Opinion ID: 399258
Heading Depth: 2
Heading Rank: 2

Heading: Financial Misrepresentations

Text: 24 The Commission's finding that RKO submitted intentionally false financial reports is equally insufficient to support RKO's disqualification. The Decision states that RKO knowingly certified to the Commission that certain financial reports were complete and accurate when RKO knew otherwise. Id. at P 164. The FCC's conclusion presumes that RKO's inaccuracies were either deliberate and intentionally deceptive, Big Valley Cablevision, Inc., 75 F.C.C.2d 702, 714 (1980); Kaye-Smith Enterprises, 71 F.C.C.2d 1402, 1415 (1979), or that RKO's reports were made with such wanton, gross, and callous disregard for their truth as to reflect the equivalent of such an affirmative and deliberate intent. Golden Broadcasting Systems, Inc., 68 F.C.C.2d 1099, 1106 (1978); see Leflore Broadcasting Co. v. FCC, 636 F.2d at 462. Despite the fact that RKO had consistently denied acting with such intent or disregard, the FCC brushed aside proffered RKO affidavits to that effect and drew adverse inferences without allowing RKO to defend itself in a hearing. Such a procedure was not lawful. 25 The FCC justifies its finding on the basis of the Special Report, which included numerous corporate admissions that RKO's recordkeeping had been sloppy and inaccurate. Specifically, General Tire conceded in the Special Report that RKO's accounting for trades and barters 30 had been incomplete for the previous five years. The FCC seized on the repeated attempts by RKO's controller to improve the recording of such information to infer that he had to know that RKO's barter information was inaccurate as early as 1972. Decision P 179. This inference was unwarranted. RKO's objections to such summary factfinding are well taken, because the admitted inaccuracy of the reports still left issues as to RKO's motive and intent that could only have been determined in what the FCC itself has called the crucible of an evidentiary hearing. Walton Broadcasting, Inc., 78 F.C.C.2d 857, 877 (1980). It is absurd to claim that RKO's underlying motives were not decisionally significant, and thus any supposed factual issue as to motivation was immaterial, FCC Brief at 111, when the issue is not whether the reports were inaccurate but whether they were knowingly so. Given RKO's sworn statements that it made no willful misrepresentations, it was error to deny RKO the timely opportunity to present live witness testimony with the bald statement that RKO's affidavits were not credible. Decision P 182. The FCC's finding turned on RKO's intent, and thus demands that the decision-maker weigh witness credibility. Nasem v. Brown, 595 F.2d 801, 807 (D.C.Cir.1979). Moreover, had the FCC formally designated this charge and given RKO a hearing in which to rebut it, the Commission would have had the opportunity to explore what possible reason RKO might have had for intentionally misreporting information that is apparently considered of minor significance by the FCC itself. 31 26 The Special Report does demonstrate a pervasive failure to maintain adequate records at RKO stations, a failure that does nothing to recommend RKO as a broadcast licensee. But it is a far leap from this to the finding that RKO intentionally or knowingly misrepresented financial information to the Commission. Section 309 of the Communications Act, 47 U.S.C. § 309(e) (1976), requires the Commission to hold a hearing in cases where a substantial and material question of fact is presented, and to specify with particularity the matters and things in issue but not including issues or requirements phrased generally. Whether RKO submitted inaccurate reports knowingly and with intent to mislead the Commission remains an unresolved and material question of fact, and it was therefore error for the Commission to disqualify RKO without following the procedures outlined by the statute. 32