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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In re Application of ) ) PRESS BROADCASTING ) COMPANY, INC., ) ) Assignor ) ) and ) ) File No. BALH-960611GU PAXSON BROADCASTING OF ) ORLANDO, L.P., ) ) Assignee ) ) For Assignment of License of WTKS(FM)) Cocoa Beach, Florida ) MEMORANDUM OPINION AND ORDER Adopted: December 19, 1997 Released: January 12, 1998 By the Commission: Introduction 1. The Commission has before it a May 9, 1997 application for review ("Application for Review") filed by Leticia Jaramillo and Joseph Rey (collectively, "Jaramillo and Rey"), seeking review of an April 9, 1997 letter decision ("Decision") by the Chief, Audio Services Division, Mass Media Bureau. The Decision denied Jaramillo and Rey's February 18, 1997 petition for reconsideration of a January 16, 1997 letter ruling by the Chief, Audio Services Division. That decision dismissed a Jaramillo and Rey Petition to Deny and granted the above-referenced application to assign the license of WTKS(FM), Cocoa Beach, Florida, from Press Broadcasting Company ("Press") to Paxson Broadcasting of Orlando, L.P. The Application for Review is opposed by Press. For the reasons set forth below, we deny the Application for Review. Background 2. In 1982, Glorious Church of God in Christ, Inc. ("GCGC") obtained a construction permit to build a noncommercial educational television station in Cocoa, Florida on Channel 18. In April 1986, New Visions of Florida Broadcasting, Inc. ("New Visions") secured from GCGC an option to purchase Channel 18 ("Purchase Option"). Subsequently, in December 1986, Press purchased from GCGC an option to swap channels with GCGC. Press's option was mutually exclusive with New Vision's Purchase Option. 3. In June 1987, Press entered into a "Consent to Assignment and Novation Agreement" with GCGC, whereby GCGC consented to New Visions' assignment of the Purchase Option to Press. In order to facilitate the sale of the Purchase Option, Press and New Visions entered into a Settlement Agreement, dated June 3, 1987 ("Settlement Agreement"). In addition, because Press is a for-profit entity, GCGC granted Press the right to assign the Purchase Option to Brevard Community College ("BCC"), an entity qualified to operate a noncommercial educational station. Subsequent to BCC's exercise of the Purchase Option, the Commission granted an application for the assignment of the Channel 18 construction permit from GCGC to BCC on January 12, 1988. Finally, on November 28, 1989, the Commission approved a channel exchange between Press and BCC, whereby Press exchanged its WKCF-TV, Channel 68, Clermont, Florida for BCC's WRES-TV, Channel 18, Cocoa, Florida. See Clermont and Cocoa, Florida, 4 FCC Rcd 8320 (Chief, Allocations Branch, 1989), recon. denied, 5 FCC Rcd 6566 (1990), aff'd sub nom. Rainbow Broadcasting Company v. FCC, 949 F.2d 405 (D.C. Cir. 1991). 4. The Settlement Agreement provided that as part of the compensation for the Purchase Option, Press would pay $500,000 to New Visions. However, this payment would be made to a third party, rather than directly to New Visions. Jaramillo and Rey's sole contention with regard to the Settlement Agreement is that this payment mechanism was used to assist David Antoniak, a New Visions principal, in evading Internal Revenue Service ("IRS") regulations in connection with liens on his property. Jaramillo and Rey rely upon the declaration of Timothy Brumlik, the other New Visions principal, in which Mr. Brumlik states that Press was aware that Mr. Antoniak was subject to IRS liens of approximately $250,000, and that Mr. Antoniak would not have entered into the Settlement Agreement if payment was made directly to him. Accordingly, Jaramillo and Rey allege that Press does not possess the requisite character qualifications to be either the licensee or assignor of WTKS. 5. The Application for Review raises three issues. First, Jaramillo and Rey argue that the Decision's conclusion that Press was not obligated to file the Settlement Agreement with the Commission was erroneous. It is Jaramillo and Rey's position that Press willingly produced all other documents germane to the channel swap with BCC, but that it did not file the Settlement Agreement with the Commission because the payment mechanism contained therein would have raised a serious question about Press's purchase of the Purchase Option from New Visions. Jaramillo and Rey allege that the Settlement Agreement was a deliberate attempt to defraud the IRS, and that Press's complicity in this scheme warrants an evidentiary hearing to determine whether Press is qualified to be either a Commission licensee or the assignor of WTKS. 6. Second, Jaramillo and Rey claim that the Decision erroneously concluded that their allegations concerning the Settlement Agreement relate to unadjudicated non-FCC misconduct, which is not subject to Commission scrutiny. Jaramillo and Rey contend that the question is not whether the federal government has adjudicated a tax fraud case against Press or New Visions. Rather, Jaramillo and Rey assert that Press's willingness to be an accomplice in wrongdoing in order to accomplish an FCC goal disqualifies it from being either the licensee or assignor of WTKS. 7. Finally, Jaramillo and Rey contend that the Decision erroneously determined that the allegations regarding Press's supposed complicity in an alleged scheme to defraud the IRS were not timely raised. It is Jaramillo and Rey's position that their allegations concerning the Settlement Agreement were timely raised because, "even with the exercise of due diligence," they could not have had access to or specific knowledge of the terms of the Settlement Agreement until Mr. Brumlik disclosed the contents of the Settlement Agreement years after the intraband channel exchange between Press and BCC had concluded. According to Jaramillo and Rey, timeliness must be measured from the point at which information became known or reasonably should have been known. 