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     In the Matter of                                                    
     FAMILY BROADCASTING, INC.                                           
     Order to Show Cause Why the Licenses for                            
                                                )   EB Docket No. 01-39  
     Stations WSTX(AM) and WSTX-FM,                                      
     Christiansted, U.S. Virgin Islands,                                 
     Should Not Be Revoked                                               


   Daniel A. Huber, Esquire, on behalf of Family Broadcasting, Inc.; and
   James W. Shook,  Special Counsel,  on behalf of the Enforcement Bureau

                           INITIAL DECISION ON REMAND



   Issued:  May 12, 2005 Released:  May 13, 2005

                             PRELIMINARY STATEMENT


    1. On February 8, 2001, the Commission commenced this proceeding to
       determine whether broadcast licenses held by Family Broadcasting, Inc.
       ("Family") should be revoked, and whether an order of forfeiture
       should be issued against Family. Order to Show Cause and Notice of
       Opportunity for Hearing, 16 FCC Rcd 4330, recon. denied, 16 FCC Rcd
       12810 (2001) ("OSC").

    2. All issues under the OSC were adjudicated by Summary Decision,
       ordering that the licenses for Stations WSTX(AM) and WSTX-FM be
       revoked. Family Broadcasting, Inc., 6 FCC Rcd 15619 (Admin. L.J.
       Sippel 2001) ("Summary Decision"). The stations were being operated by
       Family's president, Gerald Luz James ("Luz James"), in disregard of a
       licensee's "core responsibility" to provide uninterrupted
       broadcasting. It was found that Luz James had violated the licensee's
       duty of candor to the Commission in "purposefully and repeatedly"
       providing false and misleading reports and information on basic
       station maintenance such as transmitter location, extent of hurricane
       damage, and nonpayment of rent. It was also found that Luz James and
       Family Broadcasting, Inc. had failed to take care to protect the
       public from harmful emissions with adequate fencing, and had failed to
       provide an emergency alert system ("EAS"). Id at 15634.

    3. The Summary Decision also determined that a proposed transfer of
       control of Family's licenses from its principal stockholders, Luz
       James and his wife, Asta James, to their four adult children, was not
       permissible (Files BTC-20010315AAJ and BTCH-20010315AAK) ("Transfer
       Applications"). See Summary Decision, 16 FCC Rcd at 15635-36 (repeated
       wrong-doings and untruths of Luz James cannot confidently be corrected
       by assignment to children who rely on continuing parental generosity).

    4. The Summary Decision did not impose any forfeiture, and the Commission
       did not reject that ruling on forfeiture. Summary Decision, 16 FCC Rcd
       at 15635, aff'd., 17 FCC Rcd 6180 (2002).

    5. The Commission procedurally set aside the Summary Decision to the
       extent that it revoked Family's licenses, concluding that in light of
       the proposed transfer of control from Luz and Asta James to their
       adult children, revocation should not occur without further hearing to
       consider whether grant of the Transfer Applications met Commission
       standards and would serve the public interest. Family Broadcasting,
       Inc., Memorandum Opinion and Order and Hearing Designation Order, 17
       FCC Rcd 6180 (2002) ("HDO").

    6. The Commission affirmed the Summary Decision's conclusion that
       revocation was warranted if Luz James remained in control. The
       Commission also affirmed the Summary Decision's substantive findings
       and conclusions that Family had misrepresented facts and/or lacked
       candor and had violated numerous Commission rules in its operation of
       its stations, holding that:

   Mr. Luz James's removal as officer, director and principal stockholder
   does not moot the disqualifying impact of his intentional
   misrepresentation and cavalier disregard of basic public interest

   17 FCC Rcd at 6187. (Emphasis added.)

                                 Remand Issues

    7. The Commission then remanded to the Presiding Judge the following

    a. To determine whether, if the transfer of control applications are
       approved, Family Broadcasting Inc. will be influenced or controlled by
       Gerard Luz James;

    b. To determine whether transferors Gerard and Asta Luz James, as either
       creditors or debtors of Family Broadcasting Inc. or in any other
       capacity, will benefit, directly or indirectly, if the transfer of
       control applications are approved;

    c. To determine whether transferee Barbara James-Petersen, in her
       capacity as general manager from July 1998 until March 2001,
       misrepresented facts and or lacked candor with the Commission
       concerning the operation of WSTX(AM) and WSTX-FM;

    d. To determine whether transferee Barbara James-Petersen, in her
       capacity as general manager from July 1998 until March 2001, willfully
       or repeatedly operated WSTX(AM) and WSTX-FM at variance from the terms
       of their licenses;

    e. To determine whether transferee Barbara James-Petersen, in her
       capacity as general manager from July 1998 until March 2001, willfully
       or repeatedly violated Sections 1.89 and/or 73.1015 of the Rules by
       failing to respond to official Commission correspondence and

    f. To determine whether transferee Barbara James-Petersen will operate
       WSTX(AM) and WSTX-FM independently of any control or influence from
       transferors Asta and Gerard Luz James;

    g. To determine whether transferee Barbara James-Petersen will have
       sufficient financing and managerial capacity to ensure enclosure
       within an effective locked fence of WSTX(AM)'s antenna as required by
       Section 73.49;

    h. To determine whether transferee Barbara James-Petersen will have
       sufficient financing and managerial capacity to ensure the
       installation and maintenance of operational EAS equipment for Stations
       WSTX(AM) and WSTX-FM as required by Section 11.35;

    i. To determine whether Family Broadcasting, Inc. under the direction of
       transferee Barbara James-Petersen will operate WSTX(AM) and WSTX-FM in
       accordance with the Rules, the Communications Act, and the terms of
       their authorizations as required by Sections 73.1350(a), 73.1560(a),
       73.1560(b), and 73.1690(b); and

    j. To determine, in light of the evidence adduced pursuant to the
       foregoing issues, whether approval of the transfer of control
       application will serve the public interest.

