**Before the**

**Federal Communications Commission**

#  Washington, D.C. 20554

In the Matter of )

)

MARC SOBEL ) WT Docket No. 97-56

)

Applicant for Certain Part 90 Authorizations )

in the Los Angeles Area and Requestor of )

Certain Finder\'s Preferences )

)

MARC SOBEL AND MARC SOBEL )

D/B/A AIR WAVE COMMUNICATIONS )

)

Licensee of Certain Part 90 Stations in the )

Los Angeles Area )

)

**APPEARANCES**

[Robert J. Keller]{.underline} on behalf of Marc Sobel[;]{.underline}
[Aaron P. Shainis]{.underline}, [Lee J. Peltzman]{.underline}, [Barry A.
Friedman]{.underline} and [Scott A. Fenske]{.underline} on behalf of
James A. Kay, Jr.; and [Charles W.]{.underline} Kelley, [Gary P.
Schonman]{.underline}, [William H. Knowles-Kellett]{.underline}, [John
J. Schauble]{.underline}, and [D. Anthony Mastando]{.underline} on
behalf of the Wireless Telecommunications Bureau and the Enforcement
Bureau,[^1] Federal Communications Commission.

**DECISION**

**Adopted:** November 20, 2001 **Released:** January 25, 2002

By the Commission: Commissioner Martin concurring in part, dissenting in
part, and issuing a statement.

**I. INTRODUCTION**

1\. This decision modifies an Initial Decision by Administrative Law
Judge John M. Frysiak concluding that Marc Sobel lacks the requisite
qualifications to be a Commission licensee of Part 90 land mobile
stations. [Marc Sobel]{.underline}, 12 FCC Rcd 22879 (ALJ 1997). We find
that Sobel transferred control of some of his facilities in the land
mobile service without Commission authorization and that he lacked
candor about the status of these facilities in a sworn affidavit. We
modify the initial decision to the extent that we conclude that it is
appropriate to limit the sanctions imposed to Sobel's facilities and
applications on the 800 MHz band.

**II. BACKGROUND**

2\. This proceeding is an offshoot of WT Docket No. 94-147, which the
Commission designated for hearing to determine whether James A. Kay,
Jr., a licensee of land mobile radio facilities under Part 90 of the
Commission\'s rules, complied with those rules and whether he possesses
the character qualifications to remain a Commission licensee. [James A.
Kay, Jr.]{.underline}, 10 FCC Rcd 2062 (1994), [modified]{.underline},
11 FCC Rcd 5324 (1996). Kay was ordered to show cause why his licenses
should not be revoked or cancelled, why he should not be ordered to
cease and desist from certain violations of the Communications Act, and
why an order for forfeiture should not issue.

3\. In designating that proceeding for hearing, the Commission found
that: \"Information available to the Commission also indicates that
James A. Kay, Jr. may have conducted business under a number of names. .
. . . We believe these names include . . Marc Sobel dba Airwave
Communications.\" 10 FCC Rcd at 2063 ¶ 3. Accordingly, the Commission
designated for hearing in WT Docket No. 94-147 11 licenses held in the
name of Marc Sobel. [Id]{.underline}. at 2080. On January 25, 1995, Kay
moved to enlarge, change, or delete issues, alleging in part that the
Commission erred in designating the 11 Sobel licenses for hearing. WTB
Exh. 44 at 4-5. Subsequently, on February 23, 1996 and March 6, 1996,
the Wireless Telecommunications Bureau itself filed pleadings indicating
that the relationship between Kay and the Sobel licenses was unclear and
needed to be explored in a nonadjudicatory investigation. After the ALJ
certified the matter, the Commission deleted the Sobel applications from
WT Docket No. 94-147. [James A. Kay, Jr.]{.underline}, 11 FCC Rcd 5324
(1996).

4\. On June 11, 1996, the Bureau, pursuant to 47 U.S.C. § 308(b), sent a
letter of inquiry to Sobel asking him to detail his business association
with Kay. SBL Exh. 6, Att. 9. Sobel responded by disclosing a document
entitled \"Radio System Management Agreement and Marketing Agreement,\"
dated December 30, 1994, (Management Agreement) under which Kay managed
15 conventional SMR stations in the 800 MHz band licensed to Sobel.[^2]
SBL Exh. 3, WTB Exh. 39. Based on the terms of the Management Agreement,
the Commission found a substantial and material question of fact as to
whether Sobel has transferred control of the stations covered by the
Management Agreement to Kay without Commission approval in violation of
47 U.S.C. § 310(d). [Marc Sobel]{.underline}, 12 FCC Rcd 3298 (1997).
Sobel was ordered to show cause why the Management Agreement stations
(of which there were then only 13), and 15 stations licensed to Sobel in
the Business Radio Service, two on the 800 MHz band and 13 on the 450
MHz and 470-512 MHz bands, should not be revoked. The Commission also
designated for hearing Sobel\'s pending applications for 13 facilities,
five on the 800 MHz and eight on the 450 MHz and 470-512 MHz bands and
five pending requests by Sobel for finder\'s preferences for stations on
the 800 MHz band. Following designation, the ALJ added an issue to
determine whether Sobel made misrepresentations or lacked candor in a
January 24, 1995 affidavit filed in support of Kay\'s motion to enlarge,
change, or delete issues. [Marc Sobel]{.underline}, FCC 97M-82 (May 8,
1997).

5\. In his initial decision, the ALJ concluded that Sobel was
unqualified to be a Commission licensee. [Marc Sobel]{.underline}, 12
FCC Rcd 22879 (ALJ 1997). He found that, consistent with the criteria
set forth in [Intermountain Microwave]{.underline}, 24 RR 983 (1963),
Sobel transferred control of the stations covered by the Management
Agreement to Kay without Commission authorization. [Id]{.underline}. at
22899-900 ¶¶ 65-68. He further found that Sobel\'s affidavit
misrepresented Kay\'s relationship to the Management Agreement stations
and that Sobel also lacked candor before the Commission both by failing
to submit voluntarily the Management Agreement to the Commission and in
correspondence with the Commission. [Id]{.underline}. at 22900-902 ¶¶
69-77. The ALJ therefore revoked Sobel\'s licenses, denied his
applications, and dismissed his finder\'s preference requests.
[Id]{.underline}. at 22902-03 ¶¶ 78-80.

6\. Now before the Commission are exceptions filed by Sobel and Kay and
a reply by the Bureau and several associated pleadings. For the reasons
set forth below, we modify the initial decision. We find that Sobel did
transfer control of the Management Agreement stations without Commission
authorization and lacked candor about the status of the stations.
However, we conclude that it is appropriate to limit the sanctions for
these improprieties to Sobel's interests on the 800 MHz band.

**III. PROCEDURAL MATTERS**

7\. Before we turn to the merits of the case before us, we wish to
address three procedural matters. First, Sobel argues in his exceptions
that the hearing in this proceeding violates 5 U.S.C. § 558(c), which
states in pertinent part:

Except in cases of willfulness or those in which the public health,
interest, or safety requires otherwise, the withdrawal, suspension,
revocation, or annulment of a license is lawful only if, before the
institution of agency proceedings therefor, the licensee has been given
\--

\(1\) notice by the agency in writing of the facts or conduct which may
warrant the action; and

\(2\) opportunity to demonstrate or achieve compliance with all lawful
requirement\[s\].

Sobel claims that the hearing designation order was the first notice he
had of the transfer of control allegations and that, prior to
designation, the Bureau had declined Sobel\'s requests to apprise him of
the Bureau\'s concerns. Sobel disputes that the \"willfulness\"
exception applies in this case. The Bureau asserts that Sobel\'s alleged
misconduct was \"willful\" within the meaning of the Communications Act.

8\. We find that the hearing designation order in this proceeding
complies with 5 U.S.C. § 558(c) because the misconduct alleged was
\"willful.\" The term \"willful\" is not defined by the APA. Thus, to
determine the appropriate definition of \"willful\" for purposes of
applying § 558(c), we refer to the substantative statute involved, in
this case the Communications Act. [See]{.underline} [Hutto Stockyard,
Inc. v. U.S. Department of Agriculture]{.underline}, 903 F.2d 299, 304
(4th Cir. 1990) (Packers and Stockyards Act); [Lawrence v. Commodity
Futures Trading Commission]{.underline}, 759 F.2d 767, 773 (9th Cir.
1985) (Commodities Exchange Act); [Finer Foods Sales, Inc. v.
Block]{.underline}, 708 F.2d 774, 778 (D.C. Cir. 1983) (Perishable
Agricultural Commodities Act). The Communications Act states:

The term \"willful\", when used with reference to the commission or
omission of any act, means the conscious and deliberate commission or
omission of such act, irrespective of any intent to violate any
provision of this Act, or any rule or regulation of the Commission
authorized by this Act or by a treaty ratified by the United States.

47 U.S.C. § 312(f)(1). Both of the issues designated in this proceeding
clearly involve conscious and deliberate acts and, therefore,
\"willfulness.\"

9\. Second, on February 27, 1998, Sobel filed a pleading entitled
Request for Inquiry and Investigation in which he alleges that the
Bureau committed improprieties in connection with this proceeding. In
his reply to the Bureau\'s opposition, Sobel indicates that:

The Bureau argues that Sobel\'s *Revised Request for Inquiry and
Investigation (\"Request\")* is an improper an untimely supplement to
Sobel\'s appeal from the *Initial Decision of Administrative Law Judge
John M. Frysiak* . . . .But Sobel is not seeking to supplement his
appeal. Sobel timely submitted his *Consolidated Brief and Exceptions
(\"Exceptions\")* and he stands by that pleading insofar as the
Commission\'s review of the *Initial Decision* is concerned. For
purposes of the *Request*, Sobel is not challenging the presiding
officer\'s conduct of the hearing and his *Initial Decision*, nor is he
challenging the action of the Commission in designating the hearing.
Sobel is separately seeking an inquiry and investigation by Bureau
personnel in connection with the proceeding.

Reply to Opposition at 1-2. The cited language makes clear that Sobel\'s
request has no bearing on our review of the initial decision, and we
need not consider it further here. Nevertheless, out of an abundance of
caution, we have examined Sobel\'s allegations. In many respects, these
allegations are identical to those independently raised by Kay in WT
Docket No. 94-147. [See]{.underline} [James A. Kay, Jr.]{.underline}, 13
FCC Rcd 16369 (1998), [pet. for recon. dismissed]{.underline}, 14 FCC
Rcd 1291 (1998). In considering Kay\'s allegations, we found no basis to
conclude that the Bureau\'s conduct had resulted in any material
prejudice and we see no reason to believe that this conduct prejudiced
Sobel. [Id]{.underline}. We reaffirmed this conclusion, disavowing
adverse conclusions by Chief Judge Chachkin, after examining the full
record in the Kay proceeding. [James A. Kay, Jr.]{.underline}, FCC
01-341 (adopted Nov. 20, 2001) at n.3 ([see]{.underline} paragraph 10,
[infra]{.underline}). Additionally, Sobel contends that the Bureau acted
unreasonably after the inclusion of Sobel\'s licenses in the Kay hearing
designation order had been questioned. Sobel alleges that the Bureau
declined to permit Sobel to address the Bureau\'s concerns outside the
context of a hearing proceeding and instead initiated the designation of
this proceeding. As the discussion below indicates, our review of the
record developed in this proceeding demonstrates that there was an ample
basis to designate this proceeding for hearing and fails to disclose any
indication that Sobel was denied a full opportunity to meet the issues
raised. Accordingly, no further action is warranted.

10\. Third, Sobel asks the Commission to defer review of the initial
decision in this proceeding and consolidate consideration of the initial
decision in this proceeding with that in WT Docket No. 94-147 concerning
James A. Kay, Jr. In that proceeding, then Chief Administrative Law
Judge Joseph Chachkin ruled that Kay, and Sobel, did not make
misrepresentations or lack candor before the Commission. [James A. Kay,
Jr.]{.underline}, FCC 99D-04 (ALJ Sept. 10, 1999). His findings were
thus contrary to Judge Frysiak's findings in this proceeding. We have on
our own motion undertaken to consider the two proceedings concurrently.
In a companion decision we have ruled today on exceptions filed by the
Wireless Telecommunications Bureau in WT Docket No. 94-147. [James A.
Kay, Jr.]{.underline}, FCC 01-341 (adopted Nov. 20, 2001) (Decision). In
that proceeding, we held that because Kay is a party in WT Docket No.
97-56 (this proceeding), he is bound by the determinations made here to
the extent that they involve findings and conclusions common to the two
proceedings. Decision at ¶ 85. As Sobel requests, we considered the fact
that Chief Judge Chachkin and Judge Frysiak reached inconsistent
conclusions about the credibility of Kay and Sobel. We decided not to
defer to either ALJ and based our decision on our own independent
assessment of the nature of the representations made and the
circumstances that were involved. Decision at ¶¶ 86-87. In view of our
action, we will dismiss Sobel's petition to defer and consolidate as
moot.

**IV. TRANSFER OF CONTROL**

11\. [Background]{.underline}. The ALJ found that Sobel and Kay have
been friends for over 20 years and that they have each been involved in
the land mobile radio business since the 1970s. 12 FCC Rcd at 2282-83 ¶¶
7-9. In the 1990s, Sobel became interested in holding 800 MHz licenses.
He did not, however, have the disposable funds to invest in 800 MHz and
thus did not have the option of pursuing 800 MHz operations on his own.
He approached Kay, who already owned profitable 800 MHz stations. Sobel
relied on Kay to prepare the applications, because Kay had the necessary
specialized software and knowledge. Sobel and Kay also entered into an
oral agreement under which Kay would manage the stations.
[Id]{.underline}. at 2283-84 ¶¶ 11-14. In September or October, 1994,
Kay received, in response to a Freedom of Information Act request, a
copy of a draft hearing designation order relating to his stations
(which, as noted above, also dealt with stations licensed to Sobel).
Shortly, thereafter, on October 28, 1994, Sobel and Kay reduced their
oral agreement to writing. (The written agreement was corrected and
supplemented on December 30, 1994.) The agreement was prepared by Brown
& Schwaninger, a law firm then representing both Sobel and Kay. It is
effective for a term of 10 years and renews automatically for five
consecutive 10 year terms unless Kay gives notice to the contrary.
[Id]{.underline}. at 2284-85 ¶¶ 15-16, 18.

12\. The ALJ analyzed the terms of the Management Agreement in light of
the criteria set forth in [Intermountain]{.underline} for determining
the control of nonbroadcast radio facilities. These criteria are:

\(a\) Does the licensee have unfettered use of all facilities and
equipment?

\(b\) Who controls daily operations?

\(c\) Who determines and carries out policy decisions, including
preparing and filing applications with the Commission?

\(d\) Who is in charge of employment, supervision and dismissal of
personnel?

\(e\) Who is in charge of the payment of financing obligations,
including expenses arising out of operating?

\(f\) Who receives monies and profits from the operation of the
facilities?

12 FCC Rcd at 22899 ¶ 66. [See]{.underline} [Intermountain]{.underline},
24 RR at 984. Additionally, [Intermountain]{.underline} indicates that:

Ownership of the licensed facilities by someone other than the licensee
is not necessarily inconsistent with these incidents of control. At a
minimum, however, where ownership rests in hands other than those of the
licensee, the maintenance and retention of the latter\'s exclusive right
to operate must be clearly reflected.

24 RR at 984-85. To clarify our discussion, we will first present the
ALJ\'s findings, the parties\' responses to those findings, and our
analysis for each of the individual [Intermountain]{.underline}
criteria. We will then discuss our overall analysis of the transfer of
control issue.

[(a) Does the licensee have unfettered use of all facilities and
equipment?]{.underline}

13\. The ALJ found that under the terms of the Management Agreement Kay
\"shall be the sole and exclusive supplier of all equipment and labor
required to maintain and repair the Stations\' facilities . . .\" 12 FCC
Rcd at 22885 ¶ 19. Sobel, in turn, maintains and repairs the stations as
a contract technician for Kay, to whom Kay pays an hourly fee.
[Id]{.underline}. at 2285, 22887-88 ¶¶ 20, 27. The ALJ found that Sobel
performed this role in accordance with an unwritten understanding
between Sobel and Kay that was not part of the Management Agreement.
[Id]{.underline}. at 2285 ¶ 20. Sobel also repairs and services
approximately 350 stations that Kay currently owns or manages.
[Id]{.underline}. at 22882-83 ¶ 9. To perform these functions, Sobel
must drive through locked security gates and gain access to locked
buildings and cabinets. [Id]{.underline}. at 22885-86 ¶ 21. Sobel has in
his possession the keys necessary to accomplish this. Moreover, control
points for the stations are located in Sobel\'s home office.
[Id]{.underline}. Sobel also possesses the access codes needed to
activate the repeaters and performs a majority of the activations on
both the Management Agreement stations and Kay\'s stations.
[Id]{.underline}. at 2287 ¶ 25.

14\. Sobel and Kay submit that Sobel\'s access to the stations\'
facilities, including the possession of keys needed to access locked
facilities, demonstrates that he has \"unfettered use\" within the
meaning of [Intermountain]{.underline}.

15\. The Bureau responds that Sobel\'s access to the facilities is
meaningless in light of the fact that, under the Management Agreement,
Kay is the sole supplier of equipment and labor for the stations. The
Bureau stresses that Sobel\'s access to the facilities is as Kay\'s
contractor and that Kay has the authority to replace Sobel in that
capacity, if he wants to.

16\. We agree with Sobel and Kay that Sobel has \"unfettered use\" of
the stations\' facilities. The key question under this criterion is one
of access. [See]{.underline} [Brian L. O\' Neil]{.underline}l, 6 FCC Rcd
2572, 2575 ¶ 28 (1991). The Management Agreement provides that:

> \[Sobel\] shall have unlimited access to all transmitting facilities
> of the Stations, shall be able to enter the transmitting facilities
> and discontinue any and all transmissions which are not in compliance
> with the FCC rules . . . .

SBL Exh. 3 \[WTB Exh. 39\] at 5 ¶ VIII. Moreover, the record makes clear
that Sobel in fact has access to the stations\' facilities, has
possession of keys necessary to enter locked facilities, and has a
control point for the stations in his home. Tr. 118, 189-90, 225-26. In
this regard, we do not find it significant that, as the Bureau points
out, Sobel exercises this access primarily in his capacity as a contract
technician for Kay and that he has similar access to Kay\'s stations.
Tr. 118. The fact remains that he has access. However, this factor
ultimately has little significance in this case, because it is
significantly outweighed by other factors demonstrating an unauthorized
transfer of control.

[(b) Who controls daily operations?]{.underline}

17\. According to the ALJ, the Management Agreement provides that Kay
\"shall be the sole and exclusive agent for the sale of all services\"
provided by the Management Agreement stations and for \"the management
of the Station\'s transmitting facilities and associated business.\"
Pursuant to this provision, Kay and his staff handle bookkeeping,
billing, and collections and the payment of station obligations. Kay
also has the exclusive right to negotiate and execute contracts with
customers of the stations. 12 FCC Rcd at 22886 ¶ 22. Kay\'s salespeople
sell time on the Management Agreement stations, Kay\'s stations, and
community repeaters. Sobel recruits customers himself for his 450 MHz
and 470-512 MHz band stations, and will sometimes refer customers to
Kay. [Id]{.underline}. at 22886-87 ¶¶ 23-24. (The ALJ found that Kay,
Sobel, and other dealers customarily refer customers to each other.
[Id]{.underline}.) The ALJ found that customers are placed on Kay\'s
stations, the Management Agreement stations, or both based on the
customer\'s needs and not on the ownership the stations.
[Id]{.underline}. Salesman have no reason to know whether they are
selling time on a Management Agreement station or a Kay station.
[Id]{.underline}. at 22888 ¶ 28. When a Kay salesperson has made a sale,
the salesperson goes to Barbara Ashauer, a Kay employee for the
assignment of frequencies and codes. Ashauer may either assign the
frequencies and codes herself or ask the assistance of Kay or Sobel.
Sobel also assigns frequencies for many Kay stations. Ashauer then
generates a request to activate the customer\'s radio system, which is
usually performed by Sobel for both the Management Agreement and Kay
stations. [Id]{.underline}. at 22886-87 ¶¶ 24-25. As to billing,
customers receive a consolidated bill covering both Management Agreement
and Kay stations, unless they request separate bills. Sobel reviews
revenue levels for Management Agreement stations every few months. He
has free access to Kay\'s office during business hours and obtains the
information from Kay\'s computer. [Id]{.underline}. at 22887 ¶ 26.

18\. Additionally, Sobel performs repair and maintenance services for
the Management Agreement and Kay\'s stations. He monitors both types of
stations and receives calls from Kay\'s employees. Sobel\'s invoices do
not distinguish between the two types of stations. 12 FCC Rcd at
22887-88 ¶ 27. Kay\'s technicians also work on stations Kay owns or
manages, including the Management Agreement stations. They have no
reason to know whether the station they are working on is licensed to
Kay. [Id]{.underline}. at 22888 ¶ 28.

19\. In their exceptions, Sobel and Kay characterize Sobel as a \"hands
on owner\" who constructed and maintains facilities, monitors the
repeaters, and visits them. They observe that Sobel participates in
setting billing rates ([see]{.underline} paragraph 25,
[infra]{.underline}) and in placing customers on repeaters and that he
has full access to station records. Additionally, they note that the
Management Agreement contains a provision that expressly reserves
ultimate control over the management of the stations to Sobel.

20\. The Bureau emphasizes that the Management Agreement gives Kay the
exclusive right to manage the stations\' facilities and business. The
Bureau asserts that most of Sobel\'s participation in station affairs is
as Kay\'s contractor and that neither Sobel nor Kay\'s employees treat
the Management Agreement stations any differently from stations owned by
Kay. The Bureau discounts the significance of the provision in the
Management Agreement reserving ultimate control to Sobel. It maintains
for example that Sobel can reject contracts and disapprove transmitter
site locations only if doing so would be in Kay\'s interests as well as
Sobel\'s.

21\. The record indicates that Kay routinely exercises control over
daily operations. The terms of the Management Agreement makes this
clear: These terms provide that:

\[Kay\'s\] duties shall include all administrative and office functions
associated with the Stations\' services, including but not limited to
bookkeeping, billing and collections.

SBL Exh. 3 \[WTB Exh. 39\] at 2 ¶ I.

\[Kay\'s\] duties shall include all management functions associated with
the operation of the Stations, including but not limited to invoicing of
users, collection of payments from users, bookkeeping and accounting
processes, disbursement of payments to suppliers of goods and services,
and control point operation. . . . the negotiation and execution of any
\[contracts with third parties\] shall be within the sole and exclusive
discretion of \[Kay\].

SBL Exh. 3 \[WTB Exh. 39\] at 2 ¶ II.

\[Kay\] shall be the sole and exclusive supplier of all equipment and
labor required to maintain the Stations\' facilities. . . .

SBL Exh. 3 \[WTB Exh. 39\] at 3 ¶ III.

22\. There is no reason to depart from the ALJ\'s ample findings
concerning the dominant role of Kay and his employees in the stations\'
daily operations pursuant to these provisions. We find the attempts by
Sobel and Kay to characterize Sobel as a \"hands on\" owner
unpersuasive, especially since Sobel admits that he exercises most of
his functions as a contract technician for Kay and that his duties are
virtually identical to those exercised with respect to Kay\'s stations.
Tr. 107-08, 114, 116-18, 123-24, 144, 314-16. Moreover, the record
indicates that there is generally no distinction made between the
management of the Management Agreement stations and that of Kay\'s
stations. Thus, Kay\'s sales people and technicians generally do not
make a distinction between the two classes of stations, there is no
distinction made in assigning customers to one class or the other, and
the customers generally receive a single bill regardless of which class
of station they use. Tr. 314-17, 343-49. The significance of Kay\'s
operational control here must be evaluated in light of the record as a
whole and will be further discussed below.

[(c) Who determines and carries out policy decisions, including
preparing and filing of applications with the Commission?]{.underline}

23\. The ALJ made findings concerning five policy-related matters: (1)
preparation and filing of applications, (2) setting billing rates, (3)
clearing channels, (4) buying and selling stations, and (5) retention of
counsel.

24\. [Applications]{.underline}. The ALJ found that Kay would do the
research needed to locate available frequencies, which he would review
with Sobel, making a recommendation where the repeater would be located.
12 FCC Rcd at 22888 ¶ 30. Of the six or seven sites at which the
stations are located, one is a site used for Sobel\'s 450 MHz and
470-512 MHz band stations (and subleased to Kay) and the others are
sites for which Kay negotiated and executed leases. [Id]{.underline}. at
22888 ¶ 31. Sobel testified that Kay prepared \"most\" of the
applications using specialized software that he had on his computer.
Sobel indicated that he could have prepared the applications himself,
but that because Kay had the software and specialized knowledge, it was
more convenient for Kay to do so. [Id]{.underline}. at 22888-89 ¶ 32.
Sobel reviewed and signed each application but made no edits except for
correcting the misspelling of his name. [Id]{.underline}. at ¶ 22889 35.
Kay also filled out submissions to the frequency coordinator that
reviewed the applications, which Sobel signed. [Id]{.underline}. at
22889 ¶ 34. Kay, at Sobel\'s request, also prepared responses to
Commission application return notices. [Id]{.underline}. at 22889 ¶ 36.

25\. [Billing rates]{.underline}. The ALJ found that the standard rate
for the Management Agreement stations was \$12 a month, the same as for
Kay\'s stations. The last change in standard rates occurred three or
four years ago, and Sobel does not recall whose idea it was to make the
change. According to Sobel, Kay or his employees do the majority of
negotiating with customers but Sobel does some negotiating. 12 FCC Rcd
at 22891 ¶ 42.

26\. [Clearing channels]{.underline}. All of the applications for the
Management Agreement stations were for encumbered channels \--
[i.e.]{.underline}, channels shared with other licensees. The ALJ found
that Kay and Sobel agreed that Kay would do the work and spend the money
needed to clear the channels \-- [i.e.]{.underline}, to have unused
licenses on the channels cancelled and to persuade other licensees to
vacate the channels. Sobel claimed that he did not have the time or
money to do this and stated that he knew that Kay was successful at this
activity. Sobel had assisted Kay in doing work needed to clear Kay\'s
channels. 12 FCC Rcd at 22890 ¶ 37-38.

27\. [Buying and selling]{.underline}. The ALJ made several findings
concerning the buying and selling of stations. Three of the Management
Agreement stations were obtained through assignment. Sobel paid nothing
for the stations and does not know whether money was paid. 12 FCC Rcd at
22890 ¶ 39. Under the Management Agreement, Kay has an option to
purchase any of the Management Agreement stations for \$500 each for the
license, assets, and business associated with the station. The
Management Agreement also prohibits Sobel from selling any of the
Management Agreement stations without Kay\'s approval. [Id]{.underline}.
at 22890 ¶ 40. Three of the stations subject to the Management Agreement
have been sold. Kay arranged for the sale of one station to William
Matson for between \$70,000 and \$100,000, of which Sobel received
\$20,500. Sobel received \$500 of the proceeds from the sale of a second
station. Sobel received the cancellation of a license on another
frequency in return for the assignment of a third station, which
increased the value of Sobel\'s station. Sobel persuaded Kay not to
accept a \$1.5 million offer for the Management Agreement stations.
[Id]{.underline}. at 2289091 ¶ 41.

28\. [Counsel]{.underline}. The ALJ found that Kay introduced Sobel to
the law firm of Brown & Schwaninger, which also represented Kay, in the
mid-1990s. Brown & Schwaninger represented both Sobel and Kay in
drafting the Management Agreement. Kay also directed Sobel to Robert
Keller, Sobel\'s current FCC counsel. Kay has paid all of Sobel\'s legal
fees in connection with the Management Agreement stations, including the
costs of this hearing. 12 FCC Rcd at 22890 ¶ 43.

29\. Kay claims that all actions regarding the stations, including the
filing of applications, are made under Sobel\'s supervision and control.
Sobel indicates that he makes policy decisions by: (1) determining when
to make adjustments in prices charged customers; (2) reviewing the
placement of customers on repeaters; (3) reviewing applications and
filings (which Kay prepares as a convenience); and (4) having the
stations\' main control point in his office. Sobel contends that Kay\'s
participation is at his request and under his supervision.

30\. The Bureau replies that an examination of the five types of policy
decisions discussed by the ALJ shows that Kay makes policy decisions.

31\. The record fails to substantiate that Sobel retained his authority
to make policy decisions with respect to the Management Agreement
stations. Rather, the record consistently demonstrates Sobel\'s
delegation of authority to Kay in each of the five areas reflected in
the record. (1) Kay had \"primary responsibility\" for preparing
applications and suggested frequencies and transmitter sites. Tr. 73-75,
206. While Sobel reviewed all forms, he recalled making no edits except
for correcting the misspelling of his name. Tr. 75. (2) The record
discloses little if any input by Sobel in setting the stations\' billing
rates. The standard rate charged by the Management Agreement stations is
the same as for Kay\'s stations and is assertedly typical of the
industry as a whole. Tr. 129. Sobel could not recall whose idea it was
to change the standard rate, some three or four years ago. Tr. 130.
Although Sobel claims to have determined the rates charged some
individual customers, he could recall changing the rate charged by Kay
or his employees only two or three times and admits that he discussed
rates with Kay only a handful of times a year. Tr. 123, 129. Moreover,
this claim is contrary to the express terms of the Management Agreement,
which gives Kay the sole discretion to negotiate contracts. SBL Exh. 3
\[WTB Exh. 39\] at 2 ¶ IIA. (3) Sobel admits that he did not have the
time or money to deal with the clearance of the channels on which the
Management Agreement stations operated and that he relied on Kay\'s
resources and success in this area. Tr. 198-99. (4) Kay arranged for the
acquisition of some Management Agreement stations through assignment,
and Sobel was unaware of the details. Tr. 101-02. Kay also arranged for
the sale of a station to Matson. Tr. 366. Sobel did not know the amount
of money received for a second station that was sold. Tr. 127-28. In
describing the decision not to sell the Management Agreement stations
for \$1.5 million, Sobel indicates that he \"convinced\" Kay not to sell
and that Kay \"acquiesced\" in Sobel\'s view \-- not that Sobel decided
not to sell. Tr. 275. (5) Sobel has consistently used lawyers referred
by Kay and these lawyers sometimes represented Kay at the same time. Tr.
109-10. We find no justification for treating Sobel\'s involvement in
the placement of customers on repeaters and the presence of a control
point in his home, which he can use to activate and deactivate radios,
as evidence of decisonmaking authority since they are consistent with
his duties as a contract technician for Kay. Tr. 123-24, 314-17, 343-49.

