Before the

**FEDERAL COMMUNICATIONS COMMISSION**

Washington, D.C. 20554

In re Applications of ) MM Docket No. 93-75

)

TRINITY BROADCASTING OF ) File No. BRACT-911001LY

FLORIDA, INC )

)

For Renewal of License of )

Station WHFT(TV) on Channel 45, )

Miami, Florida )

)

and )

)

GLENDALE BROADCASTING ) File No. BPCT-911227KE

COMPANY )

)

For a Construction Permit for a New )

Commercial TV Station to Operate on )

Channel 45, Miami, Florida )

**APPEARANCES**

[Nathaniel F. Emmons]{.underline}, [Howard A. Topel]{.underline}, and
[Michael E. Lewin]{.underline}, on behalf of Trinity Broadcasting of
Florida, Inc. and Trinity Broadcasting Network; [Kathryn R.
Schmeltzer]{.underline} and [Gregory L. Masters]{.underline}, on behalf
of National Minority TV, Inc.; [Gene A. Bechtel]{.underline} and [John
J. Schauble]{.underline}, on behalf of Glendale Broadcasting Company;
[David Honig]{.underline}, on behalf of The Spanish American League
Against Discrimination; [Norman Goldstein]{.underline}, [Gary P.
Schonman]{.underline}, and [James W. Shook]{.underline}, on behalf of
the Mass Media Bureau Federal Communications Commission; and [Timothy B.
Dyk]{.underline}, [Barbara McDowell]{.underline}, and [Eric
Grant]{.underline} on behalf of Colby May.

**DECISION**

Adopted: November 24, 1998 ; Released: April 15, 1999

By the Commission: Chairman Kennard and Commissioner Tristani issuing a
Joint Statement; Commissioners Furchtgott-Roth and Powell dissenting in
part and issuing a Joint Statement.

**TABLE OF CONTENTS**

**Paragraph**

**I. INTRODUCTION** 1

**II. BACKGROUND** 2

**III. SETTLEMENT AGREEMENT** 10

**IV. ISSUES REGARDING TBF**

A. De Facto Control

Background 14

Initial Decision 25

Exceptions and Discussion 35

B. Abuse of Process

Initial Decision 75

Exceptions and Replies 77

Discussion 82

**V. ISSUES REGARDING GLENDALE**

Misrepresentation and Lack of Candor

Initial Decision 103

Exceptions and Replies 115

Discussion 117

**VI. CONCLUSION** 128

**VII. ORDERING CLAUSES** 129

**I. INTRODUCTION**

1\. In this decision, we affirm the initial decision in this proceeding
in part by denying the renewal application of Trinity Broadcasting of
Florida, Inc. and reverse the initial decision in part by denying the
mutually exclusive application of Glendale Broadcasting Company. We
conclude that the principals of both applicants committed serious
misconduct. We also reject a settlement submitted in this proceeding.

**II. BACKGROUND**

2\. Trinity Broadcasting of Florida, Inc. (TBF) seeks renewal of its
license to operate station WHFT(TV), Channel 45, Miami, Florida, and
Glendale Broadcasting Company (Glendale) has filed a mutually exclusive
construction permit application for this facility. In addition to the
standard comparative issue, the hearing designation order in this
proceeding specified issues concerning TBF\'s basic qualifications.
[Trinity Broadcasting of Florida, Inc.]{.underline}, 8 FCC Rcd 2475
(1993). These issues relate to the activities of TBF\'s \"parent,\"
Trinity Christian Center of Santa Ana, Inc. d/b/a Trinity Broadcasting
Network (TBN). Because TBF and TBN have common officers and directors,
TBN\'s activities bear on TBF\'s qualifications.

3\. The designated issues concern the relationship between TBN and an
entity called National Minority TV, Inc. (NMTV),[^1] a licensee of full
power and low power (LPTV) television facilities and television
translators. In 1991, NMTV filed an application to acquire station
WTGI(TV) in Wilmington, Delaware. A petition to deny filed against the
Wilmington assignment application alleged that NMTV is not, as
represented, a minority-controlled corporation, but is instead
controlled by TBN. The issues designated in this proceeding inquire into
whether TBN has exercised de facto control over NMTV and whether the
principals of TBN and NMTV abused the Commission\'s processes by using
NMTV (1) to evade the Commission\'s limitations on multiple ownership,
and (2) to improperly claim minority lottery preferences with respect to
LPTV applications.

4\. Following designation, the presiding Administrative Law Judge (ALJ)
added an issue concerning Glendale\'s basic qualifications. [Trinity
Broadcasting of Florida, Inc.]{.underline}, FCC 93M-469 (Jul. 15, 1993).
This issue involves the activities of Raystay Company (Raystay), which
is wholly owned by Glendale\'s majority stockholder. The issue inquires
whether Raystay made misrepresentations or lacked candor in seeking the
extension of several LPTV construction permits.

5\. Administrative Law Judge Joseph Chachkin found that TBF was
unqualified to be a Commission licensee and granted Glendale\'s
application for a construction permit. [Trinity Broadcasting of Florida,
Inc.]{.underline}, 10 FCC Rcd 12020 (ALJ 1995). The ALJ found that TBN
exercised de facto control over NMTV and abused the Commission\'s
processes by using NMTV to subvert the Commission\'s minority ownership
policies. 10 FCC Rcd at 12057 ¶ 304, 12060 ¶ 323. According to the ALJ,
TBN did so by using NMTV to circumvent the provisions of 73.3555(e)(1),
which limited to 12 the number of television stations that may be
commonly owned if they are not minority-controlled.[^2] (The rule
permitted the ownership of 14 stations if at least two were
minority-controlled.) [Id]{.underline}. at 12061 ¶ 329. The ALJ found
that between February 1987 and December 1991, TBN\'s president Paul
Crouch, by virtue of his being an officer and director of TBN, held
cognizable interests in 12 commercial television stations. During that
period, none of TBN\'s three directors was a minority. On three
different occasions \-\-- February, 1987 (the Odessa application),
December 1987 (the Portland application), and March 1991 (the Wilmington
application) \-- NMTV, which the ALJ deemed Crouch\'s alter ego, asked
the Commission to allow Crouch to acquire an attributable interest in a
13th or 14th full power commercial television station. The ALJ held that
NMTV justified its requests on behalf of Crouch by falsely claiming it
was minority controlled, and concealing in each of the applications the
nature and extent of its relationship with TBN. [Id]{.underline}. at
12061 ¶ 329. The ALJ also found that TBN used NMTV to claim unwarranted
lottery preferences in connection with LPTV and translator applications.
[Id]{.underline}. at 12060 ¶ 326.

6\. In this regard, the ALJ found that TBN\'s principals were aware that
NMTV was not minority-controlled and that they deliberately concealed
material facts regarding NMTV\'s control from the Commission.
[Id]{.underline}. at 12061-62 ¶¶ 330-32. The ALJ found that it was not
credible that TBN understood the Commission\'s minority ownership rules
to require only de jure control since it was clear that the Commission
never intended to abandon its long-standing practice of considering both
de jure and de facto control in determining compliance with the multiple
ownership rules. [Id]{.underline}. at 12061 ¶ 328. Further, the ALJ
rejected TBN\'s attempt to mitigate its principals\' conduct by arguing
that they relied on communications counsel who advised that NMTV
qualified as a minority controlled entity. He found that the blame for
the creation of the \'sham\' corporation, NMTV, and its subsequent use
as a vehicle to abuse the Commission\'s processes rested squarely with
Crouch. According to the ALJ, NMTV was the brainchild of Crouch to take
advantage of the Commission\'s minority ownership policies and Crouch
admitted that he understood NMTV\'s entitlement to the minority
exception to the 12 station ownership limit was uncertain. In the ALJ\'s
view, instead of putting all of the facts before the Commission and
obtaining a ruling, as he knew he should, Crouch voluntarily chose to
hide behind an opinion of counsel that allowed him to do what he
intended to do. [Id]{.underline}. at 12062 ¶ 332. The ALJ concluded that
\"\[t\]he Commission has held that it is an abuse of process to specify
a surrogate to apply for a station so as to deny the Commission and the
public the opportunity to review and pass on the qualifications of that
party . . . . Crouch\'s invention of . . . NMTV and his use of that
entity to circumvent the Commission\'s rules and improperly claim
minority preferences coupled with its concealment of the nature and
extent of its relationship with TBN manifestly demonstrates abusive
intent.\" [Id]{.underline}. at 12060 ¶ 324.

7\. The ALJ exonerated Glendale of any misconduct. 10 FCC Rcd at
12062-63 ¶ 335, 12065 ¶ 349. He rejected allegations that an exhibit
accompanying Raystay\'s two applications for extensions of time to
construct LPTV facilities falsely represented the progress that had been
made toward construction of the stations. He found that Raystay
forthrightly admitted that actual construction had not commenced and
accurately depicted the preliminary steps that had been taken.
[Id]{.underline}. at 12063-63 ¶¶ 338-48.

8\. Now before the Commission[^3] are exceptions and reply
exceptions.[^4] TBF and TBN, jointly, and NMTV filed exceptions to the
ALJ\'s treatment of both TBF\'s and Glendale\'s qualifications. The Mass
Media Bureau supports the disqualification of TBF but urges that
Glendale should also be disqualified. Glendale supports both aspects of
the Initial Decision. SALAD supports the disqualification of TBF.
Additionally, TBF, TBN, NMTV, and SALAD have submitted a Joint Requests
for Approval of Settlement Agreement. As described more fully below,
under the terms of the proposed settlement TBF\'s application for
license renewal would be granted and Glendale\'s application would be
dismissed, as would SALAD\'s petition to deny.

9\. We will affirm the Initial Decision in part and reverse it in
part.[^5] We agree with the ALJ that TBN does control NMTV and conclude
that there has been deliberate abuse of the Commission\'s processes. We
disagree, however, with the favorable findings made by the ALJ
concerning Raystay\'s extension applications. We conclude that these
documents reflect a lack of candor attributable to Glendale and that
Glendale should be disqualified on this basis. Because we conclude that
TBF\'s application for renewal of license should be denied, we will deny
the Joint Requests for Approval of Settlement Agreement, which are
premised on a grant of TBF\'s application.

**III. SETTLEMENT AGREEMENT**

10\. The settlement agreement submitted in this proceeding contemplates
the resolution not only of this proceeding but of four other comparative
renewal proceedings involving TBN-related stations. In MM Docket No.
93-156, Glendale has challenged the license of a TBN affiliate for
station WHSG(TV), Monroe, Georgia. Additionally, Maravillas Broadcasting
Company (Maravillas), an entity in which Glendale\'s principal George
Gardner is also involved, has challenged TBN-affiliated licenses for
WTBY(TV), Poughkeepsie, New York, and KTBN-TV, Santa Ana, California,
and NMTV station KNMT(TV), Portland, Oregon. The latter three stations
have not yet been designated for hearing. As to the Santa Ana station,
another applicant, Simon T entered into a separate settlement agreement
with TBN. That agreement was referred to the Bureau for consideration,
since the Santa Ana proceeding has not been designated for hearing and
the settlement was not conditioned on the outcome of this proceeding.
[Trinity Broadcasting of Florida, Inc.]{.underline}, FCC 98I-38 (Sept.
9, 1998).

11\. The settlement calls for the renewal of the various licenses and
the dismissal of the Glendale and Maravillas applications. Glendale and
Maravillas would receive a total of \$55 million in return for the
acquisition of their stock by TBN. A related settlement calls for the
dismissal of SALAD\'s petition to deny against TBF. (Settlements
submitted in the other proceedings deal with further petitions to deny.)
In return TBN would provide \$100,000 to establish two need-based
scholarship funds for students of Miami-Dade Community College or
another Florida institution of higher learning. TBN would also pay
\$143,500 in partial reimbursement of SALAD\'s legal expenses.

12\. The parties contend that approval of the settlement would serve the
public interest by resolving protracted and burdensome litigation and
that none of the parties filed their applications for the purpose of
settling. They further contend that good cause exists for waiving the
limits on reimbursement contained in the Commission\'s rules regarding
the settlement of comparative renewal proceedings.

13\. The Mass Media Bureau opposes the settlement, which is effectively
conditioned on the grant of TBF\'s license renewal application for
station WHFT(TV), because the Bureau believes that TBF is not qualified
and that its application should be denied. We agree that the settlement
can be approved only if TBF is found qualified to receive such a grant,
since the Commission\'s policy of encouraging settlements does not
extend so far as to justify the approval of a settlement agreement if
that would result in the grant of a license to an unqualified applicant.
[See]{.underline} [Mobiletel, Inc.]{.underline}, 107 F.3d 888, 896 (D.C.
Cir. 1997), [citing]{.underline} [Kannapolis Television
Co.]{.underline}, 1 FCC Rcd 1037, 1039 ¶ 18 (1986). Accordingly, we now
turn to the issue of TBF\'s qualifications, as well as those of
Glendale.

**IV. ISSUES REGARDING TBF**

**A. De Facto Control**

**Background**

14\. TBN is a nonprofit, non-stock corporation founded in 1973 by Paul
Crouch (Crouch), its president, chief executive officer, and chairman of
the board. Under Crouch\'s leadership, TBN acquired KTBN-TV, Santa Ana,
California, in 1974, and in subsequent years, Crouch formed corporations
to acquire other full power television stations. Crouch typically serves
as the president and a director of each licensee \-- which Crouch
considers as \"owned and operated\" by TBN. TBN\'s corporate counsel,
Norman Juggert (Juggert), also typically serves as an officer and
director of TBN-affiliated entities. TBN was organized to provide
religious programming, and TBN-affiliated stations carry TBN\'s
programming, which TBN offers 24 hours a day, in addition to any local
programming. 10 FCC Rcd at 12021 ¶¶ 8-10.

15\. Pearl Jane Duff (Duff), an African-American woman, began her
association with TBN in 1979 as a volunteer. Crouch, wishing to
integrate minorities into TBN\'s management, swiftly promoted Duff, who
rose quickly through TBN\'s ranks. By the end of 1980, Duff served as
TBN\'s public affairs director, vice president, and one of its three
directors. In 1981, she became \"assistant to the president,\" the
second highest management office in TBN\'s hierarchy. 10 FCC Rcd at
12021-22 ¶¶ 13-14. Duff testified that her responsibilities involved
TBN\'s legal affairs, public affairs, and station acquisitions. She
indicated that she reviewed all FCC applications and was TBN\'s day- to-
day contact with communications counsel. She was responsible for all of
TBN\'s translator applications. As of 1993-1994, TBN had approximately
150 translators and she had prepared and filed 48 applications during
the most recent LPTV window. She had a wide range of additional duties
and was \"the primary TBN representative at various industry
functions.\" [Id]{.underline}. at 12022 ¶ 14. In addition, Duff had been
a salaried employee of TBN since 1979, but never received a salary or
any other form of compensation from NMTV. [Id]{.underline}. at 12022 ¶
15.

16\. NMTV, then called TTI, was formed in 1980, shortly after the
Commission adopted a notice of proposed rulemaking on September 9
concerning the future of LPTV and translators. [Low Power Television
Broadcasting]{.underline}, 82 FCC 2d 47, 75 (1980). The notice proposed
giving preferences to minority-controlled applicants in awarding
licenses for these facilities. On September 11, 1980, two days after the
NPRM was adopted, Crouch conceived the idea of forming a new corporation
to develop a network of translators that would carry TBN programming. He
envisioned TTI as a minority-controlled corporation that would be used
to take advantage of the minority preference, while TBN would acquire
unbuilt and existing stations. He chose Duff to join him on the board of
directors and enlisted her aid in finding another minority to serve as a
third board member. Ultimately Crouch asked Phillip David Espinoza
(Espinoza), a pastor and TBN program host, who is Hispanic, to join him
and Duff on the board. (Espinoza resigned in 1990 and was replaced by
Phillip Russell Aguilar, a pastor with previous connections to TBN, who
is also Hispanic. In 1991, an African-American, Edward Victor Hill,
another pastor with TBN connections, was added as a fourth director.
When Aguilar resigned in 1993, he was replaced by Armando Ramirez, an
Hispanic, TBN-related pastor.) Juggert drafted the necessary
organizational documents and, on September 16, 1980, TTI was
incorporated. Crouch became president of TTI and Duff vice president. 10
FCC Rcd at 12022-23 ¶¶ 17-22, 12036-38 ¶¶ 112-15, 119-20, 124-25.

17\. Between November 6, 1980 and January 6, 1981, TTI filed 17
applications for television translator facilities. Because the
Commission later imposed a freeze on the acceptance and processing of
applications, no action was taken on the applications. In 1983, the
Commission adopted new rules allowing the use of lotteries to select
among certain competing applications ([Random Selection
Lotteries]{.underline}, 93 FCC 2d 952 (1983)), and in February 1984,
TTI, on the advice of TBN\'s communications counsel, Colby May (May),
certified that it was entitled to a full minority preference for its
applications. Of the original applications, only that for Houston, Texas
was granted, and this did not occur until 1988. 10 FCC Rcd at 12024-26
¶¶ 25, 35, 39, 43; MMB Exh. 180. During the pendency of TTI\'s
applications, it did not have its own bank account, and, while TBN
raised considerable sums of money for building translators, little was
credited to TTI. Inexplicably, despite TTI\'s lack of active operations,
TBN\'s accounting department charged TTI with intercompany accounts
payable, leading to a negative fund balance of over \$200,000.
[Id]{.underline}. at 12025 ¶¶ 31-33.

18\. Meanwhile, TBN-related telecommunications interests underwent a
rapid expansion. By 1984, Crouch, Juggert, and Duff were directors of
companies owning seven full power television stations, the maximum
allowed by the Commission\'s rules at that time. TBN also entered into
agreements for the carriage of its programming on cable systems and
other television stations and began loaning money to other religious
broadcasters. Crouch also organized a corporation called Community
Educational Television, Inc. (CET) to acquire educational stations, as
well as companies to acquire foreign stations. At the same time, TBN
(but not TTI) began to purchase the construction permits of unbuilt LPTV
and translator stations. During this period, Duff resigned as an officer
and director of TBN. She continued, however, to serve in those
capacities with TTI, CET, and the foreign companies. She also remained
as assistant to the president of TBN with duties including overseeing
TBN\'s LPTV and translator operations. 10 FCC Rcd at 12021-22 ¶ 14,
12026-28 ¶¶ 44-45, 48, 51-53. When NMTV secured full power TV stations,
she was put in charge of those operations. [Id]{.underline}. at 12057-58
¶ 307.

19\. In 1985, pursuant to the Commission\'s modified multiple ownership
rules, [Amendment of Section 73.35555]{.underline}, 100 FCC 2d 74
(1985),[^6] TBN acquired additional stations, until it reached the
rules\' new numerical limit of 12. The ALJ found that no consideration
was given as to whether TTI should acquire any of these full power
commercial television stations. 10 FCC Rcd at 2028 ¶ 55. Sometime in
1986, Crouch learned that a long-time TBN programmer wished to sell the
construction permit for an unbuilt full power television station in
Odessa, Texas. Communications Counsel Colby May advised Crouch and Duff
that TTI could acquire the station, since the new multiple ownership
rules permitted commonly held attributable interests in up to 14
stations, if at least two were minority-controlled.[^7] TTI applied for
assignment of the Odessa permit and changed its name to NMTV, in
recognition of the fact that it was no longer concerned exclusively with
LPTV and translator stations.[^8] [Id]{.underline}. at 12028-29 ¶¶
54-57, 63.

20\. The ALJ found that although May insisted that he received no
special instructions from Crouch concerning disclosures to be made about
NMTV and TBN\'s relationship, he also claimed that Crouch made it clear
to him that Crouch wanted complete and open disclosure of all factors
which would show that NMTV was a minority controlled company. (10 FCC
Rcd at 12030 ¶ 64. Crouch testified \" . . . I said, put everything on
the record, make it clear to the agency what the relationship between
NMTV and Trinity Broadcasting is, divulge everything, put everything on
the record, file it with the Commission. If they pass on it and approve
it, fine, our goal was to acquire as many stations and network
affiliates as we possibly could.\" [Id]{.underline}. at 12030 ¶ 65. The
ALJ found, however, that notwithstanding Crouch\'s testimony, none of
NMTV\'s applications seeking a minority exemption including the Odessa
assignment application signed by Crouch disclosed to the Commission
information about Duff\'s relationship with TBN or NMTV\'s relationship
with TBN. The ALJ found that Crouch was unable to offer a credible
justification for that omission and that he ultimately sought to retract
his earlier damaging testimony and place the onus on May for any failure
to inform the Commission. In this regard, Crouch stated, \"\...what I
instructed my counsel to do was to file and put on the record
*everything he felt necessary to put on the record.* (Emphasis supplied
by ALJ). The ALJ concluded that \"Crouch\'s belated attempt to place the
onus on his counsel is not credible and is rejected.\" [Id]{.underline}.

21\. The Commission granted the Odessa application on June 9, 1987. The
Odessa station began operation by mid-October 1988, as a TBN affiliate.
It originated no local programming. During the time NMTV held the
license for the Odessa station, Duff and Ben Miller, TBN\'s chief
engineer, supervised the station\'s management. They both performed
their NMTV-related activities during their normal TBN workdays. Despite
the objections initially voiced by Duff and the third NMTV director,
Espinoza, Crouch, within a matter of months, the board authorized Crouch
to look for a buyer for the Odessa station. In 1989, NMTV\'s board
authorized sale of the station to permit NMTV to acquire a station in a
larger market. (NMTV had, by that time, acquired a Portland station as
discussed below, thereby reaching the overall limit of 14 TBN-related
stations.) In 1991, the Odessa station was sold for \$650,000 in
installments to Prime Time Christian Broadcasting, Inc. (Prime Time),
which continued to operate the station as a TBN affiliate. The sale
price was more than \$100,000 below NMTV\'s construction costs. When, in
early 1993, it became apparent that Prime Time could not discharge its
debt to NMTV, NMTV\'s board voted to forgive the debt. The ALJ found
that without the debt to NMTV, Prime Time could expand its operations by
building translators that would extend coverage of its principal station
in Roswell, New Mexico and KMLM(TV) in Odessa. Prime Time\'s Roswell
station was also a TBN affiliate. Crouch understood that, at least
financially, NMTV\'s action benefitted TBN but not NMTV. In this
connection, NMTV made no effort to recover the station\'s physical
assets being held as security by NMTV and to sell them independently.
Such action would have forced the station off the air and deprived TBN
of an outlet for its programming. 10 FCC Rcd at 12030-32 ¶¶ 66, 73-77,
80.

22\. Even before the Odessa assignment had been granted, Crouch and Duff
were exploring the possibilities for acquiring a 14th TBN-related
station. Duff learned in October 1987 of an available unbuilt
construction permit in Portland, Oregon. The ALJ found that NMTV, rather
than TBN sought to acquire the station because TBN had its full
complement of stations. The purchase price was \$520,000, although
TBN\'s financial records showed that NMTV had cash and capital assets of
less than \$290,000, while its liabilities exceeded \$600,000.
Nonetheless, none of the NMTV directors felt any concern about acquiring
the Portland station while the company was in debt because each
understood that TBN would provide whatever funds were necessary to buy
and build the station. The Commission approved the assignment of the
station to NMTV about a year later, and the station began operation in
November 1989 as a TBN affiliate.[^9] The station began broadcasting
three local programs in 1992. With Crouch\'s concurrence, Duff hired Jim
McClellan, a TBN employee, to be the Portland station manager and hired
another TBN employee, Mark Fountain, to be the station\'s chief
engineer. 10 FCC Rcd at 12030-34 ¶¶ 67-68, 81-82, 88-91.

23\. As noted above, Crouch and Duff were also investigating
alternatives to operation in Odessa in order to enter a larger market.
Crouch had also learned in 1987 of the possibility of acquiring a
station in Wilmington, Delaware. The ALJ found that, in 1987, at a time
when NMTV did not even have a bank account, the purchase proposal
reflected that NMTV offered more than \$4 million for the station\'s
equipment plus additional sums for the station\'s land. While Espinoza
claimed that he and Duff discussed in 1987 the possible purchase of a
station in Wilmington, there are no contemporaneous board minutes or
resolutions regarding the Wilmington proposal. Crouch resumed
investigation of the station in late summer or autumn of 1990, and in
March 1991, after discussing the matter at NMTV\'s annual meeting,
submitted the winning bid for the station in a bankruptcy proceeding.
Crouch and Alan Brown, TBN\'s head of finance, signed, on behalf of
NMTV, a check for \$400,000 to cover the deposit for the Wilmington
station. At the time Brown signed the NMTV check, he was not an officer
of NMTV. TBN\'s \'Praise the Lord\' newsletter in May 1991 said, \"we
signed the agreement and deposited the down payment for the FULL POWER
CHANNEL 6 serving the great Wilmington, Delaware - Philadelphia,
Pennsylvania area! Praise the Lord! This will be, God willing, and the
FCC approving, a National Minority TV station (of which I am President)
working in full affiliation with your TBN.\" Crouch also made an appeal
for funds to pay for the station. By September, TBN had received
\$37,000 in contributions for the purchase of the station; NMTV had
received none. A petition to deny filed against NMTV\'s assignment
application for the Wilmington station raised an issue of whether NMTV
was controlled by TBN, and, on September 13, 1991, the Commission
directed a letter of inquiry to NMTV. NMTV thereupon dismissed its
assignment application. 10 FCC Rcd at 12031, 12034-34 ¶¶ 68, 92-95,
97-100.

24\. At the same time that NMTV was involved in the acquisition of full
power television stations, it continued to apply for LPTV and translator
stations. Of four LPTV applications filed in July 1987, the Commission
granted one, in Fresno, California. NMTV also filed applications in June
1988, March 1989, December 1989, May 1991, and April 1993. During this
period, Duff directed TBN\'s LPTV/translator operations. NMTV\'s LPTV
and translator stations broadcast TBN programming. 10 FCC Rcd at
12035-36 ¶¶ 101-106.

**Initial Decision**

25\. The ALJ found that TBN exercised de facto control over NMTV. He
found that NMTV \"at all relevant times has marched in absolute lockstep
with TBN.\" 10 FCC Rcd at 12057 ¶ 304. He based this conclusion on an
analysis of six factors derived from Commission precedent:[^10] (1)
purpose, (2) corporate composition, (3) finances, (4) personnel, (5)
programming, and (6) representations to the public. [Id]{.underline}. at
12057 ¶¶ 303-04. Trinity had argued that the ultimate question in
resolving whether Crouch and/or TBN exercised de facto control over NMTV
is whether Duff acted independently of Crouch or as his agent when she
performed her role as a director of NMTV. The ALJ did not agree with
Trinity\'s proposition that this is the ultimate question. In any event,
he found that Trinity failed to show that Duff was independent. 10 FCC
Rcd at 12059 n. 41.

26\. The ALJ found that NMTV\'s purpose was \"nothing more\" (10 FCC Rcd
at 12057 ¶ 306) than to carry out TBN\'s mission of spreading the gospel
over the airwaves by permitting the acquisition of stations that TBN
would otherwise not be eligible to acquire. He observed that NMTV\'s
articles of incorporation and bylaws make no reference to minority
control and are no different from TBN\'s governing documents and those
of TBN\'s \"owned and operated\" stations. He also found that, despite
claims that NMTV would ultimately \"break away\" from TBN, NMTV remains
totally dependent on TBN for money, supervision, and overall direction,
and that no plan for independence has ever been developed.

27\. The ALJ also found that this purpose was reflected in NMTV\'s
corporate composition as embodied by its board of directors. He found
that Crouch has always served as NMTV\'s president and one of its three
directors. He further found that Crouch installed as NMTV\'s second
director, Duff, who also held TBN\'s second highest management position,
and had prominent and varied responsibilities with TBN in that capacity.
He noted that Duff receives no remuneration from NMTV; her income comes
solely from her services for TBN. According to the ALJ, the criterion
for selecting the third NMTV director, Espinoza and his successors, in
addition to minority status, was past loyalty to TBN. The ALJ found that
these third directors lacked knowledge of and involvement in NMTV\'s
affairs. For example, the ALJ found that \"Espinoza never performed the
duties of chief financial officer. Essentially, what Espinoza understood
was that TTI/NMTV was separate from TBN only in that TTI/NMTV could take
advantage of certain Commission policies pertaining to minority
ownership; otherwise, TTI/NMTV was simply another vehicle for TBN
programming.\" 10 FCC Rcd at 12036 ¶ 111. The ALJ found that Edward
Victor Hill was more active than others, but that \"Hill like his fellow
directors, voted to forgive Prime Time\'s debt to NMTV, \[but\] there is
no indication that he has ever pressed TBN to forgive NMTV\'s debt which
arose from the construction and operation of the Odessa station.\"
[Id]{.underline}.at 12037-38 ¶ 122. Such an action would have been
reasonable for a director acting in a fiduciary capacity for NMTV. The
ALJ concluded that control lay firmly in the hands of TBN\'s Crouch and
Duff. [Id]{.underline}. at 12057-58 ¶¶ 307-08.

28\. The ALJ found that TBN totally dominated NMTV\'s finances. He found
that TBN\'s paid employees, consultants, and attorneys prepared NMTV\'s
applications and did not bill NMTV. From 1980 to 1987, NMTV did not
maintain a separate bank account. Its finances were handled by TBN
personnel and reflected as part of TBN\'s consolidated financial report.
In these reports, TBN\'s revenues and expenses relating to LPTV and
translator matters were allocated to NMTV without regard to NMTV\'s
actual activities. No one questioned why NMTV had a large negative fund
balance during those years, even though it was not actively engaged in
any business activities since its pending applications had not yet been
acted on. 10 FCC Rcd at 12058 ¶¶ 309-11.

29\. Until 1992, TBN advanced money to NMTV to acquire full and low
power facilities without requiring any promissory note, interest,
security, or repayment terms. In this regard, TBN treated NMTV as it did
its \"owned and operated\" stations. By contrast, TBN required formal
notes and terms when it loaned money to autonomous entities. 10 FCC Rcd
at 12058 ¶¶ 312-13.

30\. The ALJ also found significant evidence of TBN\'s financial
domination of NMTV in circumstances involving the Odessa station.
Although NMTV had borrowed over \$750,000 from TBN to construct the
Odessa station, it was willing to sell the station to Prime Time for
\$650,000. Later, when Prime Time expressed concern that it would go
bankrupt, NMTV simply wrote off the debt. To the ALJ, this meant that
NMTV had no real financial stake in this matter, since TBN would simply
fund any activity in its own interest. The ALJ found that, in this case,
the only concern was to preserve Odessa as an outlet for TBN
programming. The ALJ contrasted the situation in Odessa with the
situation in Portland. He found that in Odessa, NMTV did not construct a
studio to originate local programming because TBN did not consider it
worthwhile, whereas a studio was built in Portland because TBN
considered construction in its interest. 10 FCC Rcd at 12058-59 ¶¶
314-16.

31\. The ALJ also examined the overlap between NMTV\'s personnel and
TBN\'s. Of NMTV\'s directors, Crouch has always been an officer and
director of TBN and has received his salary from it. Duff also served as
an officer and director of TBN. Even after she terminated those roles,
she remained a salaried employee of TBN. NMTV has never had its own
headquarters. Also, Duff performed her duties for NMTV out of TBN\'s
offices during her TBN workday. She sometimes sent correspondence
relating to NMTV on TBN stationery and used the same TBN interoffice
memoranda for NMTV employees that she directed to TBN employees. 10 FCC
Rcd at 12059 ¶317.

32\. TBN employees, consultants, and lawyers were routinely used, often
without any charge to NMTV, to perform services for NMTV. They
participated in the preparation and prosecution of TBN\'s applications.
TBN personnel performed all accounting activities for NMTV. TBN\'s chief
engineer, Ben Miller supervised construction of the Odessa and Portland
stations, authorized purchase orders for equipment and supplies, and
oversaw operations without charge. TBN\'s communications counsel
frequently performed work on behalf of NMTV. Originally they did not
bill NMTV at all. Later, charges for NMTV work appeared as a line item
in counsels\' bills to TBN. 10 FCC Rcd at 12059-60 ¶¶ 318-19, 322.

33\. Additionally, the ALJ reviewed the programming on NMTV\'s
facilities. All of NMTV\'s LPTV and translators stations carry only TBN
programming. The Odessa station also carried nothing but TBN
programming. With the exception of its locally produced programming, the
Portland station also carries nothing but TBN programming. 10 FCC Rcd at
12059 ¶¶ 320.

34\. As a final matter, the ALJ pointed out that on numerous occasions,
TBN represented to the public in its newsletter, \"Praise the Lord,\"
that NMTV was the \"Satellite Division\" of TBN. 10 FCC Rcd at 12059-60
¶ 321. The ALJ concluded \"Crouch plainly regarded TTI/NMTV as an
operating branch of TBN. That was Crouch\'s frame of mind; that is how
TBN characterized TTI/NMTV to the public in its newsletters; and that is
how, in practice Crouch and others at TBN treated TTI/NMTV.\"
[Id]{.underline}. at 12060 ¶ 321.

**Exceptions and Discussion**

35\. TBF[^11] and NMTV argue that the initial decision does not
accurately depict the record in this case and that the record properly
considered does not support a finding that TBN has exercised de facto
control over NMTV. Because of the complexity of the record, we will
review separately the exceptions and record concerning each of the six
factors relied upon by the ALJ and then discuss our overall conclusion
as to whether the record indicates de facto control.

36\. [Purpose]{.underline}. NMTV complains that, in finding that its
sole purpose was to disseminate TBN programming, the ALJ ignored
evidence that NMTV\'s establishment was intended to assist minorities,
in conformance with Commission policy. NMTV asserts that Crouch, Duff,
and the other directors all testified as to the intention of assisting
minorities and that NMTV carried programming responsive to minority
concerns and hired minorities. NMTV emphasizes that NMTV\'s \"outside\"
minority directors, such as Espinoza, were community leaders, with
substantial experience and a sincere desire to assist minorities. NMTV
also contends that the absence of language in its governing documents
regarding minority control has no significance, because such language
was omitted for valid legal reasons and is unnecessary.

37\. Without questioning NMTV\'s assertion that the corporation\'s
creation was intended to assist minorities, we nevertheless find that
many aspects of the record indicate that NMTV was viewed by its
principals primarily as an instrumentality of TBN. For example, in
applying for facilities, NMTV selected only communities that did not
currently receive TBN programming over-the-air. Tr. 1744-46. As
discussed below (paragraph 68, [infra]{.underline}), NMTV stations were
devoted almost exclusively to providing over-the-air TBN programming to
these communities. This is not to say that every means that TBN used to
extend the reach of its programming involved the exercise of control.
For example, TBN had affiliation agreements with many stations it
clearly did not control. NMTV, unlike other affiliated stations,
however, was [created]{.underline} by TBN for the purpose of carrying
TBN programming. Hence, in this regard, NMTV was intended to serve as an
instrumentality of TBN.

38\. We do not, however, draw adverse inferences from the failure of
NMTV\'s governing documents to mention minority purposes or control.
Although it would be logical to include such provisions, the record
contains no evidence as to whether bona fide minority-controlled
entities coming before the Commission typically do. The testimony of
Juggert, who drafted NMTV\'s articles of incorporation, gives a credible
reason why minority purpose was not mentioned in this document. He
stated that, at the time, the California Attorney General\'s office was
actively prosecuting nonprofit corporations that exceeded the purposes
stated in their articles and that the risk of prosecution was reduced by
avoiding specificity. Tr. 3760-63. Juggert did not explain why other
documents did not mention minorities (Tr. 3763), but the record does not
support the conclusion that these were significant omissions.

39\. [Corporate composition]{.underline}. TBF and NMTV object to the
ALJ\'s inference that Duff and the various \"outside\" directors are
merely tools of Crouch and TBN. They contend that Duff\'s
responsibilities as a director of NMTV do not simply represent an
extension of her duties with TBN, but are distinct and more substantial.
Indeed, they assert that Duff independently negotiated with TBN as to
certain matters. They also take issue with the ALJ\'s finding that
Espinoza and his successors were ignorant of and uninvolved in NMTV\'s
affairs. They assert that the minority directors could remove Crouch
without cause, whereas the bylaws of TBN and the \"owned and operated\"
stations protected Crouch from removal. They place particular stress on
claims that the minority directors overruled Crouch as to two matters.
First, they maintain that in 1987, Duff and Espinoza rejected a proposal
by Crouch to sell the Odessa station. Second, they maintain that in
early 1979 Duff and Espinoza, over Crouch\'s objection, sold the
construction permit for the translator in Houston, Texas.

40\. We find, as TBF and NMTV acknowledge, that this factor really boils
down to whether Duff should be regarded as independent of or an agent of
TBN, since she has been most responsible for supervising NMTV\'s
activities. NMTV Exceptions at 9 ¶ 12. As the ALJ found, the
participation of NMTV\'s other minority directors has been far less
substantial.[^12] [See]{.underline} 10 FCC Rcd at 12036-39 ¶¶ 108-30.

41\. We find that Duff should indeed be regarded as TBN\'s agent. Her
duties at NMTV appear to be merely a part of her employment at TBN. Duff
is a salaried employee of TBN but receives no salary from NMTV. Tr.
1335. Although she \"squeezes in\" her duties for NMTV while working at
her TBN office, her salary is not diminished by the time she spends on
NMTV\'s affairs. Tr. 1786-87. Moreover, Duff\'s functions with respect
to the acquisition of NMTV\'s stations were virtually identical to the
sorts of duties she performed at TBN. Thus, while Duff was involved in
handling LPTV and translator affairs for NMTV, she was also head of
TBN\'s low power department. MMB Exh. 107 at 2; tr. 1774. Her duties at
TBN have included both low power and full power station acquisitions.
MMB Exh. 309; TBF Exh. 121 at 18.

42\. Although Duff exercised additional management functions with
respect to NMTV\'s stations that she did not have with respect to TBN\'s
(TBF Exh. 101 at 36-37), the record underscores that no real
distinctions were made between the interests of TBN and NMTV in Duff\'s
performance of her duties. This is illustrated by her role in the
preparation of the December 4, 1989 program affiliation agreement for
the Portland station (MMB Exh. 283), which Duff executed on behalf of
NMTV and which Crouch (who was also president of NMTV) executed on
behalf of TBN. Duff testified that she did not discuss the agreement
with Crouch in detail and did not negotiate the amount of TBN
programming that the station would carry. Tr. 1434. She further
testified that she did not know whether Crouch reviewed the agreement
and that he relied on [her]{.underline} (since she was responsible for
other TBN affiliation agreements) to protect TBN\'s interests. Tr.
1435-36. Similarly, Duff executed the January 2, 1992 production
agreement under which the TBN program \"Joy in the Morning\" was
produced at the Portland station (MMB Exh. 383). Duff, who executed the
agreement for NMTV (Terrence Hickey, another NMTV/TBN official, signed
for TBN), testified that she asked Juggert to prepare the agreement. She
testified that Juggert prepared the agreement on behalf of TBN
[and]{.underline} NMTV (Tr. 1438), for NMTV (Tr. 1439-40), and (in a
deposition) for TBN (Tr. 1440).

43\. In the same vein, the distinction between Duff\'s positions with
TBN and NMTV were sometimes confused in correspondence. For example,
Duff\'s January 30, 1987 letter transmitting the Odessa assignment
application to counsel (MMB Exh. 126) is signed \"Jane Duff, Assistant
to the President\" and written on TBN letterhead. Duff\'s January 18,
1988 response to a request concerning employment at the Portland station
(MMB Exh. 177) was drafted in the same manner. Similarly, when TTI\'s
name was amended to NMTV, Juggert sent the pertinent documents to TBN
\"Attn: Jane Duff.\" MMB Exh. 136.

44\. We have also carefully examined another instance where Duff
assertedly engaged in independent negotiations with TBN \-- regarding
TBN\'s provision of business services for NMTV. We find that this
episode does not provide firm support for Duff\'s independence. TBN
originally provided accounting, payroll, and other services to NMTV
without charge and without any formal agreement. In 1991, TBN\'s
accounting department complained to Duff that it wanted money, beyond
that received under the affiliation agreement, to cover the cost of
these services. Tr. 1424-25. TBN and NMTV thereupon entered into an
agreement, executed by Duff on behalf of NMTV, under which NMTV paid TBN
\$422.50 a month for these services. TBF 101, Tab W. Duff claims that
this amount was arrived at through negotiations between her and TBN\'s
accountant. TBF Exh. 101 at 40; Tr. 1426-28. Yet she testified that the
accountant told her that TBN\'s cost for providing these services was
twice that paid by NMTV or \$845. Duff further testified that an
independent firm\'s charge for the these services would have been
higher. According to Duff, she persuaded TBN to accept a fee of
\$422.50, one-half of TBN\'s costs. The difficulty with treating this as
an arm\'s length negotiations in which Duff protected NMTV\'s interests
against those of TBN is that the result is not consistent with an arm\'s
length transaction. NMTV did not even pay TBN\'s costs, let alone the
market value of the services provided.

45\. We have also carefully examined the two situations in which Duff
and Espinoza purportedly overruled Crouch. Here again, however, we find
that these episodes do not provide persuasive evidence of NMTV\'s
independence. As previously mentioned, the first of these matters
involves the Odessa station. Almost immediately after NMTV acquired the
Odessa permit, on June 9, 1987, Crouch expressed dissatisfaction with
the Odessa market, apparently because it was smaller than he realized
and because he doubted that NMTV\'s station would be carried on local
cable systems. Tr. 2723. The minutes of a special meeting of NMTV\'s
board, on June 27, 1987, reflect that Crouch proposed to explore the
feasibility of transferring the Odessa construction permit and acquiring
a facility in another area. TBF Exh. 101, Tab B. The minutes further
reflect that Duff and Espinoza opposed Crouch and that his motion failed
for lack of a second. According to the minutes, Espinoza then
recommended planning immediately to begin the development of local
programming in Odessa, but that Crouch felt that the station should rely
on TBN programming until it was financially sound. The minutes state
that Duff concurred with Espinoza and agreed to direct the development
of the programming.

46\. Although, on its face, this episode appears to support the view
that, at least on some occasions, NMTV\'s board and its minority members
prevailed in their position over the objections of Crouch, subsequent
events do not bear out the decisions apparently made at the meeting.
Despite the ostensible decision to develop local programming in Odessa,
none was ever prepared. Duff\'s own testimony indicates that, contrary
to the impression left by the minutes, her view coincided with Crouch\'s
\-- namely, that local programming was not financially justified. Tr.
1481-83. Espinoza testified that, although he felt that local
programming was important, he had no alternative but to accept Duff\'s
explanation that none would be developed. Tr. 4232-37.

47\. Moreover, the station was ultimately sold, as Crouch wished.
Approximately two months after the Odessa station began operation, at a
special meeting on December 12, 1988, Crouch again raised the
possibility of selling the Odessa station. TBF Exh. 101, Tab EE at 13.
This time the matter was tabled. Five months later, in May 1989, the
NMTV board unanimously authorized negotiations for the sale of the
station. MMB Exh. 256. Duff explained that she had opposed the sale in
June 1987 because she did not want to leave the impression that a
minority enterprise had failed. Tr. 1733. By May 1989, she testified,
she was satisfied that the station would not fail and that a proposed
purchaser would provide local programming, and therefore had no
objection to sale. Tr. 1881-83. Espinoza attributed the decision, made
only seven months after the station commenced operation, to leave
Odessa, to the desire of Crouch and TBN to reach larger markets. Tr.
4245-49. He testified: \". . . as a Hispanic, I of course would like to
reach Hispanics, but the bottom line is the main goal is the preaching
of the gospel to whomever.\" Tr. 4249. In sum, although these events
demonstrate that Duff and Espinoza at times had influence on NMTV\'s
decisions, the ultimate direction of policy appears to have stemmed from
Crouch and TBN. It is also significant, as discussed in greater detail
in paragraph 61, below, that the Odessa stations was sold for some
\$100,000 less than NMTV\'s construction costs and that the board
subsequently forgave Prime Time\'s \$650,000 debt. The fiduciary
obligations of the board members toward NMTV are not evident in these
actions.

48\. The second matter concerned the Houston, Texas translator station.
The Commission granted NMTV a construction permit for this station on
January 29, 1988. MMB Exh. 180. NMTV made no effort to construct the
station prior to expiration of the construction permit on July 29, 1989.
Three months before expiration of the permit, on April 26, 1989, Duff
wrote to May (TBF Exh. 101, Tab A), forwarding a sales agreement for the
Houston permit and stating:

Paul \[Crouch\] and I did not agree on the selling of the permit, he
would like to have built the station, selling it later but we have too
much going on.

49\. Duff explained in her testimony that, although TBN-affiliate CET
already had a full power educational station in Houston, Crouch
nevertheless wanted to build and operate the Houston translator to carry
TBN programming. She attributed this to the fact that educational
stations are permitted to engage in fundraising only for station
purposes and could not carry TBN\'s fundraising telethon. Tr. 1819,
1821-22. Crouch also testified that he opposed selling the Houston
translator for that reason. Tr. 2388-89, 2813. According to Duff, she
had no time to devote to the construction of the Houston station because
she was heavily involved in the construction of the full power station
in Portland. Tr. 1818-21. She stated that because she disagreed with
Crouch, she discussed the matter with Espinoza, who supported her. Tr.
1500-02. She further stated that Crouch was probably upset with her for
her decision because \"TBN really did suffer a loss of dollars.\" Tr.
1822.

50\. The record suggests, however, that Crouch had little real interest
in operating a low power station in a market which already had a full
power TBN affiliate and that the final decision not to build had little
significance to him. Crouch himself testified: \" . . . the best I can
recall is that there seemed to be a little inter-staff discussion and
debate on whether or not that station really should be built or should
not be built because of the duplication in coverage.\" Tr. 2813. (The
matter does not appear to have been formally considered by NMTV\'s
board.) Crouch\'s supposed interest in constructing and operating the
station also seems at odds with the language of Duff\'s contemporaneous
letter to May (above), which states that Crouch wanted to build the
station and sell it, not to build it and operate it. [See
also]{.underline} Tr. 2815 (Crouch\'s testimony that sale of the station
after construction was considered). The claim that Duff did not want to
construct the Houston station because doing so would be too burdensome
is belied by the fact that during the pendency of the Houston
construction permit, NMTV\'s low power facility in Fresno, California
was granted, constructed, and put into operation, apparently without
undue burden. [See]{.underline} MMB Exhs. 200, 230.

51\. In any event, the record does not justify interpreting the decision
not to build the Houston translator as an example of Duff acting
independently of TBN by putting NMTV\'s interests above TBN\'s.
Examining the likely impact of the decision on TBN and NMTV does not
support such an interpretation. If, as Duff testified, the decision not
to build cost TBN \"hundreds of thousands of dollars\" (Tr. 1822), it
would also have been a significant loss to NMTV. According to Crouch,
NMTV would have received \"its fair share\" of revenues from the market.
Tr. 2389. NMTV, like the licensees of other non-owned and operated
stations, typically received 80 percent of fundraising revenues derived
from the zip code in which its stations were located. [See]{.underline}
TBF Exh. 101 at 41.

52\. As a final matter relating to NMTV\'s board, we give little weight
to the fact that NMTV\'s bylaws lack a provision contained in TBN\'s
bylaws that would protect Crouch from removal by the other directors.
TBN\'s bylaws were amended in 1979 to provide that, whereas other
directors could be removed by majority vote of the directors without
cause, directors holding the office of president ([i.e.]{.underline},
Crouch) could only be removed for cause after a hearing.[^13] TBF Exh.
104 at 11-12, Tab. C at 8-9. The bylaws of most, but not all, of TBN\'s
\"owned and operated\" stations have the provision treating Crouch
differently from other directors. MMB/TBF Exh. 1. NMTV\'s bylaws do not.
TBF Exh. 104, Tab. D. By itself, however, the omission of the provision
does not outweigh the substantial evidence, discussed above, that Crouch
and TBN controlled NMTV.

53\. [Finances]{.underline}. TBF and NMTV argue that the financial
arrangements between TBN and NMTV simply indicate that TBN is providing
legitimate financial assistance to a minority company, as contemplated
by Commission policy. TBF contends that the ALJ mischaracterized several
aspects of the financial arrangements. It asserts that the financial
services provided by TBN were negotiated by Duff, that NMTV could
terminate these services at will, and that NMTV was intended ultimately
to perform these services itself. TBF asks the Commission not to
attribute any significance to TBN\'s early practice of including NMTV in
consolidated financial reports. TBF emphasizes that, for purposes of
allocating revenue, NMTV\'s stations are treated like stations that are
[not]{.underline} owned and operated by TBN. While acknowledging that
TBN has made interest-free loans to NMTV on an informal basis, Trinity
urges that these loans are strictly accounted for and will be repaid.
Trinity and NMTV fault the ALJ for drawing an unwarranted inference
because NMTV\'s forgiveness of Prime Time\'s indebtedness with respect
to the Odessa station was not a business decision. They argue that the
ALJ did not take into account that NMTV is a charitable not a business
organization.

54\. Although the record on this issue is mixed, on balance it provides
additional evidence of TBN\'s control of NMTV. We agree with TBF and
NMTV that NMTV\'s financial dependence on TBN does not per se imply that
TBN controls NMTV. We have noted that nonprofit entities are frequently
dependent in this way. [See]{.underline} [La Star Cellular Telephone
Company]{.underline}, 7 FCC Rcd 3762, 3767 n.14 (1992), [vacated on
other grounds]{.underline} [sub nom.]{.underline} [Telephone and Data
Systems, Inc. v. FCC]{.underline}, 19 F.3d 655 (D.C. Cir. 1994).
However, the record also indicates that NMTV\'s finances were not
treated as being independent of TBN\'s from 1980 to 1987. While there
have been significant corrective measures in this regard, we find that
these have not been complete and the most significant measure was not
taken until after a petition to deny was filed questioning NMTV\'s
control.

55\. During NMTV\'s early years, from 1980 to 1987, before it acquired
the Odessa station, there was an egregious failure to segregate NMTV\'s
finances. As noted in paragraph 28, [supra]{.underline}, during those
years NMTV did not have its own bank account; its payroll and other
financial operations were handled by TBN personnel and reflected as part
of consolidated financial reports; and expenses and revenues were
allocated to NMTV without regard to NMTV\'s actual operations.

56\. In 1987, when NMTV acquired the Odessa station, corrective measures
were undertaken on the advice of counsel (Tr. 3401-02). That year, NMTV
opened its own bank account. TBF Exh. 101, Tab B. Also beginning in
1987, NMTV no longer appeared in TBN\'s consolidated financial reports
and, even more significantly, the financial reports no longer attributed
non-NMTV low power revenues and expenditures to NMTV. TBF/Glendale Jt.
Exh. 1 at 6, 12, 18-19. Additionally, in 1987, NMTV took the first step
to formalize its arrangements with TBN under which TBN provided
accounting, payroll, and other business services, by formally
authorizing TBN to provide these services. TBF Exh. 101, Tab EE at 1.
Moreover, the program affiliation agreements for the Odessa and Portland
stations do not treat these NMTV stations as owned-and-operated. The
agreements use a formula in which 80 percent of the donations derived
from the zip code in which the station is located is allocated to NMTV
and 20 percent to TBN. TBF Exh. 101 at 41, Tab X at 5, 16. This is the
formula used for non-owned affiliates. By contrast TBN receives 100
percent of the zip code revenue for owned-and-operated stations.
[Id]{.underline}.

57\. These measures, while significant, have been incomplete. While NMTV
has its own bank accounts, a variety of TBN officials have been
signatories on these accounts. [See]{.underline} MMB Exh. 396; paragraph
63, [infra]{.underline}. Espinoza, NMTV\'s chief financial officer,
moreover, did not sign any checks. Tr. 4177-78. Similarly, although NMTV
moved to formalize TBN\'s provision of business services to NMTV
(including entering into the previously discussed accounting and payroll
contract in 1991), this arrangement has not been an arm\'s length
transaction, since TBN provides services at below cost. Although the
contract provides that NMTV can terminate these services and Crouch
testified that NMTV will ultimately perform these services itself (Tr.
2999-3000), the record contains no indication of how or when this will
be done.

58\. We find that the most significant factor, however, is the manner in
which TBN has provided capital and credit to NMTV. During the years
1987-92, TBN advanced some \$9.8 million to NMTV for the acquisition and
construction of stations and the payment of various expenses.
TBF/Glendale Jt. Exh. 1 at 15-27. For most of this time, as was the case
with respect to TBN\'s owned-and-operated stations, TBN\'s practice was
to make these advances without any formal note, interest, security, or
repayment schedule. TBF Exh. 104 at 16; Tr. 1701, 2150-51, 2546-47,
2874-76, 3809-10, 3951-53. Not until August 1991, after a petition to
deny had been filed against the Wilmington application, did NMTV execute
a formal note to cover funds loaned by TBN, in this case for the
purchase of the Wilmington station. MMB Exh. 368. Not until 1992-93, did
NMTV take formal measures to repay other indebtedness to TBN, although
without the payment of interest. MMB Exhs. 386, 399; Trinity Exh. 101,
Tab. II.

59\. These financial arrangements and practices indicate clearly that
NMTV was not viewed as an independent entity. In their testimony, Crouch
and Juggert acknowledged that in making informal, interest-free loans,
TBN treated NMTV like an owned-and-operated company and that the
practice was based on TBN\'s inside knowledge and involvement in NMTV\'s
operations. Tr. 2997-98, 3819-21, 3956. Moreover, the informal advance
of substantial sums of money can easily translate into determination of
policy and did so here. A number of situations illustrate this. For
example, no funds were forthcoming to construct a studio in Odessa in
the face of Crouch\'s and TBN\'s misgivings about the Odessa market.

60\. In addition, some actions taken by NMTV, while consistent with
NMTV\'s charitable and religious purposes, would be difficult to justify
or explain, in view of NMTV\'s limited resources, except as
manifestations of TBN\'s interest in supporting certain activities. For
example, in October 1992, NMTV proposed to loan \$1.5 million to assist
in the formation of Community Brace, Inc. (Community Brace), a Minority
Enterprise Small Business Investment Corporation (MESBIC). TBF Exh. 10
at 21-24; TBF Exh. 101, Tab EE at 37-39. Community Brace was affiliated
with NMTV\'s director, Hill, whose activities TBN also supported apart
from his involvement with NMTV. TBF Exh. 102 at 10-12. TBN was to
provide \$1 million to underwrite NMTV\'s \$1.5 million loan. The
transaction, which was later abandoned for various legal reasons, was
handled principally by TBN\'s counsel, Juggert. [See]{.underline}
Glendale Exh. 218. NMTV\'s lack of capital suggests that it would have
been more logical for TBN to have supported Community Brace directly and
only Hill\'s status as a director of NMTV made it expedient to use NMTV
for that purpose. Consistent with this interpretation, director Aguilar,
who was an outsider to the TBN-Hill relationship, relied totally on
Crouch in approving the Community Brace transaction and was completely
ignorant of the project\'s ultimate fate. TBF Exh. 107 at 177-79.
Moreover, May suggested the utility of the Community Brace project in
this regard when he said in a letter to Juggert that approval of the
project by the Small Business Administration could be used to \"estop\"
the FCC from finding that NMTV was not minority-controlled. Glendale
Exh. 218 at 35.

61\. Similar considerations underlie NMTV\'s March 1993 decision to
forgive Prime Time\'s \$650,000 debt incurred in the purchase of the
Odessa station. TBF Exh. 101, Tab EE at 40-41. Given the fact that NMTV
borrowed over \$750,000 from TBN in connection with the Odessa station
(paragraph 47, [supra]{.underline}) and was more than \$5 million in
debt to TBN overall (TBF/Glendale Jt. Exh. 1 at 26), it is difficult to
conceive of this action as financially sound without being underwritten
by TBN, which would benefit by the continuation of its programming on
the station. We reject the idea that charitable organizations are
somehow immune to financial concerns simply because they are not
profit-making businesses. Ramirez\' testimony is consistent with the
conclusion that NMTV did not exercise independent financial judgment in
this matter. He stated that when he voted to forgive the Prime Time debt
(he had just been appointed as a director) he heard no discussion of the
pros and cons of forgiving the debt, whether NMTV could afford to
forgive the debt, or whether there were any alternatives. Tr. 4066,
4071-72, 4120-21. (The record is unclear whether TBN forgave NMTV\'s
indebtedness for the Odessa station. Testimony by NMTV\'s accounting
firm indicates that no indebtedness was ever forgiven. TBF/Glendale Jt.
Exh. 1 at 27. NMTV\'s 1992 tax return, however, shows entries for
NMTV\'s forgiveness of Prime Time and TBN\'s forgiveness of NMTV. MMB
Exh. 413 at 11, 13.) This episode provides further evidence of NMTV\'s
lack of financial independence.

62\. [Personnel]{.underline}. As they did with respect to finances, TBF
and NMTV argue that the participation of TBN personnel in NMTV\'s
affairs represents TBN\'s legitimate assistance to a minority company,
as contemplated by Commission policy. TBF stresses that Duff and the
NMTV board, not TBN, had the authority to hire and fire NMTV personnel.
TBF also asserts that the functions performed by TBN personnel for NMTV
were not the same as their jobs for TBN.

63\. We find that the high degree of involvement of TBN personnel in
NMTV\'s affairs further supports a finding that the two entities did not
operate independently. We have already discussed the difficulty in
separating Duff\'s responsibilities towards TBN and NMTV. This factor
also undercuts the argument that Duff\'s authority to hire and fire
demonstrates NMTV\'s independence. Other key officials also \"wore two
hats\" in that same way. Crouch himself was the president of both TBN
and NMTV. [See]{.underline}, [e.g.]{.underline}, TBF Exh. 101, Tab R at
63, 72. The testimony of Hill and Espinoza indicates that Juggert was
regarded as NMTV\'s legal counsel as well as TBN\'s and participated at
NMTV board meetings. Tr. 1926, 1932-33, 4319-20. Juggert acknowledged,
for example, that in preparing the program affiliation agreement for the
Portland station, he represented the interests of both NMTV and TBN
without discussing any conflict of interest with Duff. Tr. 3664-66.
TBN\'s FCC counsel was also regarded as NMTV\'s. Tr. 1933. Additionally,
several TBN officials have served as officers of NMTV, including: Philip
Crouch (Paul\'s brother; chief of staff, TBN; assistant secretary,
NMTV), Matthew Crouch (Paul\'s son; administrative assistant, TBN;
assistant secretary, NMTV), Allan Brown (chief of staff and director of
finance, TBN; assistant secretary, NMTV), Terrence Hickey (vice
president, TBN; assistant secretary NMTV), and Charlene Williams
(director of finance TBN; assistant secretary NMTV). MMB Exhs. 107, 309,
396; TBF Exh. 101, Tabs Q at 38, R at 138, EE at 11, 16, 34. Philip
Crouch, Matthew Crouch, Brown, Hickey, and Williams have also been
signatories on NMTV\'s bank account. MMB Exh. 396.

64\. Further overlap in duties occurred because TBN made its engineering
and administrative resources available to NMTV without charge.
[See]{.underline} TBF Exh. 104 at 16. In this regard, Ben Miller, TBN\'s
vice president and director of engineering, also served as a \"technical
consultant\" for NMTV. MMB Exh. 378. Although, as TBF and NMTV claim, he
had comparatively few and limited routine duties concerning NMTV
([see]{.underline} Glendale Exh. 210 at 96-97, 138-39), the record
indicates that he sometimes exercised his authority in a manner that
blurred the distinction between his dual roles. On at least one
occasion, Miller signed correspondence to counsel as director of
engineering [of NMTV]{.underline}. MMB Exh. 249. Miller sent
correspondence, memos, and purchase orders concerning NMTV\'s stations
over his signature as a TBN official. MMB Exh. 228, 242, 361, 362.
Outside parties have also addressed correspondence concerning the Odessa
station to Miller in his capacity as a TBN official. MMB Exh. 198. In
one instance, Miller sent a memo to the staff of the Odessa station on
NMTV engineering department stationery, in which he said \"We have two
surplus \[pieces of equipment\] here at TBN\'s facility in California
which I will have sent to you . . . .\" MMB Exh. 328. Similarly, several
individuals, who worked on TBN\'s low power applications, did similar
work for NMTV in most cases without charge. Tr. 1412-16, 2142-43,
2170-71. When Crouch was interested in investigating the Wilmington
station for NMTV\'s purchase, he sent a TBN station manager, Dale
Osborn, who prepared a report (which Miller reviewed) without charge to
NMTV. MMB Exhs. 331, 333, 334; Tr. 2921.

65\. Additional overlap occurred with respect to administration. TBN
provided bookkeeping and accounting services including payrolls,
financial statements, income tax returns, purchasing requirements, and
accounts payable. [See]{.underline} TBF Exh. 101, Tab W. NMTV and TBN
used the same accounting firm. TBF/ Glendale Jt. Exh. 1 at 1, 5-6. NMTV
also used technical manuals developed for TBN stations. Tr. 2128.
NMTV\'s employee policies and insurance plans were modelled after
TBN\'s. [See]{.underline} TBF Exh. 101, Tab CC (NMTV and TBN health
insurance records); MMB Exh. 182 (NMTV use of TBN employment form; MMB
Exh. 245 (Duff memo regarding rules and regulations).

66\. Additionally, past association with TBN was a factor in several key
hiring decisions. All of NMTV\'s \"outside\" minority directors had
previously been involved in TBN programs. TBF Exh. 102 at 9 (Hill); TBF
Exhibit 103 at 5 (Ramirez); TBF Exh. 106 at 2-3 (Espinoza); TBF Exh.
107, Tab A at 4 (Aguilar). Jim McClellan was working on the TBN program
\"Joy in the Morning\" when he was hired to be the station manager in
Portland. McClellan heard about the opening from TBN\'s Miller and
Hickey. TBF Exh. 109 at 6. He then approached Duff, who hired him.
[Id]{.underline}. at 8; TBF Exh. 101 at 47-48. The production of \"Joy
in the Morning\" followed McClellan to Portland. Trinity Exh. 109 at
14-15. Similarly, Duff hired TBN employee Mark Fountain as chief
engineer at Portland based on Miller\'s recommendation. Tr. 1908-10,
2260.

67\. [Programming]{.underline}. TBF and NMTV argue that the fact that
NMTV stations are TBN programming affiliates does not establish that TBN
controls NMTV. They insist that NMTV\'s directors elected to carry TBN
programming because they independently believe that it serves the needs
of minorities. TBF contends that it would violate the First Amendment
for the Commission to draw adverse conclusions from NMTV\'s choice of
programming.

68\. The record in this proceeding provides no support for a finding
that NMTV exercises programming discretion independent of TBN. NMTV\'s
stations have always functioned as TBN outlets. Both the Portland and
Odessa stations carried the entire TBN schedule. Tr. 1433, 4424. It was
understood that NMTV\'s low power stations would carry TBN programming.
Tr. 2970, 4327. All NMTV stations are listed as TBN affiliates. MMB Exh.
341 at 6. As noted above (paragraph 37), NMTV typically applies for
facilities in communities that do not already receive over-the-air TBN
service. Even to the extent that NMTV has provided local programming (in
Portland) this programming is strongly connected with TBN. \"Joy in the
Morning,\" produced in Portland, is carried as a TBN network show and
was originally produced in TBN\'s California studios. TBF Exh. 101,Tab
EE at 36; TBF Exh. 109 at 14-15. The local program \"Northwest Praise
the Lord\" is produced in accordance with TBN guidelines and, unlike
non-owned stations, NMTV is not required to get TBN clearance for its
content. Tr. 4423-24. The nonbroadcast charitable project, \"His Hand
Extended,\" is modelled after TBN\'s version. Tr. 4419-20. The Portland
station sends monthly reports concerning its local [Prayer Partners
Line]{.underline} to the director of TBN\'s prayer ministry. Tr. 4417,
4419. At times of the day when Portland\'s Prayer Partners telephone
line is not active, the station gives out TBN\'s number. Tr. 4418,
4464-65.

69\. We recognize that the fact of program affiliation is not in itself
indicative of control. [See]{.underline} [Fox Television Stations,
Inc.]{.underline}, 10 FCC Rcd 8452, 8519 ¶ 165 (1995) (subsequent
history omitted). Nor do we question the sincerity of the testimony by
NMTV\'s principals as to the merit of TBN\'s programming.
[See]{.underline} TBF Exh. 101 at 44-45 (Duff); TBF Exh. 102 at 11
(Hill); TBF Exh. 103 at 11 (Ramirez); TBF Exh. 106 at 16-17 (Espinoza).
However, given the relationship between these witnesses and TBN, this
view seems a foregone conclusion and provides no evidence of independent
programming discretion. We do not believe that our conclusions in this
regard in any way infringe freedom of speech or religion. We draw no
adverse conclusions from the fact that NMTV stations carry any specific
programming. We draw our conclusions only from the apparent absence of
independent programming discretion.

70\. [Representations to the Public]{.underline}. TBF maintains that no
adverse conclusion should be drawn from representations that NMTV was
TBN\'s \"satellite division.\" According to TBF, the term \"division\"
was not being used in any legal or technical sense, and it claims that
the term was not applicable despite the evidence that the finances of
NMTV were not being handled separately, NMTV and TBN had consolidated
annual meetings, and Duff and others intermingled their duties with TBN
and NMTV.

71\. We find that such circumstances provide further evidence of TBN\'s
failure to respect the independence of NMTV. Several issues of the TBN
\"Praise the Lord\" newsletter for the years 1982-84 describe Espinoza
as a \"board member of our Satellite Division.\" MMB Exhs. 49 at 17, 53
at 11, 66 at 5, 76 at 5, 82 at 12. Crouch acknowledges that he reviewed
this language and that it is inappropriate. Tr. 2556. Espinoza also
acknowledges that he was aware of this language. Tr. 4172. Crouch claims
that he was not distinguishing between a \"division\" and an
\"affiliate.\" Tr. 2556. However, during that same time period, NMTV
was, in fact, being treated as a division in several respects. NMTV
annual meetings were conducted as part of TBN\'s combined annual
meetings. [See]{.underline}, [e.g.]{.underline}, MMB Exh. 91. NMTV was
included in combined financial statements. Trinity/Glendale Jt. Exh. 1
at 3-4. NMTV did not have its own employees or bank account.
[Id]{.underline}. at 3. Thus, the description of NMTV as a \"division\"
appears to reflect NMTV\'s true status in the minds of TBN\'s
principals. However, as previously discussed, after 1987, when NMTV
acquired the Odessa station, NMTV was no longer treated in this manner.
Likewise, the record discloses no references to NMTV as a \"division\"
after that time.

72\. [Summary]{.underline}. We find that the totality of the evidence
demonstrates TBN\'s de facto control of NMTV. The determinative question
is whether TBN has the power to \"dominate the management of corporate
affairs.\" [See]{.underline} [Fox Television Stations,
Inc.]{.underline}, 10 FCC Rcd 8452, 8514 ¶ 154 (1995) (subsequent
history omitted), [quoting]{.underline} [Benjamin L. Dubb]{.underline},
16 FCC 274, 289 (1951). In this regard, as our preceding discussion
indicates in greater detail, we have examined evidence of TBN\'s control
with respect to the policies that we typically consider most indicative
of control, namely those regarding: (1) the finances of the station, (2)
personnel matters, and (3) programming. [See]{.underline} [Southwest
Texas Public Broadcasting Council]{.underline}, 85 FCC 2d 713, 715
(1981). As to station finances, we find that TBN\'s practice of
informally funding NMTV based on TBN\'s inside knowledge and involvement
indicates that the two entities were not viewed as independent and
allowed TBN to determine NMTV\'s policies. Thus, our examination of the
decisions regarding the Odessa station, especially the decision to
forgive Prime Time\'s indebtedness, the decision to sell the Houston
translator, and the Community Brace project persuades us that TBN\'s
financial involvement has indeed had a tangible impact on NMTV\'s
policies. As to personnel matters, we find that the dual roles played by
key TBN/NMTV officials, the extensive use of TBN administrative and
engineering personnel and resources in NMTV\'s business, and the
practice of making key appointments from the ranks of TBN personnel
effectively removes any distinction between the two organizations and
goes beyond TBN\'s merely providing assistance to NMTV. Finally, as to
programming, we find no evidence that NMTV realistically exercises
discretion independent of TBN.

73\. This case, therefore, differs from [Southwest Texas]{.underline},
[supra]{.underline}, where we found that the University of Texas did not
exercise de facto control over the licensee\'s stations, although it
managed and largely financed them. We found that despite the
University\'s substantial involvement, the licensee continued to
exercise control over the station\'s basic policies. 85 FCC 2d at 714.
(Moreover, we noted that the management agreement and related financial
arrangements with the University had been terminated.) Here, although
the parties have taken some steps to operate NMTV as a separate entity,
for example, by conducting business through formal actions of NMTV\'s
board, we find the record devoid of evidence corroborating true
independence in policy decisions. For the reasons stated above, we are
not persuaded that the episodes involving the construction of the Odessa
station and the sale of the Houston translator substantiate
independence. We do not find credible the suggestion that NMTV could
theoretically oust Crouch or terminate TBN programming. Without in any
way impugning the parties\' sincerity in wishing to serve minorities, we
find that a preponderance of the evidence indicates that NMTV is still
treated essentially as an instrumentality of TBN.

74\. We also distinguish this case from [Fox]{.underline},
[supra]{.underline}, in which we held that the licensee, Fox, was not
controlled an alien-owned corporation, News Corp., in violation of the
foreign ownership restrictions of the Communications Act. We made this
finding despite the facts that (1) News Corp. had a substantial equity
interest in Fox, (2) Fox and News Corp. had some common directors and
used the same attorneys, (3) Fox was controlled by Rupert Murdoch (a
United States citizen), who was News Corp.\'s chairman and CEO, and (4)
a News Corp. subsidiary provided programming to Fox. 10 FCC Rcd at
8514-19 ¶¶ 154-65, 8522 ¶¶ 174-75. Despite these factors, we found, on
the totality of the evidence, that News Corp. functioned as a passive
investor in Fox, and that de facto, as well as de jure, control over Fox
was effectively exercised by Murdoch, a United States citizen, as an
individual rather than by News Corp. Murdoch\'s, rather than News
Corp.\'s, control was established by many factors indicating his
dominance over the licensee\'s operations. By contrast, the record here
establishes that TBN was no passive investor in NMTV, but through Crouch
and other TBN personnel, including its accountants, attorneys, and
engineers, was an active participant in many facets of NMTV\'s
operations to such an extent that NMTV did not function as an
independent entity. Moreover, in this case, in which the issue is
whether NMTV was minority-controlled, there is no counterpart to
Murdoch\'s role with respect to the alien ownership issue in
[Fox]{.underline}. That is, there is no minority individual who controls
both NMTV and TBN. Duff, while a minority, is Crouch\'s subordinate at
TBN. Crouch, who exercises the greatest degree of common control between
the two entities, is a nonminority.

**B. Abuse of Process**

**Initial Decision**

75\. The ALJ found that Crouch and TBN abused the Commission\'s
processes by using NMTV as a \"surrogate\" in applying for
authorizations. 10 FCC Rcd at 12060 ¶ 324. He found that they exhibited
specific abusive intent by (1) seeking to circumvent the Commission\'s
rules and improperly claiming minority preferences and (2) in
deliberately concealing the nature and extent of the relationship
between TBN and NMTV. Thus, according to the ALJ, TBN \-- knowing that
NMTV was not minority controlled \-- falsely claimed minority
preferences in applying for translator and LPTV licenses and falsely
claimed an exception to the multiple ownership rules in acquiring the
Odessa and Portland stations and attempting to acquire the Wilmington
station. [Id]{.underline}. at 12060-61 ¶¶ 325-29. The ALJ further found
that TBN repeatedly concealed from the Commission material facts
regarding the relationship between NMTV and TBN. [Id]{.underline}. at
12061-62 ¶¶ 330-31.

76\. The ALJ rejected the contention that Crouch had relied on the
advice of counsel in claiming NMTV\'s entitlement to minority
preferences. The ALJ found that Crouch intended to claim such
preferences irrespective of counsel\'s advice and knew that NMTV\'s
entitlement to preferences was suspect. He also rejected Crouch\'s
assertion that he had directed counsel to make full disclosure of
material facts. 10 FCC Rcd at 12062 ¶¶ 332. [See also]{.underline}
paragraphs 6, 20, [supra]{.underline}. Finally, the ALJ noted that
Crouch had been found to have abdicated responsibility to assure himself
that representations in a renewal application were true and correct,
[International Panorama TV, Inc. (KTBN-TV)]{.underline}, 83D-4 (ALJ Jan.
25, 1983) (SALAD Exh. 35), but that this previous misconduct had no
deterrent impact on Crouch and TBN. Accordingly, the ALJ concluded that
TBF\'s application for renewal of its license for WHFT(TV) should be
denied.

**Exceptions and Replies**

77\. TBF and NMTV deny that there has been any abuse of the
Commission\'s processes. They claim that Commission precedent with
respect to the type of control required in order to claim minority
preferences is at best unclear. They contend that Commission precedent
both condones passive minority ownership and encourages nonminorities to
provide administrative, technical, and financial assistance to
minorities \-- such as TBN provided to NMTV. In this regard, they assert
that each time NMTV claimed minority preferences, Crouch and Duff
consulted with communications counsel, who assured them that, as long as
minorities constituted a majority of NMTV\'s board of directors, NMTV
was in compliance with Commission policies for seeking minority
preferences. According to TBF and NMTV, Crouch and Duff had no reason to
disbelieve such advice.

78\. TBF also denies that any material information was withheld from the
Commission. It asserts that NMTV\'s applications revealed the
commonality of directors between TBN and NMTV, as well as the facts that
NMTV would carry TBN programming and that TBN would finance NMTV. It
further asserts that additional facts about TBN\'s relationship with
NMTV were revealed in other Commission filings.[^14] TBF observes that
in connection with the Odessa assignment application communications
counsel met with staff members of the Mass Media Bureau\'s Video
Services Division and submitted further information at their request.
TBF disputes the ALJ\'s finding that Crouch did not direct counsel to
make full disclosure; it contends that Crouch told counsel to disclose
all material information. Trinity asserts that in [International
Panorama]{.underline}, [supra]{.underline}, Crouch and his
communications counsel, May, were found to have been candid.

79\. In its proposed findings of fact and conclusions of law, the Bureau
initially argued that, although TBN did exercise de facto control over
NMTV, TBF should not be disqualified. MMB PF&C at 158-59, 184-85. The
Bureau agreed with TBF that no abuse of process had occurred with
respect to NMTV\'s LPTV and translator applications because Commission
policy only required that minorities constitute a majority of NMTV\'s
board of directors and did not require that they exercise de facto
control. [Id]{.underline}. at 151, 155-56. The Bureau further proposed
that NMTV\'s acquisition of full power stations violated Commission
policy since the rules required that minorities exercise de facto
control of NMTV for this purpose. [Id]{.underline}. at 150-55. However,
the Bureau maintained that the record did not support a finding that
Crouch, TBN, or NMTV intended to deceive the Commission in this respect.
[Id]{.underline}. at 159. Therefore the Bureau opposed disqualification.

80\. The Bureau, however, now supports TBF\'s disqualification. It
reaffirms its position that there was no abuse of process with respect
to the LPTV and translator applications because, with respect to those
stations, Commission policy as to de facto control had not been
clarified before the hearing designation order in this case. MMB Reply
at 2-3. As to the full power stations, the Bureau indicates that after
further reviewing the record, in light of the initial decision, it now
believes that the record does support a finding of intentional
deception. [Id]{.underline}. at 3-4, 14.

81\. Glendale and SALAD fully support the initial decision. They argue
that Commission policy clearly requires that minorities have de facto
control both in the context of the low power and full power applications
in this case. Glendale argues that NMTV\'s applications concealed
material information concerning the full extent of TBN\'s participation
in NMTV\'s affairs. Glendale especially criticizes statements in NMTV\'s
opposition to the petition to deny in the Wilmington proceeding, in
which NMTV made statements that Glendale asserts are misleading.
Glendale contends that Crouch and Duff did not rely on valid advice of
counsel.

**Discussion**

82\. The ALJ concluded that \"TBN and Crouch created a \'sham\'
corporation to take advantage of the minority preference\" and
repeatedly concealed material facts from the Commission that would have
made clear that TBN controlled NMTV. 10 FCC Rcd at 12061-62 ¶¶ 330-31.
More specifically, the ALJ found, \"none of NMTV\'s applications seeking
a minority exemption . . . disclosed to the Commission information about
Duff\'s relationship with TBN or NMTV\'s relationship with TBN.\"
[Id]{.underline}. at 12030 ¶ 65. The ALJ concluded that NMTV\'s
applications were \"models of nondisclosure\" in that regard, and
therefore constituted abuse of process. [Id]{.underline}. at 12062 ¶
332. He held that: \"The repeated concealment of material facts
concerning the TTI/NMTV relationship with TBN cannot be \[sloughed\] off
as an unintentional mistake. It was intentional deception since
disclosure would have thwarted TBN\'s and Crouch\'s ambitions. . . The
Commissions \'scheme of regulation rests on the assumption that
applicants will supply the Commission with accurate information.\'\"
[Id]{.underline}. at 12062 ¶ 331.

83\. We agree with the essence of the ALJ\'s finding. As our discussion
under the de facto control issue indicates, NMTV was created in order to
give Crouch interests in stations that would otherwise be prohibited and
to give TBN outlets for its programming that would otherwise be
unavailable. This objective could be realized only by representing that
NMTV was \"minority-controlled\" Our findings show that NMTV was in fact
controlled not by its predominately minority board of directors but by
TBN and that it was distinct from TBN in form only. Abuse of process
includes the use of a Commission process to achieve a result that the
process was not intended to achieve [See]{.underline} [Broadcast Renewal
Applicants]{.underline}, 3 FCC Rcd 5179, 5199 n.2 (1988). That is
certainly the case here. However, abuse of process further implies not
only that the purposes of a Commission policy have been subverted but
that the parties had specific abusive intent. [See]{.underline}
[Evansville Skywave, Inc.]{.underline}, 7 FCC Rcd 1699, 1702 n.10
(1992). Thus, the issue becomes whether TBN\'s principals acted with a
good faith belief that NMTV could honestly be presented as
\"minority-controlled\" or whether they acted with knowledge that the
claim was false or with reckless disregard of the truth.[^15]
[See]{.underline} [Evansville Skywave, Inc.]{.underline}, 7 FCC Rcd
1699, 1700 ¶ 14 (1992). We conclude, that with respect to NMTV\'s
full-power applications, the principals knew that, because of the
relationship between NMTV and TBN, their claim of minority control was
at best doubtful and at worst false.

84\. The failure of the relevant full power applications to disclose
Duff\'s relationship with TBN is especially telling with respect to
TBN\'s abusive intent. Crouch is the President of TBN and Duff is
Assistant to the President of TBN, while NMTV\'s board consisted of
three members for most of the period in question. Had the applications
stated that Duff was Crouch\'s Assistant \-- and hence that the
President of TBN and his Assistant constituted the majority of NMTV\'s
board \-- it clearly would have called into question the claim that NMTV
was minority-controlled for the purposes of the multiple ownership
rules. Similarly, the applications did not apprise the Commission of
TBN\'s massive involvement in NMTV\'s finances, employment practices,
and programming. A reasonable person could appreciate that if all of the
circumstances had been made clear, the Commission would have had ample
reason to inquire further and ultimately to deny NMTV\'s applications.
Moreover, the record confirms that TBN\'s principals knew that the
circumstances surrounding TBN\'s relationship with NMTV made it
inappropriate to claim minority control without fully disclosing to the
Commission the nature of that relationship. We will expand on these
findings below, but first, we deal with NMTV\'s low power applications.

85\. Because we find a serious abuse of process with respect to NMTV\'s
full power applications, we need not dwell at length on the low power
applications. The Bureau agrees with TBF that, at the relevant time,
Commission precedent did not make reasonably clear that the Commission
expected minorities to have de facto control of low power applicants,
such as NMTV, under our policies. Our own review of the record confirms
that applicants may well have been confused, before the
[HDO]{.underline} in this proceeding clarified the point (8 FCC Rcd at
2480 ¶ 38), that the exercise of de facto control by nonminorities
subverted the purposes of the minority ownership policy in this context.
The focus of the Commission\'s earlier precedent regarding lotteries was
on the composition of the board and beneficial ownership, and not on de
jure or de facto control. We therefore credit May\'s testimony that he
read the 1983 report and order and public notice and, pursuant to their
language, advised Crouch and Duff that NMTV could certify its status as
minority owned based on the composition of its board of directors. TBF
Exh. 105 at 9-12; Tr. 3273-77. Because May\'s advice was reasonable in
light of the existing precedent and consistent with the Bureau\'s own
interpretation, we find that Crouch and Duff were entitled to rely on
this advice. We will not discuss this matter further.

86\. In contrast to the policies regarding low power applications,
however, we find that Commission rules and precedent have always given
fair notice that de facto control is required to take advantage of the
special provision concerning minority ownership in the multiple
ownership rules. NMTV\'s applications were filed pursuant to a provision
of the Commission\'s multiple ownership rules which provided that a
licensee or its stockholders, partners, members, officers, and directors
may not own, operate, control, or have a cognizable interest in more
than 14 television stations or more than 12 stations that are not
\"minority-controlled.\" 47 C.F.R. § 73.3555(e)(1) (1986). Because
Crouch, an officer and director of both TBN and NMTV, already had an
interest in 12 stations, his ability to acquire an interest in
additional stations licensed to NMTV depended on whether NMTV was
\"minority-controlled.\" The rules state that \"*Minority-controlled*
means more than 50 percent owned by one or more members of a minority
group.\" 47 C.F.R. § 73.3555(d)(3)(iii) (1986). However, the multiple
ownership rules also specifically provide that: \"the word \'control\'
as used herein is not limited to majority stock ownership, but includes
actual working control in whatever manner exercised.\" 47 C.F.R. §
73.3555(d) Note 1. The clear intent of Note 1 is to prevent licensees
from circumventing the limitations imposed by the multiple ownership
rules by exercising actual control over stations over which they did not
have legal control. Moreover, Note 1 reflects the Commission\'s
long-standing precedent, applicable to non-stock corporations such as
NMTV, that \"control\" encompasses every form of actual or legal control
over basic operating policies. [See]{.underline} [Southwest Texas Public
Broadcasting Council]{.underline}, 85 FCC 2d 713, 715 (1981).

87\. Contrary to TBF\'s suggestion, Commission precedent has always
required minorities to exercise de facto control over
\"minority-controlled\" stations. Indeed, it is hard to imagine how an
entity controlled by minorities in name only or in which the
minorities\' interests are totally passive could foster the objective of
the Commission\'s policies to \"broaden minority voices and spheres of
influence over the airwaves. . . . \"[^16]. The memorandum opinion and
order adopting the provision at issue makes specific reference to the
traditional standard. It states that:

A question arises as to the proper definition of a minority owned
station for the purposes of our multiple ownership rules. In this
regard, we note that the Commission has adopted different standards of
minority control depending on the mechanism used to foster its minority
policies. \[Footnote citing [Minority Ownership in
Broadcasting]{.underline}, 92 FCC 2d 849 (1982) ([Policy
Statement]{.underline})\]. In the context of the multiple ownership
policies, we believe that a greater than 50 percent minority ownership
interest is an appropriate and meaningful standard . . . .

[Amendment of Section 73.3555]{.underline}, 100 FCC 2d 74, 95 ¶ 46
(1985) ([Memorandum Opinion and Order]{.underline}).[^17] While this
language does not directly set forth the Commission\'s policy with
respect to minority ownership, the [Policy Statement]{.underline}, cited
by the [Memorandum Opinion and Order]{.underline} does.

88\. The [Policy Statement]{.underline} notes that the basic standard
for minority ownership was originally enunciated in the Commission\'s
1978 policy statement, [Minority Ownership of Broadcasting
Facilities]{.underline}, 68 FCC 2d 979, 983 n.20 (1978) ([1978
Policy]{.underline}):

We currently anticipate issuing a \[tax\] certificate where minority
ownership is in excess of 50% or controlling. Whether certificates would
be granted in other cases will depend on whether minority involvement is
significant enough to justify the certificate in light of the purpose of
the policy announced herein.

[Policy Statement]{.underline}, 92 FCC 2d at 853 ¶ 7. The [Policy
Statement]{.underline} discusses the Commission\'s application of this
standard to specific situations and makes clear that what the Commission
had in mind was 50 percent ownership that constitutes voting control or
an equivalent degree of interest. Lacking that, the Commission would
decide on a case-by-case basis whether the minority interest was
sufficient to accomplish the purposes of the policy.

89\. This is clear in the [Policy Statement]{.underline}\'s discussion
of [William M. Barnard]{.underline}, 44 RR 2d 525 (1978), which was
decided within months after the Commission enunciated the [1978
Policy]{.underline} standard. [Policy Statement]{.underline}, 92 FCC 2d
at 853-54 ¶ 7. There, the Commission granted a tax certificate for
assignment of a station to a limited partnership in which minorities
held a 45.5 percent equity interest and a minority served as the general
partner with full authority to manage and control the station. The
Commission held that it would grant the tax certificate because
minorities both held a substantial equity interest and had complete
control over station affairs. [Id]{.underline}. The [Policy
Statement]{.underline} adopted the [Barnard]{.underline} treatment of
limited partnerships, which required [both]{.underline} substantial
equity and actual control, and stated explicitly that it would review
limited partnerships to avoid \"sham\" arrangements, by determining
whether the minority general partner actually had the authority to
determine the basic policies of the station\'s operations.[^18] [Policy
Statement]{.underline}, 92 FCC 2d at 854 -55 ¶¶ 8-11. In this regard,
the Commission cited [Southwest Texas Broadcasting Council]{.underline},
[supra]{.underline}, thereby manifesting an intent to require de facto
control in this context, [id]{.underline}. at 855 n.29, in order to
achieve the underlying objectives of the policy.

90\. In addition to dealing with the tax certificate treatment of
limited partnerships, the [Policy Statement]{.underline} also extended
the tax certificate policy in certain respects. It provided that tax
certificates could be issued for the sale of shares in a minority-owned
or minority-controlled licensee by individuals, whether members of
minority groups or not, who had provided financing for the initial
acquisition of the license. The [Policy Statement]{.underline} states:

Generally, to be eligible for a tax certificate, such transactions must
not reduce minority ownership of [and]{.underline} control in the entity
below 51 percent. \[Footnote omitted\]

[Policy Statement]{.underline}, 92 FCC 2d at 857 ¶ 16. \[Emphasis
added\] Thus, as the [Memorandum Opinion and Order]{.underline} notes,
while the precise combination of equity and control may vary in
different contexts, the Commission has consistently required that
minorities have both a substantial equity interest and actual control of
the station.

91\. We find that the record concerning the filing of the Odessa
application on February 3, 1987 discloses that Crouch, Duff, and May
were aware that the extent of TBN\'s involvement in NMTV\'s operations
in connection with that application made it doubtful that they would be
able to comply with those requirements. Like the ALJ, who heard the
witnesses and who could assess the forthrightness of their testimony, we
are not persuaded that the parties\' failure to make full disclosure of
all relevant facts and circumstances to the Commission can properly be
excused on the basis of alleged reliance on counsel. Although May
advised Duff and Crouch that NMTV qualified as a minority-controlled
entity based on the composition of its board of directors (TBF Exh. 105
at 11, 15-16; Tr. 3487-90), he admitted that he also advised that, to
satisfy the Commission\'s requirements, NMTV\'s board had to have actual
control over the operations of NMTV and that Crouch and TBN could not
supplant the board\'s authority over its affairs. Tr, 3226, 3228-29,
3604.

92\. We reject May\'s testimony that he felt assured that NMTV was in
compliance with the de facto control standard. May testified that he
believed that TBN\'s extensive involvement in NMTV\'s affairs would not
raise an issue of de facto control, provided that NMTV\'s board formally
met and adopted NMTV\'s policies and decisions and that NMTV formalized
its relationship with TBN. Tr. 3206, 3226, 3228, 3399-401 3604. This
view, however, does not reflect a reasonable interpretation of
Commission policy and does not warrant reliance. As set forth above, the
Commission requires that the directors actually determine the affairs of
the company, not that they merely observe the formalities of doing
so.[^19] Moreover, even if all of the parties were not totally familiar
with all of the Commission holdings concerning de facto control, Crouch,
in particular, could not have been unaware that he dominated NMTV, that
NMTV was not truly independent of TBN, and that there was no basis to
claim otherwise. May also testified that, because the rule permitted
nonminority group owners to have a \"cognizable\" interest in NMTV\'s
stations, this implied that Crouch and TBN could be active in NMTV\'s
affairs. TBF Exh. 105 at 14; Tr. 3227-29, 3398. He further testified
that he believed that the Commission\'s minority policy was intended to
encourage nonminorities to give administrative, technical, and financial
assistance to minorities and be involved to an extent that otherwise
might not be permissible. TBF Exh. 105 at 15-16; Tr. 3204-06, 3226-27.
Once again, this reasoning is self-serving and without foundation.
Domination of the enterprise by nonminorities, as has been shown here,
goes well beyond providing assistance in the form of \"investment and
support\" and gives nonminorities an interest that is far more than
merely \"cognizable.\"

93\. Moreover, the parties were aware that the Commission had never
before applied the provision of the multiple ownership rules to an
arrangement such as the one involving NMTV. May confirmed that he
considered the NMTV application \"somewhat unique,\" since the amended
rule had not yet been applied to a nonprofit public charity. Tr. 3379.
Indeed, both May and Crouch understood that NMTV was the first applicant
seeking the benefit of the exception to the rule. TBF Exh. 105 at 16;
Tr. 2674. In this regard, as the ALJ noted, Crouch and May emphatically
testified that Crouch had explicitly instructed May to make full
disclosure of material facts to the Commission in connection with the
Odessa application.[^20] Tr. 2674, 2709-11, 2755-57, 3202-03, 3205-06,
3379-81. The purchase agreement for the Odessa station was expressly
made contingent on NMTV\'s ability to establish compliance with the
multiple ownership rules.[^21]

94\. Our examination of the Odessa application (TBF Exh. 101, Tab Q at
31-36) (and the substantially similar Portland and Wilmington
applications), however, indicates that it does not contain a full
disclosure of relevant facts. The exhibit purporting to demonstrate
compliance with the multiple ownership rules states merely that \"a
majority of its directors are minorities, and National Minority TV, Inc.
is therefore minority controlled and in compliance with rule
73.3555(d)(1).\" [Id]{.underline}. at 33. It does not acknowledge that
there is even a question of whether NMTV should be deemed minority
controlled despite the involvement of TBN in its affairs. Moreover, the
facts set forth in the application were not complete or fully accurate.
The exhibit reflected that Crouch was an officer of TBN but not that he
was also its president and a director. [Id]{.underline}. at 35. It
stated that Duff had an interest in CET (TBN\'s educational television
affiliate), but did not indicate that she was an employee with the
second highest management office in TBN. [Id]{.underline}. at 36. It
made no mention of other aspects of the relationship between NMTV and
TBN \-- [e.g.]{.underline}, that they had the same address and that TBN
would provide financing and accounting and engineering services. The
application did not indicate that TBN would supply programming in the
future. [Id]{.underline}. at 30. (The exhibit also contained the
erroneous statement that NMTV had the same three officers and directors
since its organization. May testified that in preparing the exhibit he
relied on an outdated file that did not reflect that TBN officials
Terrence Hickey and Philip Crouch had served as assistant secretaries of
NMTV. Tr. 3538-40, 3595-97.)

95\. We note, as Trinity points out, that additional disclosures were
made after the filing of the application. May testified that, during the
pendency of the Odessa application, he had several conversations with
Alan Glasser, the Commission staff attorney responsible for processing
the application. TBF Exh. 105 at 16-17. May does not indicate that he
took the initiative in coming forward to supplement the information
presented in the application. Rather, the discussions apparently
occurred because Glasser had:

dealt with a number of other petitions and projects that Dr. Crouch was
involved in, \[a\]nd so, in some sense, I think he felt as if he had a
pretty good understanding or knew Dr. Crouch and knew the Trinity
organization.

Tr. 3232. During the conversations, Glasser \"would inquire about things
like . . . . is Trinity going to provide the programming?\"
[Id]{.underline}. May relates that he told Glasser during these sessions
that Duff was an employee of TBN and that the Odessa station would carry
TBN programming. Tr. 3232-33, 3236. May also relates that he informed
Glasser that NMTV\'s financial certification was based on a commitment
from TBN (although he did not mention other aspects of the relationship
such as the fact that TBN was furnishing an open line of credit and
accounting services). Tr. 3233-34, 3238.

96\. Trinity asserts that these disclosures rebut any inference that
TBN\'s principals intended to abuse the Commission\'s processes. It
maintains that May\'s dealings with Glasser do not provide any reason to
fault his candor during these sessions.[^22] It further asserts that
these disclosures did not prompt the Bureau to pursue a formal inquiry
into de facto control. The Bureau merely requested additional
information from NMTV to make certain that each of the three listed
directors had equal voting rights in the corporation. [Id]{.underline}.
May responded to the Bureau\'s informal request, submitting copies of
NMTV\'s articles of incorporation, bylaws, and organizational minutes.
TBF Exh. 105, Tab. Q. In his cover letter, May stated: \"NMTV is
governed by the majority action of its directors, unanimous votes are
not required.\" [Id]{.underline}. at 1. The Bureau thereupon approved
NMTV\'s application.

97\. We accept Trinity\'s point that, at least in hindsight, the Bureau
might have followed up Glasser\'s discussions with May more vigorously.
We also have no basis to fault May\'s conduct toward Glasser. Any
shortcomings by the Bureau in this regard, however, do not provide a
basis to absolve the parties for their failure in the NMTV application
to fully disclose the relevant facts in the first place.

The FCC . . . . must rely heavily on the completeness and accuracy of
the submissions made to it, and its applicants in turn have an
affirmative duty to inform the Commission of the facts it needs in order
to fulfill its statutory mandate. This duty of candor is basic, and well
known.

[RKO General, Inc. v. FCC]{.underline}, 670 F.2d 215, 232 (D.C. Cir.
1981). Unlike the applicant in [Fox]{.underline}, Crouch and May did not
affirmatively seek to bring the material facts to the Commission\'s
attention so that the Commission could \"vet\" the proposed transaction.
[See]{.underline} [Fox]{.underline}, 10 FCC Rcd at 8490 ¶ 93. On the
contrary, rather than the parties voluntarily presenting the Commission
with the pertinent facts, it appears that May\'s belated disclosures
were prompted by Glasser\'s probing based on his prior familiarity with
TBN.

98\. Moreover, subsequent representations by NMTV do not evidence the
candor May assertedly showed Glasser. For example, NMTV\'s opposition to
petitions to deny its application to acquire the Wilmington station
stated that (MMB Exh. 353 at 10-11, 17):

NMTV has its own bank accounts from which it pays its own employees and
other creditors, and has its own revenues, from the sale of broadcast
time and spots. NMTV receives its own contributions as a recognized
501(c)(3) organization. It is qualified to do business in California,
Texas, and Oregon, is in good standing \[footnote omitted\], and has
regular meetings of the board of directors at which corporate business
is discussed and voted upon. NMTV also has its own employee policies and
its own health insurance coverage.

. . . .

NMTV is a ten-year old organization which has operated two broadcast
stations separated by 1500 miles. It receives its own revenue, and, as
an exempt corporation, its own contributions. It is qualified to do
business in three states. . . . It hires and fires its own employees,
has its own employee policies, and has its own insurance. It files its
own tax returns. It pays its own bills.

These statements significantly distort the actual relationship between
TBN and NMTV, as described in detail in our discussion of de facto
control. By way of example, while NMTV files its own tax returns in the
sense that individual tax returns are prepared for NMTV, this is done by
TBN accounting personnel and an accounting firm shared with TBN.
Similarly, while NMTV has its own employee policies and insurance, were
merely copied from TBN\'s.[^23]

99\. Moreover, the record demonstrates that Crouch had been advised that
compliance the Commission\'s policies required that actual control of
NMTV be in the hands of NMTV\'s directors and could not be exercised by
TBN or Crouch. [See]{.underline} Paragraph 91, [supra]{.underline}. Yet,
as discussed in the de facto control section, the record shows that at
the time of the Wilmington and Portland applications and NMTV\'s
response to the petition to deny, TBN and Crouch exercised de facto
control over virtually all aspects of NMTV\'s actual operations,
including the prior decisions with respect to the Odessa and Portland
stations, as discussed above. Thus, if there were any doubt as to
whether the structural relationship between NMTV and TBN at the time the
Odessa stations was acquired subverted the minority ownership policies,
the actual operation of the Odessa and subsequent stations confirms the
abusive nature of their ownership by NMTV.

100\. [Conclusion]{.underline}. As to the full power applications and
the exception to the multiple ownership rules, we find that NMTV was in
violation of our rules and that the record indicates that Crouch and
others were aware that there was a need to make full disclosure to the
Commission because of the circumstances surrounding NMTV\'s claim of
minority control. NMTV\'s applications, however, contain no mention of
the material facts that would have alerted the Commission to these
circumstances. We conclude that these omissions were deliberate and
deceptive. Although May apparently did not lie when questioned directly
by the Bureau\'s processing staff, the principals\' underlying lack of
candor at the outset is not negated by the absence of a more searching
inquiry. Moreover, the record indicates that the principals\' subsequent
adherence to their questionable theory in pleadings was also lacking in
candor and that the actual operation of the stations was inconsistent
with the minority ownership policies as understood by the principals.
Accordingly, based on the application and the circumstances surrounding
its filing, and the manner in which the NMTV stations were actually
operated, we find that the ALJ correctly concluded that the principals
did not intend to apprise the Commission of questions concerning NMTV\'s
eligibility or operate the stations consistently with the Commission\'s
minority ownership policies. In the final analysis, the record shows
that Crouch and his associates abused the Commission\'s processes by
claiming that NMTV was a minority entity despite the circumstances
indicating otherwise, that they were not forthright about this in the
relevant applications, and that they did not intend to comply with
Commission policy in the operation of the stations.

101\. Turning to the factors relevant to assessing the seriousness of
misconduct, we find that TBF\'s application for license renewal should
be denied. [See]{.underline} [Character Qualifications]{.underline}, 102
FCC 2d 1179, 1227-29 ¶¶ 102-06 (1986). Abuse of process is serious
willful misconduct which directly threatens the integrity of the
Commission\'s licensing processes. [Id]{.underline}. at 1211 ¶ 62. The
misconduct was committed at the highest levels of the licensee\'s
organization and involved several different applications. In mitigation,
it is relevant that the legal issues involved were not totally free of
ambiguity and the licensee did have the advice of counsel. We conclude
that the loss of a single station license is an adequate and appropriate
deterrent to any repetition of this conduct by the principals here.
Accordingly, we conclude that, absent further information, these matters
will warrant no further consideration in any future proceedings.

102\. In our analysis, we have treated Crouch\'s past record of
compliance with Commission rules and policies as essentially neutral.
Questions regarding his conduct were considered in [International
Panorama TV, Inc. (KTBN-TV)]{.underline}, FCC 83D-4 (ALJ Jan. 25, 1983)
(SALAD Exh. 35). Timothy Flynn, a former TBN official, improperly
conducted ascertainment surveys in connection with an application, and
falsely represented in the application how the surveys had been
conducted. The ALJ in that case faulted Crouch for delegating excessive
responsibility to Flynn but exonerated Crouch of any dishonesty. Thus,
while the instant misconduct does not reflect an extension of a pattern
of deceptive practices, it does involve a further failure by Crouch to
ensure compliance with Commission rules and policies.

**V. ISSUES REGARDING GLENDALE**

**Misrepresentation and Lack of Candor**

**Initial Decision**

103\. The ALJ found that Glendale\'s 51 percent stockholder, George
Gardner (Gardner) did not make misrepresentations or lack candor before
the Commission in connection with applications for extension of time to
construct filed by a company he owns called Raystay Co. (Raystay). 10
FCC Rcd at 12046 ¶ 210. For the reasons set forth below, we will reverse
that finding and disqualify Glendale.

104\. In March 1989, Raystay, which also owns several cable systems,
filed applications for authority to construct five LPTV stations, all in
Pennsylvania. Two were to be located in Lancaster, with their
transmitters co-located atop a structure owned by the Ready Mixed
Concrete Company. Two others would be located in Lebanon, with their
antennas co-located on the Quality Inn Hotel. A fifth application, in
Red Lion, would have an antenna located on property owned by Raystay.
[Id]{.underline}. at 12047 ¶ 216. The Commission granted the five
construction permits to Raystay on July 24, 1990, specifying an
expiration date for the permits of January 24, 1992. 10 FCC Rcd at 12047
¶ 218. The ALJ found that, after grant of the permits, Gardner appointed
Harold Etsell (Etsell), a vice president of Raystay, to oversee the
development of the five LPTV stations. On February 12, 1991, Etsell
prepared a \"Low Power TV Business Plan,\" in which he proposed that the
five stations would be linked with W40AF (TV40), Dillsburg,
Pennsylvania, an existing LPTV station licensed to Raystay, in a network
to provide an alternative movie service supplemented by local
programming of interest to cable subscribers. The plan was premised on
cable carriage, and the ALJ found that both Etsell and Gardner
considered that cable carriage was necessary for the five stations to be
viable. [Id]{.underline}. at 12047 ¶¶ 215, 219-20.

105\. The ALJ found that, although cable operators in the area expressed
interest in Etsell\'s concept, Raystay obtained no commitments from
cable operators. 10 FCC Rcd at 12047 ¶ 221. According to the ALJ, in the
absence of a viable business plan, Gardner was unwilling to proceed with
the construction of the five LPTV stations, especially since his
existing LPTV station, TV40, had been losing money. [Id]{.underline}. at
12047 ¶ 222. The ALJ found that, in early 1991, Gardner asked Etsell to
devote fulltime to GH Cable Properties, another co-owned business. At
about the same time, in May 1991, Raystay entered into an agreement with
Quality Family Companies (Quality), under which Raystay would grant
Quality exclusive rights to air programming on the LPTV stations,
subject to Raystay\'s authority over the operation of the station.
Quality agreed to lease or purchase all equipment necessary to make the
stations operational and to make specified monthly payments. Programming
was to begin on August 31, 1991, but the agreement was terminated in
August 1991 when Quality failed to make required payments.
[Id]{.underline}. at 12050 ¶ 246 & n.36.

106\. The ALJ found that Raystay had also had discussions with three
parties concerning the possible sale of one or more of the LPTV
construction permits. He found that in March or April 1991, Gardner
received an inquiry from Dennis Grolman (Grolman) expressing an interest
in one or more of the LPTV permits. Discussions with Grolman broke off
after Raystay entered into the Quality agreement. 10 FCC Rcd at 12052 ¶
259. When the Quality agreement was terminated, the discussions resumed,
with Lee H. Sandifer (Sandifer), a vice president of Raystay. By now,
Grolman was interested only in the Red Lion permit. Sandifer and Grolman
agreed to a sale of the Red Lion permit on October 10, 1991 for
\$10,000. [Id]{.underline}. at 12047 ¶ 214, 12052-53 ¶¶ 259, 264-67.

107\. The ALJ found that TBN sent Raystay letters expressing an interest
in purchasing the construction permits. After the Quality agreement fell
through, Sandifer authorized Gardner\'s son David to enter into
discussions with TBN. Although not an officer of Raystay, David Gardner
was involved in Raystay\'s affairs as an employee of Waymaker Company, a
company also owned by Gardner, which provides management services to
Raystay. Raystay made an offer to sell TBN TV 40 and the permits for
\$400,000. TBN made a counteroffer of \$150,000 for TV40 and \$5,000
each for the five other LPTVs, which Gardner rejected. On November 11,
1991, TBN sent Raystay a purchase agreement and applications
contemplating the sale of the five LPTV\'s. On December 3, 1991, Gardner
instructed Sandifer and David Gardner to discontinue negotiations with
TBN. The ALJ found that Gardner had done so because he planned to file
the Glendale application. 10 FCC Rcd at 12046 ¶¶ 211-13, 12052 ¶ 257.

108\. According to the ALJ, around October 1991, Raystay also had
discussions with Robert Shaffner about the possibility of Raystay
acquiring Shaffner\'s cable system and using TV40 as partial payment. In
late 1991, there were discussions about Shaffner possibly purchasing
TV40 and the construction permits, contingent on Shaffner entering into
a deal with a third party, which, however, fell through in December
1991. 10 FCC Rcd at 12052 ¶ 258.

109\. By December 1991, Raystay had not started construction of the
facilities. On December 20, 1991, Raystay filed separate applications
for extension of each of the four Lancaster and Lebanon permits.
Preparation of the applications was arranged by David Gardner, who
provided information to the applications\' draftsman, John Schauble
(Schauble) of the law firm of Cohen and Berfield. After David Gardner
reviewed the applications, he sent them to Sandifer, who reviewed them
and sent them on to Gardner. Gardner reviewed the applications and
signed them. 10 FCC Rcd at 12048 ¶¶ 223-29.

110\. Exhibit 1 of each application contained Raystay\'s rationale for
requesting the extension. The exhibits read in their entirety (TBF Exh.
245 at 3-4, 7-8, 11-12, 15-16):

The permittee respectfully submits that a grant of the instant
application would be in the public interest for the following reasons:

Initially, it must be noted that Raystay Co. has built and is currently
the licensee of LPTV station W40AF licensed to Dillsburg, PA. Raystay
built the station pursuant to a construction permit issued to it by the
Commission.

At the present time, equipment for the station has not been ordered or
delivered. Raystay, however, has had discussions with equipment
suppliers concerning the types and prices of equipment that could be
used at the site specified in the construction permit. It has entered
into lease negotiations with representatives of the owners of the
antenna site specified in the applications, although these negotiations
have not been consummated. A representative of Raystay and an engineer
visited the antenna site and ascertained what site preparation work and
modifications need to be done at the site.

Raystay has undertaken research in an effort to determine the
programming that would be offered on the station. It has had discussions
with program suppliers to determine what programs could be available for
broadcast on the station. It has also had continuing negotiations with
local cable franchises to ascertain what type of programming would
enable the station to be carried on local cable systems.

The denial of this extension request could eliminate any possibility of
the proposed LPTV service being offered to the community. No application
mutually exclusive with Raystay\'s construction permit application was
filed, so no other entity has expressed an interest in providing this
service.

Accordingly, Raystay requests that the Commission extend the date for
construction for a period of six months from the date this application
is granted or the date the current construction permit expires,
whichever is later.

The Bureau, without asking for additional information, granted the
extensions on January 29, 1992, with the permits now to expire on July
29, 1992. 10 FCC Rcd at 12048 ¶ 229.

111\. By July 1992, Raystay had still not started any construction. In
June, Schauble wrote to David Gardner saying that he would prepare a new
exhibit for a new set of extension applications if Raystay had done
additional planning to get the stations on the air, otherwise he would
use the existing exhibit. After discussions with David Gardner, Schauble
sent him applications containing the same Exhibit 1 used in the December
1991 application. David Gardner sent the applications directly to
Gardner, because Sandifer was on vacation. The ALJ found that Gardner
signed the applications not realizing that Exhibit 1 was the same as
before. On September 23, 1992, the Bureau, without asking for additional
information, granted extensions until March 23, 1993. 10 FCC Rcd at
12051 ¶¶ 247-49.

112\. The ALJ considered allegations that Exhibit 1 contained
misrepresentations or was lacking in candor. He found that the exhibit
candidly admitted that construction had not been started, which he
considered the most important factor under the Commission\'s rules. 10
FCC Rcd at 12063 ¶ 339. He found that with respect to most of the
statements in the Exhibit there was no real dispute as to their
accuracy. Thus he found that: (1) David and George Gardner had
discussions with equipment suppliers; (2) David Gardner and an engineer
had visited the proposed transmitter sites; and (3) Raystay had
undertaken research to find programming for the station.
[Id]{.underline}. at 12063 ¶¶ 339-40.

113\. Only one statement in the exhibit troubled the ALJ \-- the claim
that Raystay had \"entered into lease negotiations\" with the owners of
the proposed transmitter sites. The ALJ observed that this statement
referred to two one-minute phone calls that David Gardner had with
representatives of the site owners. The ALJ concluded, however, that,
while it was questionable to characterize these brief discussions as
\"negotiations,\" there had been no intent to deceive the Commission and
the statement was a mere exaggeration. 10 FCC Rcd at 12063-64 ¶¶ 341-42.

114\. The ALJ also found no intent to deceive in Raystay\'s using the
same Exhibit 1 in its second extension requests as it had in the first
requests. In the ALJ\'s view, the Bureau must have known that the
exhibits were identical and that Raystay had not satisfied the criteria
for an extension (because no construction had been undertaken) and,
therefore, could not have been deceived. 10 FCC Rcd at 12064 ¶ 343. The
ALJ held that Raystay never abandoned its intent to build the stations,
and had little to gain from selling the unbuilt stations, but even if it
intended to sell them, this would not be improper. [Id]{.underline}. at
12064 ¶¶ 344-46. The ALJ concluded that even if the statement regarding
lease negotiations was considered untrue, Gardner had no reason to know
that it was false. [Id]{.underline}. at 12065 ¶ 349.

**Exceptions and Replies**

115\. TBF and the Bureau contend that Exhibit 1 reflected disqualifying
lack of candor and misrepresentation. They assert that the Exhibit gives
the false impression that Raystay was actively working towards the
construction of the stations when, in fact, George Gardner had no plans
at that time to construct the stations and was intending to sell them.
They also assert that specific statements in the exhibit were false.
They argue in particular that: (1) Raystay was not engaged in any
\"lease negotiations\" regarding the transmitter sites; (2) the exhibit
gave the false impression that an engineer visited the sites on behalf
of Raystay, when it was actually a TBN engineer who visited the sites;
(3) there were no \"continuing negotiations\" with cable franchisees at
the time the extension application was filed; and (4) contrary to the
exhibit, other entities, such as TBN, were interested in the facilities.
TBF and the Bureau maintain that Gardner knew he had no plans to
construct and could appreciate the false impression that the exhibit
conveyed and observe that he had previously been found to have lacked
candor in an earlier Commission proceeding, [RKO General, Inc.
(WAXY-FM)]{.underline}, 5 FCC Rcd 642, 644 (1990).

116\. Glendale replies that the initial decision correctly resolved this
issue. It insists that the statements made in the exhibit were
substantially accurate. It further insists that Gardner never abandoned
his intention to find a viable plan to construct and operate the
stations. According to Glendale, Gardner would not have sought an
extension for the purpose of selling the stations.

**Discussion**

117\. We find that Exhibit 1 reflects a significant lack of candor. We
expect licensees to represent truthfully to the Commission their
intentions and the reasons for their actions. [See]{.underline} [KQED,
Inc.]{.underline}, 5 FCC Rcd 1784, 1784-85 ¶¶ 3-5 (1990), [recon.
denied]{.underline}, 6 FCC Rcd 625 (1991). Exhibit 1 does not do so. We
reach this conclusion, although we agree with the ALJ that Exhibit 1 on
its face provided no basis for granting an extension. Under 47 C.F.R. §
73.3534(b), extensions of time to construct broadcast stations will be
granted under only three circumstances:

\(1\) Construction is complete and testing is underway looking toward
prompt filing of a license application;

\(2\) Substantial progress has been made [i.e.]{.underline},
demonstration that equipment is on order or on hand, site acquired, site
cleared and construction proceeding toward completion; and

\(3\) No progress has been made for reasons clearly beyond the control
of the permittee (such as delays caused by governmental budgetary
processes and zoning problems) but the permittee has taken all steps to
expeditiously resolve the problem and proceed with construction.

Exhibit 1 clearly does not attempt to comply with any of these
provisions. It does not seek to show that construction had been
completed, that substantial progress had been made, or that lack of
progress was due to circumstances clearly beyond Raystay\'s control. The
record provides no indication of why the Bureau relieved Raystay of its
obligations under the rule.

118\. The fact that the Bureau seemingly ignored the problematic nature
of Exhibit 1, however, does not provide a basis to conclude that the
exhibit raises no question of candor. It is true that Raystay did not
conceal its failure to make substantial progress toward construction of
the stations and that the Bureau could have denied the extension
applications based on that acknowledged defect. However, Exhibit 1 was
clearly intended to persuade the Bureau to grant an extension anyway,
and Raystay was obliged to be truthful in its representations, whether
its exhibits were consistent with the rule or not.

119\. We disagree with the ALJ\'s conclusion that Raystay\'s
representations concerning the specific factors cited in support of the
extension requests were substantially accurate. Raystay had not
\"entered into lease negotiations\" with the site owners. David Gardner
testified that this statement was based on events that occurred while he
was engaged in negotiations with TBN in October 1991 concerning the
possible sale of the permits. Glendale Exh. 209 at 4-5. He stated that
TBN asked whether one of its engineers, Tom Riley (Riley), could inspect
the sites. Accordingly, David Gardner called the Ready Mixed Concrete
Company and the Quality Inn and asked whether sites were still available
and whether Riley could inspect them. Telephone records for October 10,
1991 indicate that the calls lasted one minute each. [Id]{.underline}.
at 4, 9. These one minute calls were the \"lease negotiations\" that
Exhibit 1 refers to and during which, according to a June 3, 1993
declaration by David Gardner (TBF Exh. 246 at 1), he \"generally
discussed possible lease terms.\" David Gardner\'s hearing testimony
indicates that the \"lease terms\" referred to were whether the site was
available. Tr. 4724-26. These calls cannot fairly be described as
\"lease negotiations.\" Similarly, David Gardner indicated that Exhibit
1\'s assertion that \"A representative of Raystay and an engineer have
visited the antenna site\" refers to Riley\'s visits and his own, which
were not at the same time. Glendale Exh. 209 at 5-6. The obvious
implication of Exhibit 1, however, is that a Raystay representative
accompanied an engineer to the sites in connection with Raystay\'s
construction plans. In fact, Riley\'s visit had to do with TBN\'s
possible purchase of the permits and not at all with any construction
efforts by Raystay, and the representation is misleading.

120\. The representation that Raystay has \"had continuing negotiations
with cable television franchises. . .\" is at best an exaggeration. The
direct written testimony of both George and David Gardner indicates that
this representation refers to the discussions that Etsell had with cable
operators in connection with his \"Low Power TV Plan,\" which are indeed
the closest to anything that can fairly be described as \"continuing
negotiations.\" Glendale Exhs. 208 at 5-6, 209 at 6. [See
also]{.underline} TBF Exh. 210 (the low power TV plan). These contacts
and work on the plan, however, terminated some nine months before the
first extension application. TBF Exh. 265 at 51-66. (At the hearing,
George and David Gardner also attempted to characterize their sporadic
contacts with cable operators as \"continuing negotiations.\" Tr. 4815,
4926-28, 55235, 5264-65. However, there is nothing about this testimony
that would support a finding that Etsell\'s Plan had again become a
plausible approach.) The underlying problem with the claim of
\"continuing negotiations\" is that, as Gardner testified, the true and
undisclosed significance of Exhibit 1\'s paragraph about the contacts
with programmers and cable operators is that they resulted in no viable
business plan. Tr. 5272-743. To Gardner, the paragraph explains why
construction was not begun. [Id]{.underline}. To an uninformed reader
and apparently the Bureau, however, the paragraph appears to do just the
opposite \-- [i.e.]{.underline}, to give assurance that Raystay was
taking steps leading toward construction.

121\. Also problematic is Raystay\'s representation that \"No
application mutually exclusive with Raystay\'s construction permit
application was filed, so no other entity has expressed an interest in
providing this service.\" Given the interest expressed by TBN and others
in purchasing the construction permits, this statement is misleading.
Although the statement is not literally false in that no mutually
exclusive applicants expressed an interest to the Commission, Raystay
was aware that other parties \-- [i.e.]{.underline}, potential buyers
\-- were interested in operating the facilities, a fact inconsistent
with Exhibit 1\'s assertion that denial of the extension requests could
eliminate any possibility of the proposed LPTV service. The potential
buyers may well have applied if the frequency were vacant. Thus, the
statement clearly left the reader with an inaccurate impression.

122\. The problem with Exhibit 1, however, goes beyond these specific
deficiencies. Taken as a whole, Exhibit 1 was intended to leave an
impression that was manifestly false \-- namely, that Raystay had a good
faith intention to proceed diligently with construction of the stations.
This intent, which can be discerned from a fair reading of the exhibit,
is confirmed by a letter concerning preparation of the second extension
application from Schauble to David Gardner. Schauble wrote: \"Please let
me know if any additional planning has been done that we can use to
convince the Commission that Raystay has been diligent in working to get
the stations on the air.\" TBF Exh. 249. The Bureau also seems to have
understood Raystay\'s request in that light. In granting the second
extension, the Bureau wrote (TBF Exh. 252):

In support of your request, you state that Raystay has entered into
negotiations with representatives of the owners of the antenna sites
specified in these applications. You also state \[that\] Raystay has
undertaken research in an effort to determine programming. Based on
these facts, the Commission has decided to afford Raystay a final
opportunity to complete construction. These applications will be granted
for an additional six months. Raystay is cautioned, however, that the
Commission does not expect to grant any additional extensions of time or
assignments of the construction permits.

The Bureau\'s expectation that Raystay would complete construction
within six months implies that the extension was granted based on a
belief that Raystay was committed to proceed with construction.

123\. Viewed in this light, Exhibit 1 deceived the Bureau as to the
reasons for Raystay\'s actions and its intentions. The record leaves no
doubt that, at the time that Raystay filed its extension applications,
Gardner had no present intention to proceed with construction of the
stations. A finding to this effect does not depend, as Glendale asserts,
on a selective reading of the record. Gardner testified (Tr. 5270):

My experience with TV40 \[which was losing money\] absolutely got in my
way of doing anything without having a viable business plan. I had
learned my lesson there. And there was no way that I was going to go
ahead. I was urged by I believe Mr. Etsell to go ahead with them without
having everything in place. But I resisted that.

[See also]{.underline} Tr. 5235-38, 5274, 5280-81. He further testified
that he had \"no idea\" of when \-- or if \-- construction of the
stations would begin or he would develop a viable plan. Tr. 5236-37,
5276, 5281. In this regard, he explained (Tr. 5277-78):

Well I can\'t see the future that well. The reason we applied for these
construction permits in the first place was to put them on the air. And
my difficulty with TV40 caused me to go much slower than I would have if
I hadn\'t had the TV40 experience.

But we were still hopeful that we would find a way to make it work. We
did dedicate a lot of time to it. And we had several situations that I
felt were going fairly well. And the application for extension was
something that we needed to do.

And we not only had the business plan that we\'re talking about with the
cable systems, but we had Mr. Shaffner who was going to take TV40 off
our hands. And I was interested in preserving the construction permits
in the event that he wanted those. We had certainly a situation with
Trinity that I had to back out of. But that didn\'t mean to me that
Trinity was the only group that would have been interested in taking
TV40 and probably be interested in the CPs along with it.

I thought our plan was pretty good. We just couldn\'t find a way to
implement it. But that didn\'t at that time mean to me that no one else
was going to put a plan together.

124\. This testimony indicates that Gardner had no foreseeable prospect
of finding a viable plan or of beginning construction of the station. He
had at most an indefinite hope that something would turn up \-- and most
likely this would be the sale of the permits.[^24] Gardner had told
Etsell months before the extension applications were filed to suspend
his work on his low power TV business plan. TBF Exh. 265 at 66. The
record contains no indication that the plan was ever revived as a viable
prospect. For example, in October 1992, after the extensions had been
granted, David Gardner suggested that, rather than relying on cable
carriage, the LPTV stations could be used to provide multi-channel
service as an alternative to wired cable. Glendale Exh. 221; Tr. 4948.
The Quality programming deal had fallen through as had sales
negotiations with Shaffner and TBN. The only matter that came to
fruition was the sale of the Red Lion permit. In the absence of a viable
business plan, no funds were budgeted for development of the LPTV
stations. Tr. 5104-05, 5237-38. When Raystay refinanced its business in
July 1992, LPTV development was excluded from the scope of the
loan.[^25] TBF Exhs. 261, 264 at 17-18, 261; Tr. 5058-62, 5086-87.
Indeed, after Schauble told David Gardner that the Commission would not
likely grant a third extension unless Raystay made substantial progress
in constructing the stations and that the Commission would not likely
allow sale of the permits, Raystay promptly surrendered the permits. TBF
Exhs. 255, 256. As Gardner himself admitted in his testimony, the true
reason that construction had not begun \-- the absence of a business
plan \-- is \"missing\" from Exhibit 1. Tr. 5272-73.

125\. We find that the lack of candor reflected in Exhibit 1 should be
attributed to George Gardner. Although he may not have not have been
fully aware of all of the facts underlying the specific statements in
the exhibit (such as whether David Gardner had met with the site
owners), he knew that he had no present intention of constructing the
facilities and that other entities had, in fact expressed an interest in
them. He therefore knew that the exhibit was misleading.

126\. Gardner\'s candor has already been impugned in a prior Commission
proceeding. In [RKO General, Inc. (WAXY-FM)]{.underline},
[supra]{.underline}, Gardner was the principal of Adwave Company, an
applicant for an FM station in Fort Lauderdale, Florida. As part of his
diversification showing, he proposed to divest himself of Raystay\'s
cable interests by placing them in trust. [See also]{.underline} [RKO
General, Inc. (WAXY-FM)]{.underline}, 4 FCC Rcd 4679 (Rev. Bd. 1989).
The Commission noted that the Review Board had found that the proposal
was lacking in candor because under the trust arrangement Gardner would
retain almost all of the benefits of stock ownership including the right
to participate in the management of the cable systems, 5 FCC Rcd at 643
¶¶ 8-9, and could not fairly be described as a divestiture. Adwave
entered into a settlement of the proceeding and asked for a Commission
determination that the lack of candor finding would not bar Gardner from
acquiring additional stations. Accepting the Board\'s findings as true,
the Commission noted that the misconduct was an isolated transgression,
which would not necessarily bar future broadcast ownership. It held that
Gardner would be permitted to acquire additional stations on a showing
that (1) he had not been involved in any further significant misconduct,
(2) he enjoyed a reputation for good character in the community, and (3)
he would undertake meaningful measures to prevent the future occurrence
of FCC-related misconduct. The Commission also observed \"Of course
there should be no occurrence of misconduct in connection with the new
application.\" 5 FCC Rcd at 644 ¶¶ 18-22. When he applied for the five
LPTV facilities, Gardner proffered a showing, which the Bureau accepted
as adequate. TBF Exhs. 259-60.

127\. Despite these assurances, Gardner has once again been found
responsible for the type of deliberate misconduct for which he was
previously admonished. Because we rely on the accuracy of
representations to the Commission, lack of candor is a serious breach of
a licensee\'s obligations. [See]{.underline} [WHW Enterprises,
Inc.]{.underline}, 753 F.2d 1132, 1139 (D.C. Cir. 1985); [Character
Qualifications]{.underline}, 102 FCC 2d 1179, 1211 ¶ 61 (1986). The
repetition of such serious misconduct by Glendale\'s controlling
principal even after he had been admonished to avoid such misconduct
renders Glendale unqualified to become a Commission licensee.
[See]{.underline} [Mid-Ohio Communications, Inc.]{.underline}, 5 FCC Rcd
940 ¶ 5 (1990). [See]{.underline} [Character
Qualifications]{.underline}, 102 FCC 2d at 1227-28 ¶ 102. Nevertheless,
as in the case of TBF, we conclude that denial of a single station
application is an adequate and appropriate deterrent to any repetition
of this conduct by the principals here. Accordingly, we conclude that,
absent further information, these matters will warrant no further
consideration in any future proceedings.

**VI. CONCLUSION**

128\. We have found that TBF\'s application for renewal of its license
to operate WHFT(TV) should be denied and we have found Glendale
unqualified to be a Commission licensee. Accordingly, both applications
are denied and other matters need not be considered. Moreover, because
we have found TBF unqualified, the settlement agreement, which is
premised on the grant of TBF\'s application must be rejected. (Because
Glendale\'s application would be dismissed under the settlement,
Glendale\'s qualifications are not relevant to whether the settlement
can be approved.) We will, therefore, deny the Joint Requests for
Approval of Settlement Agreement now before us. However, since we have
also found that the loss of station WHFT(TV) is a sufficient deterrent
to future misconduct by TBN-related entities, the parties may submit an
amended settlement covering the stations other than WHFT(TV). Without
expressing any view on whether such a settlement agreement would be
approved by the Commission, TBF\'s disqualification in this proceeding
would be no bar to approval of any such settlement insofar as the
settlement otherwise complies with all of our rules and policies.

**VII. ORDERING CLAUSES**

129\. ACCORDINGLY, IT IS ORDERED, That, good cause having been shown,
Consent Motions for Extension of Time, filed August 28, 1996, September
23, 1996, September 30, 1996, October 11, 1996, and November 21, 1996,
by Glendale Broadcasting Company ARE GRANTED.

130\. IT IS FURTHER ORDERED, That the Petition of Colby May for Leave to
Intervene, to File Comments, and to Participate in Oral Argument, filed
November 15, 1996, and the Request for Leave to File Reply in Support of
Petition of Colby May for Leave to Intervene, to File Comments, and to
Participate in Oral Argument, filed January 13, 1997 ARE DENIED, and
that the Comments of Intervenor Colby May in Response to Mass Media
Bureau\'s Opposition to Motion to Vacate the Record on Improvidently
Designated Issues, filed November 15, 1996, ARE ACCEPTED as an amicus
brief.

131\. IT IS FURTHER ORDERED, That the Request of National Minority T.V.,
Inc. for Leave to Reply to Opposition to Motion to Vacate, filed
December 5, 1996, and the Request for Leave to File Reply Comments of
Intervenor Colby May, filed January 13, 1997, ARE GRANTED, and the
Motion to Vacate the Record on Improvidently Designated Issues, filed
August 20, 1996 by Trinity Broadcasting of Florida, Inc, and Trinity
Broadcasting Network, IS DENIED.

132\. IT IS FURTHER ORDERED, That oral argument being unnecessary for
the resolution of the matters before us, the Requests for Oral Argument,
filed January 23, 1996, by Trinity Broadcasting of Florida, Inc, and
Trinity Broadcasting Network, and February 28, 1996, by The Spanish
American League Against Discrimination, ARE DENIED.

133\. IT IS FURTHER ORDERED, That the Initial Decision of Administrative
Law Judge Joseph Chachkin, FCC 95D-13 (Nov. 6, 1995) (10 FCC Rcd 12020)
IS AFFIRMED in part and REVERSED in part, the application of Trinity
Broadcasting of Florida, Inc. (File No. BRACT-911001LY) IS DENIED, and
the application of Glendale Broadcasting Company (File No.
BPCT-911227KE) IS DENIED.

134\. IT IS FURTHER ORDERED, That (1) the Joint Request for Approval of
Settlement Agreement, filed April 13, 1998, by Glendale Broadcasting
Company, Maravillas Broadcasting Company, Trinity Broadcasting of
Florida, Inc., Trinity Christian Center of Santa Ana, Inc., Trinity
Broadcasting of New York, Inc., and National Minority T.V., Inc., (2)
the Joint Request for Approval of Settlement Agreement, filed April 13,
1998, by The Spanish American League Against Discrimination, Trinity
Broadcasting Network, Trinity Broadcasting of Florida, Inc., and
National Minority T.V., Inc, (3) the Joint Request for Approval of
Settlement Agreement, filed April 13, 1998, by the California State
Conference of Branches of the NAACP, the Alaska/Oregon/Washington State
Conference of Branches of the NAACP, Trinity Broadcasting Network, and
National Minority TV, and (4) the Joint Request for Approval of
Settlement Agreement, filed April 13, 1998, by the Spanish American
League Against Discrimination, Trinity Broadcasting Network , Trinity
Broadcasting of Florida, Inc., and National Minority T.V., Inc. ARE
DENIED and the associated settlement agreements ARE REJECTED.

135\. IT IS FURTHER ORDERED, that this proceeding IS TERMINATED.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

JOINT SEPARATE STATEMENT OF CHAIRMAN WILLIAM E. KENNARD AND COMMISSIONER
GLORIA TRISTANI

The Commission has adopted a decision denying renewal of Trinity
Broadcasting Network of Florida, Inc. for Station WHFT(TV) in Miami,
Florida. We believe that this action is amply justified by the record in
this proceeding, which shows that the principals of the licensee and its
affiliate, Trinity Broadcasting Network, abused the Commission\'s
minority ownership policies. That record demonstrates that Trinity
formed an entity called National Minority TV, Inc. (NMTV) to acquire
television authorizations as a minority-controlled applicant under
provisions of the multiple ownership rules then in effect. The record
further demonstrates that NMTV was not, in fact, minority-controlled but
was actually controlled by Trinity and its principals, who concealed
from the Commission the facts indicating that NMTV subverted the
purposes of the minority ownership rules.

Our action underscores that the Commission will not countenance the
abuse of its rules and policies. We have labored hard to ensure the
creation of a national telecommunications system that serves the public
interest to the fullest extent possible. We will not permit the public
interest to be undermined by those who refuse to comply with the letter
and spirit of our rules and policies. In particular, it is critically
important for the Commission to protect the integrity of our rules and
policies designed to promote the participation by people of all
backgrounds in broadcasting. Those who believe, as we do, that the
Commission should advance policies to promote participation by
minorities and women in the broadcast industry, have an obligation to
safeguard the integrity of those policies by enforcing against abuses
and shams. Our intent in enacting these rules and policies has been to
create real opportunities for those who, for too long, have been
unjustly excluded from participation. We are pleased that the Commission
has acted decisively to reaffirm that our minority ownership rules will
serve this worthy goal and will not be used for the advantage of those
not entitled to benefit by them.

STATEMENT OF COMMISSIONERS HAROLD W. FURCHTGOTT-ROTH

AND MICHAEL K. POWELL, DISSENTING IN PART

In re: Trinity Broadcasting of Florida, Inc., Miami, Florida, MM Docket
No. 93-75

We respectfully dissent from the Commission's finding that Trinity
Broadcasting of Florida, Inc. (\"TBF\"), is \"unqualified\" to hold the
license to operate television station WHFT. We are not persuaded that
the finding of abuse of process that underlies this disqualification is
warranted. Specifically, we take issue with two key conclusions in this
*Order*. First, assuming that TBF\'s parent company, Trinity
Broadcasting Network (\"TBN\") actually exercised *de facto* control of
National Minority TV, Inc. (\"NMTV\"), we do not think that the legal
definition of \"minority-controlled\" under the multiple ownership
exception unambiguously included a *de facto* element applicable to
NMTV. Second, we are not persuaded that the evidentiary record in this
proceeding shows that TBN and its principals specifically intended in
these full power television applications to deceive the Commission about
control of NMTV.

As this *Order* acknowledges, our precedent clearly requires proof of a
\"specific intent to deceive\" the Commission in order to make a finding
of abuse of process.[^26] Our precedent teaches that this \"is not an
easy matter to prove.\"[^27] Today\'s decision finds an abuse of process
on the basis of a record that shows, at most, legal uncertainty on the
part of TBN\'s principals concerning the company's disclosure obligation
and NMTV\'s status as a minority-controlled company. Such uncertainty,
however, is quite a different thing from a particularized intent to
deceive the Commission about the \"true\" facts of NMTV\'s situation and
thereby willfully abuse its process.[^28]

I.

Today\'s Order asserts "that Commission rules and precedent have always
given fair notice that *de facto* control is required to take advantage
of the special provision concerning minority ownership in the multiple
ownership rules."[^29] Close examination of the relevant legal

sources, however, reveals that this assertion is unsustainable. There
was at least some ambiguity on this score in the multiple ownership
rules. [^30] In similar circumstances, the Commission has given the
benefit of the doubt to the licensee. *See Fox Television Stations,
Inc.*, 10 FCC Rcd 8452 (1995) (exonerating party of allegations of
misrepresentation and lack of candor on grounds of party\'s reliance
upon advice of counsel and unclear state of relevant law). We would
follow that precedent here.

Much like the situation in *Fox Television*, counsel for TBN advised its
client that, for purposes of the television applications, NMTV was
"minority-controlled" within the meaning of the rule. This position was
based on the fact that two-thirds of the members of NMTV\'s board of
directors were minorities. Counsel could well have based this advice on
a strict reading of the definition of "minority-controlled" in Section
73.3555(e)(3)(iii). That section provided that: "*Minority-controlled*
means more than 50 percent owned by one or more members of a minority
group." One could rationally interpret that definition to adopt an
exclusively *de jure* test for minority-controlled: the existence of
\"control\" would be determined by an objective percentage formula.
Indeed, given that nothing in the text of the language mentions any *de
facto* element of the definition, that would be a natural reading of the
rule.

Moreover, language in the *Multiple Ownership Order* adopting the rule
supports this reading of section 73.3555(e)(3)(iii). In that Order, the
Commission explained that it was "adopting rules today which permit
group owners of television and radio stations to utilize a maximum
numerical cap of 14 stations provided that at least two of the stations
in which they hold cognizable interests are minority controlled."[^31]
The Commission continued:

A question arises as to the proper definition of a minority owned
station for the purposes of our multiple ownership rules. In this
regard, we note that the Commission has adopted different standards of
minority control depending on the mechanism used to foster its minority
policies. In the context of multiple ownership policies, *we believe
that a greater than 50 percent minority ownership interest is an
appropriate and meaningful standard* for permitting increases to the
rules adopted herein.[^32]

This passage represents the *Multiple Ownership Order's* entire
discussion of the definitional issue. Nothing in its language suggests
that the Commission intended to apply a *de facto* control test in
addition to the 50 percent test. Notably, the dissenting statement of
Commissioner Dennis Patrick asserted \-- without provoking any rebuttal
\-- that "\[n\]o concern is given as to whether the 51% majority owners
will exert any influence on the station's programming or will have any
control at all."[^33] Thus, the *Multiple Ownership Order* and the
definition of minority control that it adopted could reasonably be read
to indicate that applicants need only demonstrate *de jure* control,
*i.e.,* greater than 50 percent minority ownership.

In deciding to disqualify NMTV, this Order does not admit of any
ambiguity with respect to the applicability of the element of *de facto*
control to TBN\'s application. Instead, the *Order* asserts that a note
appended to the multiple ownership rule makes clear that NMTV was
required to prove actual control in addition to 51% percent minority
ownership.[^34] We are unconvinced that the presence of this note in
section 73.3555 is sufficient to overcome the language of either the
actual rule on "minority-controlled" or the *Multiple Ownership Order*
regarding the existence of a *de facto* control test.

First, it is not clear that Note 1 applies to the definition of
"minority-controlled" at all. Note 1 is appended to all of section
73.3555, not subsection 73.3555(e)(3)(iii) in particular. One thus could
reasonably assume that the administrative gloss in Note 1 applies to
those instances in section 73.3555 in which "control" is not otherwise
defined, such as the TV duopoly rule.[^35] It is, in fact, awkward to
layer Note 1\'s explanation of \"control\" on top of the separate
definition of "minority-controlled" in subsection 73.3555(e)(3)(iii);
indeed, the definitional part of that regulation never uses the term
"control." Moreover, the statements in subsection 73.355(e)(3)(iii) and
the *Multiple Ownership Order* regarding the definition of minority
control might colorably be thought to outweigh this addendum on the
scale of legal authority.[^36]

Even if Note 1 governed the meaning of "minority-controlled," the text
of the note can not bear the weight with which the majority saddles it.
Note 1 states that \"the word \'control\' as used herein is not
*limited* to majority stock ownership, but *includes* actual working
control.\" (emphasis added). This language does not necessarily reflect
an intent to \"prevent licensees from circumventing the limitations
imposed by the multiple ownership rules by exercising actual control
over stations over which they did not have legal control.\"[^37] Rather,
it could well be understood to manifest an attempt to explain that
\"control\" *can* mean majority stock ownership, but that it can *also*
mean actual working control, as determined on a case-by-case basis. That
is, the Note could plausibly be interpreted to mean that if an entity
fails the 51% ownership test, but can nevertheless show that minorities
exercise actual working control over the entity, that entity would still
qualify as minority-controlled. A 51% equity interest was thus a proxy
for control, but control could also be demonstrated on a fact-specific,
case-by-case basis where that test was not met. That is not the same
thing, however, as requiring the application of a fact-specific, *de
facto* control analysis in all cases.[^38]

Next, the Commission argues that agency precedent \"has always required
minorities to exercise de facto control over \'minority-controlled\'
stations\" and suggests that the Commission meant to follow this
precedent in the *Multiple Ownership Order* by \"mak\[ing\] specific
reference\" to the 1982 Policy Statement on *Minority Ownership in
Broadcasting*.[^39] Neither claim is borne out by the relevant
documents.

We take the last point \-- that the Commission intended to adhere to the
\"traditional\" definition of minority controlled when it adopted the
ownership preference \-- first. The 1982 Policy Statement, upon which
today\'s decision relies as proof of such adherence, was merely cited in
a footnote*.* The footnote followed this sentence: \"We note that the
Commission has adopted different standards of minority control depending
on the mechanism used to foster its minority policies.\"[^40] The
Commission reads too much into the fact of this citation. To be sure,
the *Multiple Ownership Order* specifically referred to the Policy
Statement, but only as an example of the varying definitions of
minority-controlled in FCC administrative law. *There is no indication
that this citation was meant to incorporate the Statement\'s definition
of minority-controlled into the ownership exemption rules*. That
citation thus provides no substantive pass-through to either the Policy
Statement or the 1978 Policy Statement quoted therein. In fact,
immediately after citing the 1982 Policy Statement, the *Multiple
Ownership* *Order* went on to adopt an apparently independent standard
based on the different \"mechanism\" at issue: \"In the context of the
multiple ownership policies, we believe that a greater than 50 percent
minority ownership interest is an appropriate and meaningful
standard.\"[^41] The citation to the 1982 Statement serves to establish
a contrast to the rule that the Commission actually adopted in the
*Multiple Ownership* item, not a corollary. The \"meaningful standard\"
that the *Multiple Ownership* Commission adopted was, in its own words,
a \"greater than 50 percent minority ownership interest\" standard, not
the standard of the 1982 Policy Statement.[^42]

In any event, close examination of the 1982 Policy Statement on
*Minority Ownership in Broadcasting*,[^43] which this Order cites as
evidence that "Commission precedent has always required minorities to
exercise de facto control over \'minority-controlled\' stations,"[^44]
leads one to doubt, not to embrace, that proposition. *Minority
Ownership in Broadcasting* presented the Commission's policy statement
on minority tax certificates. In paragraph 7 of that statement, the
Commission indicated that entities would be deemed qualified for tax
certificates "where the minority ownership interest in the entity
exceeded fifty percent *or* was controlling."[^45] The paragraph does
not state that minority interests must uniformly demonstrate actual
control \-- over and above satisfaction of the ownership percentage test
\-- in order to receive a preference. To read it that way is to ignore
the clear disjunctive nature of the sentence.

Nor does paragraph 16 make such a statement. Although that paragraph
indicates that control is a factor in issuing tax certificates, it does
not clearly require parties affirmatively to show *de facto* control in
all circumstances in order to claim a minority benefit.[^46] Notably,
the sentence in question refers to \"minority ownership of and control
in the entity below 51 percent.\"[^47] Reading \"control\" independently
of \"minority ownership\" \-- as the *Order* does by emphasizing the
word \"and\"[^48] \-- makes no grammatical sense; it produces the odd
phrase \"control in the entity below 51 percent.\" The less strained
reading of this language is that \"control in the entity\" refers back
to the proxy of a 51% ownership interest. In other words, minority
ownership of 51%*,* which in turn establishes control, should not be
diminished by the transaction.

Finally, *William M. Barnard*[^49] does not bolster the *Order*\'s
contention that *de facto* control has always been a general requirement
for a finding of \"minority-controlled.\" That case involved the
granting of a tax certificate notwithstanding the fact that the minority
ownership interest in the beneficiary entity was less than 51% \--
specifically, 45.5%. It thus does not support the proposition that
actual control is a general requirement for a finding of
\"minority-controlled.\" To the contrary, it indicates that, where the
ownership interest is less than 51%, the Commission under its
\"traditional\" approach will apply a *de facto* test in order to save
the entity from automatic disqualification for minority-controlled
status. More specifically, this case is about \"the unique nature of
limited partnerships,\" for that was the factor that caused the
Commission to find \"sufficient minority involvement\" to warrant
\"issuance of a tax certificate\" even though the percentage test was
not met.[^50] Even if the case applied to section
73.3555(e)(3)(iii),[^51] that still would not mean that a *de facto*
control test governed TBN\'s application, in which there was no question
of failure to meet the percentage test.

In short, we find unpersuasive the evidence marshaled in the Order to
show that Commission rules, notes, or precedent clearly required NMTV to
make an affirmative *de facto* showing in its application. A reasonable
attorney, as well as a reasonable layperson, might have read the
regulation without being on clear notice that the minority control test
included any such element in the context of the multiple ownership
exemption. It certainly did not make clear that a *de facto* control
showing was necessary when the percentage test was satisfied. In light
of the foregoing, we cannot find that TBN\'s failure to make an initial
and affirmative showing of *de facto* control constituted an abuse of
process.

II\.

The evidence cited in the *Order* to show that the principals of TBN may
have been \"aware that\" NMTV\'s compliance with section
73.3555(e)(3)(iii) was \"doubtful\"[^52] is insufficient to show that
they possessed the requisite intent to deceive. At best, such evidence
shows some amount of reservation about NMTV\'s technical status. But
that is often the case in the legal arena, especially where, as here, an
agency adopts different tests for different purposes. Notably, the only
direct testimony in this record on the question of intent is that the
principals believed that, notwithstanding TBN\'s interaction with NMTV,
the nature of that relationship would *not* raise legal problems
relating to *de facto* control so long as other practices to promote
NMTV\'s independence were followed.[^53]

In rejecting this direct testimony as to intent, today\'s decision
states that the opinion of TBN counsel that NMTV qualified as
minority-controlled \"does not reflect a reasonable interpretation of
Commission policy.\"[^54] Given our analysis in Part I of the
regulations in effect when the application was filed, we cannot say that
this belief was unreasonable or clearly erroneous under the
circumstances.

Moreover, the reasonableness of a party\'s belief is not the issue here.
For abuse of process determinations, the relevant question is whether
the party possessed a specific intent to deceive. Even if the definition
of \"minority-controlled\" under the multiple ownership rules was
unambiguous at the time of NMTV's filing (which, as explained above, it
was not), that does not establish that TBN specifically intended to
deceive the Commission about matters relating to control of NMTV. The
clarity of the law is not probative of the filers\' intent. From the
proposition that the Commission provided clear notice of a *de facto*
control test, one might deduce, as an *objective* matter, that TBN
*should have known* of the *de facto* control requirement. But that
proposition tells us nothing about the *subjective* state of mind of
TBN\'s principals (the essence of an intent standard) or what they
*actually knew*. What a reasonable person should have known is not
necessarily what a particular person knew. And abuse of process is not
an objective question but a subjective one.

The Order\'s conclusions about intent, however, are based on speculation
about what the majority feels the principals must have known, not on
proof of what the principals did know. As discussed above, the Order\'s
rejection of TBN counsel\'s direct testimony is based only on the
\"reasonableness\" of that view, not on any evidence that he actually
knew that NMTV did not meet the relevant tests and consciously
endeavored to hide that from the Commission. Similarly, the Order
asserts that TBN principal \"Crouch. . . *could not have been* unaware
that he dominated NMTV, that NMTV was not truly independent of TBN, and
that there was no basis to claim otherwise.\"[^55] Yet the Order points
to no proof that he *was* aware of those things, or that he
intentionally withheld those facts in order to perpetrate a fraud on the
Commission. Whether the Commission finds the principals\' belief that
they had complied with the relevant rules to be with or \"without
foundation,\"[^56] the point is what the parties actually and
specifically intended. On this score, the item adduces scant evidence.

In search of evidence on the intent question, the Order relies on a
provision in one of TBN\'s purchase contracts that conditioned the
contract on NMTV\'s compliance with the minority control rule.[^57] It
is commonplace, however, for commercial contracts to be conditioned on
regulatory compliance or approval; such conditions are no admission of a
subjective belief that the matters in question indeed fail to satisfy
the relevant regulatory requirements.[^58] Again, what this provision
reflects is, at most, some lack of certitude about NMTV\'s status as a
\"minority-controlled\" company within the meaning of the regulation.
And again, this is not at all surprising given the case-by-case,
fact-specific, multi-factored nature of the legal determination of *de
facto* control \-- if the parties even knew that was the test. Whatever
its probative force, this contractual language is certainly not enough,
in our view, to overcome the direct record testimony on intent given by
the principals.

Finally, the Order suggests that the novelty of the question presented
(the meaning of section 73.3555(e)(3)(iii) as applied to a nonprofit
public charity) at the time of TBN\'s filing increased its burden of
initial disclosure. This sword of an argument is double-edged, however.
It could just as readily cut in favor of TBN on the intent
question.[^59] The fact that \"the Commission had never before applied
the provision to an arrangement\"[^60] such as NMTV\'s means that there
was no precedent to guide the applicants in their filing. Notice
therefore was less, not more, clear than the Commission argues it was.
In light of the novelty of the issue, any failure by TBN to disclose
certain information might seem less the product of an intent to deceive
than of lack of guidance on the meaning of \"minority-controlled\" under
the ownership exemption.

In short, the evidence adduced by the Commission does not persuade us
that TBN possessed a specific intent to deceive the Commission with
respect to control of NMTV, and we are aware of no other record evidence
that demonstrates such intent. While intent to deceive certainly can be
proven by circumstantial as opposed to direct evidence, the amount of
circumstantial evidence of intent to deceive here is not particularly
substantial. The only direct evidence on this issue is that the parties
did not mean to deceive the Commission. On such a record, a finding of
abuse of process is unwarranted.

\* \* \*

To conclude, we think this Order errs in asserting that TBN was on clear
notice of the applicability of a *de facto* control showing to its
applications. We further believe that the record evidence in this
proceeding is not sufficient to prove a specific intent to deceive the
Commission. In these circumstances, we find that imposition of the
"death penalty" of disqualification is both unfair and unwarranted.

[^1]: *    ^?^* NMTV was formerly called Translator TV, Inc. (TTI). In
    the interest of simplicity, we will refer to both entities as NMTV,
    unless we find that the context requires us to differentiate between
    the two names.

[^2]: *    ^?^* Subsequent assignments reduced the number of TBN-related
    stations to 12. 10 FCC Rcd at 12040 ¶ 136. More recently, Congress,
    in the Telecommunications Act of 1996, mandated that the Commission
    eliminate limitations on the number of television stations that can
    be owned nationwide, subject to an audience limit that is not
    exceeded here. Pub. L. 104-104, 110 Stat. 56 (Feb. 8, 1996), § 202.

[^3]: *    ^?^* These pleadings were originally filed with the
    Commission\'s Review Board. Before it ceased operation, the Board
    certified this case to the Commission. [Trinity Broadcasting of
    Florida, Inc.]{.underline}, 11 FCC Rcd 5255 (Rev. Bd. 1996).

[^4]: *    ^?^* In addition to TBF, the Bureau, and Glendale, the
    hearing designation order made TBN and NMTV parties, as well as The
    Spanish American League Against Discrimination (SALAD), which had
    filed a petition to deny against TBF. 8 FCC Rcd at 2481 ¶ 44. Colby
    May, an attorney to TBF, TBN, and NMTV, filed a petition for leave
    to intervene, to file comments, and to participate in oral argument.
    [See]{.underline} 47 C.F.R. § 1.223(c). May\'s asserted interest in
    intervening is that the ALJ and the Bureau made adverse findings as
    to his conduct in advising his clients. We have in the past
    permitted individuals to intervene to defend their reputation where:
    (1) earlier failure to seek intervention was occasioned by
    circumstances beyond petitioner\'s control; (2) the evidence offered
    appeared to be of decisional significance; and (3) the decision in
    the proceeding may have had a direct bearing on petitioner\'s
    reputation and future ability to earn a livelihood in the broadcast
    industry. [See]{.underline} [West Jersey Broadcasting
    Co.]{.underline}, 89 FCC 2d 469, 472-73 ¶ 10 (1980). Here, May\'s
    failure to anticipate adverse findings concerning him does not
    justify his failure to seek intervention earlier. Moreover, since
    the hearing has concluded, he can effectively be heard as an amicus.
    We have considered his proffered comments as an amicus brief.

[^5]: *    ^?^* While the exceptions were pending, TBF filed a Motion to
    Vacate the Record on Improvidently Designated Issues, arguing that
    new information warrants setting aside the designation order in this
    proceeding. The motion, however, consists mainly of arguments
    concerning matters that were considered at the time of designation
    or that have already been developed in the hearing record in this
    proceeding and which we have taken into consideration in reviewing
    that record. We see no reason to revisit the designation order. We
    believe that our decision here adequately and appropriately disposes
    of the questions raised.

[^6]: *    ^?^* Specifically, on February 1, 1985, the FCC issued a
    Memorandum Opinion and Order amending its multiple ownership rules
    by permitting owners to hold cognizable interests in up to 12 TV
    stations. In addition, a group owner could hold cognizable interests
    in up to 14 stations if two of the stations were minority
    controlled. Minority controlled was defined as more than 50 percent
    owned by one or more members of a minority group. The Memorandum
    Opinion and Order did not discuss the concept of de facto control,
    nor did it change Note 1 to Section 73.3555, which reads as follows:

    Note 1: The word \"control\" as used herein is not limited to
    majority

    stock ownership, but includes actual working control in whatever
    manner

    exercised.

[^7]: *    ^?^* The ALJ found that May asserted that he based this
    advice on his reading of [Amendment of Section 73.3555]{.underline}
    and the resulting rule, but did no other research. In May\'s view,
    TTI\'s legal standing and the racial and ethnic identity of its
    three board members were the crucial factors which would allow TBN
    and TTI to qualify for the multiple ownership exceptions to the rule
    of 12. May was aware that under Note 1 control is not limited to
    minority stock ownership but includes actual working control.
    However, May claimed he paid no attention to Note 1 or Commission
    precedent interpreting Note 1. He asserted that in his mind control
    and ownership are functionally the same in the case of a non profit
    entity and the exception to the Rule of 12 was satisfied where the
    minority group constituted more than 50 percent of the directors.
    However, May agreed that neither Crouch nor TBN could legally
    exercise actual working control over NMTV as that term is used in
    Note 1, and he advised Crouch that the directors of NMTV had to be
    the parties that were, in fact, controlling and operating NMTV. 10
    FCC Rcd at 12029 ¶ 57.

[^8]: *    ^?^* Duff sent the purchase agreement to the seller, along
    with a transmittal letter prepared on TBN stationery, signing the
    letter as assistant to the president, her TBN title. Similarly,
    Duff\'s transmittal letter to May accompanying the FCC application
    for the station\'s transfer was prepared on TBN stationery and she
    signed it as assistant to the president (of TBN). In addition, there
    was no evidence that at the time the agreement was executed, NMTV\'s
    board had considered (much less approved) the purchase or discussed
    financing for the acquisition or construction of the station. 12 FCC
    Rcd at 12029 ¶ 60. A written authorization was subsequently issued
    by the NMTV board. At the January, 1987 board meeting of all of the
    TBN-related companies, TBN\'s board authorized TBN to spend up to
    \$3 million to acquire low power television construction permits and
    stations. The minutes are silent about TTI\'s pending contract to
    buy a full power television station for Odessa. [Id]{.underline}. at
    12029 ¶ 61.

[^9]: *    ^?^* The ALJ found that May copied the information contained
    in NMTV\'s portion of the assignment application for the Portland
    permit from the comparable portion of NMTV\'s application for
    Odessa. Although the application references translator applications
    filed by TTI in which it had been stated that Duff was then a
    director of TBN and reveals that both Crouch and Duff had interest
    in two \[noncommercial\] stations and the NMTV station in Odessa,
    the application provides no information about Duff\'s or NMTV\'s
    relationship with TBN. 10 FCC Rcd at 12033 ¶ 85.

[^10]: *    ^?^* [See]{.underline} [e.g.]{.underline}, [Arnold L.
    Chase]{.underline}, 6 FCC Rcd 7387, 7409 (ALJ 1991),
    [citing]{.underline}, [Benjamin L. Dubb]{.underline}, 16 FCC 274,
    288 (1951); [Southwest Texas Broadcasting Council]{.underline}, 85
    FCC 2d 713, 715 (1981).

[^11]: *    ^?^* As noted, TBF\'s exceptions were filed jointly with
    TBN. Given the identity of interests involved, references to TBF
    will be understood to include TBN.

[^12]: *    ^?^* We do not accord any particular significance to the
    fact that NMTV has had only three or four directors, while its
    bylaws authorize up to 10 directors. [See]{.underline} TBF Exh. 101,
    Tab C at 3. We have no reason to doubt NMTV\'s claim that such
    provisions in bylaws are frequently boilerplate.

[^13]: *    ^?^* TBN\'s bylaws provide that directors serve for a term
    of three years. TBF Exh. 104, Tab C at 11. It is unclear whether
    Crouch has any protection from not being reelected after expiration
    of his term.

[^14]: *    ^?^* Like the ALJ, we do not believe that information
    contained in various filings, such as ownership reports etc.,
    supports TBF\'s position on the abuse of process issue. We agree
    with the following observation by the ALJ:

    Even if one accepts the argument that it is incumbent on the
    Commission to review as many as 80 prior filings before finding an
    applicant to have lacked candor, the various filings of TBN and NMTV
    do not begin to give a full and truthful picture of the extent of
    their relationship. The bulk of the documents reveal no more than
    that a person named Mrs. Jane Duff, or Jane Duff, will be receiving
    copies of TBN applications or had witnessed signing of a purchase
    agreement for a television translator construction permit or
    station. With respect to the KTBN-TV renewal application which was
    filed on July 29, 1988, the document reveals only that Jane Duff,
    \'the [Administrative]{.underline} Assistant to the President\'
    \[emphasis added\] is the person primarily responsible for the
    station\'s EEO program. Only with respect to the ownership report
    for CET \[the corporation set up to acquire and hold noncommercial
    TV licenses\] filed November 13, 1989, is it revealed that Jane
    Duff, a businesswoman, is a director of both CET and NMTV, and an
    employee of TBN\...It required two Commission letters of inquiry
    before sufficient facts were forthcoming to permit even a
    preliminary analysis of the TBN/NMTV relationship. 10 FCC Rcd at
    12061 n. 47.

[^15]: *    ^?^* Reckless disregard is the equivalent of knowing
    deception. [See]{.underline} [RKO General, Inc.]{.underline}, 670
    F.2d 215, 225 (D.C. Cir. 1981), [citing,]{.underline} [Golden
    Broadcasting Systems, Inc.]{.underline}, 68 FCC 2d 1099, 1106 ¶ 16
    (1978).

[^16]: *    ^?^* [Minority Ownership in Broadcasting]{.underline}, 92
    FCC 2d 849, 850 ¶ 2 (1982).

[^17]: *    ^?^* TBF also relies on the dissenting statement of the
    Commissioner (later Chairman) Dennis R. Patrick that:

    Under the majority\'s scheme, the right to purchase broadcast
    stations over the established ceiling turns upon the race of the
    proposed owners alone. No further showing is required with respect
    to how these owners may contribute to diversity. No concern is given
    as to whether the 51 % minority owners will exert any influence over
    the station\'s programming or will have any control at all.

    [Memorandum Opinion and Order]{.underline}, 100 FCC 2d at 104. This
    dissenting statement does not, of course, reflect the views of the
    Commission majority who adopted the rule, nor is it evidence that
    the Commission, in adopting the 51 percent standard, was not
    concerned that minorities would have any control over station
    policies, as Commissioner Patrick claimed. As discussed above, the
    Commission clearly intended to establish a \"meaningful standard\"
    of control to ensure that minorities had actual control over the
    stations benefitting from its minority ownership policies.

[^18]: *    ^?^* By contrast, the [Policy Statement]{.underline} did not
    adopt a proposal cited by TBF that nonminorities would be encouraged
    to enter into \"joint ventures\" with minorities in which they would
    provide financing, management, and technical assistance.
    [See]{.underline} [Policy Statement]{.underline}, 92 FCC 2d at 852
    n.17.

[^19]: *    ^?^* As noted under the de facto control section, the
    parties in 1987 eliminated some of the most egregious failures to
    respect NMTV\'s separate identity, such as mixing together the
    accounts of TBN and NMTV. However, these corrective measures were
    incomplete, and, for example, TBN continued to advance money to NMTV
    as if NMTV were an owned-and-operated company. [See]{.underline}
    paragraphs 55-59, [supra]{.underline}.

[^20]: *    ^?^* As noted above, the ALJ found that Crouch\'s effort to
    modify his testimony in this regard in an attempt to shift the blame
    for nondisclosure to May was not credible. 10 FCC Rcd at 12030 ¶ 65.

[^21]: *    ^?^* The agreement stated:

    . . . Buyer\'s President, Paul F. Crouch, however, is an officer and
    director of \[TBN-related entities\], which in the aggregate hold
    interests in the maximum number of television facilities permitted
    by non-minority controlled organizations under Commission Rule
    73.3555. 47 C.F.R. § 73.3555. Accordingly, buyer will be required to
    establish compliance with \[the rule\], before the assignment
    specified herein can be approved by the FCC. Buyer further
    represents and warrants that it will take any and all reasonable
    steps to establish compliance with Commission Rule 73.3555, 47
    C.F.R. § 73.3555 . . . ; however, in the event the FCC does not
    approve the assignment for reasons associated with Rule 73.3555, and
    its interpretation and/or application thereof, then this Agreement
    shall automatically become void, and Buyer and Seller shall be
    relieved of any and all obligations to the other whatsoever without
    liability.

    TBF Exh. 101, Tab Q at 12-13.

[^22]: *    ^?^* Glasser (who is now deceased) did not testify in this
    proceeding. However, the record contains an account of an interview
    with Glasser reported in a January 28, 1989 article in the [Los
    Angeles Times]{.underline} (TBF Exh. 105, Tab R), which was received
    into evidence as relevant to May\'s state of mind. Tr. 678. After
    the close of the record, TBN submitted a sworn declaration by
    Glasser in an attempt to further bolster its case.

[^23]: *    ^?^* Other representations questioned by TBF\'s opponents
    have less significance. NMTV stated (MMB Exh. 353 at 26) that \"the
    cornerstone of NMTV\'s funding to acquire WTGI-TV is its December 7,
    1990 letter from the Bank of California. . . . \" Testimony
    indicates that the letter was a mere formality and that the loan
    would actually be made by TBN. Tr. 2118-19. In context, however, the
    statement related to allegations made about whether fundraising
    would be used to finance the acquisition \-- allegations as to which
    the source of the loan was not material. MMB Exh. 353 at 23-24, 26.
    Moreover, the testimony in question explained that the bank loan was
    intended to conceal TBN\'s commitment from the seller (which might
    have viewed TBN\'s \"deep pocket\" as a basis to raise the price),
    not from the Commission. Tr. 2119. In any event, to the extent that
    there was ambiguity, TBN\'s role in financing the acquisition was
    timely disclosed in response to a subsequent Commission inquiry. TBF
    Exh. 121 at 16. Additional statements discussed by TBF\'s opponents
    are not significant enough to merit separate comment.

[^24]: *    ^?^* The Commission has granted extension of a construction
    permit to permit sale where failure to complete construction was due
    to circumstances beyond the permittee\'s control. [Beacon Radio,
    Inc.]{.underline}, 18 FCC 2d 648, 649-50 ¶¶ 3-6 (1969). However, the
    permittee\'s failure to construct because of an economic judgement
    that the station was not viable did not warrant an extension to
    permit sale. [Community Service Telecasters, Inc.]{.underline}, 6
    FCC Rcd 6026, 6027 ¶ 5, 6028 ¶¶ 7-8 (1991). Thus, the permittee\'s
    right or intention to sell the permit is not dispositive, it is the
    permittee\'s diligence in undertaking construction.

[^25]: *    ^?^* The agreement did not preclude Gardner from seeking
    funds from alternative sources to undertake LPTV development, if he
    chose to do so. Tr. 5297, 5339-40. To the extent that the agreement
    reflects Gardner\'s intended course of action, it is consistent with
    the lack of a definite plan to construct, since Raystay negotiated
    provisions in the loan agreement that permitted either the transfer
    of its LPTV interests to an affiliate (so that Gardner could develop
    them) or sale to a third party. TBF Exh. 264 at 14, 20; Tr. 5087-90,
    5182-83.

[^26]: *^?^* See Order *at para*. *83* *(*citing *Evansville Skywave,
    Inc.*, *7 FCC Rcd 1699, 1702 n.10 (1992)).*

[^27]: *^?^ WWOR-TV, Inc.*, *7 FCC Rcd 636, 638 (1992) (internal
    quotation omitted).*

[^28]: *^?^ We emphasize that the finding of abuse of process is based
    on the assumption that TBF was affirmatively required to disclose
    the details of the relationship between NMTV and TBN in its initial
    application. There is no indication on this record that the parties
    failed to provide relevant information once the staff requested it;
    indeed, the record shows that TBN subsequently disclosed the
    additional facts regarding \"control\" upon which the Commission
    today relies*. See Order *at* *paras*. *94-95*. *In this regard,
    the* Order *imposes an unduly high burden of initial disclosure upon
    applicants*. See id*. at* *para*. *95 (rejecting subsequent
    disclosure as curative because TBN did not \"\[take\] the
    initiative\" to do so and because disclosure occurred as a response
    to questions asked by Commission staff). By making the validity of
    subsequent disclosures turn on the reason why disclosure was made,
    the* Order *distorts what ought to be the real issue,* i.e.*,
    whether disclosure was made.*

[^29]: *^?^* Order *at para.* *86.*

[^30]: *^?^ Indeed, the Mass Media Bureau Trial Staff initially came to
    the same conclusion*. See *Mass Media Bureau Proposed Findings of
    Fact & Conclusions of Law, at* *159.*

[^31]: *^?^ Amendment to Section 73.3555 of the Commission's Rules
    Relating to Multiple Ownership of AM, FM, and Television Broadcast
    Stations,* *100 FCC 2d 74, 94 (1985) (*herein after *"Multiple
    Ownership Order")*.

[^32]: ^ ^ *^?^* *100 FCC 2d at 95 (footnotes omitted) (emphasis
    added).*

[^33]: ^ ^ *^?^* Id*. at* *104.* *While Commissioner Patrick\'s
    interpretation of the* Order *is of course not binding in any legal
    sense, it is nonetheless probative of the meaning of the* Order*. At
    a minimum, it shows that reasonable people such as the Commissioner
    could have read the* Order *and related rule as adopting a straight
    percentage test for companies that met the 51% level.*

[^34]: *^?^* Order *at* *para. 86*.

[^35]: *^?^* See *47 C.F.R. section 73.3555(e)(1).*

[^36]: *^?^* Cf*.* *Laurens Walker*, Writings on the Margin of American
    Law: Committee Notes, Comments, and Commentary*, 29 Ga. L. Rev. 993,
    994 (1995) (arguing that \"courts should assign little, if any,
    weight to these examples of gloss\").*

[^37]: *^?^* Order *at para. 86*.

[^38]: *^?^* *The* Order's *reliance on* *Southwest Texas Public
    Broadcasting Council*, *85 FCC 2d 713 (1981),* see Order *at*
    *para*. *86, is also misplaced. That decision sets forth a
    definition of \"control\" that is limited by its terms to the
    \"determin\[ation\] whether an unauthorized transfer of control has
    occurred\" under section 310(d) of the Communications Act. 85 FCC 2d
    at 715. As the quoted sentence states in full,* \"\[s\]ection 310(d)
    *contemplates every form of control, actual or legal, direct or
    indirect, negative or affirmative, over basic operating policies*.\"
    Id*. (emphasis added). That statutory provision is not at issue
    here. Moreover, it stands to reason that in the context of
    unauthorized transfers the test for control might be exclusively* de
    facto*. Unauthorized transfers of control are rarely effected by
    overt, recorded acts like the transfer of stock; they are, by
    definition,* sub rosa*, a fact that practically requires the
    Commission to look beyond legal ownership.*

[^39]: *^?^* Order *at para. 87.*

[^40]: *^?^ 100 FCC Rcd at para. 46.*

[^41]: *^?^* Id*.*

[^42]: *^?^* Cf*.* Order *at* *para. 87 n. 17* *(asserting that \"the
    Commission clearly intended to establish a \'meaningful standard\'
    of control to ensure that minorities had actual control over the
    stations benefiting from its minority ownership policies\").*

[^43]: ^ *?*^ *92 FCC 2d 849 (1982).*

[^44]: *^?^* Order *at para* *87.*

[^45]: ^    ^ *^?^ 92 FCC 2d at 853 (emphasis added).*

[^46]: *^?^* *For this reason, it is not surprising that the* Multiple
    Ownership Order *cited paragraph 16 only for the proposition that
    the Commission "has adopted different standards of minority control
    depending on the mechanism used to foster its minority policies, "as
    discussed above.*

[^47]: *^?^* Id*.* *at 857*.

[^48]: *^?^* Order *at* *para.* *90.*

[^49]: *^?^ 44 RR 2d 525 (1978) (*cited *in* *Order at para. 89).*

[^50]: *^?^ 92 FCC 2d at para.8.*

[^51]: *^?^* Barnard *involved the interpretation and application of the
    1978 Policy Statement on minority ownership. As explained above,*
    the Multiple Ownership Order *never incorporated the definitional
    rule of the 1982 Policy Statement, much less that of the 1978 Policy
    Statement discussed in the 1982 Statement. The relevance of this
    case to the meaning of section 73.3555(e)(3)(iii) is thus difficult
    to see.*

[^52]: *^?^* Order *at para.*. *91;* see also id*. at* *para.* *94
    (faulting application for \"not acknowledg\[ing\] that there is
    even* a question *of whether NMTV should be deemed minority
    controlled\") (emphasis added);* id. *at para. 83 (concluding that
    the "claim of minority control was at best doubtful").*

[^53]: *^?^ Transcript at 3206, 3226, 3228, 3399-401, 3604.*

[^54]: *^?^* Order *at para. 92.*

[^55]: *^?^* Id.

[^56]: *^?^* Id.

[^57]: *^?^* Id*. at para. 93 & n. 21.*

[^58]: *^?^* Id*. at para. 92.*

[^59]: *^?^ The argument also contradicts the majority\'s earlier
    contention that the \"traditional\" definition of
    minority-controlled applied in the multiple ownership context. If
    that were true, then precedent on the meaning of section 73.3555 as
    applied to this case indeed would have existed.*

[^60]: *^?^* Id. *at para. 93.*