Order to Show Cause, Hearing Designation Order and Notice of Opportunity for Hearing for Forfeiture

FEDERAL COMMUNICATIONS COMMISSION

[WT Dkt. No. 97-56; FCC 97-38]

Order to Show Cause, Hearing Designation Order and Notice of

Opportunity for Hearing for Forfeiture

AGENCY: Federal Communications Commission.

ACTION: Notice; Hearing Designation Order.

-----------------------------------------------------------------------

(Authority: 47 U.S.C. Secs. 312 and 503; 47 CFR Sec. 0.411(c))

SUMMARY: On February 6, 1997, (released February 12, 1997) the

Commission designated pending applications and finder's preference

requests filed by Marc Sobel, and licenses held by Marc Sobel and Marc

Sobel d/b/a Air Wave Communications (collectively ``Sobel'') for

hearing to determine if an unauthorized transfer of control occurred in

violation of 47 U.S.C. Sec. 310(d). In addition the Commission directed

the ALJ to determine if Sobel is qualified to be a licensee, and to

determine if an order for forfeiture should issue. The Commission

designated these matters for hearing at a time and place to be

designated in a subsequent order.

FOR FURTHER INFORMATION CONTACT: Gary Schonman at (202) 418-0569, FCC

1919 M St., NW.

SUPPLEMENTARY INFORMATION: The following is a synopsis of the

Commission's order. The full text of the order is available for

inspection and copying at the FCC Docket Branch (Room 230), 1919 M

Street NW., Washington, D.C. The text of the order may also be

purchased by calling ITS at (202) 857-3800.

The results of the Commission's predesignation investigation

indicate that on December 30, 1994, Sobel and another land mobile

licensee in the Los Angeles area, James A. Kay, Jr. (``Kay''), executed

a so-called Radio System Management and Marketing Agreement

(``Agreement'') involving several of Sobel's stations, all of which

provide service to subscribers. The Agreement, as amended, expressly

covers the following stations: Stations KNBT299, WNYE761, WNYR424,

WPFF529, WNXL471, WPAD685, KRU576, WPCN239, WPCZ354, WPCG780, WNWB334,

WNZS492, WPDB603, WPFH460, and WPCA891. The Agreement contemplates,

among other things, that if the stations have not already been built,

Kay will construct them at Kay's expense; Kay will serve as the

exclusive supplier of equipment and labor to maintain each of the

stations; Kay will be the exclusive marketing agent for the sales of

service to the public and/or persons eligible to receive service from

each of the stations; Kay will serve as the sole manager of each of the

stations; Kay will compensate all employees, agents, and independent

contractors and pay all insurance, taxes and other costs arising out of

the employment of workers at each of the stations; Kay will maintain

all financial records and contracts associated with the operations of

each of the stations; and Kay will bear all responsibility for paying

utility, telephone, site rental, radio equipment, and legal expenses

associated with the operations of each of the stations. In

consideration for these services, the Agreement provides that Kay will

receive the first $600 of gross revenues per month from the operation

of each of the stations, and half of all remaining gross revenues per

month from the operation of each of the stations. The Agreement runs

for 10 years and renews automatically (unless Kay elects otherwise) for

five 10 year periods (for a total of 50 years). The Agreement also

grants to Kay, in consideration for $100, an irrevocable 10 year option

to purchase any or all of the covered stations, including the

assignment of each associated FCC license, for $500 per station upon

demand by Kay. The Agreement requires Sobel to maintain exclusive

ownership of the subject stations during the term of the Agreement,

free of all liens and encumbrances, ``until and unless said license(s)

are assigned to'' Kay.

In determining whether de facto control of a non-broadcast license

or facility has been transferred in violation of Sec. 310(d) of the

Communications Act, the Commission and the courts have traditionally

relied upon a six-part test announced in Intermountain Microwave, 24 RR

983 (1963). When the Intermountain factors are applied to the Agreement

between Sobel and Kay, a substantial and material question arises as to

whether Sobel has willfully and/or repeatedly engaged in unauthorized

transfers of control of his stations to Kay, in violation of

Sec. 310(d) of the Communications Act of 1934, as amended. Sobel and

Kay executed the Agreement a mere two weeks after the Commission

formally placed Kay's basic qualifications to remain a licensee in

issue. Order to Show Cause, Hearing Designation Order, and Notice of

Opportunity for Hearing for Forfeiture, 10 FCC Rcd 2062

(1994)(requiring Kay to show cause why his licenses should not be

revoked). The nature and timing of Sobel's arrangement with Kay raise

serious questions concerning Sobel's compliance with Sec. 310(d) of the

Act and, as a consequence, Sobel's basic qualifications to be and

remain a Commission licensee.

The Commission designated specific applications for hearing and

directed Sobel to show cause why his licenses should not be revoked, in

a consolidated proceeding before an FCC Administrative Law Judge at a

time and place to be specified in a subsequent Order, upon the

following issues: (a) To determine whether Marc Sobel and/or Marc Sobel

d/b/a Air Wave Communications have willfully and/or repeatedly violated

Sec. 310(d) of the Communications Act of 1934, as amended, by engaging

in unauthorized transfers of control of their respective stations to

James A. Kay, Jr.; (b) To determine, in light of the evidence adduced

pursuant to the foregoing issue, whether Marc Sobel and/or Marc Sobel

d/b/a Air Wave Communications are qualified to be and remain Commission

licensees; (c) To determine whether the above-captioned applications

filed by Marc Sobel and/or Marc Sobel d/b/a Air Wave Communications

should be granted; and (d) To determine whether the above-captioned

licenses held by Marc Sobel and/or Marc Sobel d/b/a Air Wave

Communications should be revoked. The Commission also directed the ALJ

to determine, pursuant to Sec. 503(b)(2)(B) of the Communications Act

of 1934, as amended, whether an Order of Forfeiture shall be issued

against Marc Sobel and/or Marc Sobel d/b/a Air Wave Communications in

an amount not to exceed $100,000 for each violation or each day of a

continuing violation, except that the amount assessed for any

continuing violation shall not exceed a total of $1,000,000 for any

single act or failure to act, for having willfully and/or repeatedly

violated Sec. 310(d) of the Communications Act of 1934, as amended. The

Commission also placed the burden of proceeding with the introduction

of evidence and the burden of proof with respect to the issues (a),

(b), and (d) above shall be on the Wireless Telecommunications Bureau,

and burden of proceeding with the introduction of evidence and the

burden of proof with respect to the issue at (c) above on Sobel.

Federal Communications Commission.

Shirley S. Suggs,

Chief, Publications Branch.

[FR Doc. 97-12075 Filed 5-8-97; 8:45 am]

BILLING CODE 6712-01-P