32\. While Sobel might legitimately have delegated authority to Kay in
any of the individual instances mentioned, the record as whole, at best,
shows a failure by Sobel to exercise positive authority over policy
decisions. At worst, the record suggests a wholesale deferral to Kay. It
thus, fails to lend substance to the provision in the Management
Agreement that: \"\[Sobel\]\" shall retain ultimate supervision and
control of the operation of the stations.\" SBL Exh. 3 \[WTB Exh. 39\]
at 5 ¶ VIII. The ultimate significance of this factor will be discussed
below.

[(d) Who is in charge of employment, supervision and dismissal of
personnel?]{.underline}

33\. The ALJ found that Sobel has no employees and is not sure whether
he ever hired any contractor to do work relating to a Management
Agreement station. 12 FCC Rcd at 22892 ¶ 44. The employees of Kay who
perform work relating to the Management Agreement stations are hired,
fired, and supervised by Kay.

35\. Kay and Sobel assert that Kay\'s employees perform functions that
are limited by the Management Agreement.

35\. The Bureau points out that Kay\'s employees perform all duties
associated with the stations\' business and that Kay could dismiss Sobel
as his contractor.

36\. On the facts of this case, this criterion is essentially redundant
with the question of who controls daily operations. All of the employees
and contractors (including Sobel) are retained by Kay in connection with
his responsibilities under the Management Agreement. Accordingly, we
will not analyze this factor separately.

[(e) Who is in charge of the payment of financing obligations, including
expenses arising out of operating?]{.underline}

37\. The ALJ found that, under the Management Agreement, Kay is
responsible for paying all of the stations\' construction and operating
expenses. Kay estimated that his total investment in station equipment
is \$97,500. He did not know how much he has paid in operating expenses
for the Management Agreement stations because he does not break out the
expenses based on the ownership of the stations 12 FCC Rcd at 22892 ¶
46-47.

38\. Sobel and Kay argue that the provisions of the Management Agreement
under which Kay pays station expenses and purchases equipment represent
a legitimate business judgment on Sobel\'s part. They urge that it would
have been more expensive for Sobel to construct and operate the stations
on his own and that it was therefore reasonable for him to finance the
operation out of future revenues rather than up front. The Bureau finds
Sobel\'s and Kay\'s reference to business judgment unpersuasive.

39\. The Management Agreement is structured to relieve Sobel of any
liability for the construction and operation of the stations.
Specifically, the Management Agreement provides that Sobel has no
liability in relation to contracts regarding the provision of marketing
services (SBL Exh. 3 \[WTB Exh. 39\] at 2 ¶ IA), management services
([Id]{.underline}. at 2 ¶ IIA), and maintenance services
([Id]{.underline}. at 3 ¶ IIIA), and that Kay shall bear all costs of
construction and operation. ([Id]{.underline}. at 3 ¶ IV, 6 ¶ XIII).
Accordingly, Kay pays all of the stations\' expenses and has invested
some \$97,500 (\$6,500 x 15) to build the stations. Tr. 131, 144,
353-54. Sobel acknowledges that his arrangements with Kay were intended
to relieve him of the burden of independently acquiring the transmitter
sites and equipment and of having the facilities installed and
maintained. Tr. 185-86. Indeed, he testified that he regarded his
arrangement with Kay as \"a good deal\" in part because it posed \"very
little\" financial risk. Tr. 309.

40\. We have no reason to dispute the characterization of Sobel and Kay
that this reflects a reasonable exercise of business judgment on
Sobel\'s part. However, such an exercise of business judgment appears
tantamount to an intent to transfer the risks normally associated with
ownership and control. Thus, for example, a business owner who decides
to sell an equity interest in a venture as an alternative to seeking
bank financing has encumbered his ownership interest. As Sobel and Kay
aptly put it, such an action would serve to finance the start-up of the
business out of future revenues. We will further consider the
implications of this factor below.

[(f) Who receives monies and profits from the operation of the
facilities?]{.underline}

41\. According to the ALJ, the revenues from the Management Agreement
stations are deposited in Kay\'s bank account along with the revenues
from Kay\'s stations. Under the Management Agreement, Kay is entitled to
the first \$600 a month in revenue from each station plus 50 percent of
the revenue in excess of \$600. At the time of the hearing, four of the
15 Management Agreement stations had revenues of over \$600 a month and
the total revenue of the 15 stations was between \$6,000 and \$7,000 a
month. Nevertheless, Sobel has not received any money from the stations
other than his hourly fees as a contractor, since he and Kay interpret
the Management Agreement as entitling Kay to retain all revenues until
the total revenue of all of the stations exceeds \$9,000 a month
([i.e.]{.underline}, \$600 x 15). 12 FCC Rcd at 22892-93 ¶ 48.

42\. Kay and Sobel defend the legitimacy of the arrangement under which
Kay receives a share of station revenues. Kay argues that he validly
receives the first \$600 a month of station revenues as compensation for
his services. Sobel maintains that he would have received more than his
hourly compensation as a contractor if the impediments posed by the
Commission proceedings involving the stations had not impaired their
revenues. Additionally, Sobel maintains that there is nothing improper
in Kay using his own bank account when collecting station revenues.

43\. The Bureau responds that it is suspicious that Sobel has not yet
received any of the stations\' revenues.

44\. The record indicates that, pursuant to the Management Agreement,
Kay would receive a large percentage of the stations\' revenues. If, as
Sobel estimated at one point (Tr. 268), the stations could be expected
to generate \$1,000 a month, Kay would receive 80 percent of the
revenues (\$600 + 50% x \$400). At the time of the hearing, Kay had
retained 100 percent of the stations\' revenues of approximately \$400
to \$470 per station a month (\$6,000 or \$7,000 / 15). Tr. 132.

45\. We accept the claims of Sobel and Kay that the retention of funds
by Kay reflects compensation for Kay\'s management services,
reimbursement for expenses paid by Kay, and the rental of station
equipment owned by Kay. Tr. 103-04, 144, 186. [See also]{.underline} SBL
Exh. 3 \[WTB Exh. 39\] at 4 ¶ VI. However, these considerations appear
to apply primarily to Kay\'s right to the first \$600 a month earned by
each station. Tr. 144, 186. Otherwise, it appears that the parties
intend to share the proceeds of the stations more or less equally, in
the manner of partners. We will discuss the ultimate significance of
this factor below.

[Ownership of facilities]{.underline}

46\. The ALJ found that pursuant to the terms of the Management
Agreement Kay selected, purchased, and provided all equipment used in
connection with the stations. 12 FCC Rcd at 22885 ¶ 19. The ALJ found
that the equipment is \"leased\" (ALJ\'s quotes) to Sobel and that Sobel
has no title, interest, or control over the equipment except to the
extent he was granted permission to use Kay\'s equipment.
[Id]{.underline}. He also found that the Management Agreement gives Kay
an exclusive option to purchase the stations for \$500 each.
[Id]{.underline}. at 22890 ¶ 40. It also requires Sobel to maintain
ownership of the stations. The ALJ therefore concluded that Sobel was
precluded from selling any of the stations, but that Kay could sell the
stations by first exercising his purchase option. [Id]{.underline}.

47\. Sobel contends that the ALJ had no basis to question the bona fides
of the arrangement under which Sobel leased the stations\' equipment
from Kay. He further contends that a lease is a legitimate means by
which a licensee may possess equipment consistent with the licensee\'s
retention of control. Both Kay and Sobel argue that the purchase option
provisions are consistent with the retention of control by Sobel.

48\. The Bureau points out that Kay and not Sobel paid the expenses of
constructing the stations and that Sobel does not pay rent under the
supposed lease, since under the Management Agreement, rental payments
are included in Kay\'s share of the station revenues. The Bureau also
maintains that the purchase option indicates a transfer of control to
Kay, since Kay has the power pursuant to the option to oust Sobel by
purchasing the stations at a price far less than their market value.

49\. Kay\'s ownership of the stations\' equipment and his capital
investment in this equipment represent a significant factor in this
case. In this regard, we discount Sobel\'s testimony that because the
equipment is leased to Sobel, Kay should not be regarded as having an
interest in it. Tr. 147. As the Bureau correctly points out, despite the
lease, Kay continues to possess the equipment as part of his day-to-day
management of the stations, in relation to which Sobel is a contract
technician. Moreover, as the Bureau also points out, the Management
Agreement provides no particular sum as the rental payment; the rent is
simply an unspecified portion of the total compensation received by Kay.
SBL Exh. 3 \[WTB Exh. 39\] at 3 ¶ IV.

50\. Additionally, in this case, the purchase option gives Kay a further
proprietary interest in the stations. The option permits Kay, for a
period of ten years, to purchase any Management Agreement station for
\$500 per station. SBL Exh. 3 \[WTB Exh. 39\] at 4 ¶ VII. The record
indicates that \$500 is considerably less than the fair market value of
the stations. As noted, one of the stations has already been sold for
between \$70,000 and \$100,000. Tr. 126. Similarly, Sobel also prevailed
upon Kay not to accept an offer of \$1.5 million for all of the stations
\-- [i.e.]{.underline}, \$100,000 per station. Tr. 275. Kay testified
that the purpose of the option was specifically to prevent Sobel from
being able to sell the stations in derogation of Kay\'s long-term
contracts. Tr. 365-66. Indeed, the purchase option specifically provides
that Sobel may not sell the stations or use them as security. SBL Exh. 3
\[WTB Exh. 39\] at 5 ¶ VIIE. Moreover, as the ALJ found, the option
effectively gives Kay the power to \"freeze out\" Sobel if he chooses to
do so. Sobel by contrast has no right to terminate his relationship with
Kay. He has no right to sell the stations, and the Management Agreement
has a term of 10 years and renews automatically at Kay\'s sole
discretion for up to 50 years. SBL Exh. 3 \[WTB Exh. 39\] at 6 ¶ XIV.
These provisions give Kay significant leverage over Sobel.

