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A. 1. a.(1)(a) i) a) 1. 1. 1. a.(1)(a) i) a)#X\  P6G;P#X01Í ÍX01Í Í#Xj\  P6G;XP#2 LLL:L "S^2CRddCCCdq2C28dddddddddd88qqqYzoCNzoozzC8C^dCYdYdYCdd88d8ddddCN8ddddY`(`lC2CC!CCCCCCCCCCd8YYYYYYzYzYzYzYC8C8C8C8ddddddddddYdddddodYYYYYYdzYzYzYzYdddddddCdCdCCCdNCdz8zCzCzCz8dddddCCCoNoNoNoNzCzCzCdddddzYzYNF2[dCYddddd7>d<d<$YYdCCddooCYd<d<+oodCCddddCoy.]8*]\  PCP?7tC2 t4  p(ACX@y.a8* ta4  p(AC<J5nC2n*f9 xCXXLH8!sb 8\  PC,PKW!C(MAC\  PChP<{,\8*M\*f9 xCXfX4 A:@bCЀxX4A:.@bCX45A: X- X   ;1 X-x  Federal Communications Commission`*(# DA 972470 ă  yxdddy u3#X\  P6G;P# Before the Federal Communications Commission  yO Washington, D.C. 20554 ă  XA-In re Applications ofR#Xj\  P6G;XP#) R)  X-THE KRALOWEC CHILDREN'SR)hpp  X-FAMILY TRUSTR)h (Assignor)R)  X-R)hFile No. BAPCT970404IB  X-andR)hFile No. BAPTVL970507ID R) PAXSON COMMUNICATIONSR) CORPORATIONR)  z#@ (Assignee) z#@ R) R) For Assignment of Construction R) Permits for KKAG(TV), Porterville,R) California and K09XA, Fresno,R) CaliforniaR) R)  X-ARTHUR C. KRALOWECR)hFile No. BMPCT900717KF  X-R)hFile No. BMPCT910419KH  X-For Modification of Facilities R)h  Xu-and for Extension of Time to ConstructR)h KKAK(TV), Porterville, CaliforniaR) R)  X0-ARTHUR C. KRALOWECR)h (Assignor)R) R)  X-andR)hFile No. BAPCT900719KG R) KRALOWEC CHILDREN'SR) FAMILY TRUSTR) (Assignee)R) R) For pro forma Assignment ofR) Construction Permit for KKAK(TV)R) Porterville, CaliforniaR)  X$-|  MEMORANDUM OPINION AND ORDER TP  X&-X` hp x (#%'0*,.8135@8:captioned modification application in his name, rather than the Trust's. Pappas and Sanger  xTelecasters, Inc., licensee of KMSGTV, Sanger, California, filed informal objections to both the  xmodification and assignment applications, alleging that the applications should be denied because:  x=(1) an unauthorized transfer of control of the construction permit to the Trust had taken place;  x(2) Kralowec misled the Bankruptcy Court and the Commission regarding various matters related  xto the construction permit, and was no longer financially qualified; (3) the modification  xapplication was untimely and would result in shadowing to over 20 percent of the area of  xMPorterville; (4) Kralowec had engaged in premature construction of the asyet unauthorized  xfacility; and (5) Melvin Querio, a television executive, and Martin Jackson, a consultant hired  xby Kralowec to assist in constructing the station, had an undisclosed ownership interest in the construction permit.  X4- ` x5.` ` By Memorandum Opinion and Order released August 19, 1991, the Division fully  xconsidered the matters raised in the informal objections and found that while Kralowec failed to  x=timely report the assignment of his interest to the Trust, he retained voting control at all times,  x|and there was no evidence that he intended to conceal pertinent information from the  xCommission or had engaged in numerous reporting violations. The Division also rejected the  xallegations that Kralowec had engaged in bankruptcy fraud and that the bankruptcy filing  xidemonstrated that he was no longer financially qualified. In addition, the Division concluded that  X- xno premature construction had taken place,x yO - xiԍ At that time, Falcon Cable Co. (Falcon) owned a transmitter building at Blue Ridge Peak, which it agreed to  xshare with KKAG(TV). Pappas argued that Falcon had begun constructing an addition for KKAG(TV) while  xKralowec's modification application to move to Blue Ridge Peak was still pending. In response, Falcon's Vice  xLPresident stated that it was constructing an "allpurpose structure" which would be leased to another entity if  xKralowec did not use it. With respect to the photographs Pappas provided, and which purported to show that the  xjKKAG(TV) equipment had been installed on Blue Ridge Peak, Kralowec submitted affidavits from Falcon and Jackson stating that the photographed equipment was owned by Falcon and used solely for its cable system.  and that Pappas failed to demonstrate that shadowing  xwithin the community of license would be as extensive as alleged. Finally, Querio and Jackson  Xe- xprovided declarations denying that they had any ownership interest in the construction permit,  x[and the Division concluded that the objectors had failed to raise an issue regarding ownership of the permit.  X - ` x6.` ` On reconsideration, Pappas complains that "the Bureau ignored the [serious]  X- x-implications and failed to follow through in demanding that Kralowec respond," and listed fifteen",-(-(ZZ"  X- xz"questions [which] remain unanswered . . . ."s yOy- xԍ The 15 "unanswered questions" listed in the petition for reconsideration are repetitive and merely contradict  xYthe Division's conclusion that no further inquiry was necessary in connection with: (1) the assignment to the Trust;  x(2) Kralowec's bankruptcy filing, including whether any misrepresentations were made and its impact on the  xpermittee's financial qualifications; (3) the ownership structure of the permittee; (4) whether unauthorized  x,construction had taken place; and (5) the extent of shadowing to portions of Porterville. It is well established that  xreconsideration is appropriate only where the petitioner shows either a material error or omission in the original order  x+ or raises additional facts not known or not existing until after the petitioner's last opportunity to present such matters.  {O- xSee WWIZ, Inc., 37 FCC 685, 686 (1964), aff'd sub nom., Lorain Journal Co. v. FCC, 351 F.2d 824 (D.C. Cir.  {O- x1965), cert. denied, 383 U.S. 967 (1966); see also Eagle Radio, Inc., 12 FCC Rcd 5105 (1997)("Reconsideration will not be granted for the purpose of debating matters on which we have already deliberated and spoken.")s Shortly thereafter, Pappas filed its petition to  xrevoke, alleging that it recently obtained a further declaration from Martin Jackson, which  x"reinforces beyond all doubt the allegations made by Pappas." Jackson's second declaration  x-contradicts his earlier statement that he had no ownership interest in the construction permit, but  x[instead states that on or about September 15, 1990, "Kralowec/The Kralowec Children's Family  xKTrust/KKAKTV, Inc. agreed to issue stock to [Jackson, Querio and Hans J. Hansen] in exchange  x?for their investments in the construction permit." According to Jackson, while the "oral  xcommitment" was reduced to writing, the agreement was not executed "at the direction of  xKralowec and/or other counsel only for the purpose of not filing such information with the FCC  x!. . . ." In its petition to deny the assignment from the Trust to Paxson, Pappas reiterates  X - x.arguments made in its informal objection and petition to revoke and contends, citing Jefferson  X - xMRadio Co., Inc., 340 F.2d 781 (D.C. Cir. 1964), that substantial and material questions of fact  x-exist regarding Kralowec's basic qualifications, which require that the Commission either conduct  X - xa revocation hearing or deny the assignment application.^ d  {O- xԍ Under the Commission's longheld Jefferson Radio policy, a transfer or assignment application cannot be  {O- xgranted when there are unresolved issues concerning the seller's basic qualifications.  See, e.g., Quests, Inc., 7 FCC  {O-Rcd 29, 30 (1991) and cases cited therein; review denied, 7 FCC Rcd 5273 (1992). According to Pappas, Kralowec has  x0deliberately and repeatedly deceived the Commission as to the operation and control of  xKKAG(TV), and shown a repeated disregard for the Commission's rules, which renders him unfit to operate KKAG(TV) or benefit from its sale.  Xf- x7.` ` Discussion. In assessing the merits of a petition to deny, a twostep process is  xrequired under Section 309(d)(1) and (2) of the Communications Act of 1934, as amended. 47  X8- xjU.S.C.  309(d)(1), (2); see also Astroline Communications Co. v. FCC, 857 F.2d 1556 (D.C. Cir.  x<1988). The first test is whether the petition demonstrates by specific allegations of fact that grant  X - xLof the application would be prima facie inconsistent with the public interest, convenience and  X- xnecessity. If such a prima facie case is alleged, the second test is whether on the basis of the  xLapplication, the pleadings, or other matters of which the Commission may take official notice  xa substantial and material question of fact is presented to warrant further inquiry in a hearing.  X- xWe agree with Pappas that a licensee's duty of candor is critical to our licensing processes.  See," ,-(-(ZZ"  X- x[e.g., Fox Television Stations, 10 FCC Rcd 8452, 8478 (1995). yOy- xiԍ The duty of candor requires an applicant to be "fully forthcoming as to all facts and information relevant"  {OA- xto its application. Swan Creek Communications, Inc. v. FCC, 39 F.3d 1217, 1222 (D.C. Cir. 1994) (citing Policy  {O - xRegarding Character Qualifications in Broadcast Licensing, 102 FCC 2d 1179, 1211 (1986)). A party's intent to  {O- xdeceive, however, is an essential element of a violation of the duty of candor. Swan Creek, 39 F.3d at 1222; Garden  {O- xhState Broadcasting Ltd. Partnership v. FCC, 996 F.2d 386, 393 (D.C. Cir. 1993); Fox River Broadcasting, Inc., 102  xFCC 2d 1179, 1196 (1986). Thus, before an applicant or licensee can be found to have withheld relevant  xinformation, it must be shown that the party knew that the information was relevant and intended to withhold it.  {O- xLSee Abacus Broadcasting Corp., 8 FCC Rcd 5110, 5112 (Rev. Bd. 1993) (no lack of candor where filing was misleading, but made without intent to deceive). Applying Commission precedent  x=to the facts and allegations before us, however, we conclude that Pappas has failed, by a wide  X- xMmargin, to raise a substantial and material question of fact which would require a hearing or  X-otherwise support denial of the assignment application, for the reasons discussed below.   yO - xiԍ Our decision here is based upon consideration of the facts and arguments raised in both the petition to deny  xthe assignment application and Pappas' earlier petitions for reconsideration and revocation, which were incorporated  xby reference in the petition to deny. Whether considered separately or collectively, the petitions do not present a substantial and material question of fact warranting further Commission consideration.   X- ` x8.` ` Assignment to the Children's Trust. Pappas asserts that Kralowec engaged in a  x"deliberate violation" of Section 1.65 of the Commission's rules by concealing from the  xyCommission that he had transferred equitable interest in the construction permit to the Trust in  x?December 1987, and that this violation impacts on his qualifications to be a Commission  X3- xlicensee. 3  yOn- xԍ Section 1.65(a) of the Commission's rules requires an applicant to inform the Commission within 30 days of any significant changes as to any matter that may be of decisional significance in the consideration of its application. It is well settled that an inquiry into a failure to report under Section 1.65 is warranted  xMonly where there is an intent to conceal facts from the Commission, or a pattern of repeated  X - xviolations or other factors reflecting significant carelessness or inattentiveness. See Richardson  X - xBroadcast Group, 7 FCC Rcd 1583, 158788 (1992); KWQJ(FM), Anchorage, Alaska, 10 FCC  X - xRcd 8774, 8776 (1995). Pappas has presented no new arguments or evidence which would  xyrequire reconsideration of our earlier conclusion that Kralowec's failure to report the transfer of  xequitable ownership in a timely manner was not fatal to his pending applications. Accordingly,  X-we find that no substantial or material question of fact exists in this regard.J  yO)- x,ԍ While Pappas characterizes Kralowec's transfer to the Trust as "part of Kralowec's maneuvers in anticipation  xxof his declaration of personal bankruptcy on October 19, 1989, whereby he sought to isolate certain of his assets  xfrom creditors," and an "effort to shield the permit from both the FCC and creditors," the record is entirely devoid  xof facts to support these insinuations. Pappas does not refute Kralowec's statement, under penalty of perjury, that  x-once it appeared to Kralowec that his application would be granted, he "assigned my rights in it to my childrens'  xtrust as I have done with other property" in December 1987. Pappas also offers no evidence to refute Kralowec's  xexplanation that his bankruptcy filing was precipitated by a fine imposed against him in the fall of 1989 after a  xKmistrial was declared in a case in which Kralowec was representing a client against the City of Porterville. Thus,  x=we fail to see how Kralowec's December 1987 transfer to the Trust could be related to his decision to file for  x: Chapter 13 protection almost two years later. Pappas's assertion that "the court sanction of the $43,000 fine imposed  xon Kralowec had to have developed over a long period of time before it was arrived at [and] Kralowec knew"& ,-(-(l'" perfectly well it was coming" is inconsistent with the record. J"X ,-(-(ZZj"Ԍ X- ` Pԙx9.` ` Bankruptcy Filing. Pappas contends that Kralowec's 1989 Chapter 13 bankruptcy  x\filing raises numerous unresolved issues which need to be explored through an evidentiary  xhearing. We disagree. With respect to the charge that Kralowec committed bankruptcy fraud  x-in connection with his Chapter 13 filing, we see no reason to revisit these allegations, which were  X- xfully considered and rejected by the bankruptcy court and the Department of Justice in 1990.  b X {O- xԍ The City of Porterville had filed a motion to dismiss the Chapter 13 case, alleging, inter alia, that Kralowec  xfailed to disclose all of his assets, including the construction permit, and improperly used the Chapter 13 filing "to  xstay enforcement of a valid judgement in favor of the City of Porterville . . . while the Debtor's appeal is being heard  xin the California State Courts." The bankruptcy court considered the City's allegations, and confirmed Kralowec's  xbankruptcy plan by Order dated February 21, 1990, finding that the plan fully complied with the Bankruptcy Code  xand "has been proposed in good faith and not by any means forbidden by law." In December 1990, an attorney  xYrepresenting Pappas submitted materials to the judge and courtappointed trustee assigned to Kralowec's case, which,  xhe asserted, showed that Kralowec had made statements under oath before the Commission which were inconsistent  x: with representations made to the court. The bankruptcy judge referred the matter to the Department of Justice, Office  x,of the United States Trustee, which informed Pappas' attorney, by letter dated January 7, 1991, that "the court and  x the trustee had full knowledge of the debtor's assets and . . . [t]his office sees no ground to challenge the administration of the case."   xThe Commission typically defers to a bankruptcy court's determination concerning matters over  Xv- xwhich the court has jurisdiction,E "v  {O- xԍ See, e.g., Sam Jones, Jr., 10 FCC Rcd 5330, 5342 (1995)("[T]he Commission has traditionally deferred to  xthe bankruptcy court's determination concerning a debtor's financial status, because that forum has jurisdiction to decide these matters.") E and Pappas has presented no reason why we should deviate  X_-from established policy in this case.   X1- ` x10.` ` We also disagree with Pappas' assertion that Kralowec's bankruptcy filing in late  x 1989 raised an issue regarding the financial qualifications of Kralowec and the Trust which  xrequired a hearing. Applicants for new broadcast stations and proposed assignees of broadcast  x\permits and licenses are required to certify that they have sufficient capital to construct the  xstation and operate for three months without advertising or other broadcast revenue. Once a  xconstruction permit is granted, however, the Commission typically does not exercise continuing  X - xMoversight regarding a permittee's finances. See Deletion of Noncommercial Reservation of  X- x=Channel *16, 11 FCC Rcd 11700, 11712 (1996); Cannon Communications Corporation, 6 FCC  xjRcd 570 (1991). In addition, the Chapter 13 trustee confirmed that the bankruptcy filing did not  xNaffect Kralowec's solvency or ability to incur postpetition debt, and Kralowec promptly  x[constructed the station upon grant of the modification application. Thus, Pappas has failed to  xdemonstrate how Kralowec's Chapter 13 bankruptcy filing adversely affected the ability of  xKralowec and the Trust to obtain financing to construct and operate the station. We also  xconclude that because the bankruptcy filing was of no decisional significance, Kralowec was not" l ,-(-(ZZ"  X-required to report the fact to the Commission.  