   17 FCC Rcd at 6191-92. The burdens of proceeding and proof as to each
   issue were assigned to Family. Id.

                         Minority Distress Applications

    8. On February 24, 2003, Family filed a Petition for Extraordinary Relief
       seeking to use the Minority Distress Sale Policy, to assign Family's
       licenses to Caledonia Communication Corporation, an entity alleged to
       have minority-control, and claiming to be a qualified distress sale
       purchaser. The petition was filed after release of the HDO, and before
       any testimony was taken. The petition was granted, and the minority
       distress applications were filed on or about March 4, 2003. See Order
       FCC 03M-09, released February 26, 2003.

    9. The Chief, Audio Division, Media Bureau dismissed the Family/Caledonia
       transfer applications (BAL-20030304AAX and BALH-20030304AAW). See
       Letter from Peter H. Doyle, Chief, Audio Division, Media Bureau to
       Daniel A. Huber, Esq.(Oct. 27, 2003) ("Chief's Letter"), determining
       that Family and Caledonia have not demonstrated a public interest in
       permitting licensee that has engaged in serious misconduct by
       violating numerous Commission rules, to receive money for the
       assignment and sale of Family's stations. There was no dispute that
       through Luz James, Family "repeatedly deceived the Commission, ignored
       Commission correspondence, and operated stations at variance from
       their authorizations, and repeatedly violated other Commission rules,
       including rules that are designed to protect the public from exposure
       to RF radiation." Id. Family and Caledonia sought Commission review of
       the Chief's denial.

                                 Remand Hearing

   10. On March 16, 2004, the Presiding Judge conducted an evidentiary
       hearing on the remand issues designated in the HDO, wherein Family and
       the Bureau presented witness testimony and documentary exhibits. There
       also was received into evidence two post-hearing exhibits sponsored by
       the Bureau. Order, FCC 04M-11, released March 31, 2004. The Presiding
       Judge thereafter stayed post-hearing briefing dates in order to
       accommodate an appeal to the Commission of the Media Bureau Chief's
       denial of distress sale relief. See Order, FCC 04M-16 (rel. Apr. 30,
       2004); Order, FCC 04M-21 (rel. July 1, 2004); Order, FCC 04M-29 (rel.
       Oct. 1, 2004); Order, FCC 04M-40 (rel. Dec. 6, 2004). A final deadline
       of April 4, 2005, was set for submission of proposed findings of fact
       and conclusions of law, in the event that the Commission had not by
       then disposed of the case. See Order, FCC 04M-40 (rel. Dec. 6, 2004),
       erratum (Jan. 12, 2005). The Commission has not yet ruled on the
       Family/Caledonia applications for review. Nor has the Commission
       stayed this proceeding pending its review.

                          Family's Intentional Default

   11. On April 4, 2005, the Enforcement Bureau filed timely its proposed
       findings of fact and conclusions of law, under Order FCC 04M-40,
       supra. Family defaulted and filed only a request for stay in lieu of
       proposed findings and conclusions. The fact that Family elected on its
       own to such a further stay on the deadline date, without even the
       courtesy of notifying OALJ, shows an intent to default on filing
       proposed findings and conclusions. In ruling on the motion, the
       Presiding Judge rejected arguments under the Second Thursday doctrine
       (filing for bankruptcy before hearing to justify stay and assignment),
       and also rejected any "right" of Family to hereafter file, at its
       option, proposed findings of fact and conclusions of law. See
       Memorandum Opinion and Order, FCC 05M-24, released April 22, 2005.
       Family's intentional default also shows that Family, under
       "management" of Ms. James-Petersen, is not willing or capable of
       compliance with Commission rules of practice.

                                Findings of Fact

                           Family's Burdens of Proof

   12. Family must demonstrate that if the Transfer Applications are granted
       and Family's licenses are transferred to the children, Luz James will
       not continue to influence or control the stations' business and
       operations, and Barbara James-Petersen, his daughter, will be able to
       operate the stations independent of any control or influence from Luz
       James. Ultimately, notwithstanding the demonstrated dominance of Luz
       James, an adjudicated wrongdoer, Family must demonstrate that under
       Ms. James-Petersen's direction, it will operate the captioned stations
       in accordance with the Communications Act, the Commission's rules, and
       the terms of the stations' authorizations. As found below, Family has
       failed to meet its burdens of proof on issues of control, and on
       related issues of failures to comply with Commission rules, and on
       operating the stations at variance from licensure. Consequently, a
       grant of the Transfer Applications cannot serve the public interest,
       they must be denied, and the stations' licenses must be revoked.

   13. Family also was assigned the burden of proving that Ms.
       James-Petersen, as general manager of the stations from July 1998 to
       March 2001, did not intentionally or willfully misrepresent facts or
       lack candor concerning the stations' operations, and did not willfully
       violate Sections 1.89 and/or 73.1015 of the Commission's rules by
       failing to respond to official Commission correspondence and

                                Family's History

   14. Family acquired Stations WSTX(AM) and WSTX-FM in September 1990. (EB
       Exh. 2 at 1; EB Exh. 3 at 1.) Luz James decided to purchase the
       stations after he had worked at them during the 1950s. (EB Exh. 4 at
       81.) Ms. James-Petersen had no role in the stations' purchase. (Tr.

   15. Before acquisition of the stations by her parents, Ms. James-Petersen
       in Maryland with her husband and three children. Shortly after her
       parents acquired the stations and Family became licensee, Ms.
       James-Petersen and her three children moved to
       St. Croix. Since returning to St. Croix, she has resided, rent free,
       with her parents. (Tr. 150-151; EB Exh. 4 at 90; EB Exh. 5.)

   16. As of March 16, 2004, Ms. James-Petersen's children were 23, 17 and
       14. The eldest is a student at Grambling State University. The
       youngest is and has been severely asthmatic, and suffers from
       hypertension. Ms. James-Petersen has no health insurance, and her
       parents pay for her son's medical care and prescription medications.
       (Tr. 157-158, 163.)

                        Family's Internalized Management

   17. On February 8, 2001, the Commission issued the OSC, under which the
       Summary Decision was issued. Upon issuance of the OSC, Luz James
       immediately resigned as president. He was succeeded by his daughter,
       Ms. James-Petersen as Family's president in March 2001. (EB Exh. 4 at
       32.) Three younger brothers, Luz James, Jr., a St. Croix resident,
       Emmeth James, of New York, and Kelsey James, a physician in Kentucky,
       became nominal corporate officers. (EB Exh. 5 at 13-14.) None of the
       brothers is involved with the business or with operating the stations.
       (EB Exh. 4 at 33-35; EB Exh. 7 at 13, 19, 34; Tr. 96, 105.)

   18. Due to pressing personal reasons, Ms. James-Petersen was and is
       frequently away from St. Croix. From March 1 to April 10, 2001, she
       was in Washington, D.C. after her husband suffered a heart attack. She
       came to Washington, D.C. in May 2001 for her one-day deposition,
       remained in Washington, D.C., and returned to St. Croix in August
       2001. She revisited Washington, D.C. in September 2001. She frequently
       travels here in order to obtain medical assistance for her son. She
       plans to one day return with her son to be near Children's Hospital.
       (Tr. 159; EB Exh. 4 at 8; EB Exh. 5 at 21.)

   19. When in St. Croix, she is at the stations every day. "I'm there seven
       days a week at least eighteen hours a day." She suffers from migraine
       headaches, which kept her away from the stations for most of the time
       between November 2003 and March 2004. When she is not at the stations,
       Family's program director and production manager, Alva Clarke,
       conducts the stations' business. Ms. James-Petersen is present at the
       stations between six to eight hours on those days, when she is there.
       (EB Exh. 9 at 19-20, 140, 210; Tr. 167-169.)

                               Purchase Financing

   20. To purchase the stations, Luz James obtained a bank loan, secured by
       properties that he and/or his wife owned. (Tr. 102.) The bank has
       foreclosed on one of the properties and the matter is now in court.
       (Tr. 113.) Ms. James-Petersen believes that foreclosure satisfied the
       Family's debt to the bank, and stated that one of her parents' other
       properties may be subject to a security interest. (Tr. 119.) She has
       no knowledge of whether Family paid off its borrowing in order to buy
       the radio stations. Luz James tells her only what he wants to
       disclose. She has not been given any documents related to the
       foreclosure litigation, despite asking. (EB Exh. 9 at 221-22.) It is
       clear that Ms. James-Petersen has no control over the working capital
       of Family's broadcast stations.

                                Stock Ownership

   21. Family sold shares of its stock to family and friends of Luz and Asta
       James, who collectively hold approximately 7% of the voting stock.
       (Tr. 129.) Family actually issued shares of stock to each "outside"
       shareholder, but it never formally issued shares of stock to Luz James
       or his wife, who control ninety three percent of the stock. (Tr.
       132-33.) Family also raised money through shareholder loans, and
       corporate tax work papers indicate more than $400,000 in loans from
       stockholders. Ms. James-Petersen does not know to whom these
       obligations may be owed, or if Family even owes any shareholders any
       money. (EB Exh. 4 at 39, 42-43.) It can only be inferred that the
       records of Family's ownership and its liabilities are in a state of

                          James-Petersen's Experience

   22. Ms. James-Petersen worked at the stations from September 1990 to
       August or September 1992. Although she holds the titles of president
       and general manager, her father controls both stations through
       pervasive de facto control. During 1990-1992, Family only paid the
       "general manager" her salary sporadically. In 1992, she left Family
       because she did not feel comfortable with the limited role her father
       had given her. From 1993 to 1997, she went to work for her brother,
       former Senator Gerard Luz James, Jr., and served as his chief of
       staff. Before returning to the stations, she conducted legal research
       for her father. (Tr. 152; EB Exh.4, at 7, 68; EB Exh. 7 at 18; EB Exh.
       9 at 10-11.)

   23. While working for her brother, Family was evicted from the site that
       was authorized for Station WSTX-FM. The eviction was due to
       non-payment of rent. During the mid-1990s, the station was
       periodically silent, and its license was renewed by the Commission in
       1997, only after a hearing. See Family Broadcasting, Inc., 11 FCC Rcd
       18700 (Admin. L.J. Luton 1997). Upon resumption of operations in
       January 1997, Family simulcast its FM station with its AM Station from
       the latter's site, a self-help operation that was not in accord with
       FCC licensure. (EB Exh. 2 at 8, 47; EB Exh. 3 at 4-5; EB Exh. 8 at

                                FCC Inspections

   24. Family's stations were inspected twice in 1997. Both stations were
       found to be operating at significant variances from their license
       authorizations, i.e., unlawfully. Station WSTX-FM was operating from
       an unauthorized site and at 100 Watts, which was 0.2% of its
       authorized power. Family had been evicted from its authorized site
       several years earlier. (Family Exh. 1 at 2.) Station WSTX(AM) was
       operating at 2,800 Watts, which was 56% of its authorized power.
       Station WSTX(AM) also was using an antenna that was 36 meters high,
       significantly below its authorized height. The FCC inspector found
       that Family had no operable EAS/EBS equipment installed, and had
       failed to enclose its antenna within a secured fence. (EB Exh. 1 at
       1-2; EB Exh. 2 at 50-55)

   25. The FCC sent written results of the first inspection to Luz James,
       him of the violations. The notification included checklists for each
       station to achieve compliance. Luz James acknowledged to the inspector
       that he had received this official FCC correspondence. But he did not
       submit a progress report on compliance, as requested. (EB Exh. 1 at 2;
       EB Exh. 2 at 49.)

   26. After the second inspection, Family received two notices of violations
       ("NOVs") that were sent by certified mail. Family received both NOVs.
       But the FCC received no reply to either. (EB Exh. 1 at 3; EB Exh. 2 at
       10; EB Exh. 3 at 6.)

                            Ms. James-Petersen As GM

   27. In June - July 1998, Ms. James-Petersen returned to the stations as
       general manager. (EB Exh. 4 at 7; Tr. 134.) Her return followed a
       meeting involving herself, her brother, Luz James, Jr., and Alva
       Clarke in which all agreed that Luz James should curtail his
       involvement with the stations. Luz James agreed to reduce his role.
       Ms. James-Petersen was to supervise daily operations, ensure that
       personnel reported on time, and see that commercial spots were aired
       as scheduled. (EB Exh. 8 at 66-70; EB Exh. 9 at 8-9, 58-60, 62, 63.)
       Yet her father remained in de facto control and clearly was and is
       "calling all of the shots."

                           Subsequent FCC Inspections

   28. On September 8, 1998, the FCC returned for another inspection. Ms.
       James-Petersen informed the inspecting agent that she was the new
       general manager and would be assuming day-to-day operations. She was
       informed that previous inspections had discovered stations operating
       below authorized power. (Tr. 138.) Again, it was found that the AM
       station was operating at only 45% of its authorized power. The AM
       facility utilized an antenna that was far below its authorized height.
       The FM station was still operating at a mere 0.2% of its authorized
       power, and it was broadcasting from an unauthorized site. EAS
       equipment had been powered down and had not been in operation since
       July 17, 1998. In plain view, the chain link fence that surrounded the
       AM antenna for the purpose of protecting the public had a hole in it.
       (EB Exh. 1 at 3-4.)

   29. On April 13, 2000, the stations were again inspected. Luz James had
       undergone heart surgery in January, was recovering at the time of the
       inspection, and funds previously earmarked for repairing the AM
       station's tower had been used for his surgery. She and her brothers
       were about to take over full operation of the stations. EAS equipment
       was found again to be malfunctioning, though she had called in an
       engineer to fix the problem. Station WSTX-FM continued to operate at
       0.2 percent of authorized power from the same unauthorized site, while
       Station WSTX(AM)'s power also was operating far below its authorized
       power. And without excuse, the dangerous opening in the antenna fence
       had not yet been repaired. (EB Exh. 1 at 4-5; EB Exh. 4 at 62.)

   30. NOVs were issued for violations at both stations, sent by certified
       mail and by facsimile. (EB Exh. 2 at 76-81.) Ms. James-Petersen's
       signature appears on the certified mail return receipts. But the FCC
       did not even receive a response to the NOVs. (EB Exh. 1 at 6.) Ms.
       James-Petersen, in a suspended state of unawareness, claimed that she
       did not realize until receipt of the NOVs that Station WSTX-FM was not
       operating at its authorized site, or that it was operating below its
       authorized power. (EB Exh. 4 at 58-59.)

   31. On May 15, 2000, Family sought special temporary authorizations
       ("STAs") to permit nonconforming operations. Luz James prepared and
       signed the letters. (EB Exh. 2 at 15-16, 82-89; EB Exh. 3 at 9.)

   32. Family received STAs to operate the stations at variance with
       authorizations, and Commission records reflect that since May 2000,
       STAs have either been granted or requested. (EB Exh. 2 at 90-93;
       Official Notice.)

   33. Following issuance of STAs, the Enforcement Bureau followed up with a
       letter of inquiry which focused on possible misrepresentations
       contained in the STA requests. A copy of the Bureau's letter was sent
       by facsimile to Ms. James-Petersen. She received it but did not
       respond. (EB Exh. 2 at 17, 94-97.) Luz James was supposed to respond,
       but he did not do so. (EB Exh. 9 at 52.) This represents another

                           Findings On Remand Issues

                                   Issue (a)

   (Family will continue to be controlled by
   Luz James)

   34. Ms. James-Petersen learned during her lifetime that her father, Luz
       James, is "extremely headstrong." She pointedly observed, under oath,
       that "he can be a slick one,"
       and that he is "a male chauvinist". (EB Exh. 9 at 56, 79; Tr. 131,
       157.) Luz James even boasted -- "in my family, I control my family."
       (EB Exh. 5 at 175.)

   35. Luz James is now at the stations as an announcer and to play his
       selected music. (Tr. 91-92.) He also functions as a salesman. (Tr.
       155-56.) Selected programmers continue to be charged less than regular
       commercial programmers, a favoritism which Luz James has no intention
       of changing. And station employees still call Luz James to resolve
       problems, even if Ms. James-Petersen, the general manager, is present
       at the stations. (Tr. 93-94; EB Exh. 5 at 65, 71; EB Exh. 9 at 60.)

   36. Regular business is conducted at the home of Luz and Asta James, who
       have ready access to all books and records. Even payroll records and
       advertising contracts are maintained at home. These records are kept
       in a filing cabinet and in boxes, unsecured by locks. (Tr. 87-89.)
       Bills are sent to a post office box for which Ms. James-Petersen and
       Luz James have keys. Luz James assists with the stations' finances,
       and will ask her if there is enough money to cover payroll and bills.
       (Tr. 95-98, EB Exh. 9 at 163.) Luz and Asta James remain as
       signatories on the Family checking account. (EB Exh. 9 at 204-05,

   37. These are all classic indicia of de facto control. The Commission has
       held that "control encompasses any form of actual or legal control
       over basic operating policies." Trinity Broadcasting, 14 FCC Rcd
       13570, 13603 (1999). And under the Commission's Regulatory policy:

   [T]he word control as used herein is not limited to majority stock
   ownership, but includes actual working control in whatever manner
   exercised." (Emphasis added.)

   47 C.F.R. S 73.3555 n. 1. The evidence of this hearing record clearly
   establishes that one of the most important indicia of de facto control,
   working capital or "money," is permeating the relationships of Ms.
   James-Petersen to her parents, Luz and Asta James, both personal and
   business. Neither she or her children, nor the stations would survive
   without continued financial support. Therefore, it is apparent that Family
   and Ms. James-Petersen would con-tinue to be influenced and/or controlled
   by Luz and Asta James if the Transfer Applications are granted.

                                   Issue (b)

   (Luz and Asta James may benefit financially
   from transfer of control)

   38. Family apparently owes over $100,000 to stockholders who have made
       loans to the corporation. (EB Exh. 4 at 137, 153.) Ms. James-Petersen
       testified that the last federal tax return filed was for 1997 or 1998.
       (Tr. 99.) As of January 2003, Luz James had information concerning
       Family's debt that he had not shared with her. (EB Exh. 9 at 170.) Luz
       James never explained which debts Family owed that were related to the
       purchase of the stations. (Tr. 102.) The evidence shows that only Luz
       James knows the true financial status of Family, and he is not

   39. However, such evidence is too remote and too speculative to support a
       specific finding that Luz and Asta James will wrongfully benefit
       financially in any way from a transfer of control. If there be some
       incidental benefits, these would be difficult to prove, and there is
       no violation of the Act or Commission rule shown or alleged. Findings
       under this issue would be speculative, would detract from the main
       issue of control, and could result in confusion. See FRE 402.

                                   Issue (c)

   (Ms. James-Petersen never intentionally
   misrepresented facts or  lacked candor with
   the Commission)

   40. Ms. James-Petersen was unaware that she was misrepresenting when she
       informed the staff that the stations constitute the only valuable
       asset held by her father for the benefit of his children and
       grandchildren. (Family Exh. 1 at 2 and Exh. 2 at 1.) Later she
       acknowledged that Family's stations are not the only valuable asset
       held by her father for the benefit of his children and grandchildren.
       She testified truthfully that her parents own several other parcels of
       real estate on St. Croix and intend  to will the properties to their
       children and grand-children. (Tr. 126.)  Her explanation for having
       represented that the stations as the only valuable asset was
       reasonable if she "was referring to businesses as opposed to real
       estate property that [her] parents owned." Her explanation is
       plausible, and she corrected the record.