[Summary]{.underline}

51\. Based on the foregoing, the ALJ found that Kay had the ultimate
control of the Management Agreement stations in accordance with the
[Intermountain]{.underline} criteria. He cited the following specific
factors: (1) Kay prepared applications and Commission correspondence;
(2) Kay selected and purchased all equipment; (3) Kay supplies the labor
to maintain and repair the facilities; (4) Kay controls the hiring and
firing of operating personnel; (5) Kay carries out all administrative
duties associated with marketing the stations, such as bookkeeping,
billing, and collections; (6) Kay pays all expenses; (7) Kay negotiates
and executes contracts with customers; (8) Kay did the work and provided
the money to clear the channels used by the stations; (9) Sobel was
unfamiliar with the details of the assignments of the three stations
that were sold; (10) Kay has an option to purchase the stations for
\$500 each; and (11) the revenues of the stations are deposited in
Kay\'s bank account.

52\. Sobel and Kay argue that their relationship constitutes a resale
arrangement such as the Commission encourages. Sobel contends that a
similar business arrangement involving an SMR licensee was approved in
[Motorola, Inc.]{.underline} File Nos. 50705 [et al.]{.underline} (PRB
1985) (unpublished). Sobel and Kay urge that the
[Intermountain]{.underline} criteria are flexible and should take into
account the character of the particular service involved. Kay asserts
that Sobel has retained control of the stations because he controls
daily operations, makes policy decisions, and has unfettered access to
facilities and records.

53\. As Sobel suggests, guidelines set forth in [Motorola]{.underline}
and restated in [Public Notice]{.underline}, 64 RR 2d 840 (PRB 1988),
have been used to evaluate whether management agreements involving SMR
licensees constituted an improper transfer of control. [See]{.underline}
[Implementation of Sections 3(n) and 332 of the Communications
Act]{.underline}, 9 FCC Rcd 7123 7127-28 ¶ 20 (1994). These guidelines
provide that licensees may hire entities to manage their SMR systems but
they may not contract away control of their systems. [Public
Notice]{.underline}, 64 RR 2d at 841.[^3] At a minimum, licensees must
retain [bona fide]{.underline} proprietary interests in, and exercise
supervisory control over their systems. [Id]{.underline}.

54\. [Motorola]{.underline} involved a management agreement between
Motorola, Inc. (Motorola) and an SMR licensee called Comven that was
similar in many respect to that involved here. Under the agreement,
Comven provided the necessary radio equipment for the system. As does
Kay in this case ([see]{.underline} paragraph 21, [supra]{.underline}),
Motorola controlled the daily operations of the stations. Specifically:

The services provided by Motorola under the contract are installation,
including antennas and cables; testing of equipment; payment of antenna
site charges; maintenance; marketing;, promotion and sales; customer
billing and collections; and updates to systems software. Any costs or
additional equipment and supplies associated with these services or the
operation of the SMR system are to be paid or provided by Motorola. As
compensation for these services Motorola receives 70 percent of the
monthly gross collections received from end-user customers of the
systems.\[footnote omitted.\] The contracts are effective for ten years
and are renewable at Motorola\'s sole option for an additional five
years.

[Motorola]{.underline} at ¶ 8. In determining that the agreement did not
represent an unauthorized transfer of control, the Bureau relied
primarily on the fact that Comven had purchased the stations\' equipment
and financed it independently of Motorola. [Motorola]{.underline} at ¶
19; [Public Notice]{.underline}, 64 RR 2d at 841. This factor was deemed
to give the licensee a proprietary interest in the stations\' equipment
which would not be taken over by the third party hired to manage the
stations and would give the licensee the ability to exercise the degree
of control over its systems which was consistent with its status as a
licensee. [Motorola]{.underline} at ¶17. The Bureau also found that the
agreement required Motorola to perform its functions pursuant to the
supervision and instruction of Comven and that if Motorola failed to
comply with this provision Comven could terminate the agreement.
[Motorola]{.underline}, ¶¶ 19-20; [Public Notice]{.underline}, 64 RR 2d
at 841.

55\. More recently [Implementation of Sections 3(n) and 332 of the
Communications Act]{.underline}, [supra]{.underline}, recognized that
different criteria had been applied to transfer of control questions
involving private and common carriers and prospectively adopted the
[Intermountain]{.underline} test for both such services.

56\. In this case, we find that whether judged by the
[Motorola]{.underline} test or with reference to the
[Intermountain]{.underline} criteria, Sobel has not retained control of
the licensed facilities. Central to the analysis is that Sobel does not
have the requisite proprietary interest in the licensed facilities.
Unlike Comven, Sobel did not purchase the stations\' equipment or
finance it independently of Kay. Rather, Kay owns the stations\'
equipment and has made the corresponding capital investment. For the
reasons set forth in paragraph 49, [supra]{.underline}, we find, as did
the ALJ, that the terms of the lease give Sobel essentially no
proprietary interest in the equipment. Moreover, as described in 50,
[supra]{.underline}, the purchase option gives Kay a further proprietary
interest in the stations and considerable leverage over Sobel, who could
be divested of the stations by Kay under its provisions. By contrast,
Sobel can neither terminate the agreement nor sell the stations. Kay\'s
payment of financial obligations ([see]{.underline} paragraph 39,
[supra]{.underline}) and the division of revenues ([see]{.underline}
paragraphs 44-45, [supra]{.underline}) are entirely consistent with
Kay\'s proprietary interest.

57\. Moreover, the record before us refutes the contention that Kay
operates the licensed facilities under Sobel\'s \"supervision and
instruction.\" Our examination of the record relating to policy
decisions indicates that Sobel consistently defers to Kay, which
indicates, at best, the absence of any positive exercise of authority in
this area and, at worst, a wholesale surrender of such authority to Kay.
[See]{.underline} paragraph 31, [supra]{.underline}.

58\. Thus, in light of both [Intermountain]{.underline} and
[Motorola]{.underline}, we find that Sobel has failed to retain the
requisite degree of control consistent with his claimed status as a
licensee. We therefore conclude that he has violated 47 U.S.C. § 310(d).

**V. MISREPRESENTATION/ LACK OF CANDOR**

59\. As noted above (Paragraph 3, [supra]{.underline}.), when the
Commission designated Kay\'s licenses for hearing on December 13, 1994,
it found that information available indicated that Kay may have
conducted business under the name of Marc Sobel dba Airwave
Communications. On January 25, 1995, Kay filed with the ALJ[^4] a
pleading entitled \"Motion to Enlarge, Change, or Delete Issues,\" in
which he asked among other things that any reference to Sobel\'s
licenses should be deleted from the hearing designation order. 12 FCC
Rcd at 22893 ¶ 49; WTB Exh. 44 at 4-5. The motion was supported by an
affidavit by Sobel dated January 24, 1995. WTB Exh. 43. The ALJ found
that Kay received drafts of the motion and affidavit from his attorneys,
Brown & Schwaninger and that he called Sobel to tell him that there was
an affidavit \"that my attorneys wanted him to read. And, if correct,
execute it.\" 12 FCC Rcd at 22893 ¶ 50. Kay and Sobel had a face-to-face
meeting at which Kay asked Sobel to sign the affidavit. Sobel did so
without making any changes or additions, although he was aware of his
right to do so. [Id]{.underline}.

60\. The affidavit stated:

I, Marc Sobel, am an individual, entirely separate and apart in
existence and identity from James A. Kay, Jr. Mr. Kay does not do
business in my name and I do not do business in his name. Mr. Kay has no
interest in any radio station or license of which I am the licensee. I
have no interest in any radio station or license of which Mr. Kay is the
licensee. I am not an employer or employee of Mr. Kay, am not a partner
with Mr. Kay in any enterprise, and am not a shareholder in any
corporation in which Mr. Kay holds an interest. I am not related to Mr.
Kay in any way by birth or marriage.

12 FCC Rcd at 22893-94 ¶ 51.

61\. The ALJ found that the affidavit and pleading did not provide any
description of the actual relationship between Sobel and Kay, although
it was purportedly prepared in part because Sobel believed that the
Commission was delaying the processing of his pending application
because it was \"confused\" about the relationship between Sobel and
Kay. 12 FCC Rcd at 22894-95 ¶¶ 52-53. The ALJ rejected as false the
statement in the affidavit that Kay had no \"interest\" in stations or
licenses assertedly held by Sobel. The ALJ did not credit Sobel\'s
attempts to reconcile this statement with the fact that Kay owned the
stations\' equipment, had an option to purchase the stations, and had a
stake the stations\' revenues, and held that this arrangement
constituted \"a fair amount of interest.\" [Id]{.underline}. at 22895-96
¶ 56-58, 22901 ¶ 73. The ALJ concluded that the affidavit was intended
to \"ward off\" the Commission from being apprised of the true nature of
the Kay-Sobel business relationship and that it therefore lacked candor.
[Id]{.underline}. at 22901 ¶ 73.

62\. The ALJ also found other instances in which Sobel lacked candor
before the Commission. The ALJ faulted Sobel for not voluntarily
disclosing the Management Agreement to the Commission until requested to
do so in a letter of inquiry. 12 FCC Rcd at 22897 ¶ 62, 22901-02 ¶ 74.
The ALJ found that Sobel could \"ill afford\" to disclose the document,
which was intended to fully describe the relationship between Sobel and
Kay. [Id]{.underline}.