yOy- xԍ While permittees and licensees have a continuing obligation under Section 1.65(c) of the Commission's rules  xto report annually to the Commission any adverse finding or adverse final action taken by any court or administrative  xbody that involves conduct bearing on its character qualifications and that would be reportable in connection with  xxan application for renewal, the filing for bankruptcy protection is not the type of conduct which permittees and  {O- xlicensees are typically required to report to the Commission. See Policy Regarding Character Qualifications in  {Oc- xKBroadcast Licensing, 102 FCC 2d 1179 (1986). In addition, under Chapter 13 of the Bankruptcy Code, entitled  xY"Adjustment of Debts of an Individual with Regular Income," the debtor remains in possession of all property of the  {O- xestate. See 11 U.S.C.  1306. Accordingly, a pro forma assignment of the construction permit to the Chapter 13 trustee was not required.  X- ` x11.` ` Ownership and Control of KKAG(TV). Pappas first contended, in a supplement  X- xto its informal objection, that Jackson and Querio had an undisclosed ownership interest, based  xiupon a hearsay declaration of Pappas' consulting engineer. In response, Kralowec acknowledged  xthat he had discussions with Querio, Jackson and others about investing in the station, but that  xjno agreements had been reached. Querio and Jackson also submitted declarations stating that  xthey had no ownership interest in the permit. Several months after the pro forma assignment and  xmodification applications were granted, Pappas filed its petition to revoke, based upon a more  x>recent declaration from Jackson stating that he, in fact, had a binding "oral commitment" to  xacquire a 16 percent ownership interest in KKAKTV, Inc., a corporation which Kralowec created  X - xto acquire the construction permit from the Trust.A  yOR- xԍ Pappas also submitted an unexecuted "Agreement of September 15, 1990," listing Jackson, Querio, Kralowec  x=and Hans J. Hansen as parties, and describing the terms of a deal whereby the parties were to acquire stock in  xKKAKTV, Inc., which would then become the licensee of KKAG(TV). According to Jackson, the agreement was  xnever executed "at the direction of Kralowec and/or other counsel only for the purpose of not filing such information with the FCC . . . ." A In response, Kralowec again admits that he  xhad discussions with these individuals and other potential investors, including Pappas, but that  xno definitive agreement was ever reached. Kralowec also questions the veracity of Jackson's  xMsecond declaration, which was given to Pappas after Kralowec and the Trust filed a lawsuit  xiagainst Jackson, alleging breach of contract, breach of fiduciary duty and fraud, and Jackson filed  xa crosscomplaint for a judicial declaration that he was entitled to a 16 percent partnership  Xy- xinterest in KKAG(TV).lyN  yOx- xZԍ According to Kralowec, Jackson's local lawyer threatened that unless the case was settled, "[w]e will pursue  xiour cross complaint vigorously, not only in Superior Court, but at the FCC, where we expect Kralowec, et al. will  xbe found either unfit to be an FCC licensee, or unable to obtain an extension of time in which to complete  xconstruction. In that matter we expect to retain [Pappas' communications counsel] to represent our interests." Pappas filed its petition to revoke some two months later. l Finally, in supplemental filings, Kralowec provides deposition  xtestimony in which Jackson concedes that his earlier declaration, stating that he had no ownership  xinterest in KKAG(TV), was accurate, and the California court's order granting summary judgment  x=and dismissing Jackson's crossclaim, based upon the finding that "the alleged oral agreement  xis unenforceable because it is lacking and uncertain in essential terms." Based upon the record  xbefore us, we conclude that Pappas has failed to raise a substantial and material question of fact",-(-(ZZ"  X- x{regarding the ownership of station KKAG(TV). We also find no evidence that Kralowec  xintended to deceive the Commission concerning the ownership of the construction permit or  xwithheld pertinent information. Section 1.65 of the Commission's rules "does not require parties  X- xto notify the Commission of a proposed transaction that is still being negotiated." Nextel  X- xCommunications, Inc., 10 FCC Rcd 3361, 3368 (WTB 1995); see also Sparkling City  X- xCommunications, Inc., 10 FCC Rcd 12220 (1995)(the execution of a letter of intent to negotiate an agreement to sell a broadcast station does not create a reporting obligation).  XN- ` x12.` ` We also reject Pappas' claim that the Trust is a "sham," and that KKAKTV, Inc.  X7- xis the real owner and operator of the station, as based solely on speculation and surmise. 7 yO - xԍ For example, Pappas argues that because EEO reports filed with the Commission indicate that the Trust  xg employs less than five fulltime employees in the operation of the station, "[t]his makes clear that the entity operating  xStation KKAG(TV) is not the Kralowec Trust, but KKAKTV, Inc." Pappas also claims that "the name, KKAKTV, Inc., left no doubt that its organization was for the purpose of building and operating Station KKAG(TV)."  The  X - xfacts show that while Kralowec originally formed KKAKTV, Inc. in October 1992 in  xanticipation of an agreement being reached for investors to become partial owners of the  xcorporation, which would then acquire the construction permit from the trust, no agreement was  xever reached. Kralowec then used the corporation as a vehicle to acquire equipment for use by  xthe station, and to serve as the corporate obligor for various obligations of the station. In  xaddition, at the time of incorporation the Trust owned all of the stock of KKAKTV, Inc. and  X- xKralowec is the sole officer and director of the corporation.x yO-ԍ Kralowec states the Trust now owns 98.25 percent of the stock of KKAKTV, Inc.x Pappas has presented no evidence  x?to suggest that the relationship between the Trust and KKAKTV, Inc. contravenes the  xCommission's rules or the public interest. In addition, it is apparent from a fair and balanced  xZreading of the parties' prolific submissions that the record is bare of any evidence which supports  x>Pappas' speculation that Station KKAG(TV) has consistently operated "outside the rules."  xAbsent specific factual allegations, supported by affidavit, we see no reason for further inquiry  X -regarding the operations of KKAG(TV).    X- ` %x13.` ` Other Matters. Pappas has presented no new information in support of its  xcontention that the Division erred in granting the modification application because of  xunacceptable shadowing to Porterville, and concluding that Kralowec had not engaged in  xpremature construction of the modified facilities. It is well established that reconsideration is  xappropriate only where the petitioner shows either a material error or omission in the original  xZorder or raises additional facts not know or not existing until after the petitioner's last opportunity  x[to present such matters, and that it "will not be granted for the purpose of debating matters on  X?- xwhich we have already deliberated and spoken." Eagle Radio, Inc., 12 FCC Rcd at 5107. We  xhave reexamined the record however, and conclude that our earlier decision was correct in all regards. x  X- ` Px14.` ` Conclusion. Accordingly, based on the foregoing, we find that petitioner Pappas  xTelecasting Incorporated has failed to raise a substantial and material question of fact requiring" @,-(-(ZZ"  xresolution in a hearing. We further find that the applicants are fully qualified and that a grant of the assignment application will serve the public interest, convenience and necessity.  X- ` x15.` ` Accordingly, the Petition to Deny, the Petition to Revoke Construction Permit, and  xthe Petition for Reconsideration of the grant of the pro forma assignment and modification  xapplications, filed by Pappas Telecasting Incorporated, ARE DENIED. Further, the applications  x!for the assignment of construction permit of KKAG(TV) and K09XA from the Kralowec Children's Family Trust to Paxson Communications Corporation z#@  ARE HEREBY GRANTED. x` `  hh@FEDERAL COMMUNICATIONS COMMISSION x` `  hh@Barbara A. Kreisman x` `  hh@Chief, Video Services Division  X-x` `  hh@Mass Media Bureau  xx 0