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******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect or Word to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the Word or WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) File Number 98080351 ) KEVIN HACKLER NAL/Acct. No. x32080020 ) ) ) Licensee, Station KSRW(FM) ) ) ) Childress, Texas ) ) NOTICE OF APPARENT LIABILITY FOR FORFEITURE Adopted: July 13, 2000 Released: July 14, 2000 By the Chief, Enforcement Bureau: I. INTRODUCTION 1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find that Kevin Hackler (``Hackler'') apparently violated Section 310(d) of the Communications Act of 1934 (``Act''), as amended1, and Section 73.3540 of the Commission's rules2, by transferring control of commercial radio Station KSRW(FM), Childress, TX, without first obtaining Commission approval, and Section 73.3615(c) of the Commission's rules3 by failing to file an updated ownership report with the Commission. We conclude that Kevin Hackler is apparently liable for a forfeiture in the amount of eleven thousand dollars ($11,000). II. BACKGROUND 2. By inquiry letter dated September 23, 1999, we commenced an investigation into allegations that Hackler, licensee of commercial radio Station KSRW(FM), Childress, TX, violated Section 310(d) of the Communications Act of 1934, as amended ("the Act"), and Section 73.3540 of the Commission's rules by transferring control of the station to Kenneth Paul Harris, Sr. (``Harris'') without obtaining the prior authorization of the Commission. The allegations were contained in a confidential complaint filed on August 12, 1999. The complaint cites locally published lien transfer and sale documents which suggest that transfer of the station took place on or about July 8, 1999, even though the licensee had not then obtained prior Commission authorization.4 After examining our files, it also appeared that the licensee had not submitted required station ownership information and documentation to the Commission, in possible violation of Section 73.3615(c) of the Commission's rules. We made further inquiry by letter dated April 6, 2000. Hackler and Harris filed submissions in response to our inquiries on October 18, 1999, February 11, 2000, and May 11, 2000. III. DISCUSSION 3. Unauthorized Transfer of Control. Section 310(d) of the Act prohibits the transfer of control of a station license, and any rights thereunder, without prior Commission consent. See 47 C.F.R. §§ 73.3540 and 73.3541. There is no exact formula by which control of a broadcast station can be determined. It is well settled that "control," as used in the Act and pertinent Commission rules, encompasses all forms of control, actual or legal, direct or indirect, negative or affirmative, and that the passage of de facto as well as de jure control demands the prior consent of the Commission. See, e.g., Stereo Broadcasters, Inc., 55 FCC 2d 819, 821 (1975), modified, 59 FCC 2d 1002 (1976). 4. We traditionally look beyond the legal title to whether a new entity or individual has obtained the right to determine the basic operating policies of the station in ascertaining whether a transfer of control has occurred. See WHDH, Inc., 17 FCC 2d 856 (1969) aff'd sub nom. Greater Boston Television Corp. v. FCC, 444 F.2d 841 (D.C. Cir. 1970) cert. denied, 403 U.S. 923 (1971). Specifically, we look to three essential areas of station operation: programming, personnel and finances. See, e.g., Stereo Broadcasters, Inc., 87 FCC 2d 87 (1981), recon. denied, 50 RR 2d 1346 (1982). A licensee may delegate certain functions on a day-to-day basis to an agent or employee, but such delegation cannot be wholesale. See, e.g., Southwest Texas Public Broadcasting Council, 85 FCC 2d 713, 715 (1981). That is, those persons assigned a task must be guided by policies set by the permittee or licensee. See David A. Davila, 6 FCC Rcd 2897, 2899 (1991). Moreover, the standards by which we measure control are equally applicable in situations involving ``time brokerage'' or ``management agreements.'' Choctaw Broadcasting Corporation, 12 FCC Rcd 8534, 8538 (1997). 5. Review of our records reveals that Hackler has been the station's licensee since approximately August 20, 1996.5 In response to our query, Hackler explains that in June 1999, he experienced financial difficulties and took steps to sell the station to long-time station employee Harris. In this connection, Hackler first assigned his outstanding promissory note and station equipment lien, held by NationsBank, to Harris in July 1999 to avoid foreclosure. Hackler argues, however, that, pursuant to an oral management agreement, he retained the right to ``full and unlimited access to [the] equipment'' until such time as the Commission approved Harris as the assignee. Hackler emphasizes that he has remained in control of the station at all times, notwithstanding contrary representations he made in bank financing documents. Both Hackler and Harris acknowledge that because they entered this agreement without first having obtained legal counsel, their actions were ``unconventional'' and did not always observe pertinent Commission policies concerning station control. However, it was not until October 6, 1999, subsequent to the complaint and our September 23, 1999, inquiry, that the parties entered into a revised, written management agreement that purports to comply with those policies. 6. In this case, we find that an unauthorized transfer of control took place at Station KSRW(FM) on or about July 8, 1999, and has continued since that time. While accepting the parties' representations that de facto control of the station was ultimately restored to the status quo ante, we note that the record indicates that de jure control of the station shifted from the licensee on July 8, 1999, and has not been restored. In this regard, the lien transfer documents executed by and between Hackler and Harris on July 8, 1999 and July 12, 1999, indicate that Hackler conveyed all pertinent station ``equipment, accounts receivable, inventory, furniture, fixtures . . . radio tower equipment, transmitters, FCC licenses, and all other properties related thereto'' to Harris. Moreover, the documents specifically refer to Harris as the radio station's ``owner.'' Hackler contends that the documents in question do not truly reflect events at the station, because they were executed merely to appease the station's lenders. However, Hackler's argument ignores that the documents' execution improperly transferred de jure control of the station from him, which we cannot overlook. Moreover, Hackler provides no evidence that this transaction was ever nullified. Accordingly, a forfeiture is warranted for unauthorized de jure transfer of control. 7. Failure to File Required Forms or Information. As noted above, on August 20, 1996, the Commission granted assignment of the station's license to Hackler from Eddie J. Leary. Our records do not reflect that the date of consummation of that transaction was ever reported to the Commission through an updated Form 323 ownership report, as required by Section 73.3615(c) of the Commission's rules. In response to our query on this issue, Hackler indicates that he ``believes he forwarded all documents and ownership reports to the Commission.'' However, despite our specific request that he indicate when consummation occurred and submit appropriate documentation therefor, he declined to answer or provide proof that an updated ownership report was filed within thirty days of consummation, or at any time. Consequently, it appears that the licensee has violated Section 73.3615(c) of the Commission's rules continuously since failing to report consummation of the August 20, 1996, license assignment. Accordingly, we believe a forfeiture is warranted. 8. Based on the evidence before us, we find that the licensee transferred station control without obtaining prior authorization, and apparently willfully and repeatedly violated Section 310(d) of the Act and Sections 73.3540 and 73.3615(c) of the Commission's rules.6 The Commission's Forfeiture Policy Statement7 sets a base forfeiture amount of $8,000 for the unauthorized substantial transfer of control and $3,000 for the failure to file required forms or information. We have reviewed Hackler's response to our letter of inquiry, and we find no reason to decrease the instant proposed penalty from the base forfeiture amount. In this connection, Hackler's explanation that he ``never intended'' to violate the Commission's rules does not excuse or mitigate his actions. Empire Broadcasting Corp., 25 FCC 2d 68 (1970); Victor Valley Broadcasting, Inc., 2 FCC 2d 495 (1966). Moreover, Hackler does not indicate that he took specific steps prior to entering into the arrangement with Harris to ensure that his actions complied with the Commission's rules. See, e.g., Liability of Monte Corporation, 11 FCC Rcd 20535 (MMB 1996) (reliance upon prior advice given by recognized authority may, in