, the
then unpaid amount of the Voluntary Contribution, together with interest, as aforesaid, any penalties
permitted and/or required by the law, including but not limited to 31 U.S.C. § 3717 and administrative
charge(s), plus the costs of collection, litigation, and attorneys’ fees, shall become immediately due and
payable, without notice, presentment, demand, protest, or notice of protest of any kind, all of which are
waived by ETI.
16.

Waivers

. ETI waives any and all rights it may have to seek administrative or judicial
reconsideration, review, appeal, or stay, or to otherwise challenge or contest the validity of this Consent
Decree and the Adopting Order, provided the Bureau issues an Adopting Order as defined herein. ETI
shall retain the right to challenge Commission interpretation of the Consent Decree or any terms
contained herein. If either Party (or the United States on behalf of the Commission) brings a judicial
action to enforce the terms of the Adopting Order, neither ETI nor the Commission shall contest the
validity of the Consent Decree or of the Adopting Order, and ETI shall waive any statutory right to a trial
de novo. ETI hereby agrees to waive any claims it may have under the Equal Access to Justice Act, 5
U.S.C. § 504 and 47 C.F.R. § 1.1501 et seq., relating to the matters addressed in this Consent Decree.


20 Debt Collection Improvement Act of 1996, Pub. L. 104-134, 110 Stat. 1321, 1358 (Apr. 26, 1996).
6

Federal Communications Commission

DA 12-360
17.

Invalidity

. In the event that this Consent Decree in its entirety is rendered invalid by any
court of competent jurisdiction, it shall become null and void and may not be used in any manner in any
legal proceeding.
18.

Subsequent Rule or Order

. The Parties agree that if any provision of the Consent
Decree conflicts with any subsequent Rule or order adopted by the Commission (except an order
specifically intended to revise the terms of this Consent Decree to which ETI does not expressly consent)
that provision will be superseded by such Rule or Commission order.
19.

Successors and Assigns

. ETI agrees that the provisions of this Consent Decree shall be
binding on its successors, assigns, and transferees.
20.

Final Settlement

. The Parties agree and acknowledge that this Consent Decree shall
constitute a final settlement between the Parties with respect to the Investigation. The Parties further
agree that this Consent Decree does not constitute either an adjudication on the merits or a factual or legal
finding or determination regarding any compliance or noncompliance with the Communications Laws,
and that by entering into this Consent Decree, ETI does not admit to or deny any violation of the
Communications Laws.
21.

Modifications

. This Consent Decree cannot be modified without the advance written
consent of both Parties.
22.

Paragraph Headings

. The headings of the paragraphs in this Consent Decree are
inserted for convenience only and are not intended to affect the meaning or interpretation of this Consent
Decree.
23.

Authorized Representative

. The individual signing this Consent Decree on behalf of
ETI represents and warrants that he is authorized by ETI to execute this Consent Decree and to bind ETI
to the obligations set forth herein. The FCC signatory represents that she is signing this Consent Decree
in her official capacity and that she is authorized to execute this Consent Decree.
7

Federal Communications Commission

DA 12-360
24.

Counterparts

. This Consent Decree may be signed in any number of counterparts
(including by facsimile), each of which, when executed and delivered, shall be an original, and all of
which counterparts together shall constitute one and the same fully executed instrument.
________________________________
P. Michele Ellison
Chief
Enforcement Bureau
_______________________________
Date
_______________________________
Avi El-Kiss
Vice President
ETI Sound Systems, Inc.
______________________________
Date
8

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