EXHIBIT 1 - Federal Communications Commission

EXHIBIT 1

Complaint and Declarations of Mark Scully and David McGinnis in

National Lightnet, LLC v. Willard Burge III, Betty Burge et al.

Case No. 18CV40521 (OR Cir. Ct., filed Sept. 12, 2018)

EXHIBIT 2

Third Amended Complaint in


Case No. 18CV40521 (OR Cir. Ct., filed Jan. 8, 2020)

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IN THE CIRCUIT COURT OF THE STATE OF OREGON FOR DOUGLAS COIINTY

NATIONAL LIGHTNET, LLC, andCOMSPAN COMMUNICATIONS INC.,

Case No. Case No. 18CV40521))))))))))))))))))))))

Plaintiffs, THIRD AMENDED COMPLAINT

v(Breach of Duty; Fraud; Diversion ofBusiness Opportunities; Account;Conversion; Breach of Contract;Negligence)

WILLARD BURGE III, BETTY BURGE,NATIONAL NETWORK HOLDINGS, [NC.,and LOCALITY NETWORKS, INC.,

Not Subject to Mandatory Arbitration

Total claim : $77 0,800.79

DefendantsiThird PartyPlaintiffs,

MARK J. SCULLY,

Third Party Defendant.

Plaintiffs allege:

Plaintiff National Lightnet, LLC (hereinafter, "Plaintiffi") is a Nevada manager-managed

rFor the sake of convenience, "Plaintiff' shall refer to National Lightnet, LLC, while"Comspan" shall refer to Plaintiff Comspan Communications Inc., even though both parties are

Page 1 -- THIRD AMENDED COMPLAINT

DOLE COALWELLAltorneys

8 I 0 SE Douglas - PO Box I 205Roseburg. OR 97470

Phonc: (54 I )(r73-554 I

1/8/2020 9:20 AM18CV40521

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I limited liability company engaged in the business of telecommunications. Plaintiff Comspan

Communications Inc. (hereinafter, "Comspan") is an Oregon corporation with its principal place

of business in Roseburg, Douglas County, Oregon.

At all material times, Defendants Willard Burge III (hereinafter, "Willard Burge") and

Betty Burge were residents of Douglas County, Oregon. At all material times, Willard Burge

was an employee and manager of Plaintiff and the President of Comspan. At all material times,

Betty Burge was an accountant and bookkeeper who provided accountant and bookkeeper

services for Plaintiff and Comspan in Douglas County, Oregon.

Defendant National Network Holdings, Inc. (hereinafter, "NNH"), is a Washington

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12 Corporation formed by Willard Burge on March 8, 2018

Defendant Locality Networks Inc. (hereinafter, "LNI") is a North Carolina Corporation

15 formed by Willard Burge on April 9,2018

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t7 Defendant Willard Burge was employed by Plaintiff from March 17 ,2015 through July

18 17 ,2018. Some time after Willard Burge was hired, Defendant Betty Burge was contracted by

19 Plaintiff and Comspan to provide bookkeeping and accounting services.

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DOLE COALWEI-LAtlorneys

8 I 0 Si: Douglas - PO Box 1205Roseburg. OR97470

Phone: (54 I )673-554 I

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Plaintiffs herein


1 6.

As a manager and employee of Plaintiff, Willard Burge owed Plaintiff the duty of loyalty,

and was obligated to act for the benefit of Plaintiff and to avoid self-dealing. Willard Burge also

owed Plaintiff a duty to disclose his plans to compete with Plaintiff.

FIRST CLAIM FOR RELIEF

(Breach of Duty of Loyalty and Disclosure)

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Plaintiffs reallege paragraphs 1 through 6.

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Willard Burge, in concert with his wife, Betty Burge, participated in a secret plan to

misappropriate Plaintiff s funds, as well as a business opportunity of Plaintiff.

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During his employment, Willard Burge, in concert with Betty Burge, failed to fulfill and

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14 breached his duties and obligations to Plaintiff and/or Comspan in the following particulars:

15 a. Paying Willard Burge, Betty Burge, and another family member expense

16 reimbursements that were fabricated, undocumented, andlor unsubstantiated;

l7 b. Misappropriating funds from Plaintiff under the guise of "office storage rent ,

18 c. Paying Willard Burge unauthorized and excessive vacation and PTO pay, including

19 pay for periods after Willard Burge had resigned;


DOLE COALWELLAttorneys

810 SE Douglas - PO Box 1205

Roseburg, OR97470Phone: (54 I )673-554 I

1 d. Paying Betty Burge amounts in excess of the terms of her contract with Plaintiff;

e. Using company funds and credit to pay for expenses incur:red in personal business

ventures;

f. Taking a business opportunity in North Carolina for themselves, without disclosing

their intention to compete to Plaintiff;

g. Failing to pay payroll taxes, while improperly taking company funds for themselves

that could otherwise have been paid toward those liabilities; and

h. inaccurately reporting assessable revenues to the Universal Service Administrative

Company, resulting in erroneously high Universal Service Fund assessments and a withholding

10 of credits otherwise due to Comspan, failing to pay the Universal Service Fund assessments,

11 resulting in penalties and interest, and misrepresenting to Comspan that said assessments were

12 timely paid. Defendants' breaches set forth above also caused Plaintiff and Comspan to incur

13 legal fees, accountant fees, and consultant fees to seek to remedy the harm caused by Defendants,

14 not including the attorney fees incurred as part of this action.

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t6 The above breaches of duty were not discovered until on or after August, 2018, upon the

t7 hiring of an independent accountant to review Plaintiff and Comspan's financial and payroll

records. Defendants actively concealed their breaches of duty to Plaintiff and Comspan.18

19 Plaintiff neither knew nor should have known of Defendants' breaches until on or after August




Roseburg, OR 97470Phone: (541)673-5541

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1 2018

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11.

As a direct and proximate result of Defendants' breaches of duty detailed above, Plaintiff

has been damaged in the amount of $226,849.85, consisting of overpayments to Defendants

Burge, payroll tax penalties and interest incurred by Plaintiff, accounting and consulting fees in

addressing Defendants' breaches. Comspan has been damaged in the amount of $543,950.94,

consisting of USAF assessments, penalties, interest, and attorney fees in addressing the

unwarranted USAF liabilities.

SECOND CLAIM FOR RELIEF

(Fraud)

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Plaintiffs reallege paragraphs I through 1 1.

13.

During the period of Willard Burge's employment and the period that Betty Burge

contracted with Plaintiff and Comspan, both made representations to Plaintiff and Comspan

about their expenses submitted for reimbursement, vacation and PTO hours submitted for pay,

their pursuance of business opportunities on behalf of Plaintiff (while intending to take an

opportunity for themselves), their hours submitted for pay, their entitled to "storage rent"

payments, their alleged payment of payroll taxes, and their alleged timely payment of USF




Roseburg, OR97470Phone: (541)673-5541

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1 contributions assessed against Comspan.

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Willard and Betty Burge's representations to Plaintiff and Comspan regarding the items

set forth in paragraphs 9 and 13 were false, and they knew they were false. Willard and Betty

Burge used Plaintiff s assets for their personal use and profit, to which neither was entitled, and

each received amounts that were not authorizedby Plaintiff or by law.

15.

Willard and Betty Burge fraudulently concealed facts from Plaintiff, including those set

forth in paragraphs 9 and 13 of this Complaint, by failing to disclose those facts, by making

misrepresentations regarding those facts, and by actively destroying and secreting files

concerning the same.

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Willard and Betty Burge made their misrepresentations and failed to disclose their

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14 wrongful conduct, knowing that Plaintiff would rely on their misrepresentations and thereby

15 continue the employment and contractual relationship, to Plaintiff s detriment.

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Willard and Betty Burge made their misrepresentations with the purpose of inducing

18 Plaintiff to rely on them.

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8 I 0 SE Douglas - PO Box I 205


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Plaintiff did in fact rely upon the misrepresentations of Willard and Betty Burge, in

ignorance of their falsity.

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Plaintiff has been damaged as a result of Willard and Betty Burge's misrepresentations in

the amount of $226,849.85, and Comspan has been damaged in the amount of $543,950.94, as

more specifically alleged in paragraph 11 herein.

THIRD CLAIM FOR RELIEF

(Diversion of Business Opportunities - Constructive Trust )

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Plaintiffs reallege paragraphs I through 6.

21.

In early 2018, Willard Burge, purportedly acting on behalf of Plaintiff, considered a

potential expansion of Plaintiff s operations to a locality in North Carolina. Willard Burge

traveled to Norlh Carolina and worked to develop the new telecommunications opportunity.

22.

Unbeknownst to Plaintiff, Willard Burge intended to form a new company of his own and

take that opportunity in North Carolina for himself. On March 8,2018, Willard Burge secretly

formed Defendant NNH. Subsequently, on April 8, 2018, Willard Burge formed Defendant LNI.



8 I 0 SE Douglas - PO Box I 205

Roseburg, OR 97470Phone: (541)673-5541

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Willard Burge falsely represented to others that NNH was an investment group which

owned several corporations across the country providing broadband services to smaller

communities. In fact, NNH had just been formed and did not own several corporations across

the country. Willard Burge carefully selected the name "National Network Holdings, Inc." to

create confusion with Plaintifls name "National Lightnet, LLC." Unlike NNH, Plaintiff does

have several subsidiaries that provide broadband services to rural communities. Willard Burge

deliberately used Plaintiff s goodwill, as well as PlaintifPs assets and money, for his own

purposes and to divert the North Carolina opportunity for himself and the new companies he had

10 secretly formed.

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12 Defendant LNI was formed to provide broadband services to Pinetops and other localities

13 in North Carolina. This was the same opportunity that Willard Burge had been paid to seek for

14 the benefit of Plaintiff.

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16 On information and belief, Defendants LNI and NNH are operating in the community of

17 Pinetops and other localities in North Carolina, providing broadband services, and receiving

18 profits therefrom.

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20 Willard Burge, in concert with Betty Burge, LNI, and NNH, concealed their plan to take



810 SE Douglas - PO Box 1205Roseburg, OR97470

Phone: (54 I )673-554 I

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I Plaintiff s business opportunity in North Carolina, and used Plaintiff s money to finance their

business venture through excessive payments of salary, contract payments, fraudulent benefits,

and fraudulent expense reimbursements.

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On information and belief, in the months leading to Willard Burge's resignation with

Plaintiff, Willard and Betty Burge intentionally attempted to sabotage Plaintiff s business by

failing to pay required regulatory fees and failing to file required regulatory filings. Willard and

Betty Burge have caused Plaintiff severe and irreparable financial harm with their efforts.

Plaintiff has no adequate remedy at law for Defendants' actions of diverting a business

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l3 Defendants have usurped and misappropriated a business opportunity that belonged to

14 Plaintiff, and Defendants have been, and will continue to be, unjustly enriched at Plaintiff s

15 expense, and to Plaintiff s detriment.

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tl A constructive trust should be imposed in favor of Plaintiff on all of Defendants' profits

I 8 and proceeds derived as a result of the improper diversion of Plaintiff s business opportunity

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Roseburg, OR97470Phone: (541 )673-554 I

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FOURTH CLAIM FOR RELIEF

(Accounting)

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Plaintiffs reallege paragraphs 1 through 30.

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Defendants should be required to account to Plaintiff for the profits received as a result of

their wrongful diversion of Plaintiffls business opportunity

FIFTH CLAIM FOR RELIEF

(Conversion)

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Plaintiffs reallege paragraphs I through 10.

Defendants wrongfully and unlawfully took company funds with no intention of returning

them, and without the consent of Plaintiff. Defendants acted in bad faith.

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Defendants' dominion and control over Plaintiff s property has been to the exclusion of,

and in defiance of, Plaintiff s rights, and Defendants have interfered with the rights of Plaintiff in

and to such property.

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Defendants' conversion of Plaintiff s property has caused Plaintiff damages in the amount




Roseburg, OR 97470Phone: (54 I )673-554 I

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I of $190,853.07, consistent of the value of the monies taken by Defendants and the consultant and

accountant fees incurred in discovering Defendants' acts of converslon.

SIXTH CLAIM FOR RELIEF

(Breach of Contract)

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Plaintiffs reallege paragraphs 1 through 10

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Plaintiff and Willard Burge were in a contractual relationship as employer and employee,

one of the implied terms of which was the duty of good faith, and the other duties set forth

10 herein.

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I2 Plaintiff and Betty Burge were in a contractual relationship under which Betty Burge

13 agreed to provide Plaintiff accounting and bookkeeping services, and Plaintiff agreed to pay

14 Betty Burge for those services. The contract between Plaintiff and Betty Burge included an

15 implied duty of good faith and fair dealing.

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17 Defendants Willard and Betty Burge breached the duty of good faith and fair dealing, as

18 well as the other duties alleged herein, by misappropriating the funds of Plaintiff and usurping

19 Plaintiff s business opportunity in North Carolina.

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Page 1l -- THIRD AMENDED COMPLAINT


8 I 0 SE Douglas - PO Box I 205Roseburg, OR 97470

Phone: (541)673-5541

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Willard and Betty Burge's breaches of contract have caused Plaintiff damages in the

amount of $190,853.07, consistent of the value of the monies taken by Defendants and the

consultant and accountant fees incurred in discovering Defendants' acts of conversion.

SEVENTH CLAIM FOR RELIEF

Q.{egligence)

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Plaintiffs reallege paragraphs I through 10

Defendants Willard and Betty Burge's failure to accurately report gross revenue to USAC

11 and failure to timely pay assessed USF contribution amounts caused Comspan to incur

12 unwarranted USF assessments, penalties, and interest. Defendants Burges' failure to pay payroll

13 taxes caused National Lightnet to incur unwarranted payroll tax liabilities. As the President and

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bookkeeper/accountant for Comspan, Defendants Burge owed Comspan a heightened duty of

care and were in a special relationship with Comspan. It was foreseeable that the above-

described omissions would cause harm to Comspan, the type of which the law protects against

negligent invasion, and Defendants Burges' conduct was unreasonable in the light of the risk to

Comspan. Defendants Burges' negligence caused Comspan damages in the amount of

19 $543,950.94, consisting of USAF assessments, penalties, interest, and attorney fees in addressing

20 the unwananted USAF liabilities, and National Lightnet damages in the amount of $59,871.28,





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1 consisting of payroll tax penalties and interest, plus accounting and consulting fees.

WHEREFORE, Plaintiffs request judgment against Defendants as follows:

1. A money award in the amount of $543,950.94 in favor of Comspan, plus post-

judgment interest at the statutory rate;

2. A money award in the amount of $226,849.85 in favor of National Lightnet, LLC, plus

post-judgment interest at the statutory rate;

3. Imposition of a constructive trust over the profits earned by Defendants as a result of

their usurpation of PlaintifPs business opportunity;

4. An order requiring Defendants to account to Plaintiff for the profits earned from their

misappropriation and diversion of Plaintiff s business opportunity; and

5. Such other equitable relief as the Court deems just and proper.

DATED: January 7,2020.12

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, osB #024004

AvenuePost Office Box 1205

Roseburg, OR 97470-0303Telephone: (541) 613-5541Telefax: (541) 673-I | 56

Email : [email protected]

Of Attorneys for Plaintiffs


8 I 0 SE Douglas - PO Box I 205Roseburg, OR 97470

Phone: (54 I )673-554 I

CERTIFICATB OF SERVICB

I hereby certiff that on January 8,2020,I served a true copy of the foregoing ThirdAmended Complaint upon the following:

Travis W. MisfeldtOf Attorneys for DefendantsBassinger & Harvey1200 Executive Pkwy ste320Eugene, OR 97401

Electronic Service through the OJDElectronic filing system pursuant to UTCR.21.100 (lXa), at the party's email address onrecord in the eFiling system

X First Class Mail

tr Facsimile Transmissron

Electronic Mail

Electronic Mail through the OJDElectronic filing system at the party's emailaddress on record in the eFiling system

tr Hand Delivery

, osB #024004DO COAL81 ED AvenueP.O. Box 120

Roseburg, Oregon 97470Telephone: (541) 673 -5541Facsimile: (541) 67 3-1 | 56

Email : j ason@,roseburglaw.comOf Attorneys for Plaintiffs

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EXHIBIT 3

Trial Scheduling Order in


Case No. 18CV40521

(OR Cir. Ct., filed Feb. 18, 2020)

IwruB Clncurt Counr oFTHE Srarn or OnpcottFoRTHE CouNrv or DOUGLAS

ro36 SE DouglasAvenue Roseburg Oregon 97470S4r.gST.247r http://courts.oregon.gov/douglas

February t8, zozo

Dole Coalwell Trust AccountPO Box reo5Roseburg OR 9747o

Re: National Lightnet,LLC, Comspan Communications Inc vs Willard Burge, III, Betby Burge,

National Network Holdings, Inc., Locality Networks, Inc.Case #: r8CV4oser Tort - General

NOTICE OF SCHEDI.]LED COURT APPEARANCE

Scheduled Proceeding: Trial - Twelve Person JuryRoom: Courtroom 4o3

Date Timeo7/28/zozo g:go AMo7/zglzozo g:3o AMoTlgo/zozo 9:3o AMoTl3rlzozo 9:3o AM

Additional information: 4 days

IMPORTANT NOTICE: PLEASE READ

Failure to appear at the time and place noted above may result in an order or judgment being

entered against you in the case.

Inter?reter: If you need an interpreter, you must tell the court at least 4 business daysbef""e y"*;ppearatr"e date. Go {o www.courts.oregon.gou/ScheduleAnlnterpreter to get an

interpreter.

Interprete: Si Ud. necesita un int6rprete, debe notificar al tribunal por lo menos 4 dias

ffi"r ""t.s

de la fecha de su co-iarec"ncia. Para conseguir un int6rprete, siga el siguiente

enlace:

Hearing Notice03/2012

EXHIBIT 4

Documentation of Farmers Union Insurance Co. Payments of Claims Arising From Fraud and Thefts Upon Comspan by Willard and Betty Burge

[FILED CONFIDENTIALLY]

EXHIBIT 1 - Federal Communications Commission

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Transcript of EXHIBIT 1 - Federal Communications Commission