appropriate cases, demonstrate licensee's ``good faith'' effort to comply with Commission rules and justify mitigation). In sum, we believe that the nature of the apparent violations require the imposition of the respective base monetary forfeiture amounts. IV. ORDERING CLAUSES 9. Accordingly, IT IS ORDERED THAT, pursuant to Section 503(b) of the Communications Act of 1934, as amended8, and Sections 0.111, 0.311 and 1.80 of the Commission's rules9, Kevin Hackler is hereby NOTIFIED of his APPARENT LIABILITY FOR A FORFEITURE in the amount of eleven thousand dollars ($11,000) for violating the provisions of the Act and the Commission's rules requiring licensees to obtain Commission authorization prior to transferring substantial station control, pursuant to Section 310(d) of the Act and Section 73.3540 of the Commission's rules, and for failing to file required forms or information with the Commission, pursuant to Section 73.3615(c) of the Commission's rules. 10. IT IS FURTHER ORDERED THAT, pursuant to Section 1.80 of the Commission's rules10, within thirty days of the RELEASE DATE of this NOTICE OF APPARENT LIABILITY, Kevin Hackler SHALL PAY the full amount of the proposed forfeiture or SHALL FILE a written statement seeking reduction or cancellation of the proposed forfeiture. 11. Payment of the forfeiture may be made by credit card through the Commission's Credit and Debt Management Center at (202) 418-1995 or by mailing a check or similar instrument, payable to the order of the Federal Communications Commission, to the Forfeiture Collection Section, Finance Branch, Federal Communications Commission, P.O. Box 73482, Chicago, Illinois 60673-7482. The payment should note the NAL/Acct. No. referenced above. 12. The response, if any, must be mailed to the Commission's Investigations and Hearings Division, Enforcement Bureau, 445 Twelfth Street, S.W., Room 3-B443, Washington, D.C. 20554, and MUST INCLUDE the file number referenced above. 13. 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. Any claim of inability to pay must specifically identify the basis for the claim by reference to the financial documentation submitted. 14. Requests for payment of the full amount of this Notice of Apparent Liability under an installment plan should be sent to: Chief, Credit and Debt Management Center, 445 12th Street, S.W., Washington, D.C. 20554.11 15. IT IS FURTHER ORDERED THAT a copy of this NOTICE OF APPARENT LIABILITY shall be sent by Certified Mail -- Return Receipt Requested to Kevin Hackler, 1511 Avenue F, P.O. Box 5, Childress, Texas 79201. FEDERAL COMMUNICATIONS COMMISSION David H. Solomon Chief, Enforcement Bureau _________________________ 1 47 U.S.C. § 310(d). 2 47 C.F.R § 73.3540. 3 47 C.F.R § 73.3615(c). 4 In response to the complaint and our query, the parties filed a Form 315 application proposing assignment of the station's license from Hackler to Harris (File No. BALH-990927AAM) and entered into a written interim ``Management Agreement'' which specifies Harris as the station's manager. That assignment application remains pending with the Mass Media Bureau. 5 This reflects the date that the Commission's staff granted assignment of the station's license to Hackler from Eddie J. Leary. Our records do not reflect that the date of consummation of that transaction was ever reported to the Commission through an updated Form 323 ownership report, as required. However, noting grant of the subsequent license renewal to Hackler, we infer that consummation occurred. See File No. BRH-970404WO. 6 We note that the statute requires only that the conduct in question, in order to be sanctionable, be either ``willful'' or ``repeated.'' See 47 U.S.C. § 503(b)(1)(B). In this case, Hackler's apparent violation of Section 73.3540 of the Commission's rules is both ``willful'' and ``repeated'' because he intended to engage in the transaction that resulted in the unauthorized transfer of de jure control, and the violation has been continuous. Hackler's apparent violation of Section 73.3615(c) of the Commission's rules is ``repeated'' because his failure to file the required information has been continuous. See Southern California Broadcasting Co., 6 FCC Rcd 4387-88 (1991). 7 See Report and Order, The Commission's Forfeiture Policy Statement and Amendment of Section 1.80 of the Commission's Rules, 12 FCC Rcd 17087 (1997), recon. denied, 15 FCC Rcd 303 (1999). 8 47 U.S.C. § 503(b). 9 47 C.F.R. §§ 0.111, 0.311, 1.80. 10 47 C.F.R. § 1.80. 11 47 C.F.R. § 1.1914.