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In Re Application of STAR STATIONS OF INDIANA, INC. For Renewal of Licenses of Stations WIFE AM-FM, Indianapolis, Ind.


Docket No. 16612 Files Nos. BR-1144, BRH-1276




19 F.C.C.2d 991 (1969)




September 17, 1969 Adopted







Marcus Cohn, Paul Dobin, and Joel Levy, on behalf of Star Stations of Indiana, Inc.; Philip N. Baker, on behalf of Ronald Mercer; and Thomas B. Fitzpatrick, Leo I. George, Larry M. Berkow, and William A. Kehoe, on behalf of the Broadcast Bureau, Federal Communications Commission.






1.  The history of this proceeding is accurately reflected in the "Initial Decision" of Hearing Examiner Thomas H. Donahue (F.C.C. 67D-73, released December 19, 1967), and hence will not be repeated here.  Exceptions to the initial decision, a statement in support, and a brief were filed by the Chief, Broadcast Bureau.  Exceptions to the initial decision and a supporting brief were filed by Star Stations of Indiana, Inc. n1 Oral argument was held on February 10, 1969. 


n1 Star Stations of Indiana submitted a motion for leave to file a brief 6 pages in excess of the 50-page limitation set out in our rules.  We grant this motion.


2.  This proceeding involves applications for renewal of the licenses of stations WIFE and WIFE-FM, Indianapolis, Ind.  In order to view the record in proper perspective, we note at the outset that on October 28, 1964, we granted these stations a 1-year license renewal until August 1, 1965, because the licensee had "hypoed" its ratings by using an audience rating report based solely on a 1 3/4-day survey made during a period when an intensive giveaway contest was being conducted by the station, without disclosing that such was the case.  We found that conduct to be irresponsible and inconsistent with the licensee's obligations, n2 and renewed the licenses for only 1 year so that we  [*992]  might have an early opportunity to reexamine the applicant's operations and determine the degree of responsibility exhibited by it during the year.  Star Stations of Indiana, Inc., 3 R.R. 2d 745 (1964).


n2 See our public notice of June 18, 1963, 28 F.R. 6243, regarding the use of audience ratings.


3.  Accordingly, on May 17, 1965, applications were filed for renewal of the WIFE AM and FM licenses.  Once more we were unable to make the requisite finding that renewal would serve the public interest.  This time, the applications were designated for hearing on issues seeking a determination of whether, during the short-term license period, fraudulent contests had been held and whether false invoices and affidavits of performance had been rendered to advertisers and/or agents misrepresenting the times of presentation of commercial spot announcements, resulting in overcharges and overpayments.

The matter of the contests


4.  The facts as to the Eaton water-filter contest are accurately set forth in the initial decision, and we agree with the hearing examiner that WIFE's actions with respect thereto constituted a fraud.  The argument is advanced by WIFE that there was no fraud because Eaton received that for which it bargained, i.e., a number of spot announcements.  We believe, however, that it was implicit in the agreement that the filters would be awarded to persons who had at least listened to the announcements and had participated in the contest as a result, with consequent advertising benefits to Eaton.  The false report to Eaton was obviously made for the purpose of concealing the fact that there had been no entires in the contest, perhaps because there had been no listeners to the announcements, a fact which was likely to discourage future business.  No other reasonable purpose has been suggested to us, and none is indicated by the record.  We note, however, that the examiner made no effort fasten direct responsibility for this dereliction on Don Burden, the licensee's controlling stockholder, vis-a-vis Ronald Mercer, the station manager.  We also note that whereas prior to the hearing, Mercer had executed an affidavit assuming all culpability for the episode, at the hearing he indicated that his acts were at Burden's direction to "go get some winners." While we cannot resolve this dispute, we do in any event fix responsibility on the licensee since it is fully responsible for the conduct of its officers.  See Continental Broadcasting, Inc., 15 F.C.C. 2d 120, recondieration denied, 17 F.C.C. 2d 485 (1969), and cases therein cited.


5.  While we adopt in the main the hearing examiner's findings of fact 7-10, our independent examination of the record and exhibits discloses that there is no support for his conclusion that the public was misled in the conduct of the mystery Santa Claus contest.  We are satisfied that the award at random of Top Value stamps to one entry from each store complied with the rules and was not unfair to any party.  We do discern that 47 correct guesses as to the "Mystery Santa Claus," out of 5-10,000 entries, were not replaced in the bags from which the random drawings at the station were made, but this we consider as de minimis carelessness and not fraud.  We further agree with the Broadcast Bureau that while WIFE was on notice well before the close of the contest that there had been submitted more than enough correct entries to account for all of the prizes to be awarded, this matter does not warrant further consideration.


 [*993]  The matter of the false and misleading bills and affidavits


6.  As set forth at length in the initial decision (which we adopt in this respect), there is no question but that during its probationary 1-year renewal period, WIFE furnished numerous statements of account to clients along with affidavits of performance which contained false and misleading information with respect to the times and dates purchased advertising was broadcast.  the record contains at least 10 instances, conceded by the applicant, where specific instructions were give to change the times in the affidavit from the times of actual broadcast.  n3 It is also clear that the licensee took no steps to insure that more spots would not be booked for a particular hour than could be or, under the commercial policy adopted by the station, would be broadcast.  In fact the record shows that the station's aggressive promotion and sales policies encouraged overbooking and that a control book used by the former owner to prevent such a happening was deliberately abandoned.  The practice of false billing pursued by WIFE is rendered even more reprehensible by the fact that bills were supported by affidavits certifying that the "broadcasts were made according to the official station log." Although testimony was introduced to indicate that these affidavits were pro forma and that no particular significance was attached to them by those in the advertising business, the fact remains that they purport to be statements under oath and were clearly intended to mislead the advertisers into believing that the individual who signed the affidavit had personally checked the accuracy of the bill. 


n3 The applicant has conceded the fraudulent billing and has made restitution to advertisers in excess of $6,000.  Star Stations on Mar. 4, 1969 moved to reopen the record to show that, in addition to some $3,306.48 already refunded by station WIFE to its overcharged advertisers, $2,794.95 has been refunded since the close of the record for a total refund of $6,101.43.  This request will be granted and our decision will be based on the record as amended.  Other relief sought by the motion is to show a change of status of Dorothy Storz, an officer of the parent corporation, and Don W. Burden.  This will be denied as being of no decisional significance.  Mrs. Storz at no time held an ownership interest in the licensee; Mr. Burden continues to be its 76-percent stockholder.