   41. A misrepresentation or lack of candor requires "an actual intent to
       deceive the Commission." See Amendment of Section 1.17, 18 FCC Rcd
       4016, 4020 (2003). "Material" is defined as "important" or "having
       influence or effect;" and a "material misrepresentation is defined as
       "one relating to matter which is so substantial or important as to
       influence the party to whom it is made." 18 FCC Rcd at 4020 n. 4. What
       is necessary to find in order to have "disqualifying misconduct" is
       "the fact of misrepresentation coupled with proof that the party
       making it had knowledge of its falsity," the sine quae non factors
       necessary for finding fraudulent intent. Leflore Broadcasting Co. v.
       FCC, 636 F.2d 454, 462 (D.C. Cir. 1980). These factors are not found
       with respect to the misstatement of Ms. James-Petersen concerning to
       her parents' estate properties.

   42. A mere statement in a revocation proceeding that she is "unaware" of
       having misrepresented would certainly not influence or impress any
       prosecutor or decision-maker, and therefore no fraudulent intent is
       found. Nor does the fact that Ms. James-Petersen misspoke about
       parental estate assets prove a misrepresentation or absence of candor,
       even though the information may not be accurate. It is plausible that
       Ms. James-Petersen was mentally focused on assets that are only
       broadcasting assets of Family, not assets which are the universe of
       her parents' estate. Certainly, the staff was at no time induced to
       take or defer regulatory action based on her erroneous information
       concerning these "assets." And ultimately, when pressed on the issue,
       Ms. James-Petersen disclosed all the assets that she knew of,
       including the real estate holdings of her parents.

   43. In addition, the argument for finding misrepresentation or lack of
       candor on the part of Ms. James-Petersen misses the necessary
       ingredients of deliberateness and fraudulent intent, particularly
       where as here, the influence and control of Luz James extended over
       everything that the stations' general manager said and did relating to
       the stations. The lack of evidence of concealment or intent to
       conceal, and observations of demeanor, preclude adverse findings of
       intentional misrepresentation or lack of candor on the part of Ms.

                                   Issue (d)

   (Ms. James-Petersen operated stations at
   variance from licensure)

   44. Luz James denied that his daughter had responsibility to correct
       matters found deficient by FCC inspections. (EB Exh. 5 at 162.) But
       she was general manager of record when the inspections occurred in
       1998 and in 2000, when both stations were operating under serious
       variances. (EB Exh. 1 at 3-4.) There were "some things that needed to
       be rectified," and she knew that both stations were operating below
       authorized power. (Tr. 136-138.) Yet when the stations were
       reinspected in 2000, no improvements were found, because none had been
       made. It is officially noticed that Hurricane Lenny had caused damage
       to Station WSTX(AM). Yet, Ms. James-Petersen acknowledged that she had
       not taken steps to operate the stations at licensed power. (Tr. 142.)
       To her credit, in the final analysis, on her watch,  Family received
       STAs permitting variances with authorizations. (EB Exh. 2  at 90-93.)
       And official notice establishes that Commission records reflect that
       STAs have either been granted or requested since May 2000.   This
       evidence indicates that Ms. James-Petersen was trying to comply,
       albeit not successfully.

   45. Ms. James-Petersen shares responsibility with her father for these
       variances. This record is replete with evidence that Luz James
       controls everything and that it is impossible to ascribe
       responsibility to his daughter for not making costly repairs and
       maintenance. Ms. James-Petersen might commit Family to spend money or
       incur financial obligations with respect to station equipment only
       with Luz James' approval and direction.
       In lacking financing, she was not directly responsible for failures to
       comply with Family's licensure authorizations involving capital
       expenditures. She was, however, at all times vicariously responsible
       as president and general manager for conducting broadcast operations
       in accordance with the Act, the rules, and the terms of authorization.

                                   Issue (e)

   (Ms. James-Petersen failed to  respond to FCC
   inquires on violations)

   46. Family received NOVs dated May 1, 2000. (EB Exh. 2 at 15, 76-81.)
       While admitting that she received a copy of Bureau letter of inquiry
       addressed to Luz James, she asserted that she gave the letter to her
       father and assumed that he would take care of the matter. (Tr. 135.)
       Family never responded to the Bureau's letter. (EB Exh. 2 at 17,
       94-97; EB Exh. 3 at 9-10.)

   47. Based on the evidence of Luz James' control, Ms. James-Petersen would
       be expected to have cleared all FCC communications with her father,
       Luz James. She gave the letter to him, as would be expected. Knowing
       his past non-diligence, Ms. James-Petersen was negligent in not
       pursuing the matter with her father to make a timely response. But she
       could not control what Luz James stated in his responses, or when he
       would reply. The primary wrongdoer in failing to respond to FCC
       inquiries was the de facto manager, Luz James. His daughter was not in
       a realistic position to control Family's answering of NOVs.

                                   Issue (f)

   (Ms. James-Petersen cannot independently
   operate stations)

   48. Luz James and his wife pay stations' expenses as needed. (Tr. 95.) Ms.
       James-Petersen acknowledged that "when we fall behind, then, you know,
       she [Mrs. James] would step in and she would assist." (Tr. 95.) She
       intended to move the stations' checking account to a different bank
       and to specify herself and her brother Luz James, Jr. as the account's
       only authorized signers. But her parents still have signature
       authority on the current Family checking account. (EB Exh. 9 at

   49. This evidence is definitive of "actual working control" exercised
       through parental dictation, and particularly parental financing of
       necessary working capital. 47 C.F.R. S 73.3555 n. 1. This de facto
       control over working capital, in addition to the day to day
       controlling conduct of a "headstrong" Luz James, shows that working
       control will remain with Luz James after any formal assignment to the
       children of Luz and Asta James.

