Featured Stories
SEC Obtains Final Judgment as to Cannabis Company, Its Subsidiaries, CEO, COO Charged in Fraudulent Offering
WASHINGTON, July 18 -- The Securities and Exchange Commission issued the following litigation release (No. 2:23-cv-05379; C.D. Cal. filed Mar. 16, 2023):
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Securities and Exchange Commission v. American Patriot Brands, Inc., et al., No. 2:23-cv-05379 (C.D. Cal.) (filed Mar. 16, 2023)
On July 10, 2026, the U.S. District Court for the Central District of California entered a final judgment as to American Patriot Brands, Inc. (APB), a cannabis company, APB's CEO Robert Y. Lee, APB's COO Brian L. Pallas, and APB's subsidiaries Urban Pharms, LLC (Urban Pharms), TSL Distribution, LLC (TSL), and
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WASHINGTON, July 18 -- The Securities and Exchange Commission issued the following litigation release (No. 2:23-cv-05379; C.D. Cal. filed Mar. 16, 2023):
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Securities and Exchange Commission v. American Patriot Brands, Inc., et al., No. 2:23-cv-05379 (C.D. Cal.) (filed Mar. 16, 2023)
On July 10, 2026, the U.S. District Court for the Central District of California entered a final judgment as to American Patriot Brands, Inc. (APB), a cannabis company, APB's CEO Robert Y. Lee, APB's COO Brian L. Pallas, and APB's subsidiaries Urban Pharms, LLC (Urban Pharms), TSL Distribution, LLC (TSL), andDJ & S Property #1, LLC (DJ&S) in connection with previously-filed fraud charges.
The final judgment permanently enjoins APB, Urban Pharms, TSL, DJ&S, Lee, and Pallas from further violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; permanently enjoins Lee and Pallas from participating in the issuance, purchase, offer, or sale of securities, except for purchases or sales for their personal accounts; prohibits Lee and Pallas from acting as an officer or director of a public company; orders APB, Urban Pharms, TSL, and DJ&S jointly and severally to pay disgorgement of $17,786,703, together with prejudgment interest thereon in the amount of $6,202,777; orders APB and Urban Pharms each to pay a civil penalty of $4,729,004; orders TSL to pay a civil penalty of $2,364,502; orders DJ&S to pay a civil penalty of $1,182,251; orders Lee to pay a total of $6,399,792, consisting of disgorgement of $2,687,061, prejudgment interest thereon in the amount of $1,025,670, and a civil penalty of $2,687,061; and orders Pallas to pay a civil penalty of $472,902. The final judgment separately rules in favor of Relief Defendant Castro Business Enterprises, LLC (CBE) with respect to the Commission's claim of unjust enrichment alleged as to CBE. The final judgment follows the Court's June 16, 2025 order granting the SEC's motion for partial summary judgment and its July 10, 2026 amended order granting in part and denying in part the SEC's motion for remedies and entry of final judgment.
Previously, on March 13, 2026, the Court entered a final judgment by consent as to J. Bernard Rice, APB's alleged former CFO. The Court also previously dismissed the SEC's unjust enrichment claims as to Relief Defendants Puerto Rico One Corporation and Legion Accounting Services, Inc. pursuant to a stipulation filed by the parties.
The entry of the final judgment concludes the litigation.
The SEC's litigation was led by Eugene Hansen and Samantha Williams, substantially assisted by Senior Accountant Jamie Wohlert, and supervised by James Carlson.
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Resources
* Final Judgment (https://www.sec.gov/files/litigation/litreleases/2026/judg26587.pdf)
* Amended Order Granting in Part and Denying in Part Remedies and Entry of FInal Judgment (https://www.sec.gov/system/files/filefield_paths/order26587.pdf)
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Original text here: https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26587
SEC Obtains Final Consent Judgment as to Individual in Alleged Microcap Fraud Scheme
WASHINGTON, July 18 -- The Securities and Exchange Commission issued the following litigation release (No. 20-cv-11092; D. Mass. filed June 9, 2020) involving an individual in an alleged microcap fraud scheme:
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On July 17, 2026, the United States District Court for the District of Massachusetts entered a final consent judgment as to Shane Schmidt in a previously-filed action against 11 defendants alleging a fraudulent microcap scheme.
The Commission's complaint, filed on June 9, 2020, alleged that Schmidt engaged with others in a fraudulent scheme to dump the securities of a microcap company,
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WASHINGTON, July 18 -- The Securities and Exchange Commission issued the following litigation release (No. 20-cv-11092; D. Mass. filed June 9, 2020) involving an individual in an alleged microcap fraud scheme:
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On July 17, 2026, the United States District Court for the District of Massachusetts entered a final consent judgment as to Shane Schmidt in a previously-filed action against 11 defendants alleging a fraudulent microcap scheme.
The Commission's complaint, filed on June 9, 2020, alleged that Schmidt engaged with others in a fraudulent scheme to dump the securities of a microcap company,Sandy Steele Unlimited, Inc. According to the complaint, Schmidt used an alias to secretly operate Sandy Steele and created a false and misleading company website. Schmidt allegedly facilitated the distribution of Sandy Steele shares to his associates who then allegedly sold the shares during a false and misleading promotional campaign.
Schmidt consented to the entry of a final judgment enjoining him from violating the antifraud provisions of Section 17(a)(1) and 17(a)(3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, ordering him to pay $15,802 in disgorgement, which is deemed satisfied by the forfeiture judgment imposed against Schmidt in a parallel criminal case, United States v. Schmidt, No. 25-cr-10046 (D. Mass), and imposing a penny stock bar against him. The Court previously entered judgments by consent against defendants Douglas Roe, Kelly Warawa, Nelson Gomes, Michael Luckhoo-Bouche, and Atlantean Management Corporation and judgments by default against FFS Capital Limited, Paifang Trading Limited, Artefactor Limited, Meadow Asia Limited, and Thyme International Limited.
The SEC's litigation, which is now complete, was handled by Kathleen Shields in the SEC's Boston Regional Office.
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Resources
* Revised Final Judgment (https://www.sec.gov/files/litigation/litreleases/2026/judg26588.pdf)
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Original text here: https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26588
SEC Charges Ex-Director of Public Company, 3 Friends in Connection With Alleged Insider Trading
WASHINGTON, July 18 -- The Securities and Exchange Commission issued the following litigation release (No. 2:26-cv-12451; E.D. Mich. filed July 17, 2026):
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Securities and Exchange Commission v. Jamal Chammout, et al., Civil Action No. 2:26-cv-12451 (E.D. Mich. filed July 17, 2026)
On July 17, 2026, the Securities and Exchange Commission charged Ali El Siblani, a former senior executive and director of Desktop Metal, Inc., a then-publicly traded company, and three of El Siblani's friends, Jamal ("Jimmy") Chammout, Ali Jawad, and Rabih Rakha, all of Michigan, alleging that El Siblani's friends
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WASHINGTON, July 18 -- The Securities and Exchange Commission issued the following litigation release (No. 2:26-cv-12451; E.D. Mich. filed July 17, 2026):
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Securities and Exchange Commission v. Jamal Chammout, et al., Civil Action No. 2:26-cv-12451 (E.D. Mich. filed July 17, 2026)
On July 17, 2026, the Securities and Exchange Commission charged Ali El Siblani, a former senior executive and director of Desktop Metal, Inc., a then-publicly traded company, and three of El Siblani's friends, Jamal ("Jimmy") Chammout, Ali Jawad, and Rabih Rakha, all of Michigan, alleging that El Siblani's friendsunlawfully traded based on material nonpublic information in advance of an August 11, 2021 announcement that Desktop Metal would acquire The ExOne Company at a premium to the market price. El Siblani, Jawad, and Rakha have agreed to settle the SEC's charges against them.
The SEC's complaint, filed in the U.S. District Court for the Eastern District of Michigan, alleges that from at least June through August 2021, Desktop Metal entrusted El Siblani with highly sensitive information about its proposed acquisition of ExOne, including the significant premium the company planned to pay ExOne shareholders. According to the complaint, rather than keeping this material non-public information to himself--as required under Desktop Metal's internal policies--El Siblani breached his fiduciary duty to Desktop Metal and its shareholders by tipping his close friends Chammout, Jawad, and Rakha before the acquisition was publicly announced. The SEC's complaint alleges that shortly after communicating with El Siblani, each of the tippees simultaneously started building substantial positions in ExOne securities and kept buying stock right up until the announcement. After the acquisition was publicly announced, the tippees are alleged to have quickly sold off their ExOne positions and obtained illicit profits in the amounts of: $218,036 for Chammout, $218,082 for Jawad, and $61,006 for Rakha.
The SEC's complaint charges El Siblani, Chammout, Jawad, and Rakha with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC's complaint seeks permanent injunctive relief and civil penalties against all defendants, disgorgement with prejudgment interest against Chammout, Jawad, and Rakha, and an order barring El Siblani from service as an officer or director of a public company.
Without admitting the allegations in the SEC's complaint, El Siblani, Jawad, and Rakha have agreed to the entry of final judgments, subject to court approval, that would permanently enjoin them from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, order El Siblani to pay a civil penalty of $497,124, and prohibit him for four years following entry of the judgment from serving as an officer or director of a public company, order Jawad to pay disgorgement of $218,082, prejudgment interest of $72,364, and a civil penalty of $218,082, and order Rakha to pay disgorgement of $61,006, prejudgment interest of $20,243, and a civil penalty of $61,006.
The SEC's investigation was conducted by Taryn Lewis and Nicolas Magena and supervised by Brian Fagel of the SEC's Chicago Regional Office. The SEC's litigation will be led by Timothy Leiman and Jonathan Polish and supervised by Eric Phillips, also of the Chicago Regional Office. The SEC appreciates the assistance of the Financial Industry Regulatory Authority (FINRA).
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Resources
* SEC Complaint (https://www.sec.gov/files/litigation/complaints/2026/comp26589.pdf)
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Original text here: https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26589
NRC Accepts Ginna Subsequent License Renewal Application for Review
WASHINGTON, July 18 -- The Nuclear Regulatory Commission issued the following news release:
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NRC Accepts Ginna Subsequent License Renewal Application for Review
ROCKVILLE, Md. -- The Nuclear Regulatory Commission has accepted for review Constellation's application to extend the operating license of the R.E. Ginna nuclear power plant in Ontario, New York, by 20 years, from 60 to 80 years total.
What: NRC staff determined the application has sufficient technical and environmental information to begin a full safety and environmental review, including audits, ahead of a licensing decision.
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WASHINGTON, July 18 -- The Nuclear Regulatory Commission issued the following news release:
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NRC Accepts Ginna Subsequent License Renewal Application for Review
ROCKVILLE, Md. -- The Nuclear Regulatory Commission has accepted for review Constellation's application to extend the operating license of the R.E. Ginna nuclear power plant in Ontario, New York, by 20 years, from 60 to 80 years total.
What: NRC staff determined the application has sufficient technical and environmental information to begin a full safety and environmental review, including audits, ahead of a licensing decision.
When: If approved, Ginna could operate through Sept. 18, 2049. The plant was first licensed in 1969 for 40 years and renewed in 2004 for 20 more, extending its license to 2029.
How: The NRC will publish a hearing notice within days, opening a 60-day window for the public to request a legal hearing on the application.
Background: Constellation filed the application June 17. Copies of the application are available at Lyons Public Library, 122 Broad St., Lyons, New York, and online.
More on the renewal process: www.nrc.gov/reactors/operating/licensing/renewal.html
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Original text here: https://www.nrc.gov/sites/default/files/cdn/doc-collection-news/2026/26-021-a.pdf
MSPB Issues Board Decision Involving Department of the Navy Vs. Appellant Cynthia E. Montalvo
WASHINGTON, July 18 -- The Merit Systems Protection Board issued the following case report on a board decision involving the Department of the Navy and appellant Cynthia E. Montalvo on July 17, 2026:
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BOARD DECISIONS
Appellant: Cynthia E. Montalvo
Agency: Department of the Navy
Decision Number: 2026 MSPB 6
Docket Number: SF-0752-23-0327-X-1
Issuance Date: July 10, 2026
MIXED CASE PROCEDURES COMPLIANCE
In the underlying appeal, the administrative judge issued an initial decision that reversed the appellant's removal based on a charge of excessive absences and ordered the agency to
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WASHINGTON, July 18 -- The Merit Systems Protection Board issued the following case report on a board decision involving the Department of the Navy and appellant Cynthia E. Montalvo on July 17, 2026:
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BOARD DECISIONS
Appellant: Cynthia E. Montalvo
Agency: Department of the Navy
Decision Number: 2026 MSPB 6
Docket Number: SF-0752-23-0327-X-1
Issuance Date: July 10, 2026
MIXED CASE PROCEDURES COMPLIANCE
In the underlying appeal, the administrative judge issued an initial decision that reversed the appellant's removal based on a charge of excessive absences and ordered the agency tocancel the removal, retroactively restore the appellant to duty, and pay her back pay with interest and benefits. The appellant filed a petition for enforcement asserting that the agency was in noncompliance with the initial decision and alleging that its noncompliance was the result of discrimination based on disability and retaliation for equal employment opportunity (EEO) activity. The administrative judge issued a compliance initial decision finding that the agency was not in compliance with its back pay obligations. As to the appellant's discrimination and retaliation claims, the administrative judge rejected the agency's argument that such claims were outside of the scope of a compliance proceeding, relying on the Board's decision in Jimenez v. U.S. Postal Service, 58 M.S.P.R. 520, 525 (1993), but nevertheless concluded that the appellant failed to prove these "affirmative defenses." Neither party objected to the administrative judge's finding of noncompliance and the appellant's petition for enforcement was subsequently referred to the Board for a final decision on compliance.
Holding: The Board may not adjudicate discrimination claims under 5 U.S.C. Sec. 7702 in a petition for enforcement; the Board's decision in Jimenez v. U.S. Postal Service, 58 M.S.P.R. 520 (1993), is overruled.
1. Pursuant to the Board's authority to hear and adjudicate an appealable action within its jurisdiction under 5 U.S.C. Sec. 1204(a)(1), the Board may adjudicate related claims of discrimination in what is known as a "mixed case." Because noncompliance is not an appealable action under 5 U.S.C. Sec. 7702(a)(1)(A) that the Board may adjudicate under 5 U.S.C. Sec. 1204(a)(1), compliance matters may not be mixed cases as a matter of law, overruling Jimenez.
2. When the Board exercises its enforcement authority under 5 U.S.C. Sec. 1204(a)(2), by contrast, the sole issue before the Board is whether the agency complied with the Board's final order or decision, and therefore, the Board may not adjudicate discrimination claims in an enforcement proceeding, even if they pertain to the agency's alleged noncompliance.
Holding: The Board may consider allegations of agency retaliation, including claims of EEO reprisal, to the extent retaliation may constitute noncompliance with a final Board order or enforceable settlement agreement.
1. Because an employee who is being retaliated against for having filed an appeal with the Board has not been returned to the status quo ante, the Board may consider allegations of agency retaliation, including allegations of EEO retaliation, to the extent such retaliation may constitute noncompliance with a final Board order or enforceable settlement agreement.
2. The Board will limit its assessment of retaliation claims to whether the agency restored the appellant to the status quo ante, or the agency's compliance with a settlement term, as the case may be, and will not consider whether the claims constitute actionable discrimination.
Holding: Because the agency complied with its obligations to pay the appellant back pay and interest, the Board dismissed the petition for enforcement.
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COURT DECISIONS
PRECEDENTIAL:
Petitioner: Casandra Ann Hernandez
Respondent: Department of Justice
Tribunal: U.S. Court of Appeals for the First Circuit
Case Number: 24-1482
MSPB Docket No. NY-0752-20-0229-I-1
Issuance Date: July 7, 2026
MIXED CASE PROCEDURES
APPEAL RIGHTS UNDER CSRA
As relevant here, the agency removed the petitioner based on charges of insubordination and lack of candor. The petitioner filed a Board appeal challenging her removal and raised an affirmative defense of retaliation for her prior protected EEO activity. The administrative judge issued an initial decision sustaining the insubordination charge, not sustaining the lack of candor charge, denying the petitioner's EEO reprisal affirmative defense, and sustaining her removal based on the insubordination charge alone. That decision became the final decision of the Board when neither party petitioned for review. The petitioner subsequently filed an appeal in U.S. District Court for the District of Puerto Rico alleging, among other things, that the removal decision was the product of retaliation for her protected EEO activity. The district court granted the agency's motion for summary judgment.
Holding: The Board's removal decision is supported by substantial evidence.
1. Substantial evidence supported the Board's determination that the agency instructed the petitioner to communicate by phone or in person with her immediate supervisor and that she failed to follow this instruction by either not communicating with him at all or by communicating with him through other people.
Holding: The Board correctly determined that the petitioner failed to prove her Title VII retaliation claim.
1. The agency articulated legitimate, nonretaliatory reasons for the removal decision, i.e. the petitioner's alleged insubordination and lack of candor. Therefore, even assuming that the petitioner proved a prima facie case or reprisal, she would still need to provide evidence that each of the agency's reasons supporting the removal were pretextual.
2. The court rejected the petitioner's argument that the agency's failure to prove the lack of candor charge was evidence of pretext, concluding that the agency's failure to prove the charge before the Board did not warrant a finding that the petitioner's termination was retaliatory.
3. Similarly, the court rejected the petitioner's argument that the insubordination charge alone could not justify her removal because she was not actually insubordinate, concluding that the petitioner was "merely rehash[ing] her qualms against the [Board's] finding of insubordination."
4. Finally, the court rejected the petitioner's argument that it should infer a finding of pretext because the agency inhibited her ability to obtain key discovery information on the issue, pointing to its earlier determination that the district court properly denied the petitioner's discovery-related motion.
NONPRECEDENTIAL:
Hart v. Merit Systems Protection Board, No. 2026-1241 (Fed. Cir. July 10, 2026) (MSPB Docket No. SF-0752-22-0558-B-1). The court affirmed the Board's decision, which dismissed the petitioner's appeal challenging her probationary termination for lack of jurisdiction. The court agreed with the Board's determination that the petitioner failed to establish that she was an "employee" with Board appeal rights under 5 U.S.C. Sec. 7511(a)(1)(C) because (1) it was undisputed that she had not completed at least 2 years of current continuous service in the same or similar positions in an Executive agency under other than a temporary appointment limited to 2 years or less, and (2) she failed to demonstrate that she was not serving in a probationary or trial period at the time of her termination because she had not provided any evidence indicating that her Schedule A appointment was any different from the agency's other positions under Schedule A, which public-facing and internal agency documents confirmed were all subject to a probationary or trial period of 2 years for individuals who were not preference-eligible. The court also declined to disturb the Board's decision not to consider evidence the petitioner submitted for the first time on review and her argument challenging the merits of her termination.
Le v. Office of Personnel Management, No. 2024-1946 (Fed. Cir. July 14, 2026) (MSPB Docket No. SF-844E-19-0097-I-1). The court dismissed the petitioner's appeal challenging the Board's decision denying his request for Federal Employees' Retirement System (FERS) disability retirement benefits for lack of jurisdiction. The Board had affirmed the decision of the Office of Personnel Management denying the petitioner's FERS disability retirement application on the basis that his medical evidence failed to establish a disabling medical condition. The court determined that it lacked jurisdiction to entertain the petitioner's challenge to the Board's determination, reaffirming that factual determinations made by the Board in disability retirement appeals under FERS are final and conclusive and not subject to court review, absent a limited set of exceptions related to procedural or legal errors. The court also rejected the petitioner's argument that his challenge fell within those narrow exceptions.
Lynn v. Department of Veterans Affairs, No. 2026-1095 (Fed. Cir. July 16, 2026) (MSPB Docket No. SF-0714-17-0702-C-1). The court affirmed the Board's decision, which denied the petitioner's petition for enforcement of a settlement agreement. The court agreed with the Board that the terms of the settlement agreement unambiguously stated that the settlement payment must be paid directly to the petitioner and not his designated representative. The court also rejected the petitioner's arguments that the court should consider extrinsic evidence of another agreement the agency executed, that the Board improperly credited the agency's post-hoc rationalizations for refusing to issue payment to the representative, and that the agency violated its duty of good faith and fair dealing.
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Original text here: https://www.mspb.gov/decisions/case_reports/Case_Report_July_17_2026.pdf
FEC Issues Digest for Week of July 13-17, 2026
WASHINGTON, July 18 -- The Federal Election Commission issued the following weekly digest:
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Commission meetings and hearings
No open meetings or executive sessions were scheduled this week.
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Litigation
Bernegger v. FEC (Case No. 25-4072) On July 6, Plaintiff filed a Motion for an Order Directing the Clerk to Enter Default Under Fed. R. Civ. P. 55(a), or in the Alternative, for Entry of Default by the Court in the U.S. District Court for the District of Columbia.
Campaign Legal Center v. FEC (Case No. 26-1559) On July 10, the Commission filed an Answer in the U.S. District Court
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WASHINGTON, July 18 -- The Federal Election Commission issued the following weekly digest:
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Commission meetings and hearings
No open meetings or executive sessions were scheduled this week.
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Litigation
Bernegger v. FEC (Case No. 25-4072) On July 6, Plaintiff filed a Motion for an Order Directing the Clerk to Enter Default Under Fed. R. Civ. P. 55(a), or in the Alternative, for Entry of Default by the Court in the U.S. District Court for the District of Columbia.
Campaign Legal Center v. FEC (Case No. 26-1559) On July 10, the Commission filed an Answer in the U.S. District Courtfor the District of Columbia.
CREW v. FEC (Case No. 22-35) On July 15, the U.S. Court for the District of Columbia issued a Minute Order directing the Clerk of Court to terminate this case from the active docket in light of the Joint Stipulation of Dismissal filed by the parties on July 9.
DCCC v. FEC (Case No. 24-2935) On July 16, the U.S. District Court for the District of Columbia issued a Minute Order that the parties shall appear before the court on July 22, 2026, for a status conference to discuss the need for and scope of any further briefing on the pending motions.
Esrati v. FEC (Case No. 26-1498) On July 10, Plaintiff filed an Opposition to the Commission's Motion to Dismiss in the U.S. District Court for the District of Columbia.
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Reports Due in 2026
The Commission has posted the 2026 Congressional Pre-Election Reporting Dates. Reporting schedules for all filers in 2026 are also available.
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Election Dates
The Commission has posted a list of 2026 Congressional Primary Dates.
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Upcoming educational opportunities
For more information on upcoming training opportunities, see the Commission's Trainings page.
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Upcoming reporting due dates
July 20: July Monthly Reports are due. For more information, see the 2026 Monthly Reporting schedule.
The Commission has posted information regarding reporting deadlines as some states reschedule congressional primary elections to account for redistricting.
The Commission has posted filing information regarding the Georgia 13th District Special General Election, scheduled for July 28, 2026, and Special Runoff Election (if necessary), scheduled for August 25, 2026.
The Commission has posted filing information regarding the California 14th District Special Runoff Election, scheduled for August 18, 2026.
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Additional research materials
Contribution Limits: In addition to the current limits, the Commission has posted an archive of contribution limits that were in effect going back to the 1975-1976 election cycles.
Federal election results are available. The data was compiled from the official vote totals published by state election offices.
FEC Notify: Want to be notified by email when campaign finance reports are received by the agency? Sign up here.
The Combined Federal State Disclosure and Election Directory is available. This publication identifies the federal and state agencies responsible for the disclosure of campaign finances, lobbying, personal finances, public financing, candidates on the ballot, election results, spending on state initiatives, and other financial filings.
The Presidential Election Campaign Fund Tax Checkoff Chart provides information on balance of the Fund, monthly deposits into the Fund reported by the Department of the Treasury, payments from the Fund as certified by the FEC, and participation rates of taxpayers as reported by the Internal Revenue Service. For more information on the Presidential Public Funding Program, see the Public Funding of Presidential Elections page.
The FEC Record is available as a continuously updated online news source.
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Original text here: https://www.fec.gov/updates/week-of-july-13-17-2026/
FCC Enforcement Bureau Settles Investigation Over Texas 10 Supply Chain Certification
WASHINGTON, July 18 -- The Federal Communications Commission Enforcement Bureau has officially settled an investigation into Texas 10 LLC regarding accurate reporting within a federal telecom supply chain cleanup initiative. The federal action, officially titled In the Matter of Texas 10, LLC (DA 26-674), resolves allegations that the company made incorrect statements during the final compliance phase of a national security program.
Under the terms of the settlement, the company admits it could not verify the proper destruction of certain national security risk components, despite certifying that
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WASHINGTON, July 18 -- The Federal Communications Commission Enforcement Bureau has officially settled an investigation into Texas 10 LLC regarding accurate reporting within a federal telecom supply chain cleanup initiative. The federal action, officially titled In the Matter of Texas 10, LLC (DA 26-674), resolves allegations that the company made incorrect statements during the final compliance phase of a national security program.
Under the terms of the settlement, the company admits it could not verify the proper destruction of certain national security risk components, despite certifying thatit had done so. To resolve the liability, the business has agreed to pay a $10,000 voluntary contribution to the United States Treasury and accept strict compliance terms as it prepares to dissolve its operations later this year.
The enforcement action stems from the Secure and Trusted Communications Networks Act of 2019, which lawmakers enacted on March 12, 2020. The law designed a framework to protect the domestic communications infrastructure from foreign espionage risks by requiring the removal of suspect hardware. The law directed the federal regulator to compile a list of covered communications equipment and services deemed to present an unacceptable risk to national security. The resulting list prominently featured technology produced by Huawei Technologies Company and ZTE Corporation.
To assist service providers burdened by the mandate, the government established the Secure and Trusted Communications Networks Reimbursement Program. This program provided federal funds to offset reasonable expenses incurred by companies as they permanently removed, replaced, and discarded prohibited equipment from their active commercial networks.
Participation in the multi-billion-dollar program carried strict administrative obligations. Every participating network operator had to submit a final certification via a specific federal document known as Form 5640 within 10 days of completing their project timeline. This document required participants to explicitly confirm whether they had finished the permanent removal, replacement, and disposal of all covered items present in their infrastructure when they first applied for funding.
Texas 10, LLC operated as an Eligible Telecommunications Carrier providing commercial broadband services across the state of Texas. The provider entered the reimbursement program to purge its infrastructure of the banned components. Between January and May of 2022, the company filed its initial funding applications and subsequent amendments to participate in the security initiative. Records show the company chose to remove the restricted equipment from its operating grid but opted not to replace the components with substitute gear.
The regulatory issue arose when the company submitted its final project completion papers. The company checked a box indicating that all prohibited hardware had been permanently removed, replaced, and destroyed. However, an internal accounting gap existed. Certain pieces of covered hardware, which were present in the network when the initial funding request occurred, were misplaced. The company could not locate this gear prior to the decommissioning phase and therefore could not verify that it had been properly destroyed according to federal rules.
Although the provider did not initially highlight the missing hardware in its initial completion filing, the business did not seek federal reimbursement cash for the disposal or removal of those specific lost items. When federal investigators discovered the discrepancy and requested specific information regarding the missing assets, company representatives were cooperative. The entity offered to revise its final certification documents to accurately reflect that the final whereabouts and destruction of the lost items could not be validated.
Enforcement Bureau Chief Patrick Webre signed the adopting order on July 17, 2026, officially terminating the active investigation. The bureau determined that accepting the consent decree and ending the inquiry served the public interest by avoiding the expenditure of additional public resources. The regulator affirmed that, barring the discovery of subsequent material evidence, the agency will not use these specific facts to initiate separate proceedings against the entity or question its basic qualifications to hold operational licenses.
The settlement comes at a time when the Texas provider is preparing to exit the marketplace entirely. According to the case text, the company currently generates no operating income and expects to wind down its remaining business functions by the conclusion of 2026.
The $10,000 penalty must be delivered electronically to the United States Treasury within 30 calendar days of the order. The agreement states that failure to submit the funds on time triggers an immediate default, allowing the government to add interest charges calculated using the United States Prime Rate plus an additional 4.75 percent, along with collections fees and litigation costs. Legal notices regarding the order were dispatched to corporate representative Jonathan Foxman in Wayne, Pennsylvania, and legal counsel David LaFuria in Tysons, Virginia.
-- Vidhi Gianani, Targeted News Service
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Original text here: https://docs.fcc.gov/public/attachments/DA-26-674A1.pdf
