August 12, 2005

More on the Air America Scandal: The Check Is In The Mail

Brian Maloney of the Radio Equalizer has more on the Air America Scandal. Brian includes a transcript of Al Franken discussing the scandal, which includes some interesting admissions (the audio can be found here):

FRANKEN: Anyway, so here's the deal. So the first guy who was the chairman of the board of of Air America, a guy named Evan Cohen, was a crook, it turns out. I guess that's the only way to put it (laughter) and, but, he got a job.... So he let us believe that we had enough funding, enough capital, to go three years, before making a profit, turned out it was three weeks.... Ok, it turns out he was on the board, or worked for, this Gloria Wise Boys and Girls Club in the Bronx or something. And he uh, borrowed (laughter) $875,000 from, I don't know why they did it, and I don't know where the money went, I don't know if it was used for operations (softer, especially fast), which I imagine it was. I think he was robbing Peter to pay Paul. And about three weeks into the life of Air America, I became an involuntary investor. I stopped being paid. So now, we started to make arrangements, and I didn't know anything about this until late last week, and I'm sorry, Rick, that you have to be here for this....So, um, we had to do, forensic, or not we, but the guys who run the thing, the new management, did forensic accounting, and discovered this big loan from this Boys and Girls Club, and Rob Glaser, the new guy, who is the head of this new company Piquant, said OK, we don't legally have to pay it back, because we're a different company I guess, but we morally do, so they start making arrangements to pay it back. . . .

I would really like to know how they are not legally obligated to pay back the money. If the loan was made to Air America, then it was an obligation of Air America that the new ownership would have assumed upon acquisition of the radio station by operation of law. Even if the loan was made to Evan Cohen personally, I imagine that there are unjust enrichment theories that would be applicable. It will likely depend on the facts uncovered during the investigation.

Evidently, Al Franken believes that conservative bloggers and newspapers are "exploiting" the fact that a children's charity was robbed.

GUEST: So you can see you can see why they're groping for something here. To make some kind of a vague exploitation of children angle...

FRANKEN: oh yeah, oh no, they went right for it. And that's, of course, why we're paying them back, we put money in escrow, you know, we don't have $850, or $875,000 laying around. So we had to do it....and then the investigators said, well, you can't pay them back, because we're doing this investigation, so let's put it in escrow.

This is a big story - how do you expect it to be ignored? Is it any less of a story than Rush Limbaugh's past drug addiction? Al Franken is still harping on that... What is not newsworthy about a children's charity being defrauded to help run a commercial radio station?
Well, at least Air America has agreed to repay the children's charity, right? Correct. However, according to the NY Post, Air America has been dragging its feet in actually reimbursing the children's charity for the amounts that were stolen to continue its operations:

The left-wing radio network, which showcases Al Franken, last Friday made a $50,000 repayment on the loan to an escrow account controlled by the station's lawer. "The [city] Department of Investigation advised Air America to repay $875,000 into an escrow account from which no money can be disbursed without our approval," said DOI spokeswoman Emily Gest. "Air America has not followed that recommendation." But an Air America official told The Post yesterday that both sides had agreed to a payment plan months ago and that they were on schedule with their payments. That was news to the Boys & Girls Club. "Air America has agreed in principle to give the money, but nothing has been finalized yet," Grossman said yesterday. "They haven't agreed how and when to do it."

Air America is saying the right things - i.e., "we are going to pay the Boys and Girls Club back" - but is definitely falling short on the execution. Yet, all they are really doing is making a small partial payment (this was contrary to the DOI's suggestion - DOI wanted the entire amount deposited) and the payment isn't even going to the charity. Rather, it is going into the escrow account of the station's lawyer. The DOI suggested the money be placed into the escrow account pending the results of the investigation. If Air America truly has every intention of repaying the charity, however, why put the money in escrow and wait until the investigation is done?? Put simply, they agreed to pay it back even though they don't think that they did anything wrong or otherwise are under any legal obligation to do so. If this is the case, then it wouldn't matter what is the result of the investigation. So, why put the money into escrow?

Air America's claim that they have agreed to pay the money back is misleading. According to this report in the New York Sun, Air America's agreement to pay the money back will depend upon the outcome of the investigation. "Until the claims of financial impropriety are resolved, we're not going to give the club the money directly until we know it is going to an appropriate source," a spokesman for the network, Jaime Horn, said.

David Reinhard of the Oregonian makes a great point - where are the Air America listeners?
Surely, Air America's listeners must be scandalized by these Enronesque corporate shenanigans. Victimizing the children -- isn't that what Republicans do? Air America says it's ready to repay the principal to the Gloria Wise Boys & Girls Club. I think the network's listeners should do more. Liberals are always letting the rest of us know just how much sharper and more compassionate they are than the rest of us. Now it's time to prove it: Air America Needs You. First, its listeners should unleash their "we know better" candlepower and their you-can't-fool-us cynicism to get to the bottom of the Air America's kids-for-kilowatts scandal. And, clearly, a scheme that hurts children and Alzheimer's patients to fund left-wing outreach should appeal to progressives' dark sense of irony. Second, Air America's listeners should go beyond the network owners on the financial front. Simply repaying funds to club isn't enough. Really, how cover-your-assets corporatist is that? Leftist listeners need to really showcase that storied compassion of theirs. Yes, how about a radio-thon to raise funds for kids and Alzheimer's patients across this broad land? Lefty listeners could, well, "Give piece of change." Better yet, progressive forces should do what they do best -- hold a rock concert. Franken probably could put the finger on some major talent. It's hard to imagine that the Dixie Chicks, Madonna, Sheryl Crow, Bruce Springsteen and Barbra Streisand wouldn't want to participate in a Live Air America-Aid concert. The guess here is that even stars who said they would leave the United States if Bush were elected or re-elected would return home to help the victims of this hideous corporate scandal.
Finally, Elliot Spitzer is investigating. Took him long enough...

For more, see Michelle Malkin, Macho Nachos, Captain's Quarters, Stratasphere, Flopping Aces,
Also, here is the NY Sun article with more background on the scandal.
| |

<< Home