WPC, 2?BJZECourier#|d#Xj\  P6G;yoXP#HP LaserJet 4Si lpt1HPLAS4SI.PRSx  @\+W[X@ X-#Xj\  P6G;yoXP#2,qKXCourierTimes New Roman"i~'^:DPddDDDdp4D48dddddddddd88pppX|pDL|pp||D8D\dDXdXdXDdd88d8ddddDL8ddddX`(`lD4l\DDD4DDDDDDDDd8XXXXXX|X|X|X|XD8D8D8D8ddddddddddXdbdddpdXXXXXlX~|X|X|X|XdddldldD8DdDDDdplld|8|P|D|D|8dvddddDDDpLpLpLpl|T|8|\ddddddl|X|X|Xd|DdpL|Dd~4ddC$CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxH\dDXddddd8@d<@d<DDXXdDDxddzHxxHvppDXd<"dxtldpxxd<?xxx,2x6X@`7X@7jC:,yoXj\  P6G;XP\ @^5q.$h';U7G;A 7Xn-6F[w!/DTck{2^ np Z#|d(  HP LaserJet 4Si lpt1HPLAS4SI.PRSd  @8;\+W[@2D vPpk6CourierTimes New RomanTimes New Roman ItalicTimes New Roman Bolda8DocumentgDocument Style StyleXX` `  ` a4DocumentgDocument Style Style . a6DocumentgDocument Style Style GX  2 k>vtY a5DocumentgDocument Style Style }X(# a2DocumentgDocument Style Style<o   ?  A.  a7DocumentgDocument Style StyleyXX` ` (#` BibliogrphyBibliography:X (# 2   <  a1Right ParRight-Aligned Paragraph Numbers:`S@ I.  X(# a2Right ParRight-Aligned Paragraph Numbers C @` A. ` ` (#` a3DocumentgDocument Style Style B b  ?  1.  a3Right ParRight-Aligned Paragraph Numbers L! ` ` @P 1. ` `  (# 2  v 5a4Right ParRight-Aligned Paragraph Numbers Uj` `  @ a. ` (# a5Right ParRight-Aligned Paragraph Numbers _o` `  @h(1)  hh#(#h a6Right ParRight-Aligned Paragraph Numbersh` `  hh#@$(a) hh#((# a7Right ParRight-Aligned Paragraph NumberspfJ` `  hh#(@*i) (h-(# 2/a8Right ParRight-Aligned Paragraph NumbersyW"3!` `  hh#(-@p/a) -pp2(#p Tech InitInitialize Technical Style. k I. A. 1. a.(1)(a) i) a) 1 .1 .1 .1 .1 .1 .1 .1 Technicala1DocumentgDocument Style Style\s0  zN8F I. ׃  a5TechnicalTechnical Document Style)WD (1) . 2a=a6TechnicalTechnical Document Style)D (a) . a2TechnicalTechnical Document Style<6  ?  A.   a3TechnicalTechnical Document Style9Wg  2  1.   a4TechnicalTechnical Document Style8bv{ 2  a.   2]3a1TechnicalTechnical Document StyleF!<  ?  I.   a7TechnicalTechnical Document Style(@D i) . a8TechnicalTechnical Document Style(D a) . Doc InitInitialize Document Stylez   0*0*0*  I. A. 1. a.(1)(a) i) a) I. 1. A. a.(1)(a) i) a)Documentg2HeL1PleadingHeader for Numbered Pleading PaperE!n    X X` hp x (#%'0*,.8135@8:"  X-was convicted one year ago.f qg Xy-#Xj\  P6G;yoXP#э In addition, the 1990 Character Policy Statement, supra, 5 FCC Rcd 3252, states that the Commission generally will await local court adjudication before initiating its own inquiry into the effect of such convictions on the character of the licensee or applicant in issue.f We believe that Rice's misconduct was not sufficiently remote in time to vitiate our concern with such serious offenses.  X-x12.` ` With respect to Contemporary/Lake's claim in mitigation that Rice's crimes were not willful, we note that there is no indication that Rice was found by the Court to be lacking in criminal intent, either by reason of an alleged psychiatric disorder or otherwise. Moreover, his conviction on these multiple criminal counts, all of which include an element  X_-of criminal mens rea, is inconsistent with this claim. Contemporary/Lake's further claim that we should not designate this case for hearing because the crimes "occurred over a relatively short period of time (five years) and involved a limited number of individuals (five)," is without merit. The Second Amended Information shows that the acts of sexual abuse against these juvenile victims took place over extended periods of time and constituted a recurring pattern of child sexual abuse. Rice's conviction on twelve felony counts further refutes the contention that this was an isolated instance of misconduct.  X -x13.` ` We also are unable to find that the licensee has taken adequate "remedial action" in mitigation of the conviction's effect on Contemporary/Lake's qualifications. Contemporary/Lake contends that by excluding Rice from management and operations since the preliminary hearing in March 1991, they have taken such remedial action. The Review Board has held, however, that a wrongdoing principal's resignation as an officer and director  X6-prior to his actual conviction does not moot the conviction's significance on the applicant's  X!-qualifications. See The Petroleum V. Nasby Corp., 8 FCC Rcd 4035, 4036 (Rev. Bd. 1995),  X -appeal pending. Moreover, here Rice remains as President, Treasurer, and director, with no evidence that such roles are, as Contemporary/Lake claims, in name only. Although it is claimed that Rice remains an officer and director of the three companies "in title only," there is no evidence presented that Rice is legally barred from exercising the powers which he still holds as President, Treasurer, and director of these three companies which he owns either entirely, or in the case of LBI, in the majority. The further representation that Rice will continue to be excluded from active involvement in the stations "for the foreseeable future" is similarly illusory and unreliable. Rice's alleged exclusion from control of the stations will extend, apparently, only for as long as Rice desires it to continue.  X(-x14.` ` Moreover, there is a substantial question of fact as to whether Contemporary/Lake has misrepresented that Rice has been completely excluded from any involvement in the management or operation of the Contemporary/Lake stations since his hospitalization in April 1991 following the preliminary hearing. In its first "Statement Pursuant to Section 1.65 of the Commission's Rules" dated June 14, 1991, and repeated in  X!-each of the Section 1.65 Statements filed thereafter (see footnote 4, supra),"!M 0*(( " Contemporary/Lake has made the following representations as to Rice's involvement in the management of the stations: Xx` ` Since Mr. Rice's hospitalization on April 3, 1991, he has had absolutely no managerial, policy, or consultative role in the affairs of the three broadcast corporations in which he has ownership interests and officer positions . . . . In other words, pending a resolution of the referenced criminal charges, Mr. Rice is being completely insulated and excluded from any involvement in the managerial, policy, and daytoday decisions involving any of the four licensed stations and three construction permits held by the three corporations.   X -x15.` ` As noted above, however, KWIX claims in its Informal Objection that Rice has continued to make management decisions, including conducting negotiations over the sale of its existing stations and acquisition of others, as evidenced by three letters written by Rice in 1993 and 1994, well after the 1991 date after which he was supposedly excluded from all management decisions. These letters are written on "Contemporary Media Broadcast Group" stationery. In one of the letters, dated April 29, 1993, Rice suggests that it was written as a followup to a telephone call to Rice from its recipient (another local broadcaster) earlier in the week. After discussing a possible trade of certain stations owned by each, Rice concludes, "[i]f you have any further thoughts or ideas, please let me know." In another letter written the same day to another broadcaster, Rice suggests that he was "following up" on a telephone call the broadcaster made to Janet Cox, Contemporary/Lake's Vice President, regarding sale of the unbuilt construction permit for KAAM. Again, Rice concludes the letter by suggesting that if the broadcaster has "any further thoughts or ideas, please let me or Janet know." Additionally, certain of the letters from "character" witnesses submitted by Contemporary/Lake as Exhibit C to its Brief suggest that Rice has continued to have some involvement in the stations after April 1991. For example, the letter from Contemporary/Lake engineer Eric Hoehn, dated August 8, 1994, suggests that "during the past eight years of my full time employment" starting in 1986, he and Rice had been engaged in extensive travel together between the various Contemporary/Lake stations "making signal measurements and supervising construction projects." Another letter, from broadcast engineering consultant James F. Mitchell, suggests that after Rice got out of the hospital in October 1991, Mitchell "worked with him in various technical matters going from Eldon, Missouri to Terre Haute, Indiana," where the Contemporary/Lake stations are located. Finally, a letter written by LBI minority stockholder Kenneth W. Kuenzie, dated August 1, 1994, suggests that Rice is still involved in decision making of LBI: "even though Mike [Rice] is the major stock holder, all decisions and business dealings are done with all three stock holders considerations welcomed." These items raise a substantial and material question as to whether Contemporary/Lake has been completely truthful with the Commission on this issue. Therefore, an appropriate issue will be designated as to whether Contemporary/Lake has been truthful in its representations to the Commission.  X:&-x16.` ` In addition, if Contemporary/Lake's representations regarding Rice's exclusion from the management, policy, and daytoday operations of the stations are true, a question is"#' 0*((%" raised as to whether Contemporary/Lake has engaged in an unauthorized transfer of control of the stations. Section 310(d) of the Communications Act states, in pertinent part: XxNo construction permit or station license, or any rights thereunder, shall be transferred, assigned, or disposed of in any manner, voluntarily or involuntarily, directly or indirectly, or by transfer of control of any corporation holding such permit or license, to any person except upon application to the Commission and upon finding by the Commission that the public interest, convenience, and necessity will be served thereby.  