7.  Although it cannot be satisfactorily resolved on this record, it appears that Mr. Burden may not actually have been aware of these deceptive billing practices.  Nonetheless, it is undisputed that false bills were issued and that the ultimate responsibility for this practice lies with Burden.  See Continuental Broadcasting, Inc., supra; KWK Radio, Inc., 34 F.C.C. 1039 (1963), affirmed 119 U.S. App. D.C. 114, 337 F.2d 540 (1964), cert. denied 380 U.S. 910 (1965); Eleven Ten Broadcasting Corp., 32 F.C.C. 706 (1962), reconsideration denied 3o F.C.C. 92 (1962), affirmed sub nom.  Immaculate Conception Church of Los Angeles, et al., v. F.C.C., 116 U.S. App. D.C. 73, 320 F.2d 795, (1963), cert. denied 375 U.S. 904 (1963); Palmetto Broadcasting Company, 33 F.C.C. 250 (1962), pet. for reconsideration denied 34 F.C.C. 101 (1963).




8.  This is a very difficult and close case.  n4 On the one hand we credit Burden with lack of knowledge and recognize that not only has some restitution been made, but that the licensee has voluntarily unearthed and made reimbursement in regard to additional infractions.  On the  [*994]  other hand, however, we cannot forget that WIFE's derelictions occurred during the period of a 1-year renewal when it should have been exercising the greatest degree of care.  In light of the facts and circumstances here, we believe this is a case which requires the imposition of certain conditions and sanctions, but that denial of renewal is not required in the public interest since the evidence below simply does not warrant disqualification as a licensee.  That punishment would be unduly harsh.  We stress, however, that WIFE's operation has only minimally met the public interest standard.  In view of this, we believe the best way to proceed here is to grant a 6 months' renewal of these licenses.  This means that new applications must be filed within 90 days. 


n4 We note that we have imposed monetary forfeitures in similar situations where a licensee's principals knowingly engaged in, or permitted fraudulent billing practices.  WBZB Broadcasting Service, Inc., 10 F.C.C. 2d 321 (1967).


9.  During this interim period, any deviation from a high standard of performance will result in the initiation of proceedings seeking termination of the station licenses.  As soon as possible after the release date of this order the licensee must effectuate a management system of internal controls to prevent overbooking of spot announcements, to insure that billing is done accurately from the station logs, and to provide that the licensee's principals and employees are comprehensively, accurately and promptly apprised of the full nature, conditions, rules, and all other matters relating to radio contests aired and billing practices followed in the licensee's operations; and, further, the licensee shall with its renewal application file a comprehensive report disclosing the details of the said management system of internal controls and the institution of that system.


10.  In the appendix to this decision we have ruled on the exceptions of the parties to the initial decision of the hearing examiner.  Except as modified by the rulings or by our decision, the findings of the hearing examiner are adopted.


11.  Accordingly, It is ordered, That the motion of Star Stations of Indiana, Inc., to file a brief in excess of 50 pages Is granted, and the brief Is accepted for filing; and


12.  It is further ordered, That the motion of Star Stations of Indiana, Inc., to reopen the record Is granted to the extent set forth herein and in all other respects Is denied; and


13.  It is further ordered, That the above-captioned applications of Star Stations of Indiana, Inc., for renewal of licenses of stations WIFE and WIFE-FM, Indianapolis, Ind., Are granted, the licenses to be issued, however, for a period of only 6 months pursuant to the conditions required by the decision.







Neither the evidence nor law of this case supports denial of WIFE's licenses.  To decide otherwise engenders a rather novel proposition that the Commission will deny the renewal of broadcast licenses where employees of a licensee, without the licensee's knowledge or authorization, engage in fraudulent billing practices, but will only impose monetary forfeitures where the licensee knowingly permits or authorizes the practice to exist.  This unique precept tends to produce judgments in which lesser offenses require greater penalties, while the greater offense is less impugned.  If administrative fairness means anything, it must denounce such a legal practice for the abuse it causes to equal protection and due process.


The Commission has consistently ordered monetary forfeitures in every case of fraudulent billing.  WBZB Broadcasting, 10 F.C.C. 2d 321 (1967); Lawrence Broadcasting, Inc., 14 R.R. 2d 1 (1968); Robert D. Rapp, et al., 13 R.R. 2d 32 (1968); Rocket Radio, Inc., 15 R.R. 2d 1151 (1969); and Perry Radio, Inc., 16 R.R. 2d 524 (1969). In all except the Rapp case, fraudulent billing practices were engaged in by managers and officers who were also the sole or partial owners of the broadcast licensees involved.  Consequently, there could be no dispute about the licensee's knowledge.  For purposes of imposing a monetary forfeiture, the Rapp case established that licensees are legally responsible for the conduct of employee-managers who, though not holding any ownership interest, nevertheless engage in fraudulent billing under circumstances where the exercise of due diligence would have prevented the practice.  This is the nearest precedent to the instant case involving the licenses of WIFE; and the legal conclusion there resulted in a forfeiture rather than the denial of a license.


Even if the Commission did not differentiate between the ownermanager who knowingly engages in fraudulent billing and the licensee who fails to exercise due diligence, in view of these precedents an arbitrary result would still be produced by applying the harsh alternative sanction which requires denying a license renewal.  The disparity of  [*1005]  consequences between a monetary forfeiture and the denial of a license is so great that the severity of a denial, based on the inconclusive facts of this case, results in a refutation of the principles of administrative fairness.  The entire area of broadcasting commercial practices urgently requires investigation; and until the Commission establishes a comprehensive policy in this field, it should limit the application of its ultimate sanction to the most clear and grievous situations.


The merit of this view is even more pronounced where lack of due diligence becomes the primary element of decisional relevance.  In that case, when employment or ownership of the culpable individual is terminated, the Commission has settled on monetary forfeitures as a more equitable sanction than license revocations, reasoning that the lesser penalty is sufficient to assure "direct continuing supervision" of the licensee's facilities.  Quality Broadcasting Corp., 13 F.C.C. 2d 642, 685-686 (1968).


The Commission, nevertheless, did not impose a monetary forfeiture in this case.  The only reason seems to be that a notice of apparent liability was not issued within the 1-year limitation period prescribed by section 503(b)(2)(3) of the Communications Act.  However, it appears difficult to assume this is an appropriate bar.  The Commission's regulation covering fraudulent billing practices n1 came into effect on October 22, 1965, subsequent to the time the instant proceeding was commenced.  However, on March 9, 1962, the Commission issued a public notice warning licensees that such activity would be regarded as contrary to public interest.  n2 The 1962 statement was notice that liability was possible and that rules could be adopted.  The initiation of a hearing, within 1 year from the date the fraudulent billing practices became known to the Commission was, in itself, a sufficient receipt of written notice on which to base compliance with the statute.  The Commission's regulation prohibiting deceptive billing became effective prior to a conclusion of the hearing record in this proceeding; and that again was notice of the applicability of its provisions -- that the licensee was as much entitled to any benefits accruing from the regulation as it was subject to any sanctions it might impose. 


n1 47 C.F.R. 73.124.


n2 F.C.C. 62-272, 23 R.R. 175 (1962).