                                   Issue (g)

   (Ms. James-Petersen has no independent
   capacity to repair and maintain effective
   antenna fence)

   50. During inspections in 1998 and in 2000, an FCC agent discovered
       openings in
       a protective fence that surrounded the WSTX(AM) antenna. Because Luz
       and Asta James control the working capital necessary for Family to
       make such repairs, Ms. James-Petersen has no capacity to make
       necessary capital repairs independent of her parents. Ms.
       James-Petersen was general manager in charge of the stations'
       operations and maintenance, and by virtue of her office, she was
       responsible. But the necessary financing is under control of Luz
       James, and he was the person in control who had the ability to make
       fence repairs.

                                   Issue (h)

   (Ms. James-Petersen has no independent
   capacity to install and maintain EAS

   51. The FCC inspection of 1998 found EAS equipment that was not operating,
       and the inspection of 2000 found the same EAS equipment to be
       malfunctioning. (EB Exh. 1
       at 3-5.) It will be necessary for Luz James to provide financing for
       installing and maintaining EAS equipment. Ms. James-Petersen could not
       do so without authorization, cooperation, and financing of Luz James.
       Nothing will correct Family's malfunctioning EAS equipment by an
       assignment, because the condition of EAS equipment still will depend
       upon Luz James.

                                   Issue (i)

   (Ms. James-Petersen cannot assure operating
   in accordance with Commission rules)

   52. Ms. James-Petersen testified that she did not know whether Family was
       operating its stations with approved STAs, a matter that she felt was
       "up to the attorneys to handle." (Tr. 146.) Commission records reflect
       that Family obtained STA extensions which were valid from June 12,
       2000, through November 17, 2004. Family sought STAs by letters dated
       May 23, 2003. These STAs granted on May 17, 2004, were designated to
       expire on November 17, 2004. Commission records also reflect that
       Family sought STAs on March 14, 2005. The Media Bureau granted an STA
       on March 22, 2005, that was designated to expire on September 22,
       2005. The March 2005 STA did not cover the period between November 17,
       2004 and March 2005. Therefore, there was a lapse of several months
       during which Family was in technical violation. (Official Notice.) Ms.
       James-Petersen was vicariously responsible for the lapses.

   53. Results of inspections conducted by FCC investigators since Ms.
       James-Petersen became general manager establish that the stations have
       not operated at all times in accordance with FCC's rules and terms of
       authorization. Ms. James-Petersen has failed to offer reliable
       evidence to show that she can operate and control Family's stations to
       assure reasonable compliance with FCC rules and the terms of license

                                   Issue (j)

   (Transfer of control not in the public interest)

   54. The ultimate issue is whether a transfer of control from Luz and Asta
       James to his children, with the stations being managed by Ms.
       James-Petersen, will serve the public interest. The facts determined
       under the remand issues reflect that Ms. James-Petersen and her
       siblings are totally dependent upon Luz and Asta James for financing
       stations' operations. The adjudicated facts also establish that after
       resignation from all positions at Family,
       Luz James, acting as patriarch, continues to operate, control,
       influence, and essentially dominate all aspects of the stations'
       business and broadcasting operations. This fact record establishes by
       a preponderance of reliable evidence that the transfer of control
       would not be effective, and therefore would not be in the public

   55. This fact record also establishes that Ms. James-Petersen is an
       unreliable assignee who cannot assure that the stations' would operate
       in accordance with the Act and/or Commission's rules, or in accord
       with station license authorizations. Therefore, the public interest
       requires the unconditional denial of Transfer Applications for
       assignment to the children of Luz and Asta James.

                               Conclusions of law

                                 Control Issues

   56. The ultimate issue to be resolved is who will de facto manage Family's
       stations should the Commission grant the Transfer Applications. The
       weight of the evidence establishes that Ms. James-Petersen cannot
       manage Family's business or broadcasting free of her parents', and
       particularly her father's - Luz James - domineering influence. It is
       concluded that Luz and Asta James, through financing and familial
       influence, virtually dictatorial in the case of Luz, have had and will
       continue to have commanding influence, control and at times dominance
       over Family's business and broadcast operations.

   57. Family has not met its burden of proof regarding control of Family
       Broadcasting, should the Transfer Applications be granted. In
       Petroleum v. Nasby, 10 FCC Rcd 6029, 6033 (Rev. Bd. 1995), remanded,
       11 FCC Rcd 3494 (1996), and in Faulkner Radio, Inc., 88 FCC 2d 612,
       618 (1981), the Commission found that license renewal was appropriate
       only after concluding that wrongdoers were going to be completely
       removed and isolated from station operations. In the case of Nasby,
       supra, the Commission required transfer of the wrongdoer's control
       stock (including children's and relative's stock) to unrelated
       persons. There, wrongdoer Tom Root was shown to exercise no control
       and could no longer influence the licensee's affairs after assignment.
       Here, after assigning all control stock to his children, wrongdoer Luz
       James would remain at the station, be involved in broadcast
       operations, act as banker and record keeper, and choose programming.
       Luz James would control and/or significantly influence all aspects of
       the day-to-day broadcast and business operations of Family, as well as
       the life of their daughter while she serves nominally as the stations'
       general manager. Consequently, under Nasby, supra, issues (a) and (f)
       regarding control of Family after transfer, are resolved against