Section 73.3540(a) of the Commission's Rules states that "[p]rior consent of the FCC must be obtained for a voluntary assignment or transfer of control."  X -x17.` ` There is no exact formula by which control of a broadcast station can be determined. In ascertaining whether a transfer of control has occurred, we have traditionally looked beyond the legal title to whether a new entity or individual has obtained the right to  X-determine the basic operating policies of the station. See WHDH, Inc., 17 FCC 2d 856  X{-(1969), aff'd sub nom. Greater Boston Television Corp. v. FCC, 444 F.2d 841 (D.C. Cir.  Xf-1970), cert. denied, 403 U.S. 923 (1971). Although a licensee may delegate certain functions to an agent or employee on a daytoday basis, ultimate responsibility for essential station  X:-matters, such as personnel, programming and finances, is nondelegable. Southwest Texas  X%-Public Broadcasting Council, 85 FCC 2d 713, 715 (1981). Here, Rice is the 100% owner of CMI and CBI, the 67.5% owner of LBI, and the President of all three corporations. His exclusion from all management, policy, and operational functions of the stations, as claimed by Contemporary/Lake, would appear to result in an unauthorized transfer of control of the stations. Therefore an appropriate issue will be designated.  X-x18.` ` On the basis of the foregoing, the Commission is unable to conclude that CMI, CBI, and LBI continue to possess the basic qualifications to remain licensees. Additionally, on the basis of the foregoing, the Commission is unable to find that the public interest will be served by granting the pending applications for modification of existing licenses and permits and for a new FM station. We reject the contention, set forth in Contemporary/Lake's Brief,  X*-that we can resolve the issue of their qualifications in their favor without a hearing on the record, as we believe is required in these circumstances.  X-x19.` ` With respect to KWIX's Informal Objection to the grant of the application for extension of the KAAMFM construction permit, we reject the contention that the extension should be denied because CBI should have built the station notwithstanding the pendency of the rule making proceeding and the onestep upgrade proposal to change from Class C2 to Class C1 status. CBI is correct in its assertion that the Commission has not required new permittees to build lower class facilities at one site when the permittee has timely and  X]%-expeditiously filed a proposal to upgrade to a higher class of station. See, e.g., Letter to  XH&-Lovcom, Inc., Mass Media Bur., October 12, 1993. Such a requirement would be wasteful and unreasonable, and the Commission has viewed the time elapsed while awaiting"3' 0*((%" Commission action on such rule making proceedings as being circumstances beyond the control of the applicant, within the meaning of Section 73.3534(b)(3) of the Rules. Thus we deny this aspect of KWIX's Informal Objection to the grant of the extension application. With respect to the matters raised by KWIX as to CBI's character qualifications, these issues will be resolved through the revocation proceeding here initiated. As noted above at footnote  X-2, supra, further action on the KAAM extension and upgrade applications will be withheld pending resolution of the instant proceeding.  XJ-x20.` ` Accordingly, IT IS ORDERED, That pursuant to Section 312(a)(2) of the Communications Act of 1934, as amended, Contemporary Media, Inc., Contemporary Broadcasting, Inc., and Lake Broadcasting, Inc., ARE DIRECTED TO SHOW CAUSE why the licenses and/or construction permits for Radio Stations WBOW(AM), WBFX(AM), and WZZQ(FM), Terre Haute, Indiana, KFMZ(FM), Columbia, Missouri, KAAMFM, Huntsville, Missouri, KBMX(FM), Eldon, Missouri, and KFXE(FM), Cuba, Missouri, should not be REVOKED, and LBI's pending application for a new FM station at Bourbon, Missouri, should not be denied, at a hearing to be held at a time and location specified in a subsequent Order, upon the following issues: Xx1. To determine the effect of Michael Rice's convictions on the basic qualifications of Contemporary Media, Inc., Contemporary Broadcasting, Inc., and Lake Broadcasting, Inc.   X- Xx2. To determine whether Contemporary Media, Inc., Contemporary Broadcasting, Inc., and Lake Broadcasting, Inc., misrepresented to the Commission that, subsequent to his arrest, Michael Rice has been excluded from the management and operation of the Contemporary Media, Inc., Contemporary Broadcasting, Inc., and Lake Broadcasting, Inc., radio stations.  Xx3. To determine, pursuant to Section 310(d) of the Communications Act of 1934, as amended, and Section 73.3540 of the Commission's Rules, whether Michael Rice has engaged in the unauthorized transfer of control of Contemporary Media, Inc., Contemporary Broadcasting, Inc., and Lake Broadcasting, Inc.  Xx4. To determine, in light of the evidence adduced under the foregoing issues, whether Contemporary Media, Inc., Contemporary Broadcasting, Inc., and/or Lake Broadcasting, Inc., possess the requisite qualifications to be or remain licensees of their respective radio stations.   X#-x21.` ` IT IS FURTHER ORDERED, That the Chief, Mass Media Bureau, is directed to serve upon Contemporary Media, Inc., Contemporary Broadcasting, Inc., and Lake Broadcasting, Inc., within thirty (30) days of the release of this Order, a Bill of Particulars with respect to all the foregoing issues. "%' 0*((%"Ԍ X-x22.` ` IT IS FURTHER ORDERED, That pursuant to Section 312(d) of the Communications Act of 1934, as amended, both the burden of proceeding with the evidence and the burden of proof shall be upon the Mass Media Bureau as to all the foregoing issues.  X-x23.` ` IT IS FURTHER ORDERED, That to avail themselves of the opportunity to be heard, the licensees, pursuant to Section 1.91(c) of the Commission's Rules, in person or by attorney, shall file with the Commission within thirty (30) days of the receipt of the Order to Show Cause a written appearance stating that they will appear at the hearing and present evidence on the matters specified in the Order. If the licensees fail to file an appearance  X1-within the time specified, the right to a hearing shall be deemed to have been waived. See Section 1.92(a) of the Commission's Rules. Where a hearing is waived, a written statement in mitigation or justification may be submitted within thirty (30) days of the receipt of the  X -Order to Show Cause. See Section 1.92(a) of the Commission's Rules. In the event the right to a hearing is waived, the presiding officer, or the Chief Administrative Law Judge if no presiding officer has been designated, will terminate the hearing proceeding and certify the case to the Commission in the regular course of business and an appropriate order will be  X-entered. See Section 1.92(c) of the Commission's Rules.  Xh-x24.` ` IT IS FURTHER ORDERED, That if it is determined that the hearing record does not warrant an Order revoking the licenses of CMI, CBI, and/or LBI for their respective stations identified in the caption above, it shall also be determined if CMI, CBI, and/or LBI has willfully or repeatedly misrepresented facts to the Commission in violation of Section 1.65 of the Commission's Rules, or if CMI, CBI, and/or LBI engaged in an unauthorized transfer of control in violation of Section 310(d) of the Communications Act and Section 73.3540 of the Commission's Rules. If so, it shall also be determined whether an Order for Forfeiture shall be issued pursuant to Section 503(b) of the Communications Act of 1934, as amended, in an amount up to $250,000 for the willful and/or repeated violation of Section 1.65 of the Commission's Rules, 47 C.F.R. 1.65, and/or for the willful and/or repeated violation of Section 310(d) of the Communications Act of 1934, as amended, and/or Section 73.3540 of the Commission's Rules, 47 C.F.R. 73.3540.  X=-x25.` ` IT IS FURTHER ORDERED, That this document constitutes a Notice of Apparent Liability for forfeiture for violation of Section 1.65 of the Commission's Rules, 47 C.F.R. 1.65, Section 310(d) of the Communications Act of 1934, as amended, 47 U.S.C 310(d), and/or Section 73.3540 of the Commission's Rules, 47 C.F.R. 73.3540. The Commission has determined that, in every case designated for hearing involving revocation or denial of assignment, transfer, or renewal of license for alleged violations which also come within the purview of Section 503(b) of the Communications Act of 1934, as amended, it shall, as a matter of course, include this forfeiture notice so as to maintain the fullest possible flexibility of action. Since the procedure is thus a routine or standard one, we stress that the inclusion of this notice is not to be taken as in any way indicating what the initial or final disposition of the case should be; that judgment is, of course, to be made on the facts of each case. ")' 0*((%"Ԍ X-x26.` ` IT IS FURTHER ORDERED, That the Secretary of the Commission send a  X-copy of this Order by Certified Mail Return Receipt Requested, to: xContemporary Media, Inc. x235 Jungerman Road xSuite 212 xSt. Peters, MO 63376 xContemporary Broadcasting, Inc. x235 Jungerman Road xSuite 212 xSt. Peters, MO 63376 xLake Broadcasting, Inc. x235 Jungerman Road xSuite 212 xSt. Peters, MO 63376 FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary