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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** Before the Federal Communications Commission Washington, D.C. 20554 In re Application of ) MM Docket No. 96-221 ) Desert Broadcasting Corporation ) File No. BRH-910327YD ) For renewal of license for ) Station KZAL(FM)) Desert Center, California ) HEARING DESIGNATION ORDER AND NOTICE OF APPARENT LIABILITY FOR FORFEITURE Adopted: October 29, 1996 Released: November 5, 1996 By the Commission: 1. The Commission has before it for consideration the captioned application for renewal of license filed by Desert Broadcasting Corporation ("Desert"), licensee of FM Station KZAL, Desert Center, California. For the reasons that follow, we are unable to conclude that grant of the application would be consistent with the public interest, convenience and necessity. Therefore, we designate the application for hearing. Our reasons follow. 2. In the last ownership report (FCC Form 323) filed by the station on February 15, 1991, Desert states that, as of January 1, 1991, Eugene B. White and Ralph M. Savage each held a 40% ownership interest in the licensee. The report further shows that White was the vice president and a director and that Savage was the treasurer and a director. On May 20, 1991, White entered a guilty plea in Florida state court to charges of racketeering, fraud, and sales of unregistered securities. For his crimes, White was sentenced to 12 years in prison. Likewise, in the State of North Carolina, White entered a guilty plea to charges that he committed securities fraud and other related crimes, and he received a prison sentence which was to run concurrently with the sentence imposed by the State of Florida. In October 1992, Savage also entered guilty pleas to similar charges brought by the States of Florida and North Carolina. However, on January 29, 1993, the date Savage was to appear in North Carolina for sentencing, he committed suicide. Desert did not report any of the foregoing information to the Commission. 3. White's and Savage's convictions were based upon their activities as president and chairman, respectively, of Sonrise Management Services, Inc. ("Sonrise"). Those activities involved, among other things, the sales of interests in partnerships that filed construction permit applications for FM broadcast stations. Most of those applications were denied or dismissed because of misdeeds committed by Sonrise and/or those involved in its activities. See Abuses of Commission Processes by Broadcast Applicants, 4 FCC Rcd 6342 (1989). 4. In Policy Regarding Character Qualifications in Broadcast Licensing ("Character Policy Statement"), 102 FCC 2d 1179 (1986) (subsequent history omitted), the Commission stated that where there was an ultimate adjudication by an appropriate court, it would consider certain criminal misconduct in character determinations. Consideration is limited to misconduct of those whose ownership interests are cognizable under the Commission's multiple ownership rules where the individual has the potential to influence or control the operations of a station. Id. at 1205-6. The misconduct which resulted in his convictions occurred while White was a principal of Desert. The convictions regarding fraud clearly raise questions about Desert's qualifications in that they have a direct bearing on the licensee's propensity to be truthful with this agency. Pursuant to the Character Policy Statement, White's misconduct must be considered in determining Desert's entitlement to a renewal of its license. See The Petroleum V. Nasby Corporation, 8 FCC Rcd 4035 (1993). Accordingly, an appropriate issue will be specified. 5. Section 1.65(c) of the Commission's Rules requires that broadcast licensees report annually to the Commission any adverse finding or adverse final action that involves conduct bearing on the licensee's character qualifications and that would be reportable in connection with license renewal. As noted, Desert made no such report. It thus appears that Desert violated Section 1.65(c). Accordingly, an appropriate issue will be specified. 6. Section 73.3615 of the Commission's Rules requires that a broadcast licensee file an ownership report on FCC Form 323 once a year on the anniversary of the date that its renewal application is required to be filed. A corporate licensee such as Desert must report the name, residence, citizenship and stockholding of every officer, director and stockholder holding 5% or more of the votes of the voting shares of the corporation. In lieu of filing a new report, a licensee may certify that its current report is accurate only if no reportable changes have occurred since the last filing date. As noted, Desert filed its last such report in February 1991. No report or certification has since been filed despite White's incarceration and Savage's death. Therefore, Desert is in apparent violation of Section 73.3615. Accordingly, an appropriate issue will be s pecified. 7. KZAL is licensed to serve Desert Center, California as a Class A FM station from transmitting facilities located approximately 7.9 kilometers southwest of its community of license. On April 9, 1993, Desert first notified the Commission that it had suspended operations as the result of alleged "severe financial difficulties." Since that date, Desert has repeatedly requested authority to remain silent to look for a buyer and/or to attempt to regain access to its authorized transmitter site. For example, by letter dated January 23, 1995, Desert indicated that the right-of-way to its transmitter site had been renewed but that the site was "no longer fully maintained nor readily available for use." Desert also reported that it was continuing its 3-year search for a buyer for the station and that its "financially strapped" condition further burdened its ability to re-establish operations from its licensed site. Although by letter dated January 26, 1995, the Commission granted Desert continued authority to remain silent until July 21, 1995, the Commission also informed Desert that no further extensions of such authority were likely to be granted absent "substantial progress towards resolution of the station's problems." Although the Commission granted further extensions through March 4, 1996, Desert has not yet resumed broadcast operations. By letter dated March 4, 1996, Desert requested continued authority to remain silent, relating that it was still searching for a buyer and that it had been displaced from its transmitter site. 8. KZAL has been off-air for more than three years, depriving the community of license of the station's authorized service. Moreover, Desert has not demonstrated that it is likely to return to the air any time within the foreseeable future. Further, Desert has not made any demonstrable progress towards resolution of the station's problems and has thus failed to meet the condition set forth in the Commission's grant of authority to remain silent. Finally, we cannot conclude from Desert's March 4, 1996, letter that causes beyond its control make resumption of operations impossible. We therefore deny its March 4, 1996, request for continued authority to remain silent and find that Desert is in apparent violation of Sections 73.1740 and 73.1750 of the Commission's Rules. Accordingly, an appropriate issues will be specified. 9. Accordingly, IT IS ORDERED, That pursuant to Section 309(e) of the Communications Act of 1934, as amended, the renewal of license application of KZAL(FM), Desert Center, California, IS DESIGNATED FOR HEARING at a time and location to be specified in a subsequent Order, upon the following issues: (1) To determine the effect of Eugene B. White's state convictions on the basic qualifications of Desert Broadcasting Corporation. (3) To determine whether Desert Broadcasting Corporation has violated Section 1.65(c) of the Commission's Rules. (3) To determine whether Desert Broadcasting Corporation has violated Section 73.3615 of the Commission's Rules. (4) To determine whether Desert Broadcasting Corporation has violated Sections 73.1740 and/or 73.1750 of the Commission's Rules. (5) To determine whether Desert Broadcasting Corporation has the capability and intent to expeditiously resume the broadcast operations of KZAL(FM), consistent with the Commission's Rules. (6) To determine, in light of the evidence adduced pursuant to the preceding issues, whether grant of the subject renewal of license application would serve the public interest, convenience and necessity. 10. IT IS FURTHER ORDERED, That, in the event it is determined that grant of the renewal of license application would serve the public interest, convenience and necessity, the grant will be conditioned on the expeditious resumption of operation by the licensee, the precise period of time to be established in the hearing. Failure to resume operations within the time specified in the condition will result in the cancellation of the license and the deletion of the station's call letters. 11. IT IS FURTHER ORDERED, That, pursuant to Section 309(e) of the Communications Act of 1934, as amended, both the BURDEN OF PROCEEDING with the introduction of evidence and the BURDEN OF PROOF with respect to the issues specified above shall be upon the LICENSEE, Desert Broadcasting Corporation. 12. IT IS FURTHER ORDERED, That, if it is determined that the hearing record does not warrant an Order denying the renewal application for Station KZAL, it shall be determined, pursuant to Section 503(b) of the Communications Act of 1934, as amended, whether a FORFEITURE ORDER shall be issued against the licensee in an amount not to exceed $250,000 for the willful and/or repeated violations of Sections 1.65(c), 73.1740, 73.1750, and/or 73.3615 of the Commission's Rules. 13. IT IS FURTHER ORDERED, That this document constitutes a NOTICE OF APPARENT LIABILITY for willful and repeated violations of Sections 1.65(c), 73.1740, 73.1750, and/or 73.3615 of the Commission's Rules pursuant to Section 503(b)(3) of the Communications Act of 1934, as amended. 14. IT IS FURTHER ORDERED, That, to avail itself of the opportunity to be heard, the licensee, pursuant to Section 1.221(c) of the Commission's Rules, SHALL FILE with the Commission, in person or by attorney, within twenty (20) days of the receipt of this Order a WRITTEN APPEARANCE stating an intention to appear on the date fixed for hearing and to present evidence on the issues specified in this Order. 15. IT IS FURTHER ORDERED, That the licensee herein shall, pursuant to Section 311(a)(2) of the Communications Act of 1934, as amended, and Section 73.3594 of the Commission's Rules, give notice of the hearing within the time and in the manner prescribed in such Rules, and shall advise the Commission of the publication of such notice as required by Section 73.3594(g) of the Rules. 16. IT IS FURTHER ORDERED, That, to inform Desert of the issues specified against it, a copy of this Order will be sent by certified mail -- return receipt requested to: Desert Broadcasting Corporation 5 Santo Domingo Drive Rancho Mirage, CA 92270 and Lee W. Schubert, Esq Haley, Bader & Potts 4350 North Fairfax Drive, Suite 900 Arlington, VA 22203-1633 FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary