Post by Moses on Feb 26, 2005 9:42:25 GMT -5
February 26, 2005
F.C.C. to Review Decision on Sale of 4 Stations
By STEPHEN LABATON
WASHINGTON, Feb. 25 - The Federal Communications Commission, in an abrupt about-face, has decided to reconsider a staff decision that allowed a prominent Oklahoma politician convicted of perjury and obstruction of justice to sell a group of radio stations, officials said on Friday.
The decision to approve the sale was considered by some media experts to be a significant deregulation of the broadcast ownership rules, because the agency has long required the forfeiture of radio licenses to the commission by those who fail a character test. The character test, which requires truthfulness in dealing with the government, is an integral part of the media rules, because owners of radio licenses hold a public trust and are obliged to act in "the public interest."
The commission had never considered a case involving a conviction of perjury before a federal agency, according to officials.
But the commission has revoked licenses for a variety of other crimes, from sexual abuse of a minor to fraud to dealing in illegal narcotics. The character guidelines also make clear that truthfulness is a central element of the rules.
The agency's decision to permit the sale was disclosed in a letter on Jan. 18 to lawyers for the four radio stations. They were being sold for $2.2 million by companies controlled by Gene Stipe, who for many years was among the most powerful Democrats in Oklahoma.
He stepped down in 2003 after 53 years in the state legislature - at the time he was the longest serving member of any state legislature in the country - as investigators focused on his role in a scheme to launder money given to the congressional campaign of a friend.
Mr. Stipe then pleaded guilty to three criminal counts, acknowledging his role in an illegal scheme to funnel more than $245,000 into the failed campaign of Walter Roberts for a seat in the House of Representatives. Mr. Stipe was sentenced to five years' probation and six months' house arrest.
The commission's chairman, Michael K. Powell, appeared to ratify the staff decision earlier this week, when one of his senior aides told Andrew Jay Schwartzman, a lawyer who was critical of the deal, that Mr. Powell would not seek a review of the decision by the full commission, Mr. Schwartzman said in a filing with the commission.
Mr. Schwartzman, a lawyer who heads the Media Access Project, an organization that has been critical of efforts to deregulate the industry, said he had stumbled onto the deal during a Google search on a separate issue and was immediately outraged by its implications.
"This involves somebody who has pleaded guilty to tampering with an election in the service area of these stations and is a clear demonstration of how the democratic process has been corrupted by this man," he said. "I cannot imagine a more powerful case for loss of license and a weaker case for enriching him."
Mr. Schwartzman then tried to get the commission to reconsider the staff's decision. He was told there would not be the three votes from among the five commissioners that would be needed for the commission to intervene.
But after The New York Times called officials at the commission about the matter on Wednesday and Thursday, Mr. Powell abruptly reversed course. On Friday, commission officials said the full commission had agreed to order a review of the case.
Mr. Powell has announced his intention to leave the agency next month. Kevin J. Martin, the leading contender to replace Mr. Powell, also indicated to officials that he would not vote to review the matter, but he changed his mind after Mr. Powell did, officials said.
The decision also followed sharp questions about the staff's opinion by Jonathan S. Adelstein, one of the Democratic commissioners, who was supported in his effort by a second Democratic member, Michael J. Copps.
"This deal demands a lot more scrutiny than it's gotten, and I now expect that it will get the review that it deserves," Mr. Adelstein said. "Lying to the government raises serious questions about a broadcaster's character under our longstanding policy. I've raised concerns with my colleagues that letting a convicted perjurer profit from the sale of these stations may be a dangerous departure from our past precedent."
Richard R. Zaragoza, a partner at the law firm of Shaw Pittman who represented Mr. Stipe and the buyers of the stations, said he was surprised by the reversal and defended the January staff opinion.
The agency's staff, in its January letter approving the deal, noted that the "misconduct here is both recent and very serious, as adverse determinations regarding a licensee's untruthful representations in a federal investigation are at the core of the Commission's character policy concerns." But the letter also said there were reasonable exceptions to the policy and Mr. Stipe should be permitted to sell the stations, because the misconduct did not involve other executives at the companies, the companies had "an unblemished record of compliance with the commission rules" and Mr. Stipe was in failing health. "The staff decision represents a well-articulated, well-reasoned decision that is fully compatible," with early cases, Mr. Zaragoza said.
But other media lawyers not connected to the case were critical of the staff decision.
