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Already under the government microscope in two federal investigations, telecommunications giant Qwest Communications International Inc. appeared before a panel of California regulators on Thursday to defend its sales tactics. In a hearing before the state’s Public Utilities Commission, lawyers representing Qwest challenged a $38 million fine against the company for “slamming,” the illegal practice of switching a person’s phone service without their permission. The fine is the largest ever meted out by the CPUC and represents one more legal battleground for the troubled telecommunications company. In the past four months, Qwest has announced that it is under investigation by both the Securities and Exchange Commission and the U.S. Department of Justice. Joseph Malkin, an attorney with San Francisco-based Orrick, Herrington & Sutcliffe who is representing Qwest in the slamming case, told the three-commissioner panel that the $38 million fine was excessive. “The penalty proposed is so far out of line with anything the commission has ever done that we urge you to correct it,” he said. Malkin acknowledged Qwest’s telemarketers had engaged in slamming, but stressed that the company had immediately taken actions to end the practice upon learning of it, and sent refunds to 97.5 percent of customers who filed complaints. “There is no profit to a company like Qwest in slamming,” said Malkin. In December, the investigation of Qwest by the CPUC resulted in a so-called Presiding Officer’s Decision. The decision concluded that inadequately supervised sales agents switched thousands of customers’ long-distance service without their permission in 1999 and 2000. In certain instances, reads the decision, “the third-party verification tapes or letters of authorization confirming the switches were falsified.” Many of the companies involved in this type of behavior are fly-by-nights, said Itzel Berrio, deputy general counsel for the Greenlining Institute. “This is one of the first times a company like Qwest has been caught in such a dramatic way.” As a party to the proceeding, the Greenlining Institute joined lawyers from the CPUC in making rebuttals at Thursday’s oral arguments. Travis Foss, a CPUC attorney, argued that Qwest was aware that its sales agents were slamming customers but were slow to react. Moreover, he said, many of the audio tapes purporting to show customers accepting a new phone service were falsified. Appearing alongside Malkin was Qwest President and Chief Operating Officer Afshin Mohebbi. “What I’m here to tell you is that we have fixed the control issues that happened in 1999 and 2000,” he said, cataloguing a list of reforms the company took to combat the slamming. But CPUC President Loretta Lynch interjected that she was more interested in hearing about how extensive Qwest admits the problem was than about the changes it enacted. “If you kill somebody and say ‘I won’t kill again,’ fine. But we’re dealing with the killing,” said Lynch. The commission didn’t say when it will reach a decision. According to Malkin, the CPUC’s $38 million fine is not proportional to the other fines imposed by the commission in other slamming cases. He cited two recent cases in which the companies were fined the equivalent of $2,000 a day for the duration of the violation. Under that formula, argued Malkin, Qwest’s fine should be more along the lines of $1.4 million. “The penalty must fit the offense,” said Malkin.

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