During the oral argument in this proceeding, counsel for the licensee petitioned the Commission for discretionary relief, requesting the imposition of a fine.  Considering the state of evidence on the record, the Commission should have accepted the petition as a salutary indication of the licensee's interest in assuming a proper degree of responsibility for misconduct of which it was unaware and apparently could not prevent.  Therefore, the petition for discretionary relief seemed entirely appropriate and should have been granted.  Cf.  KFNF Broadcasting Corp., 16 F.C.C. 2d 731 (1969). To say that regulatory authority is limited to the alternatives of either denying or renewing a license when the technicality of giving notice is not fully (though it is practically) observed, merely elevates form over substance to the disadvantage of sound administrative judgment.


The Commission may perform any and all acts not inconsistent with the Communications Act, as may be necessary in the execution  [*1006]  of its functions.  n3 "While such 'necessary and appropriate' provisions do not have the same majesty and breadth in statutes as in a constitution, there is no dearth of decisions making clear that they are not restricted to procedural minutiae, and that they authorize an agency to use means of regulation not spelled out in detail, provided the agency's action conforms with the purpose and policies of Congress, and does not contravene any terms of the act.  * * * The source of discretion is available not only where an agency has the explicit power to impose penalties * * *." Niagara Mohawk Power Corp. v. FPC, 379 F.2d 153, 158-159 (D.C. Cir., 1967).  See generally United States v. Storer Broadcasting Co., 351 U.S. 192, 203 (1956); FCC v. WOKO, Inc., 329 U.S. 223, 227-28 (1964); Philadelphia Television Broadcasting Co. v. FCC, 359 F.2d 282 (1966).


n3 47 U.S.C. 154(i).


Unfortunately, the Commission has not reached this view of its authority.  Perhaps in time it will come to see its merit and importance.  Nevertheless, the omission of a monetary forfeiture does not properly dictate a different result than the majority reached in this case.




The validity and effect of Commission decisions in the fraudulent billing area is not altered by the fact that this case, in addition, arises out of charges of fraud in the conduct of certain contests.  With respect to these latter allegations, the Commission properly found there was no deception practiced upon the public in the conduct of two giveaway contests, and that the evidence was inconclusive concerning the licensee's knowledge or lack of due diligence in preventing the conduct which resulted in a fraud upon the advertiser sponsoring a water-filter contest.




The hearing record of the water-filter contest was marked by doubt.  At best, the evidence and testimony probing the knowledge and involvement of the licensee's majority stockholder, Don Burden, was conflicting and unresolved.  Prior to the hearing, the station manager, Ronald Mercer, executed an affidavit in which he admitted full responsibility for the manner in which the contest was conducted.  n4 At the hearing, however, he repudiated his oath and testified that he had, in fact, reported the complete absence of entries to Burden, who told him to "go get some winners." n5 Mercer said all his subsequent acts were performed with Burden's knowledge and under his direction.  Burden, on the other hand, denied any such knowledge; and considerable testimony was offered to show that information copies of correspondence were deliberately withheld from Burden, even though it was routinely required that they be sent to him at the corporation's home office in Omaha, Nebr. Burden insisted he was surprised when he finally learned of Mercer's activity. 


n4 Broadcast Bureau exhibit 19A, enclosure 3A.


n5 Tr. 966 et seq.


In this contradictory state of evidence, the most important fact appears to be that the conduct of the contest violated WIFE policies  [*1007]  prohibiting free advertising and the award of prizes to station employees and their families.  The question, of course, arises -- if one assumes the conduct of the contest was an unauthorized act committed by Mercer -- whether there was adequate supervision by the licensee, without which lack of actual knowledge is unavailing as a defense.  The examiner did not resolve this question other than to find Mercer and Burden "were in pari delicto insofar as misconduct at WIFE is concerned." n6 This conclusion was simply insufficient as probative evidence either of the licensee's knowledge or of its lack of due diligence. 


n6 "Initial Decision," F.C.C. 67D-73, Dec. 19, 1967, finding 57.




Without recounting the details surrounding the fraudulent billing practices conducted by employees in the WIFE station, it is readily observed from the record and the hearing examiner's decision that there was an almost complete failure of proof to establish the licensee's liability.  The testimony describing the circumstances in which the conduct occurred was not sufficient to find renewal of the applicant's licenses would not be in the public interest.  A preponderance of the evidence established that the false billing practices were instigated at the station manager's instructions.  n7 The employee of the licensee's parent company, principally responsible for supervising WIFE's administrative operations, admitted being aware of WIFE's improper billing practices, but feared her position might be jeopardized by reporting them.  n8 During one period when the Indianapolis station was overbooked, Burden instructed some of the personnel to play commercial announcements as near as possible to times in which they were ordered.  But this is not tantamount to finding he directed the false fixing of charges, especially when the evidence clearly identified Mercer as having given those instructions.  When the parent company's advertising consultant discovered the billing practices in use at the WIFE station, corrective measures were instituted, advertisers notified, cash restitution or replacement announcements made, and the station manager's employment was ultimately terminated.  n9 No testimony was adduced to controvert all of this evidence corroborating the principal stockholder's lack of knowledge.  Indeed, the record is devoid of any substantial evidence that Burden was actually aware of, or otherwise affirmatively responsible for, these deceptive practices.  The hearing examiner's conclusion that Mercer and Burden were in pari delicto failed to resolve that issue. 


n7 Ibid, finding 27.


n8 Ibid, finding 56.


n9 Ibid, findings 50-52.


Whether the licensee exercised due diligence to prevent the existence of this deceptive conduct is equally incapable of being resolved on the record.  Much has been made of the fact that employees of WIFE ordered the abandonment of a "master control book," used by the predecessor licensee, which purportedly foreclosed the possibility of fraudulent billing practices.  It is difficult to see how any system of bookkeeping, whatever internal control it provides, can serve to check an intention to issue false invoices.  The hearing record adequately disclosed  [*1008]  that WIFE's journal system supplied detailed information about commercial overbooking.  Nevertheless, the fact that a station may overbook advertising does not, in itself, warrant finding a licensee authorized or ratified false billing.  The relevant issue still remains whether the licensee knew or could have known about the misconduct.  This is the type of question which cannot be satisfactorily resolved by saying it is somewhat difficult to see how the principal stockholder could have been unaware.  Even though the burden of proof was on the licensee, in a hearing where the denial of a license is in issue, the licensee should not be denied the benefit of doubts which the hearing failed to resolve.  The hearing examiner simply assumed a lack of due diligence from the established fact of false billing.  n10 He deemed irrelevant the question whether WIFE's accounting procedures might be accurate in view of the station's sales and promotion policies.  n11 Unfortunately, without an inquiry into the character and quality of those procedures, and their design to prevent fraudulent billing, there was no standard against which to judge the licensee's diligence. 


n10 Ibid, finding 57.


n11 Ibid, finding 22.


The Commission's decision does not, in this regard, change the burden of a licensee's responsibility to prove its license renewal will serve the public interest.  It merely reflects the generally accepted view that "[the] Commission and the examiners have an affirmative duty to assist in the development of a meaningful record which can serve as the basis for the evaluation of the licensee's performance of his duty to serve the public interest." United Church of Christ v. FCC,     U.S. App. D.C.    ,     F.2d     (D.C. Cir., June 20, 1969).


If the commission were to turn away from this responsibility, the burden of proof standard could then come to represent a denial of due process.  Existing administrative practice places a broadcast licensee in a position where, in a sense, he is both prosecutor and defendant.  If the admission of uncontroverted misconduct cuts off the possibility of defenses, the burden of proof with respect to service in the public interest can never be met under any circumstances.  If that means a man must admit his own guilt, and then for the sake of showing fairness be required to go through the motions of fashioning a defense against the admission, the whole hearing process merely becomes an idle gesture in futility -- proceeding from guilt to a presumption against innocence.  With all the cards stacked against success, are we then to say he is not entitled to any doubts which remain?  If this is the system we intend to pursue, we might as well admit due process has been supplanted by a form of administrative tyranny in which no defense is ever possible.


The decision in this case is entirely consistent with the United Church of Christ standard.  In that decision, even though a short-term renewal was previously granted, the court refused to find the licensee disqualified, and ordered filings for the issuance of a new license in which the existing licensee was permitted to participate.  The Commission's order in the instant case has the same effect in the context of a license renewal proceeding.


 [*1009]  In determining the proper action to take as a result of WIFE's dereliction, it was impossible to discount the fact that misconduct occurred under circumstances which, at least, raised doubt about the licensee's supervision to avoid misconduct by station personnel.  The inferences drawn from the record are not entirely overcome by the examiner's failure to fully explore the due diligence issue.  Moreover, it cannot be determined whether the licensee's failure to come forward with evidence fully controverting the reasonable presumptions against due diligence was effectively caused by the examiner's denying any relevance to the subject of accounting and management systems.


While WIFE's billing practices and its conduct of the water-filter contest cannot be condoned, the most compelling fact is that there was a failure of substantial proof to result in findings upon which a sound conclusion would reasonably justify denial of a license.  There is no doubt that considerable weight must be given to the fact that WIFE was previously denied more than a 1-year renewal because of "hypoing" audience ratings to the detriment of advertisers.  But unless we are to disregard proof of knowledge and the lack of due diligence as essential elements of liability, once the licensee succeeded in overcoming the presumption of its impropriety in the conduct of the giveaway contests, there seems no reasonable ground for distinguishing this case from the usual fraudulent billing situation in which monetary forfeitures are ordered.


If the Commission had a general policy prohibiting one short-term renewal to succeed another, I would have been inclined toward a contrary result on that basis alone.  That consideration would have placed on the licensee the entire onus of unresolved doubt about its due diligence with respect to the false billing charges.  My belief is that, unless very substantial mitigating circumstances would make such a policy result arbitrary or unreasonable, it should govern all future cases of this type.




There is sufficient legal basis for the majority opinion founded solely on the fraudulent billing precedents to which previous reference has been made.  However, the majority relies on prior Commission decisions which are almost totally irrelevant to the instant case.  Those opinions confirm the general view that licensees are ultimately responsible for the dereliction of employees.  Unfortunately, their use, based on the result in this case, creates the impression that renewal and revocation proceedings will not longer be regarded as an appropriate recourse in the fraudulent billing situation.  If the cited cases were needed to support the result, the majority, at least, should have announced that they do not imply a narrowing of the sanctions which may govern the area of fraudulent billing practices.  Accordingly, some clarification seems justified to dispel any inference that this decision may be construed to restrict the ambit of Commission authority.


With the exception of the KWK Radio, Inc., 34 F.C.C. 1039 (1963) case, all the referenced precedents expressly hold that misrepresentation and lack of candor in dealing with the Commission is an independent ground for revoking a license or denying its renewal.  The  [*1010]  preservation of this standard is an essential condition prerequisite to the maintenance of an effective regulatory process.  Any conduct in derogation of its integrity places in issue the character of a licensee's qualifications to remain the recipient of valuable public benefits.


These precedents form a pattern of requiring disqualification where there is misrepresentation and lack of candor, among other things, in a licensee's failure to prevent course, vulgar, suggestive, and indecent programming ( Palmetto Broadcasting Co., 33 F.C.C. 250 (1962)); in practicing deception upon the Commission by altering program logs and misrepresenting program proposals ( Eleven Ten Broadcasting Corp., 32 F.C.C. 706 ( 1962), aff'd sub nom.  Immaculate Conception Church of Los Angeles v. FCC, 320 F.2d 795 (1963)); in maliciously rigging contests to deceive the general public, and to produce results based on racial selection ( KWK Radio, Inc., supra); and in falsifying time brokerage contract documents to deceive the Commission ( Continental Broadcasting, Inc., 15 F.C.C. 2d 120 (1969)). In the opinion of the Supreme Court of the United States, "[the] fact of concealment may be more significant than the facts concealed.  The willingness to deceive a regulatory body may be disclosed by immaterial and useless deceptions as well as by material and persuasive ones." FCC v. WOKO, 329 U.S. 223 (1939). Thus, the licensee's misrepresentation and false statements constitute an independent ground for denying a license renewal.  Palmetto Broadcasting Co., supra.


These precedents emphasize the dangers inherent to public interest in attempts to conceal, misrepresent, and falsify information on which that interest necessarily depends.  A notable aspect of the WIFE case was the licensee's complete candor and veracity in disclosing to the Commission detailed facts about the conduct which occurred at its Indianapolis station.  The licensee completely disclosed the overbilling which had taken place in its commercial operations.  In addition, it introduced evidence of $3,306,48 in refunds for overcharges to advertising agents.  After the hearing was concluded, the licensee moved to reopen the record in order that the Commission might consider additional refunds of $2,794.95.  n12 As a result $6,101.43 in restitution was paid to advertisers.  This candor, in view of the facts of the case, tends to corroborate the principal stockholder's denial of knowledge in the frauds, and confirms an intent to operate in the public interest.  When a licensee carries the burden of proof with respect to lack of knowledge, thereafter the making of restitution may be regarded not only as a proper means of redressing the malfeasance of employees, but also as proof bearing on the licensee's performance of its duty to serve the public interest. 


n12 Star Stations' motion to reopen record, filed Mar. 4, 1969.


In these circumstances, it would not be fair to suggest the licensee was less than forthright in dealing with the Commission.  I am not willing to say this show of candor entirely overbalances a licensee's obligation to maintain an especially high standard of performance, particularly during the period of a short-term renewal.  But to the extent it may weigh on this decision, WIFE must be credited with having properly  [*1011]  fulfilled an important public obligation.  This is not to imply that there could never be a sufficiently aggravated case of fraudulent billing calling in question a licensee's character qualifications, or that future cases of a similar character will be decided the same way when one short-term renewal is made to succeed another.  But this is not such a case.  The hearing examiner left substantial doubts unresolved on the record of the proceeding; and the licensee is entitled to the benefit of that doubt.  Accordingly, I concur in the Commission's decision.





The result reached here is truly shocking.  In an astonishing opinion, the majority has concluded that, although the licensee of WIFE (AM) in Indianapolis, Ind., fraudulently deceived its clients with respect to certain promotional contests and bilked its advertisers of more than $6,000 in advertising revenues (all during a 1-year probationary license renewal period), the licensee's operation has nevertheless "minimally met the public interest standard" (majority opinion, par. 8) and its license should be renewed.


If fraud and deception of more than $6,000 are minimally in accordance with the public interest, then I think it must be apparent to all that the FCC's attempts at serving the public interest are themselves without even minimal standards.


The facts here which are largely undisputed are summarized in the majority opinion.  Briefly, on October 28, 1964, this Commission found that the licensee of WIFE and WIFE-FM had "hypoed" its ratings by using an audience rating report made during a period when the station was conducting an intensive give-away contest.  The Commission found that the licensee's conduct fell "considerably short of the degree of responsibility in the operation of a broadcast station which the Commission has the right to expect of a licensee." Star Stations of Indiana, Inc., 3 P. & F. Radio Reg. 2d 745, 748 (1964) (Commissioners Hyde and Robert Lee joining the majority).  Nevertheless, we decided to grant the licensee a probationary 1-year license renewal, from August 1, 1964, to August 1, 1965, "affording the Commission," as we said then, "an early opportunity to re-examine your operations and determine  [*997]  the degree of responsibility which you have exhibited during the year." Ibid.


On May 17, 1965, applications for renewal of the licenses of WIFE and WLFE-FM were filed.  On September 14, 1965, the Commission received its first indication that WIFE had fraudulently falsified its bills to advertisers in a letter of c complaint from the Central Indiana Better Business Bureau.  (tr. 392, et seq.) The license renewal applications were accordingly designated for hearing on April 28, 1966 ("Order," F.C.C. 66-395 [corrected], released May 4, 1966).  On December 19, 1967, Hearing Examiner Thomas H. Donahue released his "Initial Decision" (F.C.C. 67D-73), concluding that the licensee of WKFE had misled and defrauded advertisers and the public, and recommending against renewal of both WIFE (AM) and WIFE-FM.


Today the Commission finally reaches that long-awaited re-examination of the licensee's qualifications which it promised in 1964.  Despite blatant and admitted fraudulent misconduct by the licensee, despite the licensee's probationary 1-year-renewal status, and despite the findings and recommendations of the hearing examiner to deny renewal of the WIFE-AM-FM licenses, the licensee is again let off merely with a warning -- which I am forced to assume means as little now as it apparently did in 1964.


The majority does not attempt to dispute the licensee's misconduct in any respect.  With respect to the Eaton water filter contest, the majority agrees with the examiner that WIFE's actions were fraudulent -- that the licensee falsely told the sponsor of a contest that there had been winners when there were none, and then collected the prizes and gave them to station employees.  Quite properly, the majority holds the licensee of WIFE-AM-FM "fully responsible for the conduct of its officers" (majority opinion, par. 4), even though the fraud may have been initially perpetrated by officers below the ownership level.


More importantly, the majority also finds that the licensee, on numerous occasions, furnished to clients "false and misleading information with respect to the times and dates purchased advertising was broadcast." Spot announcements, for example, were deliberately broadcast at times outside the time called for by the contracts (and upon occasion were not run at all) -- apparently when time was not available within were not run at all) -- apparently In preparing the bills for the spot announcements, WIFE utilized a variety of means in order to keep advertisers from being alerted as to what was transpiring.  One such method was the preparation of signed and executed affidavits which effectively served to lull unsuspecting advertisers into the mistaken belief that the commercials set forth were actually broadcast according to the official station log.  In actual fact, the bills were not prepared from the logs at all.


The record also reveals that the customer was either billed off the orders, i.e., on the basis of what he had ordered rather than on the basis of what the station log disclosed that he had received, or from an intermediate "recap" sheet on which entries abstracted from the logs were forced into the proper time segments.  The net result was that a minimum of $6,101.43 was paid by advertisers for spot announcements which either had not been carried or which were run in time segments for which a lesser charge should have been assessed.


 [*998]  What is more, the licensee took no steps to ensure that blatant fraud such as this court not happen.  Indeed, it deliberately abandoned a control book used by an earlier manager to prevent just such fraud -- again as the majority acknowledges.  Confronted by all this, the majority concludes: "It is undisputed that false bills were issued and that the ultimate responsibility for this practice lies with Burden," the station's principal owner.

Presented with clear, acknowledged, and repeated fraud by the licensee, during a probationary period which would normally call for higher than average performance, what does the majority conclude?  Its conclusion, a cosmic nonsequitur, can only be described as a pathetic equivocation (majority opinion, par. 8):


"This is a very difficult and close case." [Emphasis added.] How many other Federal regulatory agencies, when shown clear and repeated cases of fraud, could still describe them as posing "a very difficult and close case"?

Despite this closeness, however, and without much apparent strain, the majority finds itself able quickly to conclude (a mere three sentences later) that WIFE has, after all, "minimally met the public interest standard," and that "denial of renewal is not required in the public interest.  * * *" (Majority opinion, par. 8; emphasis added.)


What public interest?  If more than $6,000 worth of fraud is minimally consistent with the public interest, is there anything a licensee could do that would not meet this minimal public interest?


Their conclusion reached, the majority then falls comfortably back into the tried rhetoric of how the Commission (of course) will henceforth hold the licensee to very high standards of performance.  Yet is it not perfectly clear from this decision that the Commission majority appears willing to whitewash almost any sort of licensee misconduct -- including substantial involvement in dishonest practices?


Is it not ironic, for example, that the Commission majority is willing to admonish a television station for purportedly inducing criminal conduct (such as the smoking of marijuana, see Columbia Broadcasting System (WBBM-TV), 18 F.C.C. 2d 124, 142 (1969), yet excuse a licensee when that licensee itself commits what may very well be a crime?  And is it not equally ironic that on the same day that the Commission finds repeated fraud by WIFE to be minimally in the public interest and renews the licenses of WIFE-AM-FM without imposing even a monetary fine, it levies numerous fines on other stations for far less culpable behavior -- $700 on WKVA in Lewistown, Pa. (failure to make field intensity measurements and excessive modulation), $500 on WSNO in Barre, Bt. (operating above power), $2,000 on KFLN in Baker, Mont. (logging violations, excessive power, and post-sunset operation), $500 on KWMC in Del Rio, Tex., (unauthorized operator, logging violations), and $7,500 on WVOZ in Caroline, Puerto Rico (overmodulation, excessive power after sunset, and false logging)?  Is there any doubt that this Commission too often reserves punitive action for smaller licensees?  Is there any lingering doubt that the majority's marked disinclination to enforce its rules and policies by revocation of valuable broadcast properties simply enshrines the precept that the wealthier and more influential any broadcaster becomes,  [*999]  the more immune he is to regulation? n1 Can there be any doubt left that there is something very wrong with the will of this agency to discharge its responsibilities to the public? 


n1 I cannot agree with the assertion that revocation of WIFE's license would "produce judgments in which lesser offenses require greater penalties, while the greater offense is less impugned." (Concurring opinion, pt. I.) In actual fact, the majority has adopted an opinion in which "the greater offense" [i.e., fraud] receives no penalty at all.  The cases cited for the proposition that the Commission has "consistently ordered monetary forfeitures" and not license revocation "in every case of fraudulent billing" are inapposite.  The offenses in those cases did not occur during a probationary 1-year license renewal period, were generally far fewer in number than here, and involved far less money than WIFE's repeated fraud.


Nor can I agree with the statement that "[the] disparity of consequences between a monetary forfeiture and the denial of a license is so great that the severity of a denial, based on the inconclusive facts of this case, results in a refutation of the principles of administrative fairness." (Concurring opinion, pt. I.) I fear that this position may have serious consequences for this Commission's attempts to regulate the broadcasting industry.  If followed, it might rapidly become an apologia for deference to wealth, placing the larger and wealthier broadcasters beyond the reach of the Commission's regulations.  If a majority of this Commission finds itself unable to grasp the nettle of license revocation -- for the wealthier broadcaster as well as the smaller and less experienced -- than I am afraid the Commission will lose its credibility as an even-handed regulatory agency in the eyes of the American public.


One can read and re-read the majority's opinion, and find scant recital of any mitigating factors which might excuse the licensee for the fraud committed by WIFE.  The only justification even attempted by the majority (and off-handly at that) is the conclusory assertion that:


[We] credit Burden [the licensee's controlling stockholder] with lack of knowledge and recognized that not only has some restitution been made, but that the licensee has voluntarily unearthed and made reimbursement in regard to additional infractions.  (Majority opinion, par. 8)


Utterly fantastic.  If the latter part of this assertion is truly taken sexiously, one can only assume the majority will tend to excuse fraud so long as the licensee makes restitution when caught, and cooperates with the Commission in discovering additional wrong doing in which it has been involved and apprehended.  n2


n2 The majority's position was squarely rejected in Lawrence Broadcasters, Inc., 14 P. & F. Radio Reg. 2d 1, 2 (1968); "The corrective action taken by the licensee after being advised of the violations in no way excuses them or justifies reduction of the forfeiture."


As for the assertion that Burden lacked knowledge of the fraud, an assertion which the concurring opinion apparently accepts, the contention is almost certainly incorrect -- and in many ways immaterial to this proceeding.  Although there is some conflicting evidence in the record as to whether Bruden was actually aware of, and was affirmatively responsible for, the deceptive billing practices carried out by his manager, Ronald Mercer, it is difficult to see how Burden could have been unaware of the false billings (if not directly responsible for them) in view of his close supervision of all station operations.


A reading of the record demonstrates how preposterous this lack-of-knowledge claim is.  The licensee of WIFE and WIFE-FM is Star Stations of Indiana, Inc., which is wholly owned by Star Stations, Inc. Star Stations, Inc., also wholly owns the licensees of KISN, Vancouver, Wash., and KOIL and KICN-FM (now KOIL-FM), Omaha, Nebr.  The stock of the holding company, Star Stations, Inc., is owned 76.36 percent by Don W. Burden, 16.34 percent by J. P. Wilkerson, and the remainder (7.29 percent) by four other persons.  Thus, it is clear that Don Burden was the controlling figure in the enterprise from the standpoint of ownership interest.


 [*1000]  The record further indicates, for example, that Burden directed the staff to put spots on at times other than those for which they were ordered, without also telling them to notify the advertisers that this was being done.  It also contains substantial and direct evidence that he must have known of the false billings, even if we disregard the testimony of the general manager, Mercer, who claimed at hearing that Burden knew of the irregularities.  Thus, Louis T. Rudol, who was Burden's secretary from September 1960 until April 1966, testified that she heard Burden instruct the station manager of WIFE to "spread out" trade account spot announcements when the station was oversold (tr. 1305-1326), and she also made clear on cross examination that Burden said to spread the announcements around and not merely to sell the business on a spread-out basis.  (tr. 1346-1352.) Another witness, Patricia Van Cleave, testified that she told Burden she could not get the spot announcements into the times for which they were ordered and that his response was to "move them out but just as close to what they wanted to buy." When she told him there were too many, he told her to "Do as I say." (tr. 326-327.) Apparently at no time was the instruction or suggestion made that the advertiser was to be told or asked whether he still wanted the announcements.


The testimony of another witness, A. E. Donegan, indicated that Burden's alleged misconduct was not confined to WIFE, but may well have encompassed the billing practices of other stations controlled by him as well.  Thus, Donegan testified (tr. 839) that Burden had given instructions with respect to station KOIL in Omaha, Nebr., to put on daytime announcements at night, even though the advertisers were paying daytime rates.


Although the record does not contain undisputed evidence that Burden had knowledge of the actual billing practices, it is difficult to conclude, in light of his apparent knowledge that spots were being moved from contracted period coupled with other evidence of record, that he was unaware of the fraud perpetrated on WIFE's advertisers.  All other WIFE officers concerned with sales and billing (Storz, Mercer, Shireman) testified that they had knowledge of the practice.  All of the personnel at the station also had knowledge of the practice and acted to implement it.  The record additionally evidences that Burden was in constant close touch with all station affairs.


In any event, such considerations are of lesser importance in light of established Commission policy that the licensee must be held responsible for the actions of its employees -- absent clear and convincing exculpatory evidence to the contrary.  In this case, Burden's responsibility is clear.  The misconduct was engaged in by Mercer, a vice president of the licensee, and Mrs. Storz, an officer of the parent corporation, not merely by employees down the scale of responsibility.  Furthermore, there has been no significant showing that a reasonable effort was made to maintain even basic bookkeeping, much less adequate procedures, in order to avoid misconduct by station personnel.  In fact, when the licensee acquired the station, there was in existence a "master control book" (finding 25) which, properly used, made it impossible to sell more spots than there was available time.  The book was abandoned and  [*1001]  no effective control substituted by Burden.  The examiner's conclusions, therefore, should come as no surprise: n3


n3 In light of this accumulation of evidence, the concurring opinion's contention that "the evidence was inconclusive concerning the licensee's knowledge or lack of due diligence in preventing the conduct" is unsupportable.  There is ample evidence to indicate Burden's direct involvement with WIFE's fraudulent billing practices, and Burden's failure to adopt any procedural safeguards -- indeed, his abandonment of the prior licensee's control procedures -- appears to establish a prima facie case of lack of diligence.


Further, this position, if pushed to its logical conclusion, would place the burden of proving actual knowledge on the Commission -- a burden which would grow in difficulty as the complexity of the licensee's managerial organization increased.  Responsibility is already substantially diffused throughout the corporate hierarchies of many large licensees.  And when this Commission is alerted to charges of "payola," or news "staging." or fraudulent billing, its investigations often run into a blank wall.  Thus, we may be told that the chairman of the board was out of the country at the time, the president of the corporation wasn't told of these things, none of the numerous vice presidents were in charge of that particular problem, the general manager had issued instructions that the given offense was never to occur, his assistant didn't see it happen, and lower ranked employees were fired last week (for "unrelated reasons," of course) -- but in any case, "it will never happen again." The problem is finding out "who's in charge here?"


I have often noticed that licensee responsibility has a tendency to vanish under Commission scrutiny.  It is essential, therefore, that this Commission not set the stage for a "disappearing act" by licensee responsibility.  We must not make the concept of responsibility, so important to a lawful and orderly society, a figment or fiction.  We must hold licensees responsible for at least promulgating control procedures to prevent fraud and other kinds of misconduct.  The 1-year license renewal is designed to give the licensee fair warning that such procedures must be rapidly implemented.  As WIFE failed to adopt such procedures.  I do not understand how one can contend that "[whether] the licensee exercised due diligence to prevent the existence of this deceptive conduct is * * * incapable of being resolved on the record." (Concurring opinion, pt. II.)


[While] various people were permitted to play with the ends, the reins of authority [at WIFE] were at all times firmly in the hands of Don Burden and manipulated by him with varying degrees of firmness, depending on his mood of the moment and the exigencies presented by the obstacle at hand * * *.  (Finding 55.)


The record makes abundantly clear that Don Burden and Ronald Mercer were in pari delicto insofar as misconduct at WIFE is concerned * * *.  (Finding 57.)


The burden of showing diligent supervision of WIFE's operations clearly lay with Burden, for where an issue involving serious misconduct is involved, the Commissions Act requires that the applicant carry the burden of proof on this issue.  The necessity for this showing is heightened where, as here, the station is on a 1-year short-term renewal.  Office of Communication of the United Church of Christ v. F.C.C.,     U.S. App. D.C.    ,     F.2d     (June 20, 1969); D & E Broadcasting Co., 1 F.C.C. 2d 1388 (1965).


Manifestly, the licensee must be held responsible for the fraudulent billing practices established on this record.  This principle has been clearly enunciated by us over and over again.  See KWK Radio, Inc., 34 F.C.C. 1039 (1963), aff'd, 119 U.S. App. D.C. 14, 337 F. 2d 540 (1964), cert. denied, 380 U.S. 910 (1965); Eleven Ten Broadcasting Corp., 32 F.C.C. 706 (1962), reconsideration denied, 33 F.C.C. 92 (1962), aff'd sub nom, Immaculate Conception Church of Los Angeles v. F.C.C., 116 U.S. App. D.C. 73, 320 F.2d 795 (1963), cert. denied, 375 U.S. 904 (1963); Palmetto Broadcasting Company, 33 F.C.C. 250 (1962), pet. for reconsideration denied, 34 F.C.C. 101 (1963); and, most recently, our decision in Continental Broadcasting, Inc., 15 F.C.C. 2d 120, reconsideration denied, 17 F.C.C. 2d 485 (1969). As we stated there:


[The] Commission must insist upon the effective exercise by the licensee of actual control over station operation and management, and it is only by holding the licensee accountable for the operation and management of the station that there can be any assurance that the operation and management will be responsible.   [*1002]  The degree of responsibility imposed and the standard of conduct required are the same for all licensees, irrespective of their form or the relative size of their operations.  [See Prattville Broadcasting Company, 4 F.C.C. 2d 555 (1966), citing KWK Radio, Inc., supra, and Eleven Ten Broadcasting Corp., supra.] A multiple station owner, or an absentee owner [such as Burden], is subject to the same degree of responsibility for adequate supervision and control over station operation as a local station owner who is integrated in ownership and management.  To hold otherwise would result in giving an added benefit to absentee ownership as compared to local ownership.


In addition, the majority erroneously shifts the burden of proof by suggesting that the licensee's lack of diligence should be proved by the Commission and not the contrary -- namely, that the licensee has the burden of proving its diligence in light of its repeated fraudulent conduct and the significant fact that its station was already on a short-term probationary license.


In Office of Communication of the United Church of Christ v. F.C.C., supra, for example, the court vacated the Commission's action granting a license renewal application because, in large measure, of what it termed an "erroneous concept of the burden of proof" by the Commission.  The court stressed that a probationary grant (as was given to WIFE and WIFE-FM) stems from the Commission's inability to make the requisite finding that a license renewal will serve the public interest, and that the burden of proof -- both of producing evidence and of persuasion -- in the next renewal proceeding lies heavily with the licensee.  As the court said, a 1-year probationary grant is "a grant which by its nature assumes that the renewal licensee has been unable to persuade the Commission that it is presently in the public interest to grant a 3-year renewal." As the licensee presented no convincing evidence that it was unaware of the fraudulent conduct involved, the issues must be resolved against it.  n4 One can only wonder why the majority seems so willing to evade this conclusion and violate the clear mandate of the U.S Court of Appeals for the District of Columbia Circuit.  One might surmise the majority feels safe in doing so because there is no losing party in this proceeding that could appeal the question to the courts -- as there was in the United Church of Christ case -- and thus obtain another embarrassing reversal. 


n4 The concurring opinion argues that "even though the burden of proof was on the licensee, in a hearing where the denial of a license is in issue, the licensee should not be denied the benefit of the doubts which the hearing failed to resolve." As the United Church of Christ case, supra, unequivocally indicates, however, the burden of going forward with the evidence may be on the Commission, but the burden of proof lies with the licensee.  Where a licensee is on a 1-year probationary renewal, and the issues raised involve facts peculiarly within the knowledge of the licensee (e.g., whether the licensee's major stockholder had knowledge of, or actively directed, the fraudulent billing; whether there was adequate superivision of the licensee's staff to prevent illegal practices; etc.), the licensee must either sustain the burden of proof or lose his case.  The licensee cannot, for example, refuse to submit evidence to establish that his supervisory practices were adequate, and then argue that the Commission has failed to prove its case.  The United Church of Christ case specifically holds that the burden of proof is on the licensee.  WIFE cannot "benefit" from any "doubt" which is casued by its own failure to present evidence sufficient to overcome that doubt.


The majority today gives the licensee yet another chance to demonstrate that it can operate its station in the public interest, and repeats the same warning given it with the last 1-year renewal.  How many chances must we give licensees for fraud or other misconduct?  Has not the time come simply to say that when licensees, on repeated occasions, "hypo" ratings, conduct fraudulent contests, and defraud  [*1003]  advertisers out of thousands of dollars, they have lost their right to function as a "trustee" for public property?


One final point warrants special emphasis.  The disposition of this case may determine for years to come the usefulness of the short-term renewal.  The power to grant short-term renewals in doubtful situations can be extremely useful in obtaining operation in the public interest where a licensee's operation, while not entirely satisfactory, does not warrant absolute disqualification.  However, if this is to be a meaningful compliance procedure, the licensee on a short-term renewal must be expected to improve his operation and to be diligent in maintaining proper standards.  In this case, whatever the conclusion as to the majority stockholder's actual participation in the wrongdoing, it is absolutely clear that he made no reasonable effort to maintain proper supervision and standards of good practice in the station.  In theory, a short-term probationary license renewal ought to have a sobering impact on any licensee's conduct; in fact, it seem here to have had no impact whatsoever.  Indeed, the licensee's performance appears to have degenerated substantially during its 1-year probationary period.  If a further license renewal is granted in such situations, the industry cannot be expected to consider short-term license renewals as a serious warning that operations must improve.  The short-term renewal will become nothing more than a patently transparent whitewash, a subterfuge to cover up unwillingness to hold erring licensees to meaningful standards.  This case, therefore, is bound to affect the Commission's future ability to use the short-term renewal as an effective compliance tool.


If this Commission refuses to adopt programming standards, continues to grant engineering violation waivers, and persists in ignoring undue concentrations of media control, then the very least it can do is hold its licensees to accepted standards of business behavior.  This agency should at least protect other businessmen who must deal with broadcasters on a commercial basis.  It is highly significant to note that the Commission first learned of WIFE's fraudulent billing practices, not from a member of the listening public, but from the Central Indiana Better Business Bureau (tr. 392, et. seq.), representing businessmen in the Indianapolis area.  Apparently a competitor of WIFE monitored the station's broadcasts (which is apparently more than WIFE's owner did) and then informed Amalie Oil, a WIFE advertiser, that its spots were not being carried at times specified in the contract and the affidavit-accompanied bills.  I imagine the Central Indiana Better Business Bureau will not react with pleasure to today's majority decision.  I would have thought that the broadcasting industry and the business community in general would want the FCC to supervise stations closely in this regard.  the reputations of all stations suffer when the advertisers upon whom those stations depend for support are bilked, cheated, and defrauded through a station's illegal practices.


WIFE's admittedly fraudulent and indefensible billing practices, its conduct of the Eaton water-filter contest, its failure to show adequate supervisory control and licensee responsibility and, of great importance, the fact that the derelictions and lack of control occurred  [*1004]  during the period of a 1-year probationary grant -- all are clear evidence that its licensee should not be permitted to continue as trustee for the public in its control of a valuable broadcast frequency.  Why must this Commission, and the American public, brook the sort of corruption which has been clearly acknowledged in this case? Can the licensee's economic interests here be of such overriding importance that this Commission, on equitable grounds, must deem its further operation to be minimally in the public's interest?  WIFE was given a second chance.  It is not entitled to a third.


In condoning fraud in the operations of WIFE, the majority has itself deprived the public of the protection to which it is entitled.

I believe that the public is entitled to far more from the broadcasting profession and this Commission.


I dissent.







Exception No.       Ruling


1, 2, 4, 5,8  Denied.  The examiner is not required to make findings

                   on every conceivable fact which might be deduced

                   from the evidence, absent a showing of materiality

                   or decisional significance in the exception, or a readily

                   identifiable reference to the brief.


3, 6, 22       Denied.  The Commission's disposition of this case being

                   bottomed on failure to exercise licensee control and

                   supervision, it is not material whether Don Burden

                   himself or the licensee generally had actual knowledge;

the adverse import lies in the failure of actual

                   knowledge and control.


7                 Denied.  The documents sought were not statements of

                   the witness-to-be-impeached; they were notes of in-

                   vestigators to whom he talked.  No attempt was made

                   to subpoena the investigators to give countervailing



9, 10, 11,

35, 37, 38,

39, 40.        Denied.  Moot in view of the Commission's disposition of this matter.


12, 13         Denied.  The examiner's finding fairly reflects the



14               Denied.  Exceptor fails to specify the contrariness to

                   the record with particularity.  Further, assuming

                   arguendo that all of the requested findings are correct,

it does not negate the rendition of false bills

                   "according to the official stating log."


15               Denied.  The requested finding did not apply to the

                   period under scrutiny.


16               Denied.  The sentence is of no decisional significance


17, 20, 24   Denied.  Exceptions must run to facts -- not implications.


18               Denied.  If the excepted to words be accurate, they do

                   no harm; if inaccurate, the exception must be to the

                   findings and conclusions which they inaccurately



19               Granted to the extent that the first sentence of finding

                   23 is amended to read "in April 1965 when he was

                   station manager of KOIL * * *";

                   Denied in all other respects, as the examiner saw

                   and heard the witnesses.


21               Denied for failure to indicate with particularity the

                   incompleteness or contrariness to the record.  The

                   sought-for finding has no materiality or relevancy

                   to the false bills proved and conceded.


23               Denied.  Finding 26 in no way indicates anything about

                   incorrect billing.


25               Denied for failure to specify error with particularity.


26               Denied.  The evidence in question was offered only

                   (exceptor's brief, pp. 54 et seq.) in support of possible

                   rulemaking which would have no relevancy to this



27               Denied, in view of the Commission's disposition of this

                   case on the grounds that the licensee failed to exercise control,

the chronology of discovery, restitution,

                   etc., being immaterial.


28               Denied.  The Commission agrees with the examiner.  As

                   to the requested findings, no showing of materiality

                   was made by the exceptor.


29               Granted.  The words in finding 57 "hardly scratches

                   these practices" are deleted.


30               Denied as to finding 55 in that exceptions must run

                   to facts, not implications.

                   Denied as to finding 57 in that nothing in such finding

                   "indicates * * * that Don Burden knew of, condoned or ratified the practices."

                   Denied as to the requested findings in view of the

                   Commission's disposition of this case on the grounds

                   that the licensee failed to exercise control.


31               Denied.  The examiner's finding fairly reflects the



32               Denied for lack of particularity.  The exceptor cannot

                   cast upon the Commission the burden of selecting

                   "the extent [to which] it finds or concludes."


33               Denied.  The brief contains nothing relating to this



34               Denied.  Conclusion 1 contains none of the statements

                   excepted to.


36               Denied except as to the word "innumerable" because

                   the Commission agrees with the examiner;

                   Granted, to the extent of substituting "numerous" for





Exception No.       Ruling


1                           Denied in view of the Commission's action in this matter.



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