(CN) - New York City had the authority to block a telecommunications company from operating pay phones on public property based on its ties to organized crime and its history of fraud, the 2nd Circuit ruled.
Safe-harbor provisions in the Telecommunications Act allow the city to manage public rights of way and require "fair and reasonable compensation," Judge Leval wrote.
Global Network's CEO, Ronald Massie, associates with the Bonnano crime family and has pleaded guilty to loan sharking and money laundering, according to the ruling. He said Global Networks raked in 20 percent to 30 percent of its profits from pay phones planted by Bonnano family members. Property owners were reportedly threatened or intimidated into accepting them. Massie also admitted to having defrauded property owners out of $1.8 million in commissions.
Because of the company's criminal history, the New York-based federal appeals court said the city was justified in denying the franchise.
Global Network Communications failed to cite any federal or state law that pre-empts the city's actions, the court added.
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