RBR+TVBR INFOCUS
Six years ago, RBR+TVBR published its most-read article to date. It was titled “How to Lose Your Station’s License,” and was based on a review of the FCC’s revocation actions over the past 75 years conducted by Garvey Schubert Barer counsel Erwin Krasnow and Jacksonville-based attorney John Wells King.
“The time has come to update our article, thanks to the conduct of four AM stations in the St. Louis area,” they note in this newly penned piece exclusive to RBR+TVBR.
Krasnow and King identified eight ways for a broadcast station to lose its license.
To recap, they are as follows:
- molestation of children
- drug trafficking
- lying and cheating
- stealing
- racist actions
- lack of integrity
- not minding the store
- being oblivious to FCC deadlines
Now, Krasnow and King write, comes a Hearing Designation Order involving Entertainment Media Trust (EMT).
As RBR+TVBR reported in early June, the Media Bureau believes this owner is guilty of misrepresentation and fraud.
The case involves St. Louis-based KZQZ-AM 1430, KQQZ-AM 1190 in Fairview Heights, Ill.; daytime-only WQQW-AM 1510 in Highland, Ill.; and KFTK-AM 1490.
It is so serious that the Media Bureau has designated EMT for a hearing in front of an Administrative Law Judge to determine whether it committed “serious violations” of the Communications Act and the Commission’s rules by lying about its true owner. If found to have committed these serious violations, EMT’s licenses may be cancelled.
Here’s what Krasnow and King have to say about the matter.
THE HDO IN A NUTSHELL
The Hearing Designation Order issued by the FCC’s Media Bureau on June 5 describes, in 24 single-spaced pages, a veritable road map for novel and not-so-novel ways a licensee might be the target of revocation.
Following an extensive investigation, the Bureau found that there were substantial and material questions: (a) whether there has been an undisclosed de facto transfer of control of the stations to Bob Romanik, and thus whether he is a real party-in-interest in pending renewal and assignment applications; (b) whether EMT engaged in misrepresentation or lack of candor in its applications and other communications with the Commission; and (c) whether the EMT Trust shields Romanik or the Trust’s beneficiaries from holding attributable interests in the stations under the Commission’s ownership attribution rules.
Don’t be fooled. Behind this familiar bone-dry legal phraseology lurks an eyebrow-raising tale likely unmatched in the history of FCC licensing.
The HDO provides grist for a pulp fiction novel. Romanik, the central character, is a shock jock who calls himself the “Grim Reaper of Radio” and is a shotgun-toting former police chief of Washington Park, Ill.
He is also a convicted felon who served time in a federal penitentiary.
Other players include Romanik’s longtime girlfriend, Katrina A. (Tina) Sanders; his son, Stephen Romanik II; personal lawyer and business associate Dennis J. Watkins; and one very disgruntled listener, Mark A. Kern.
[Editor’s Note: Kern is the Democratic County Board Chairman in St. Clair County, Ill., and served as Belleville, Ill., Mayor from 1997-2016.]
The saga began when Bob’s son Stephen told his father that he wanted to be in the radio broadcasting business. Romanik then approached lawyer Watkins to establish a trust to acquire broadcast assets, including the licenses, of which Stephen would be the sole beneficiary. Watkins, who was to control 100% of EMT, had provided legal representation to Romanik in numerous civil proceedings and had served as a trustee of various assets of Romanik relating to his client’s adult entertainment business operations. EMT acquired the four stations between 2006 and 2010.
As the next step, Stephen formed Insane Broadcasting Company to operate and manage the EMT stations. We kid you not … that is the licensee name.
The plot thickens. When Kern filed a petition to deny the 2012 applications to renew EMT’s station licenses, he alleged that EMT was operating as a front for Romanik because Romanik not only established and financed EMT’s operations but also funded the acquisition of the stations.
Kern claimed that Romanik appears “to exercise control over the hiring of personnel and management” of the stations. He also complained that Romanik broadcast on KQQZ vulgar and slanderous remarks against Kern’s wife and others. In particular, Kern told the FCC that Romanik called him a cross-dressing “faggot.” On the air, he referred to Kern’s wife as “Mrs. Hairy ass” and as “bitch Kern.” Romanik also said, “Mark Kern should give you $5,000 just to have sex with the nasty old lady [Mrs. Kern]. Hey, Mark Kern you rotten bastard.”
On the basis of Kern’s charges, the FCC initiated an investigation that lasted several years.
Meanwhile, in 2015, Stephen Romanik II died. Romanik then looked for another person to hold a beneficial interest in EMT. His interest in the stations was assigned to his girlfriend, Ms. Sanders.
According to an article that appeared in the May 24, 2018, edition of the St. Louis Post-Dispatch, Sanders shares the same residential address in Belleville, Ill., as Romanik. This address is listed as the registration address for the stations’ website. This address is also listed with the Illinois Secretary of State for the registry of Insane Broadcasting. Further, this address is listed on Romanik’s 2018 campaign filings for the Illinois State Senate and his 2016 failed bid for the state House.
Back in 2012, Watkins prepared a 10-page trust agreement that “was created to clarify and confirm the original formation of the trust…” The original version consisted of a three-sentence paragraph. The second trust was named Entertainment Media Trust #2. Nearly four years later, an application was filed to assign the station license to EMT#2, whereby Sanders would become the sole beneficiary, after the younger Romanik.
In 2016, Kern filed a second petition to deny alleging that the proposed assignment of EMT to a new trust “is merely a continuation of the subterfuge to enable Robert S. Romanik to exercise de facto control over the [EMT] stations.” As additional evidence of Romanik’s alleged control over the stations, Kern alleged that Romanik had been involved in the negotiation and implementation of a Local Marketing Agreement between Insane Broadcasting Company and Emmis Communications.
A ROAD MAP FOR LICENSE REVOCATION
What’s wrong with this picture? Let us count the ways. The Bureau’s HDO provides a road map for broadcasters who do not want to jeopardize their station licenses.
Use a Straw Man to Cover-up Actual Station Ownership
Here, as in the Nixon Watergate scandal, the discovery of an attempt to cover up was regarded as more reprehensible than the original action.
The Bureau’s investigation found “significant evidence” supporting the claim that Romanik established EMT and provided all of EMT’s funds for the acquisition of its stations but was not listed as a party in any of EMT’s applications.
The Bureau also observed that if Romanik had identified himself as a party to EMT’s applications and disclosed his felony convictions in those applications, the Commission would have undertaken a careful examination of the nature of his crimes (e.g., the willfulness, frequency, and seriousness of the misconduct) to determine whether he has been sufficiently rehabilitated to become a Commission licensee.
Use a Sham Entity to Serve as the Licensee
The document that EMT used in acquiring stations was undated and consisted of the following three sentences:
Entertainment Media Trust has been established in the State of Illinois for the purpose of acting as a sole Trust for Stephen Romanik II. Entertainment Media Trust has as its Executor and Trustee, Dennis James Watkins. Entertainment Media Trust has Stephen Romanik II as sole one hundred percent beneficiary of said Trust and any and all assets and properties acquired by Entertainment Media Trust.
The trust agreement did not identify and/or mention the trust grantor, a declaration of trust, the trust property and delivery of such property to the trustee, the purpose of the trust, or the manner in which the trust is to be performed.
While a formal trust instrument was executed in 2012, the Bureau’s investigation found that EMT did not properly insulate Romanik from the stations and also that the trust was not created in a timely manner since the stations were acquired between 2006 and 2010.
Exercise Unlawful De Facto Control
The Bureau found that although Romanik provided all of the funds for the acquisition of the stations, he was not listed as a party in any FCC filing. The investigation supported Kern’s claim that Romanik held de facto control over the stations, including negotiating an LMA agreement with Emmis Communications for KTTK.
Withhold Information from the FCC
When the FCC issues a notice of inquiry to a broadcast licensee, silence is not golden.
The Media Bureau was troubled that its investigation was impeded by EMT’s failure or inability to provide responsive information. EMT did not provide any documents to the Commission that had been executed contemporaneously with the creation of EMT or Insane reflecting an arrangement concerning the operation and/or management of the stations.
Indeed, EMT conceded that “there was no formal agreement” between EMT and Insane and that [a]ny and all understandings between [EMT] and Insane were oral only.” Instead, EMT provided the Commission with the EMT-Insane LMA, executed on July 1, 2018, more than 12 years after the purported creation of EMT and Insane, and only after the Media Bureau issued a letter of inquiry requesting information concerning control of the stations.
EMT’s failure to produce basic business documentation caused the Bureau additional concern. For example, EMT asserted that Insane pays all of the costs and expenses for the stations, but did not provide any documents reflecting the payment of these expenses.
EMT did not provide the Commission with any information as to who managed Insane and/or oversaw the operations of the stations during the period between Stephen Romanik’s death and Romanik’s formal assignment to Sanders. Also, EMT failed to provide any Federal or state tax returns.
Lack Candor
Behind the “straw party” and sham charges, the citations for the exercise of unlawful de facto control and failure to communicate with the FCC, lurked a more serious – deadly serious – sin: untruthful dealing the FCC. Through the years, lack of candor has been the principal ground on which the FCC has yanked the licenses of broadcast stations.
According to the Bureau, substantial and material questions of fact were raised as to whether EMT engaged in misrepresentation and/or lack of candor in its applications and other communications with the Commission in representing that it is (and has been) exercising affirmative control of the stations, and in failing to identify Romanik, a convicted felon, as a party.
The HDO directs the Administrative Law Judge to seek evidence on whether EMT engaged in misrepresentation and/or lack of candor in its applications and other communications with the Commission and whether the trust shields Romanik or the Trust’s beneficiaries from holding attributable interests in the stations under the FCC’s ownership attribution policies.
Obstruct Justice
The FCC’s investigation went beyond the four corners of the station licenses, and yielded damaging information that could have an impact on them: in 1997, Romanik refused to answer a grand jury’s questions about the strip clubs he owned. He was convicted of obstructing justice by lying 150 times to a grand jury in a probe involving a $48 million video gambling and racketeering operation. He was placed on probation for a term of 12 months and fined $20,000 as a consequence of his guilty plea.
The FCC has said that “there may be circumstances in which an applicant has engaged in non-broadcast misconduct so egregious as to shock the conscience and evoke almost universal disapprobation.” The Commission has postulated that “such misconduct might, of its own nature, constitute prima facie evidence that the applicant lacks the traits of reliability and/or truthfulness necessary to be a licensee.
In determining a licensee’s character and fitness to own a station, all prior felony convictions, especially those involving fraud or untruthfulness, are pertinent to the Commission’s evaluation of a licensee’s propensity to obey the law generally, and to comply with the Communications Act and the Commission’s rules.
Commit Bank Fraud
The FCC investigation also found that in 1998, Romanik was convicted of bank fraud involving a $1.5 million loan to construct a pair of strip clubs in Washington Oak, Ill. — the same community where he once served as police chief. He was sentenced to 20 months imprisonment, ordered restitution of $1.575 million to the banks which he had defrauded, and was fined $40,000.
What does it all add up to?
If nothing else, clouds will hover over the licenses indefinitely, which will likely cause the stations economic harm, prevent any sale, significantly diminish their value, and cost Romanik incalculable legal fees. A ruling against Romanik on just one of the issues could result in the loss of all of EMT’s licenses. Taken together, the conduct summarized in the HDO reads like a recipe for revocation.
Erwin G. Krasnow, counsel to Garvey Schubert Barer, is a former General Counsel of the National association of Broadcasters andWashington counsel to the Media financial Management Association. He has been described by Legal Times as “the guru of Communications Law.” Erwin can be reached at [email protected] and at 202-298-2161.
John Wells King is a principal in the Law Office of John Wells King LLC, in Jacksonville, Florida. A veteran FCC lawyer, King has practiced before the Commission for more than 45 years. He can be reached at [email protected].