63\. The ALJ also took issue with a December 6, 1994 letter that Sobel
sent to FCC staff member Gary Stanford at the Commission\'s Gettysburg,
Pennsylvania facility regarding the Commission\'s failure to process
Sobel\'s pending applications and requests. 12 FCC Rcd at 22897-98 ¶ 63,
22902 ¶ 75. The letter stated:

I can only assume that I have been \"blacklisted\" by Mr. \[Deputy Chief
of the FCC\'s Gettysburg Office of Operations W. Riley\] Hollingsworth
and am having my applications held, my customers\' applications held,
and my finder\'s preference requests ignored due to my association with
Mr. Kay. Contrary to whatever beliefs that may be held by Mr.
Hollingsworth, which have resulted in his taking unwarranted actions
against me, I would like to assure you that I am an
[Independent]{.underline} Two Way Radio Dealer. I am [not]{.underline}
an employee of Mr. Kay\'s or of any of Mr. Kay\'s companies. I am not
related to Mr. Kay in any way. I have my own office and business
telephone numbers. I advertise my own company name in the Yellow Pages.
My business tax registration and resale tax permits go back to 1978 \--
long before I began conducting any business whatsoever with Mr. Kay \--
the apparent target of Mr. Hollingsworth.

WTB Exh. 46. The ALJ faulted Sobel for failing to explain his
relationship with Kay and for asserting, without reservation, his
independence from Kay.

64\. Finally, the ALJ found lack of candor in responses to application
return notices (which are sent to indicate problems with land mobile
applications) prepared by Kay for Sobel. 12 FCC Rcd at 22898-99 ¶ 64,
22902 ¶ 76. The ALJ noted that on customer invoices attached to the
responses, the name and address of Kay\'s business, Lucky\'s Two-Way
Radios, had been blacked out before they were submitted to the
Commission. The ALJ found that this was done to conceal the relationship
between Sobel and Kay from the Commission.

65\. The ALJ concluded that the above findings indicate that Sobel
consistently avoided disclosing the full nature of his relationship with
Kay to the Commission and intended to deceive and mislead the Commission
as to this relationship. The ALJ believed that this reflected serious
misrepresentation and lack of candor. 12 FCC Rcd at 22902 ¶¶ 77-78.

66\. In their exceptions, Sobel and Kay deny that the January 24, 1995
affidavit contained any misrepresentation or lack of candor. They claim
that the affidavit was justified in stating that Kay had no \"interest\"
in the stations, that Sobel was not Kay\'s \"employee,\" and that Sobel
did not do business \"in Kay\'s name.\" Sobel and Kay contend that the
affidavit reflected no intent on the part of Sobel to mislead the
Commission. They assert that Sobel was merely trying to correct the
Commission\'s misimpression that Sobel was an alter ego of Kay and that
there was no need to explain the nature of their relationship any
further. In any event, they submit that their attorneys, Brown &
Schwaninger, drafted the affidavit and assured Sobel that it complied
with Commission rules.

67\. Sobel and Kay also deny that any other misrepresentations or lack
of candor occurred. As to the Management Agreement, they contend that
they would not have reduced the agreement to writing if they intended to
conceal its terms from the Commission. They further contend that Sobel
did not file the affidavit and thus had no reason to file the Management
Agreement, which, in any event, he thought had been filed. They point
out that Kay disclosed the agreement during discovery on March 24, 1995.
Concerning the Stanford letter, Sobel argues, as he did with respect to
the affidavit, that he was merely trying to disabuse the Commission of
the idea that he was Kay\'s alter ego and had no reason to further
elaborate upon the nature of his acknowledged \"association\" with Kay.
Lastly, Sobel maintains that he did not delete Kay\'s business name from
the application return responses and did not consider it important that
Kay apparently had.

68\. The Bureau supports the ALJ\'s findings of misrepresentation and
lack of candor. According to the Bureau, Sobel knew that the Commission
was confused about the relationship and that the Commission would want
an accurate description of that relationship. The Bureau argues that the
statements that Kay had no \"interest\" in the stations and that Sobel
was not Kay\'s \"employee\" were false or at least misleading. The
Bureau finds no evidence that Sobel actually relied on advice of
counsel.

69\. The Bureau considers it suspicious that the parties supposedly
drafted the Management Agreement in response to Commission confusion
about the Sobel-Kay relationship and then did not voluntarily disclose
it. The Bureau considers the Stanford letter and the responses to the
application return notices misleading.

70\. We find that Sobel\'s January 24, 1995 affidavit was lacking in
candor. Although Sobel testified that he intended merely to deny that he
was an alter ego of Kay (Tr. 142-43), the affidavit makes several
specific factual assertions about the relationship between Sobel and
Kay. Most notably, the affidavit states that \"Mr. Kay has no interest
in any radio station or license of which I am the licensee.\" WTB Exh.
43. As our discussion under the transfer of control issue makes clear,
we find that Kay had substantial interests in the Management Agreement
stations. He owned the stations\' equipment, he was entitled to a share
of the stations\' revenues, and held purchase options for the stations.
We find that Sobel\'s attempt at the hearing to justify the
representation as referring only to \"ownership of the license\" (Tr.
147) is an unreasonably restrictive use of the word \"interest.\" For
example, we find wholly unpersuasive Sobel\'s self-serving explanation
that because Kay leased the station\'s equipment to Sobel
([see]{.underline} paragraph 49, [supra]{.underline}), Kay did not have
an interest in the equipment. Tr. 147.

71\. Moreover, the record indicates that Sobel was aware of the
questionable nature of the representation. Sobel admitted that:

The word interest \-- I thought about the word interest, because it was
the only thing that in here might have been questionable, but it was in
regards to the license and I didn\'t give it much thought, to be honest
with you.

Tr. 156-57. Kay, in turn, acknowledged that Sobel had asked him about
the meaning of the word \"interest\" in the affidavit and that Kay had
told him that it referred to \"ownership as in a partnership or
ownership of stock, [as having a direct financial stake in
something]{.underline}. Being an owner or a stockholder or a direct
party to something.\" Tr. 371 (Emphasis added.). Sobel acknowledges that
he understands that Kay has a direct financial stake in the stations.
Tr. 150.

72\. Aside from the statement about \"interest,\" the affidavit contains
other statements that while perhaps technically correct tend to be
misleading. The affidavit states: \"I am not an . . . employee of Mr.
Kay. . . . \" WTB Exh. 43. As Sobel testified, that statement is
accurate only because there is a technical distinction between an
\"employee\" and an \"independent contractor,\" in which capacity Sobel
has long served Kay. Tr. 150-51, 247. The affidavit also states: I . . .
am not a partner with Mr. Kay in any enterprise . . . .\" WTB Exh. 43.
That statement is also true only if a distinction is made between the
technical legal definition of \"partner\" and the more colloquial usage.
Thus, Sobel testified: \"You can agree to split something without
becoming a partnership.\" Tr. 151-52. The affidavit states: \"I do not
do business in \[Mr. Kay\'s\] name.\" WTB Exh. 43. As Sobel explained,
that statement is true in the sense that Sobel does not conduct a
business using Kay\'s name. Tr. 15-53. However, the Management Agreement
stations, which are licensed to Sobel, are marketed by Kay under his own
name as part of his business. [Id]{.underline}.

73\. All told, the affidavit leaves the impression that, as the motion
it supported argues: \". . . Kay has no interest in any license or
station in common with Marc Sobel. . . . \" WTB Exh. 44 at 4. In the
context of the Management Agreement stations, that impression is wholly
misleading.[^5] In this regard, we reject the suggestion that, because
the hearing designation order erred in treating Sobel as an alter ego of
Kay, it was permissible to be misleading about the true relationship
between Sobel and Kay in challenging the designation order. As Sobel
acknowledged, he understood that the Commission would \"eventually\"
want to know about the actual relationship between Sobel and Kay. Tr.
143, 156, 301. There is no justification for him to withhold this
information even if he expected that the Commission would ultimately
find it out. As the courts have stated:

. . . the Commission 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).

As a licensing authority, the Commission is not expected to \"play
procedural games with those who come before it in order to ascertain the
truth\" . . . . and license applicants may not indulge in common-law
pleading strategies of their own devise.

[Id]{.underline}. at 229.

74\. We reject the argument that the affidavit does not disclose
deceptive intent. The record indicates that the parties drafted the
Management Agreement because they learned of the forthcoming hearing
designation order and realized the need to put the details of their
relationship in writing. Tr. 261-63, 299-301. In view of this
circumstance, the failure of the affidavit to be forthcoming about this
relationship and the misleading character of the affidavit must be
regarded as deliberate. (Sobel\'s testimony that he believed the
Management Agreement had been submitted along with the motion is
unsupported by the record. Tr. 303.) \" . . .
[\[D\]eliberate]{.underline} failures to produce information can result
in disqualification for lack of candor.\" [Garden State Broadcasting
Limited Partnership v. FCC]{.underline}, 996 F.2d 386, 393 (D.C. Cir.
1993). (Emphasis in the original.)

75\. We also reject Sobel\'s attempt to rely on advice of counsel.
Although the affidavit was originally drafted by their attorneys, Brown
& Schwaninger (Tr. 154), Sobel and Kay acknowledge that Sobel reviewed
the affidavit, discussed it with Kay, and understood that he could
correct or supplement it. Tr. 140-41, 156, 161, 371. We find that he
could appreciate its nature. Advice of counsel does not excuse a clear
breach of duty by a licensee. [See]{.underline} [RKO General, Inc. v.
FCC]{.underline}, 670 F.2d at 231.[^6] Moreover, we note that in the
December 4, 1994 letter to Gary Stanford, which Sobel composed himself
(Tr. 158), Sobel adopted a similar line. He assured Stanford that he was
an \"[Independent]{.underline} Two Way Radio Dealer.\" WTB Exh. 46 at 1
(Emphasis in the original). We find wholly unpersuasive his attempt to
justify this statement in the context of the Management Agreement
stations. He testified: \"I made a deal with \[Kay\], but that does not
make us dependent on each other. I am an independent radio dealer.\" Tr.
159. Sobel, however, ignores the obvious implication of his
representation that his stations are operated and/or marketed
independently of Kay, which they are not. For example, in the Stanford
letter, Sobel specifically asserted: \"I advertise under my own company
name in the Yellow pages.\" WTB Exh. 46 at 1. The Management Agreement
stations are, however, marketed under Kay\'s name, not Sobel\'s.
Although the Management Agreement was subsequently disclosed during
discovery in the Kay proceeding, Sobel did not disclose it in his
correspondence with Stanford, even though disclosure would have served
to clarify Sobel's relationship with Kay. We believe this matter is
relevant to the designated issue because it confirms the existence of a
pattern of conduct. [See]{.underline} [Ismail v. Cohen]{.underline}, 706
F. Supp. 243, 252-53 (S.D.N.Y. 1989); Fed. R. Evid. 404(b).[^7]

**VI. SANCTIONS**

76\. The ALJ concluded that Sobel was unfit to remain a Commission
licensee. 12 FCC Rcd at 22902 ¶ 78, 22903 ¶ 80. He found that Sobel
transferred control of the Management Agreement stations without
authorization, made misrepresentations, and lacked candor about the
transfer of control. He deemed Sobel\'s misconduct willful and repeated.
He found that Sobel cannot be relied on to be forthcoming with the
Commission and to comply with rules and policies. He therefore revoked
Sobel\'s licenses, denied his applications, and dismissed his finder\'s
preference requests.

77\. In their exceptions, Sobel and Kay argue that disqualification is
not appropriate on the facts of this case. Sobel observes that he has no
past record of misconduct. Sobel and Kay deny that any misrepresentation
or lack of candor occurred here and claim that the Commission does not
customarily disqualify licensees for an unauthorized transfer of control
unaccompanied by dishonesty. Kay suggests that if any sanction is
appropriate it should be a forfeiture. Sobel urges that any
disqualification should be limited to the Management Agreement stations.

78\. The Bureau fully supports the ALJ. It argues that revocation of the
Management Agreement stations is an insufficient sanction because they
have not been profitable for Sobel.

79\. We have found that Sobel violated 47 U.S.C. § 310(d) by
transferring control of the Management Agreement stations without
Commission authorization and that Sobel lacked candor about the status
of these stations. An unauthorized transfer of control accompanied by
deception reflects serious misconduct implicating a licensee\'s most
basic obligations. In the past, we have disqualified licensees who have
committed this combination of misconduct. [See]{.underline} [Deer Lodge
Broadcasting, Inc.]{.underline}, 86 FCC 2d 1066, 1097 n.164 (1981).

80\. In specifying the appropriate sanction here, we are mindful that
the misconduct found did not affect all of Sobel\'s licensed facilities,
but only the Management Agreement stations ([i.e.]{.underline}, Sobel\'s
conventional SMR stations on the 800 MHz band). The record indicates
that Sobel has operated land mobile stations, including his facilities
on the 450 MHz and 470-512 MHz bands, for over 20 years without any
evidence of misconduct. The record here gives no indication that Sobel
failed to exercise appropriate control over these facilities or that he
lacked candor in any representation made about them. Thus, the question
arises whether the sanctions imposed here should extend to the
uninvolved stations. In this regard, deterrence is an important element
of the character qualifications process. [See]{.underline} [Character
Qualifications]{.underline}, 102 FCC 2d 1179, 1128 ¶ 103 (1986).
Sanctions imposed on licensees may deter future misconduct by the person
involved and by others. In the context of broadcasting, we observed
that: \"Suffering the loss of one station, with the costs thereby
imposed will likely serve to deter all but the most unrepentant from
serious future misconduct.\" [Id]{.underline}. In this case, we find
that loss of Sobel's interests involving the 800 MHz band alone will be
an adequate deterrent. We will therefore revoke Sobel\'s licenses for
facilities on the 800 MHz band, deny his pending 800 MHz applications,
and dismiss his finder\'s preference requests for such facilities. In
light of these sanctions, we find it unnecessary to impose a forfeiture
against Sobel. We will direct the Bureau to process Sobel's remaining
applications.

**VII. ORDERING CLAUSES**

81\. ACCORDINGLY, IT IS ORDERED, That, the Petition to Defer and
Consolidate Consideration, filed March 2, 1999, by Marc D. Sobel; and
the Supplement to Petition to Defer and Consolidate Consideration, filed
March 2, 1999, by Marc D. Sobel ARE DISMISSED as moot.

82\. IT IS FURTHER ORDERED, That, because oral argument would not
materially assist the Commission in the resolution of this proceeding,
the Requests for Oral Argument, filed January 12, 1998, by James A. Kay,
Jr. and January 29, 1998, by Marc D. Sobel d/b/a Air Wave Communications
ARE DENIED.

83\. IT IS FURTHER ORDERED, That, Wireless Telecommunications Bureau\'s
Reply Brief, having been timely served by mail before January 27, 1998,
the Joint Motion to Strike \[the reply brief as untimely\], filed
January 29, 1998 by Marc D. Sobel d/b/a Air Wave Communications and
James A. Kay, Jr. IS DENIED.

84\. IT IS FURTHER ORDERED, That the Motion for Leave to File Supplement
to Consolidated Brief and Exceptions, filed May 28, 1998, and the
Further Motion for Leave to File Supplement \[to\] Exceptions, filed
October 2, 1998, by Marc D. Sobel d/b/a Air Wave Communications ARE
GRANTED in part and, because further briefing would not materially
assist the Commission, ARE DENIED in part.

85\. IT IS FURTHER ORDERED, That, the Consolidated Brief and Exceptions,
filed by Marc D. Sobel d/b/a Air Wave Communications, and James A. Kay,
Jr.\'s Consolidated Brief and Exceptions to the Initial Decision of
Administrative Law Judge John M. Frysiak, both filed January 12, 1998,
ARE GRANTED in part and ARE DENIED in part, and the Initial Decision of
Administrative Law Judge John M. Frysiak, FCC 97D-13 (Nov. 28, 1997) (12
FCC Rcd 22879) IS MODIFIED as set forth above.

86\. IT IS FURTHER ORDERED, That the following licenses of Marc D. Sobel
and/or Marc D. Sobel d/b/a Air Wave Communications ARE REVOKED: KNBT299,
KRU576, WNWB334, WNXL471, WNYR424, WNZS492, WPAD685, WPCA891, WPCZ354,
WPDB603, WPFF529, WPFH460, WPCG780, WNPY680, WNZC764.

87\. IT IS FURTHER ORDERED, That the following applications of Marc D.
Sobel and/or Marc D. Sobel d/b/a Air Wave Communications ARE DENIED:
File Nos. 670861, 697577, 501542, 666673, 614567.

88\. IT IS FURTHER ORDERED, That the following requests for finder\'s
preferences of Marc D. Sobel and/or Marc D. Sobel d/b/a Air Wave
Communications ARE DISMISSED: 93F600, 93F622, 93F683, 93F758, 93F323.

89\. IT IS FURTHER ORDERED, That the Wireless Telecommunications Bureau
IS DIRECTED to proceed with the processing of Sobel's other pending
applications.

90\. IT IS FURTHER ORDERED, That the licensee IS AUTHORIZED to continue
operation of the stations mentioned in paragraph 86 until 12:01 A.M. on
the ninety-first day following the release date of this decision to
enable the licensee to conclude the stations\' affairs; PROVIDED,
HOWEVER, that if the licensee seeks reconsideration or judicial review
of our action revoking its license, it is authorized to operate the
stations until final disposition of all administrative and/or judicial
appeals.

91\. IT IS FURTHER ORDERED, That the proceeding IS TERMINATED.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

**CONSOLIDATED SEPARATE STATEMENT OF\
COMMISSIONER KEVIN J . MARTIN,**

**CONCURRING IN PART AND DISSENTING IN PART**

*Re: James A. Kay, Jr., Licensee of One Hundred Fifty Two Part 90
Licenses in the Los Angeles, California Area*, Decision, WT Docket No.
94-147;

*Marc Sobel and Marc Sobel d/b/a Air Wave Communications, Licensee of
Certain Part 90 Stations in the Los Angeles Area*, Decision, WT Docket
No. 97-56

I dissent in large part from this item. I am unwilling to approve, based
on the conflicting and confusing record before us, the determination
that James A. Kay, Jr. improperly failed to respond to requests for
information and that Kay and Marc Sobel lacked candor in filings they
made to the Commission. In the information request decision, the
Commission reverses an ALJ's explicit findings that Kay acted reasonably
in the face of a demanding inquiry by the Bureau -- findings that are
ordinarily accorded great deference. In the lack of candor decision,
upon which two ALJs reached opposite conclusions, the Commission
essentially sides with the first ALJ, even though he did not have
accurate information on all of the relevant facts. In my view, the
Commission does itself a disservice by making these decisions on the
cold record before it. At the very least, the Commission should have
referred this proceeding to a new ALJ to reconcile the conflicting
decisions and make definitive findings.

**I. Failure To Respond to Commission Inquiries**

This case began as an investigation into whether Kay was falsely
reporting the number of mobile units he served in order to avoid certain
channel sharing and recovery rules. Having received several complaints
making such allegations, the Wireless Bureau served Kay with a request
for information. A lengthy exchange ensued, in which Kay and the Bureau
wrestled over what information Kay would provide and when he would
provide it. Kay's actions during the course of this exchange are the
basis for the Commission's determination that Kay improperly failed to
respond to the Bureau's inquiries in violation of 47 U.S.C. § 308(b) and
47 C.F.R. § 1.17.

The Commission makes this determination in the face of a contrary
decision and express findings by the ALJ. That ALJ, Judge Chachkin,
found that "the Bureau was engaged in a fishing expedition with the hope
that something would turn up," that "Kay was being asked to provide
virtually every detail regarding the operation of his business\[,\] . .
. include\[ing\] sensitive information such as his entire customer list
and details regarding the technical configuration of each of his
customers' system\[s\]," and that "all of Kay's reasonable requests for
modification of the extremely broad inquiry were arbitrarily ignored."
*James A. Kay, Jr., Licensee of One Hundred Fifty Two Part 90 Licenses
in the Los Angeles, California Area*, Initial Decision of Chief
Administrative Law Judge Joseph Chachkin, WT Docket No. 94-147, FCC
99D-04, ¶ 179 ("*Chachkin Decision*"). In addition, Judge Chachkin found
that the Bureau's request for information "was received by Kay only two
weeks after the Northridge earthquake, a devastating natural disaster
that did substantial damage to his business and personal residence" and
that, ultimately, "Kay turned over some 36,000 documents." *Id.* ¶ 180.
Finally, Judge Chachkin ruled that Kay's actions were based on
"legitimate concerns in Kay's mind whether the data sought would be kept
confidential" (*id.* ¶ 181), because, among other things, Kay's
competitors had received a copy of the Bureau's inquiry letter to Kay
(*id.* ¶ 29) and the Bureau at one point demanded 50 copies of Kay's
response (*id.* ¶ 181).

In my view, the Commission goes too far in reversing Judge Chachkin's
conclusions. There can be no question that Kay and the Bureau were
engaged in a heated dispute. Judge Chachkin made a number of factual
determinations to resolve that dispute and determine that Kay did not
violate the statute or Commission rules. In such situations, I am
reluctant to reverse an ALJ's determinations based on a cold record. It
is well established that, generally, the initial trier of fact is
"closer to the course of the litigation," *Bonds v. District of
Columbia*, 93 F.3d 801, 808 (D.C. Cir. 1996), and "has a better 'feel' .
. . for the litigation" than a reviewing tribunal, *Founding Church of
Scientology v. Webster*, 802 F.2d 1448, 1457 (D.C. Cir. 1986). Thus, the
Commission routinely defers to the ALJ on these sorts of decisions.
*See*, *e.g.*, *Applications of WWOR-TV, Inc. for Renewal of License of
Station WWOR(TV), Secaucus, New Jersey and Garden State Broadcasting
Limited Partnership for Construction Permit, Secaucus, New Jersey*,
Memorandum Opinion and Order, 5 FCC Rcd 4113, ¶ 11 (1990) ("\[W\]e are
reluctant to reverse the ALJ, to whom broad discretion is ceded in
ordering discovery . . . ."); *Applications of Mid-Ohio/Capitol
Communications Limited Partnership et al. for Construction Permit for a
New FM station on Channel 298A in Columbus, Ohio*, Memorandum Opinion
and Order, 4 FCC Rcd 8125, ¶ 6 (1989) ("\[T\]he Commission routinely
entrusts the determination of the scope of such discovery in comparative
hearings to the broad discretion of the ALJ."). Indeed, this principle
of deference extends well beyond the FCC; in the similar arena of
discovery disputes, appellate tribunals traditionally afford great
deference to the decisions of the trial court. *See*, *e.g.*, *United
States v. Davis*, 244 F.3d 666, 670 (8th Cir. 2001) ("The district court
has broad discretion in imposing sanctions on parties for failing to
comply with discovery orders."); *accord Bonds*, 93 F.3d at 807.
Accordingly, on this record, I would not have reversed the ALJ's
decision.

**II. Lack of Candor**

The Commission's lack of candor decisions against Kay and Sobel stem
from other events in this case. During the course of the Bureau's
investigation of Kay, it received information indicating that Kay may
have conducted business under several other people's names, including
Marc Sobel's. The Commission thus included Sobel's licenses in the order
designating Kay's licenses for hearing. Kay filed a motion to remove
Sobel's licenses from the hearing designation and attached an affidavit
signed by Sobel stating that Kay had no interest in any of Sobel's
stations. Based on this submission, the Commission removed Sobel's
licenses from the Kay proceeding.

The Bureau subsequently discovered that Kay operated a number of Sobel's
stations pursuant to a management agreement. Accordingly, the Commission
designated Sobel's licenses for hearing, asking whether Sobel had
engaged in misrepresentation or lack of candor. The ALJ assigned to
Sobel's case, Judge Frysiak, concluded that Sobel's actions showed a
lack of candor. Judge Frysiak based that determination on, among other
things, statements in the affidavit and on Sobel's apparent failure to
provide the Bureau the management agreement in a timely manner.

However, Judge Chachkin, in *later* reviewing the same conduct in Kay's
case, came to the opposite conclusion. Judge Chachkin found that Kay
understood the affidavit's statement that Kay had no interest in any of
Sobel's stations to mean that Kay had no ownership interest in any
licenses that were issued to Sobel. *Chachkin Decision* ¶ 216. Judge
Chachkin determined that "Kay was specifically advised, by counsel, that
. . . the management agreement did not constitute an interest." *Id.* ¶
172. He thus concluded that "Kay's testimony as to what he meant by the
word 'interest' and the phrase 'stations or licenses' is entirely
reasonable and credible." *Id.* ¶ 216.

Judge Chachkin also found that Kay's and Sobel's actions showed no
intent to deceive the Bureau or conceal the management agreement. He
pointed out that Kay and Sobel provided the management agreement to the
Bureau just two months after they filed the challenged motion and
accompanying affidavit, long before anyone raised any questions about
lack of candor. *Id.* ¶ 217.

Finally, Judge Chachkin addressed Judge Frysiak's prior decision on the
lack of candor issue and concluded that Judge Frysiak had been misled by
the Bureau. Judge Chachkin explained that, although Kay had provided the
Bureau a copy of the management agreement in March of 1995, the Bureau
represented to Judge Frysiak that no copy was provided until late 1996.
*Id.* ¶ 210. "There is no doubt," Judge Chachkin concluded, "that
\[Judge Frysiak's\] ultimate conclusion that 'Sobel made
misrepresentations and lacked candor . . .' was based on his erroneous
assumption as to when the Agreement was given to the Bureau." *Id.* ¶
210.

Based on these conflicting decisions and on Judge Chachkin's view that
Judge Frysiak was misled, I cannot support this decision. As the
Commission acknowledges, determinations of credibility must rest in
large part on factual determinations made by an ALJ. I am unable, on the
record before us, to reconcile the ALJ's conflicting decisions and
determine that Judge Frysiak was not misled.[^8] Particularly given the
severity of the sanctions at issue, I would not find that Kay and Sobel
lacked candor.

**III. Conclusion**

At best, this is a case of conflicting opinions by ALJs that ought to be
remanded to a third ALJ to reconcile their determinations. Even worse,
however, this case involves allegations that Commission staff misled a
judge into reaching an erroneous conclusion. While I am confident that
Commission staff engaged in no misconduct in this case, we do them a
disservice by depriving them of an opportunity, in a new hearing, to
explain what occurred. Such a hearing would defend the reputation of our
staff and ensure the integrity of our process. Thus, for all of these
reasons, the more reasonable course would be to refer this case for a
hearing in front of a new ALJ. Accordingly, I dissent from parts IV,
VII, VIII, and IX of the Kay Order and from parts V, VI, and VII of the
Sobel Order. I concur with respect to the other parts of these Orders.

[^1]: The Enforcement Bureau was established effective November 8, 1999.
    [See]{.underline} [News Release]{.underline} [FCC Reshapes for the
    Future]{.underline} (Oct. 26, 1999). Its responsibilities include
    serving as trial staff in formal Commission hearings. It has
    participated in this proceeding in lieu of the Wireless
    Telecommunications Bureau beginning in November 1999.

[^2]:     ^?^ The Specialized Mobile Radio Service (SMR) was established
    on the 800 MHz band to provide radio dispatch communications to
    customers within local areas. SMR stations are classified as either
    conventional or trunked. [See]{.underline} [amendment of Part
    90]{.underline}, 10 FCC Rcd 7970, 7974-75 ¶¶ 3-4 (1994); [Amendment
    of Part 90]{.underline}, 60 RR 2d 867, 868 ¶ 2 (1986).

[^3]:     ^?^ Sobel argues that his relationship with Kay is a valid
    resale arrangment. \" . . . \[R\]esale is an activity in which one
    entity (the reseller) subscribes to the communications services or
    facilities of a facilities-based provider and then reoffers
    communications services to the public (with or without \'adding
    value\') for profit.\[footnote omitted\]\" [Interconnection and
    Resale Obligations Pertaining to Commercial Mobile Radio
    Services]{.underline}, 11 FCC Rcd 18455, 18457 ¶ 3 (1996). Since the
    Sobel-Kay agreement specifically provides for Kay\'s management of
    the licensed facilities, we decline to treat it as simply a resale
    agreement.

[^4]:     ^?^ Kay had earlier filed a version of the pleading with a
    supporting affidavit by Sobel with the Commission.

[^5]:     ^?^ In view of this finding, we do not believe that our
    analysis places excessive weight on our interpretation of any
    ambiguous word, as was found in [Lutheran Church-Missouri Synod v.
    FCC]{.underline}, 141 F.3d 344, 356 (D.C. Cir. 1998). Rather, we
    focus on the discrepancy between the reasonable interpretation that
    a reader would give to the affidavit and the facts as fully
    disclosed.

[^6]:     ^?^ Because Sobel was personally involved in the
    representations and fully aware of counsel\'s conduct, his reliance
    on [Rainbow Broadcasting Co.]{.underline}, FCC 98-85 (Aug. 5, 1998),
    as set forth in Sobel\'s Further Motion for Leave to File Supplement
    \[to\] Exceptions is unavailing.

[^7]:     ^?^ As to another matter, however, we accord no significance.
    The record shows that Kay prepared responses to application return
    notices on Sobel\'s behalf. Tr. 87-88. On customer invoices attached
    to responses, the name of Kay\'s business, \"Lucky\'s Two-Way
    Radios,\" is blacked out. [Id]{.underline}.; WTB Exhs. 19-23.
    However, Kay, not Sobel, took the initiative in marking out the
    information. Tr. 337-39. The record does not indicate that, at that
    time in 1993, Sobel was aware that the deleted information might be
    of a detrimental nature.

[^8]: I also take issue with the Commission's conclusion that Judge
    Frysiak would not have made a different decision had he known Kay
    and Sobel provided the Bureau a copy of the management agreement in
    March of 1995, long before lack of candor was an issue. Judge
    Frysiak's decision explicitly rests in part on the determination
    that "even though the Management Agreement fully disclosed their
    relationship, Sobel did not voluntarily submit it to the Commission
    until requested by the Commission to do so in \[1996\]." *Marc Sobel
    and Marc Sobel d/b/a Air Wave Communications, Licensee of Certain
    Part 90 Stations in the Los Angeles Area*, Decision, WT Docket No.
    97-56, FCC 97D-13, ¶ 74. While this may not have been the largest
    factor in Judge Frysiak's decision, I find it impossible to assess
    its impact after the fact. I do not understand how my colleagues, on
    the record before us, can make such a conclusion on Judge Frysiak's
    state of mind.