8. In response, Press contends that Jaramillo and Rey have shown no legal or factual errors in the Decision. Specifically, Jaramillo and Rey have not cited any statute, rule, regulation or policy requiring submission of the Settlement Agreement. Press asserts that the Decision correctly relied upon the Commission's policy that no action will be taken with regard to non-Commission misconduct prior to adjudication of that misconduct by an appropriate court or agency. To the best of its knowledge, Press asserts that there has never been any finding by the IRS, a court or any other forum that any unlawful tax evasion was committed by Mr. Antoniak. Furthermore, Press states that allegations of tax evasion are plainly outside of the Commission's area of responsibility and expertise. Finally, Press asserts that the Decision correctly concluded that Jaramillo and Rey's allegations - first raised in 1996 on the basis of a document known to be in existence by Jaramillo and Rey for almost ten years - were untimely. It is Press's position that Jaramillo and Rey have offered no factual or legal arguments to weaken the Decision's conclusion that the claims were not timely raised, nor have they established why their allegations concerning the Settlement Agreement could not have been raised earlier. Discussion 9. We affirm the Decision's denial of Jaramillo and Rey's petition for reconsideration. As an initial matter, we note that none of the allegations raised by Jaramillo and Rey relate to the captioned assignment of Station WTKS from Press to Paxson. Rather, all of the allegations regarding Press's alleged complicity in a tax evasion scheme stem from the Settlement Agreement between Press and New Visions which was entered into in order to effectuate the 1989 television channel exchange between Press and BCC. 10. As for the issues raised in the Application for Review, Jaramillo and Rey do not offer any legal or factual basis for alleging that Press was obligated to file the Settlement Agreement in connection with the intraband television channel exchange proceeding. Jaramillo and Rey do not cite any law or regulation which was breached as a result of the non-filing of the Settlement Agreement, nor do they allege that the Settlement Agreement had a material impact upon the channel exchange proceeding involving Press and BCC. The Commission's rules specifically limit the obligation to file agreements relating to station ownership to the permittee or licensee of such station. 47 C.F.R.  73.3613 ("Each licensee or permittee . . . shall file . . . documents relating to the present or future ownership or control of the licensee or permittee . . . ). Neither Press nor New Visions, the two parties to the Settlement Agreement, was the licensee or permittee of Channel 18 at either the time the Settlement Agreement was entered into or at the time of the channel swap proceeding. 47 C.F.R.  73.3613 did not require Press, when it acquired the Channel 18 permit in 1989, to disclose New Visions' assignment of the Purchase Option to Press under the 1987 Settlement Agreement. Section 73.3613 is limited to instruments relating only to present or future control of the station. Accordingly, we affirm the Decision's conclusion that Press was not obligated at any time to file the Settlement Agreement with the Commission. 11. We further affirm the Decision's conclusion that Press's participation in the alleged tax evasion scheme is not FCC-related. Regardless of whether it occurs in connection with an FCC-related transaction, tax evasion is not FCC-related misconduct. See, e.g., Charlotte L. Olive, 6 FCC Rcd 4993, 4993 (1991) (failure to pay federal income taxes on monies earned from the brokerage of cellular applications is not FCC-related misconduct). In this regard, "FCC[-]related misconduct describes activity which violates the Communications Act or a specific Commission rule or policy." Policy Regarding Character Qualifications in Broadcast Licensing, 102 FCC 2d 1179, 1183 n. 11 (1986), recon. granted in part, denied in part, 1 FCC Rcd 421 (1986)(1986 Character Policy Statement)(citations omitted). Although the Commission's character policy also takes into account certain specified non-FCC misconduct, instances of such non-FCC misconduct, such as tax evasion, are not cognizable prior to adjudication by an appropriate agency or court. See Multimedia, Inc., 11 FCC Rcd 4883, 4896 (1995), citing the 1986 Character Policy Statement, 102 FCC 2d 1179, 1204-1205 (1986). The record does not indicate the existence of any adjudicated misconduct or even a pending investigation, claim or other action related to the Settlement Agreement that, if adjudicated, would constitute tax evasion or other relevant non-FCC misconduct. Therefore, the Commission has no basis for examining Press's participation in the Settlement Agreement. Furthermore, while we will consider non-broadcast related misconduct that is "so egregious as to shock the conscience and evoke almost universal disapprobation," see Character Qualifications, 102 FCC 2d at 1205, n. 60, we concur with the Decision's conclusions that Jaramillo and Rey have presented no basis on which to evaluate Press's conduct pursuant to this standard. Moreover, Jaramillo and Rey have not presented any error of fact or law that would warrant reversal of the Decision's conclusion that unadjudicated allegations of tax fraud do not constitute such egregious conduct. 12. Because we affirm the Decision's determination that Press's alleged misconduct is not FCC- related, it is unnecessary to reach the issue of whether Jaramillo and Rey's allegations of misconduct were timely raised. Ordering Clause 13. Accordingly, IT IS ORDERED, That, pursuant to Section 1.115(g) of the Commission's rules, 47 C.F.R.  1.115(g), the May 9, 1997 Application for Review filed by Leticia Jaramillo and Joseph Rey IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary