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Federal Communications Commission
Washington, D.C. 20554
In the Matter of
Frank Neely File No. EB-03-NF-014
Licensee, Station WLTC(AM) NAL/Acct. No. 200332640007
Gastonia, North Carolina FRN 0008-4986-68
Rock Hill, North Carolina
MEMORANDUM OPINION AND ORDER
Adopted: January 29, 2007 Released: January 31, 2007
By the Assistant Chief, Enforcement Bureau:
1. In this Memorandum Opinion and Order ("Order"), we deny a Petition for
Reconsideration filed by Frank Neely ("Mr. Neely"), licensee of AM
broadcast station WLTC, Gastonia, North Carolina, of an Enforcement
Bureau ("Bureau") Forfeiture Order which imposed a forfeiture of four
thousand dollars ($4,000) to Mr. Neely for repeated violation of
Section 73.1745(a) of the Commission's Rules ("Rules"). The noted
violation involved Mr. Neely's operation of its broadcast station at
unauthorized power levels.
2. In a July 16, 2003 Notice of Apparent Liability for Forfeiture, the
Commission's Norfolk, Virginia Resident Agent Office ("Norfolk
Office") issued a monetary forfeiture in the amount of $4,000 to Mr.
Neely for apparent repeated violation of Section 73.1745(a) based on
overpowered operations observed on April 22, 23, and 24, 2003. In his
response to the NAL, Mr. Neely did not dispute that WLTC operated with
excessive power on the dates specified in the NAL, but opposed the
NAL, stating that he had set up procedures to prevent the reoccurrence
of the violation, and that he had a history of overall compliance with
the Commission's Rules. In addition, Mr. Neely claimed to be
financially unable to pay the forfeiture. On August 23, 2004, the
Bureau issued a Forfeiture Order finding Mr. Neely liable in the
amount of $4,000 for repeated violation of Section 73.1745(a). In the
Forfeiture Order, the Bureau found that Mr. Neely's corrective efforts
were insufficient to nullify or mitigate the forfeiture, and that Mr.
Neely did not have a history of compliance because of previous
enforcement action taken against WLTC. Further, the Bureau found that
the proposed forfeiture amount was a very small percentage of the
gross revenues of Rejoice, Inc. ("Rejoice"), the parent company of
WLTC, and held that no mitigation or reduction of the proposed
forfeiture was warranted based on the financial information provided.
3. On September 9, 2004, Mr. Neely filed a Petition for Reconsideration
of the Forfeiture Order. He argues the single point that the financial
information submitted with his response to the NAL supports his
request for reduction or elimination of the forfeiture based on an
inability to pay. The financial information provided is a set of tax
returns for Rejoice. No financial information for Mr. Neely himself is
4. The forfeiture amount in this case was assessed in accordance with
Section 503(b) of the Communications Act of 1934, as amended ("Act"),
Section 1.80 of the Rules, and The Commission's Forfeiture Policy
Statement and Amendment of Section 1.80 of the Rules to Incorporate
the Forfeiture Guidelines, ("Forfeiture Policy Statement"). In
examining Mr. Neely's Petition for Reconsideration, Section 503(b) of
the Act requires that the Commission take into account the nature,
circumstances, extent and gravity of the violation and, with respect
to the violator, the degree of culpability, any history of prior
offenses, ability to pay, and such other matters as justice may
5. Under the Forfeiture Policy Statement and Section 1.80(b)(4) of the
Rules, inability to pay is a downward adjustment factor for Section
503 forfeitures. In analyzing economic-hardship claims, the Commission
generally looks to a violator's gross revenues from the three most
recent tax years as a reasonable and appropriate yardstick to
determine its ability to pay an assessed forfeiture. Thus, the
Commission will not consider reducing or canceling a forfeiture in
response to a claim of inability to pay unless the petitioner submits
(1) federal tax returns for the most recent three-year period; (2)
financial statements prepared according to generally accepted
accounting practices ("GAAP"); or (3) some other reliable and
objective documentation that accurately reflects the petitioner's
current financial status.
6. In the Petition for Reconsideration, Mr. Neely argues that it is not
appropriate to look at the "gross revenues" for Rejoice in assessing
his ability to pay the forfeiture, but rather that the Bureau should
consider that Rejoice has had a net operating loss after expenses. Mr.
Neely argues that he was not paying himself a salary from the revenues
of the company; he states that the provided tax returns show that the
bulk of Rejoice's expenses are salaries, repairs and maintenance,
rent, and taxes and licenses, which are expenses, he argues, that must
be met to keep the business running.
7. First, we note that Mr. Neely, the licensee of WLTC, and the person
whom the Bureau found liable for the violations herein and the
forfeiture, has not provided any financial information in support of
his own individual inability to pay the forfeiture. Instead, Mr. Neely
argues only that his company Rejoice has an inability to pay. That Mr.
Neely receives no salary from Rejoice simply means that we must infer
there are other sources for Mr. Neely's support. All of a violator's
sources of revenue must be identified, and the requisite financial
information regarding them provided, in order for us to consider a
request to reduce a forfeiture for inability to pay. Accordingly, Mr.
Neely has failed to make the requisite showing that he has an
inability to pay the forfeiture.
8. While we recognize that the financial information of Rejoice is
relevant in analyzing Mr. Neely's ability to pay, however, standing
alone, it is not conclusive in determining Mr. Neely's financial
ability. Furthermore, considering the information on Rejoice in the
light most favorable to Mr. Neely, we find that this information also
does not demonstrate an inability to pay the forfeiture. In PJB
Communications, the Commission stated that:
[i]n general, a licensee's gross revenues are the best indicator of its
ability to pay a forfeiture. Nevertheless, we recognize that in some
cases, other financial indicators, such as net losses, may also be
relevant. If gross revenues are sufficiently great, however, the mere fact
that a business is operating at a loss does not by itself mean that it
cannot afford to pay a forfeiture.
In examining the relevant three years of Rejoice's financial information,
we note that the gross revenues for Rejoice have increased each year.
Moreover, in comparing the average gross revenues for the three year
period to the $4,000 forfeiture, we note that the forfeiture amount
represents a percentage significantly less than the threshold used to
determine an inability to pay reduction. We therefore believe that the
gross revenues are sufficiently great when compared to the forfeiture
amount such that the mere fact that Rejoice may be experiencing an
operating loss does not demonstrate that it cannot afford to pay the
forfeiture. The Commission stated in Radio X Broadcasting Corporation
that: "[i]n setting an appropriate forfeiture amount, we are guided by
Congress's stated goal of imposing forfeitures that are `sufficiently high
to deter violations and constitute a meaningful sanction.'" If a violator
could escape meaningful sanctions for violations of the Rules by seeking
an inability to pay reduction that is unsupported by its gross revenues,
it would be in a position to undermine the remedial purpose of Section 503
of the Act.
9. Moreover, Mr. Neely has provided incomplete information concerning the
nature of Rejoice's operating losses. Rejoice's financial information
appears to be missing a number of schedules that would shed light on
the specific assets and liabilities upon which Mr. Neely relies to
show a net operating loss. Accordingly, we are unable to assess the
precise nature of all of Rejoice's operating losses. We are able to
observe from the information provided, however, that some of the
operating losses include non-cash expenses of depreciation of, for
example, more than $75,000 in 2003. Depreciation is not an actual
expenditure which affects the licensee's cash availability in any
negative way. Accordingly, a significant amount of Rejoice's operating
losses are not relevant.
10. The holding in First Greenville Corporation that Mr. Neely cites in
his petition does not support his request for reduction of forfeiture.
In that case, the Commission found that the sole shareholder of the
licensee had loaned the violating station and its affiliates the funds
to continue operating and that, without regard for depreciation, the
stations' losses had generally exceeded their revenues. The petitioner
in Greenville also was able to successfully argue that significant
loss of service to the public would occur if it were found liable for
the full amount of the proposed forfeiture because it was the sole
service provider to its area.
11. Likewise, the holding in Benito Rish does not support Mr. Neely's
request for a reduction in forfeiture for inability to pay. The
Commission noted in that case that the station was a daytime-only,
directional station that served a community of 425, and that it was
the only service to the area. These conditions of inherently low
station value, in addition to the lack of its profitability, are the
reasons the Commission reduced the forfeiture it assessed against the
station. Mr. Neely has not argued or demonstrated similar qualities
showing inherently low station value and that it is the sole radio
resource to its service area.
12. We have examined Mr. Neely's Petition for Reconsideration pursuant to
the statutory factors above, and in conjunction with the Forfeiture
Policy Statement. As a result of our review, we conclude that a
reduction of the $4,000 forfeiture amount is not warranted and hereby
affirm the Forfeiture Order.
IV. ORDERING CLAUSES
13. Accordingly, IT IS ORDERED that, pursuant to Section 405 of the Act,
and Section 1.106 of the Rules, the Petition for Reconsideration filed
by Frank Neely, Licensee, Station WLTC(AM), IS DENIED, and the
Forfeiture Order finding Mr. Neely liable for a $4,000 forfeiture for
repeated violation of Section 73.1745(a) of the Rules IS AFFIRMED.
14. Payment of the forfeiture shall be made in the manner provided for in
Section 1.80 of the Rules within 30 days of the release of this Order.
If the forfeiture is not paid within the period specified, the case
may be referred to the Department of Justice for collection pursuant
to Section 504(a) of the Act. Payment of the forfeiture must be made
by check or similar instrument, payable to the order of the Federal
Communications Commission. The payment must include the NAL/Acct. No.
and FRN No. referenced above. Payment by check or money order may be
mailed to Federal Communications Commission, P.O. Box 358340,
Pittsburgh, PA 15251-8340. Payment by overnight mail may be sent to
Mellon Bank /LB 358340, 500 Ross Street, Room 1540670, Pittsburgh, PA
15251. Payment by wire transfer may be made to ABA Number 043000261,
receiving bank Mellon Bank, and account number 911-6106. Requests for
full payment under an installment plan should be sent to: Associate
Managing Director - Financial Operations, 445 12th Street, SW, Room
1A625, Washington, D.C. 20554.
15. IT IS FURTHER ORDERED that a copy of this Memorandum Opinion and Order
shall be sent by first class mail and certified mail return receipt
requested to Mr. Frank Neely, 1286 Holland Road, Rock Hill, South
Carolina 29732, and to his counsel David Tillotson, Esq., 4606
Charleston Terrace, N.W., Washington D.C. 20007-1911.
FEDERAL COMMUNICATIONS COMMISSION George R. Dillon Assistant Chief,
Frank Neely, Forfeiture Order, 19 FCC Rcd 16135 (Enf. Bur. 2004)
47 C.F.R. SS 73.1745(a).
Frank Neely, Notice of Apparent Liability for Forfeiture, NAL/Acct. No.
200332640007 (Enf. Bur., Norfolk Office, released July 16, 2003) ("NAL").
Forfeiture Order, 19 FCC Rcd at 16135.
47 U.S.C. S 503(b).
47 C.F.R. S 1.80.
12 FCC Rcd 17087 (1997), recon. denied, 15 FCC Rcd 303 (1999).
47 U.S.C. S 503(b)(2)(D).
See Forfeiture Policy Statement, 12 FCC Rcd at 17100; 47 C.F.R. S
1.80(b)(4), Note to paragraph (b)(4): Section II. Adjustment Criteria for
Section 503 Forfeitures.
See PJB Communications of Virginia, Inc., 7 FCC Rcd 2088, 2089 (1992)
("PJB Communications"); see also Forfeiture Policy Statement, 12 FCC Rcd
at 17106-07, P 43.
See NAL at P 13.
Petition for Reconsideration at 4.
See Forfeiture Policy Statement, 12 FCC Rcd at 17158 P 113 ("As for
forfeitures that a licensee believes it cannot afford to pay relative to
its financial situation, we must look to the totality of the circumstances
surrounding the individual case."). See, e.g., Radio X Broadcasting
Corporation, 21 FCC Rcd 12209, 12217 (2006) (subsidiary and parent company
financial information are both relevant to an inability to pay
determination by the Commission); A-O Broadcasting, 20 FCC Rcd 756, 761
(2005) (financial information of the corporate owner is relevant to the
Commission evaluation of an inability to pay claim); KASA Radio Hogar, 17
FCC Rcd 6256, 6258-59 (2002) (it is appropriate to consider other income
to determine whether the violator, in general "is financially capable of
paying a forfeiture, not whether financial data from a limited portion of
its operations can sustain a forfeiture" citing Hinton Telephone Company,
7 FCC Rcd 6643, 6644 (Com. Car. Bur. 1992), review denied, 8 FCC Rcd 5176
PJB Communications, 7 FCC Rcd at 2089.
See PJB Communications, supra n. 20 (forfeiture not deemed excessive
where it represented approximately 2.02 percent of the violator's gross
revenues); Hoosier Broadcasting Corp.. 14 FCC Rcd 3356 (CIB 1999), recon.
denied, 15 FCC Rcd 8640, 8641 (Enf. Bur. 2000) (forfeiture not deemed
excessive where it represented approximately 7.6 percent of the violator's
Radio X Broadcasting Corporation, 21 FCC at 12217, P 19, citing S. Rep.
No. 580, 95th Cong. 1st Sess. 3 (1978), reprinted in 1978 U.S.C.C.A.N.
In addition, the financial information refers to "other deductions" of
more than $255,000, which are not identified and itemized.
Applications of Farr Communications, Inc., 12 FCC Rcd 10733, 10736 P 8
11 FCC Rcd 7399 (1996) ("Greenville").
Id at 7403, P 13.
Even with a significant forfeiture reduction based on inability to pay,
the Greenville petitioner was found liable for a forfeiture higher than
the one assessed in the instant proceeding.
10 FCC Rcd 2861 (1995).
Id at 2862, P 7.
47 U.S.C. S 405.
47 C.F.R. S 1.106(f).
47 U.S.C. S 504(a).
See 47 C.F.R. S 1.1914.
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Federal Communications Commission DA 07-320
Federal Communications Commission DA 07-320