"The commission for decades has had a policy that if you are disqualified from holding a license, then you don't have a license to sell. That's Telecom 101," said Harry F. Cole, a partner at the law firm of Fletcher, Heald & Hildreth who has practiced for 30 years before the commission, frequently on broadcast issues. "Here you have a case of a guy who lied and lied as a government official. You have to smack yourself in the head and ask, 'Why did they let him get away with this transfer?' "
In an e-mail message sent early Friday evening to the commission, Mr. Zaragoza attacked Mr. Schwartzman for surreptitiously making what he called "scurrilous characterizations of the parties." He noted that the deal had already closed weeks ago, and that the new owners have already filed a request for the renewal of their licenses for the next eight years. One of the principals of the companies purchasing the stations is Richard Lerblance, who now holds Mr. Stipe's old seat in the Oklahoma legislature. Mr. Schwartzman said the deal might now have to be unwound, although Mr. Zaragoza said it would be "unprecedented" for the commission to order that the transaction be undone.
Lawyers for Mr. Stipe said he was 78 and had suffered from prostate cancer, diabetes, depression, water on the brain, high blood pressure and other ailments. Court records say he has a net worth of more than $26 million, according to an article last Sunday in The Daily Oklahoman. In 1968 he was acquitted on federal charges of tax evasion, and in 1981 he was acquitted in two other federal cases - one on charges of participating in a kickback scheme and a second of racketeering and wire fraud.
In the case in which he pleaded guilty, Mr. Stipe acknowledged that he had participated in a series of schemes to conceal more than $245,000 in contributions to Mr. Roberts. To persuade a federal judge to give him a minimal criminal sentence, he received letters of support from three former Oklahoma governors, former Senator David L. Boren, and several current and former state legislators.
According to court documents, Mr. Roberts used a significant portion of the money to purchase campaign ads. But the commission staff, in its review of the proposed sale, never examined whether the ads were broadcast on the stations owned by Mr. Stipe, officials said. Mr. Stipe controls four of the five stations licensed in his hometown of McAlester and the only station in the nearby town of Wilburton. The stations are KESC-FM, KMCO-FM, KNED-AM, and KTMC-FM and AM.
Copyright 2005 The New York Times Company
F.C.C. to Review Decision on Sale of 4 Stations
By STEPHEN LABATON
WASHINGTON, Feb. 25 - The Federal Communications Commission, in an abrupt about-face, has decided to reconsider a staff decision that allowed a prominent Oklahoma politician convicted of perjury and obstruction of justice to sell a group of radio stations, officials said on Friday.
The decision to approve the sale was considered by some media experts to be a significant deregulation of the broadcast ownership rules, because the agency has long required the forfeiture of radio licenses to the commission by those who fail a character test. The character test, which requires truthfulness in dealing with the government, is an integral part of the media rules, because owners of radio licenses hold a public trust and are obliged to act in "the public interest."
The commission had never considered a case involving a conviction of perjury before a federal agency, according to officials.
But the commission has revoked licenses for a variety of other crimes, from sexual abuse of a minor to fraud to dealing in illegal narcotics. The character guidelines also make clear that truthfulness is a central element of the rules.
The agency's decision to permit the sale was disclosed in a letter on Jan. 18 to lawyers for the four radio stations. They were being sold for $2.2 million by companies controlled by Gene Stipe, who for many years was among the most powerful Democrats in Oklahoma.
He stepped down in 2003 after 53 years in the state legislature - at the time he was the longest serving member of any state legislature in the country - as investigators focused on his role in a scheme to launder money given to the congressional campaign of a friend.
Mr. Stipe then pleaded guilty to three criminal counts, acknowledging his role in an illegal scheme to funnel more than $245,000 into the failed campaign of Walter Roberts for a seat in the House of Representatives. Mr. Stipe was sentenced to five years' probation and six months' house arrest.
The commission's chairman, Michael K. Powell, appeared to ratify the staff decision earlier this week, when one of his senior aides told Andrew Jay Schwartzman, a lawyer who was critical of the deal, that Mr. Powell would not seek a review of the decision by the full commission, Mr. Schwartzman said in a filing with the commission.
Mr. Schwartzman, a lawyer who heads the Media Access Project, an organization that has been critical of efforts to deregulate the industry, said he had stumbled onto the deal during a Google search on a separate issue and was immediately outraged by its implications.
"This involves somebody who has pleaded guilty to tampering with an election in the service area of these stations and is a clear demonstration of how the democratic process has been corrupted by this man," he said. "I cannot imagine a more powerful case for loss of license and a weaker case for enriching him."
Mr. Schwartzman then tried to get the commission to reconsider the staff's decision. He was told there would not be the three votes from among the five commissioners that would be needed for the commission to intervene.
But after The New York Times called officials at the commission about the matter on Wednesday and Thursday, Mr. Powell abruptly reversed course. On Friday, commission officials said the full commission had agreed to order a review of the case.
Mr. Powell has announced his intention to leave the agency next month. Kevin J. Martin, the leading contender to replace Mr. Powell, also indicated to officials that he would not vote to review the matter, but he changed his mind after Mr. Powell did, officials said.
The decision also followed sharp questions about the staff's opinion by Jonathan S. Adelstein, one of the Democratic commissioners, who was supported in his effort by a second Democratic member, Michael J. Copps.
"This deal demands a lot more scrutiny than it's gotten, and I now expect that it will get the review that it deserves," Mr. Adelstein said. "Lying to the government raises serious questions about a broadcaster's character under our longstanding policy. I've raised concerns with my colleagues that letting a convicted perjurer profit from the sale of these stations may be a dangerous departure from our past precedent."
Richard R. Zaragoza, a partner at the law firm of Shaw Pittman who represented Mr. Stipe and the buyers of the stations, said he was surprised by the reversal and defended the January staff opinion.
The agency's staff, in its January letter approving the deal, noted that the "misconduct here is both recent and very serious, as adverse determinations regarding a licensee's untruthful representations in a federal investigation are at the core of the Commission's character policy concerns." But the letter also said there were reasonable exceptions to the policy and Mr. Stipe should be permitted to sell the stations, because the misconduct did not involve other executives at the companies, the companies had "an unblemished record of compliance with the commission rules" and Mr. Stipe was in failing health. "The staff decision represents a well-articulated, well-reasoned decision that is fully compatible," with early cases, Mr. Zaragoza said.
But other media lawyers not connected to the case were critical of the staff decision.
"The commission for decades has had a policy that if you are disqualified from holding a license, then you don't have a license to sell. That's Telecom 101," said Harry F. Cole, a partner at the law firm of Fletcher, Heald & Hildreth who has practiced for 30 years before the commission, frequently on broadcast issues. "Here you have a case of a guy who lied and lied as a government official. You have to smack yourself in the head and ask, 'Why did they let him get away with this transfer?' "
In an e-mail message sent early Friday evening to the commission, Mr. Zaragoza attacked Mr. Schwartzman for surreptitiously making what he called "scurrilous characterizations of the parties." He noted that the deal had already closed weeks ago, and that the new owners have already filed a request for the renewal of their licenses for the next eight years. One of the principals of the companies purchasing the stations is Richard Lerblance, who now holds Mr. Stipe's old seat in the Oklahoma legislature. Mr. Schwartzman said the deal might now have to be unwound, although Mr. Zaragoza said it would be "unprecedented" for the commission to order that the transaction be undone.
Lawyers for Mr. Stipe said he was 78 and had suffered from prostate cancer, diabetes, depression, water on the brain, high blood pressure and other ailments. Court records say he has a net worth of more than $26 million, according to an article last Sunday in The Daily Oklahoman. In 1968 he was acquitted on federal charges of tax evasion, and in 1981 he was acquitted in two other federal cases - one on charges of participating in a kickback scheme and a second of racketeering and wire fraud.
In the case in which he pleaded guilty, Mr. Stipe acknowledged that he had participated in a series of schemes to conceal more than $245,000 in contributions to Mr. Roberts. To persuade a federal judge to give him a minimal criminal sentence, he received letters of support from three former Oklahoma governors, former Senator David L. Boren, and several current and former state legislators.
According to court documents, Mr. Roberts used a significant portion of the money to purchase campaign ads. But the commission staff, in its review of the proposed sale, never examined whether the ads were broadcast on the stations owned by Mr. Stipe, officials said. Mr. Stipe controls four of the five stations licensed in his hometown of McAlester and the only station in the nearby town of Wilburton. The stations are KESC-FM, KMCO-FM, KNED-AM, and KTMC-FM and AM.
Copyright 2005 The New York Times Company