                              Other Remand Issues

   58. The weight of the evidence with respect to other issues shows that
       Ms. James-Petersen was nominally responsible for Family's operations
       as president and general manager, the stations were operated at
       variance from the licenses. Family also failed to respond to FCC
       inquires about violations and Family failed to repair fencing and
       install EAS equipment. As president and general manager, Ms.
       James-Petersen bears vicarious responsibility for violations occurring
       on her watch. However, the evidence establishes that her father, Luz
       James, was de facto primarily responsible for these violations.

   59. Luz James has been shown to be the person in de facto control, and it
       is unclear at what point he was not exercising such control, and at
       what point Ms. James-Peterson became her own person. It does appear
       that Luz James was de facto responsible for misrepresentations made by
       Family, whether communicated by himself or through his daughter. There
       is not sufficient evidence in this record to prove that Ms.
       James-Peterson willfully or intentionally lacked candor, or willfully
       or intentionally misrepresented in reporting the status of station
       operations to the Commission, or in responding to Commission inquires.

                              ULTIMATE CONCLUSIONS

   60. In offering proof in support of its burdens, Family failed to
       demonstrate by a preponderance of the evidence that it will not be
       influenced or controlled by Luz James, and that Ms. James-Petersen
       will be able to operate the stations free of control or influence of
       her parents. Therefore, Family has failed to meet its burden of proof
       to show that as transferee Ms. James-Petersen will operate the
       stations in accordance with Commission regulations,
       47 C.F.R. SS 73.1350(a), 73.1560(a), 73.1560(b), and 73.1690(b).
       Family also has failed in its burden of proof to show that after
       assignment of licenses, Ms. James-Petersen will be capable of
       operating the stations independent of her father, an adjudicated

   61. Recently, in a related significant matter, Family intentionally
       defaulted by failing to file proposed findings and conclusions on
       April 4, 2005. Such malfeasance constitutes further convincing
       evidence that Ms. James-Petersen fails to accept a licensee's
       responsibility for complying with FCC rules, even in this adjudication
       wherein Family's licenses are at stake. Cf. Memorandum Opinion and
       Order FCC 05M-24, supra.  Once again, Family is found to have failed
       to demonstrate that its continued status as licensee will serve the
       public interest, this record being replete with evidence to the

   62. Therefore, it is in the public interest that Family Broadcasting,
       Inc.'s Transfer Applications be denied, and that all of its licenses
       be revoked.


   IT IS ORDERED that the proposed Transfer Applications seeking to transfer
   control and ownership of Family Broadcasting, Inc. from its principal
   stockholders, Gerald Luz James and his wife Asta James, to their four
   adult children, Barbara James-Petersen, Luz James, Jr., Emmeth James, and
   Kelsey James (File Nos. BTC-20010315AAJ and BTCH-20010315AAK) involving
   Stations WSTX(AM) and WSTX-FM at Christiansted, U.S. Virgin Islands, ARE

   IT IS FUTHER ORDERED that FCC licenses held by Family Broadcasting, Inc.
   for Stations WSTX(AM) and WSTX-FM at Christiansted, U.S. Virgin Islands,


   Richard L. Sippel

   Chief Administrative Law Judge

   The Commission policy is set forth in Minority Ownership of Broadcasting
   Facilities, 68 FCC 2d 979, 983 (1978). See also Commission Policy
   Regarding Advancement of Minority Ownership of Broadcasting, 92 FCC 2d
   849, 851 (1982).

   Family exhibits are referred to as (Family Exh. __) and Bureau exhibits
   are referred to as (EB Exh. __). Hearing transcript pages will be referred
   to as (Tr. __.).

   Second Thursday Corp., 22 FCC 2d 515; 25 F.C. C. 2d 112 (1970).

   Communi-Centre Broadcasting v. F.C.C., 856 F.2d 1551 (D.C. Cir. 1988).

   Because of the unremitting dominance of Luz James over his daughter
   Barbara James-Petersen, she will not be found by this fact-finder to have
   willfully or intentionally misrepresented or lacked candor in
   communicating with the Commission staff. Evidence of intent or willfulness
   on her part is light to lacking. Also, it is difficult to assign
   willfulness and intent when she is dependent on Luz James for daily
   sustenance and needed care for her sick child, and she is dominated by a
   "headstrong" father while acting as general manager of the stations.

   The Review Board specifically decided not to permit stock retentions by
   members of the Root family and would grant renewal only upon complete
   divestiture of Root stock to unrelated third parties. See 10 FCC Rcd at

   This Initial Decision on Remand shall become effective and this proceeding
   shall be terminated 50 days after its release if exceptions are not filed
   within 30 days thereafter, unless the Commission elects to review the case
   on its own motion. 47 C.F.R. S 1.276(b).

   (Continued from previous page)


   Federal Communications Commission FCC 05D-01



   Federal Communications Commission FCC 05D-01