Air America Embroiled in Scandal
By Leon H Wolf Posted in Democrats — Comments (17) / Email this page » / Leave a comment »
Some of our diarists and commenters around here have mentioned this affair briefly, and the story is picking up steam that I thought it might be appropriate to visit the issue on the front page. If any of you are interested in a further breakdown of the story, I would refer you to Michelle Malkin and Brian Maloney, who have been on the case from the very beginning.
To summarize the facts of this case as they are known now, the Gloria Wise Boys and Girls Club of New York is currently under investigation by the city of New York for approving "inappropriate contracts" and also for destroying records. During the course of the investigation, one of the "investments" that came to light was a loan of $480,000 that the Gloria Wise Club made to a company called Progressive Media.
What was significant about this loan was that Evan Cohen, who was Director of Development for Gloria Wise was also chairman of Progressive Media. What has made this story significant politically is that Progressive Media was the company that owned and operated the liberal talk radio network Air America Radio.
More below the fold:
Since the time of the transaction currently under discussion, Air America Radio has transferred ownership to a new coporation called Piquant LLC. When this story went "public", Piquant LLC issued a statement that said, in effect, it's not our problem:
On MAY 24, 2004 the newly formed PIQUANT LLC acquired the principal assets of AIR AMERICA RADIO from the prior ownership entities. PIQUANT has owned and operated AIR AMERICA RADIO since that time. The company that had run AIR AMERICA RADIO till then no longer had anything to do with the network.
PIQUANT had no involvement whatsoever with funds from GLORIA WISE BOYS &GIRLS CLUB. PIQUANT neither received nor expended any of the sums that are the subject of the City's investigation of the CLUB.PIQUANT is not being investigated by the City, which is investigating a
transaction that took place before PIQUANT existed.
Upon reading this, I sought some legal advice about whether this explanation from Piquant LLC would wash. The short version of that story is, as long as they paid fair market value for Progressive Media's assets, and as long as they didn't know before the transaction about the fraudulent loan, they are most likely in the clear, from a legal standpoint. I have been told, and I will frankly admit to not knowing if this is true or not, that many of the board members from Piquant LLC also sat on the board at Progressive Media. I haven't yet received a response as to how, if true, this information would affect Piquant LLC's possible legal liability.
Many bloggers, myself included, were not satisifed with this explanation on ethical grounds, if not legal grounds, especially given the stark appearance of quid pro quo when Air America decided to provide a promotion for a camp run by Gloria Wise, a promotion which ran after the transfer of ownership to Piquant LLC.
Also, the question was repeatedly raised about whether the personalities at Air America, in particular, felt comfortable knowing that they had been the beneficiaries of a loan that defrauded a government program they all supported. Today, Air America responded with a new statement, emailed directly to Michelle, which said this:
Statement:
If the allegations of mismanagement and corruption at Gloria Wise Boys and Girls Club are true, it is absolutely disgraceful.As reported in the Wall Street Journal and the HBO Documentary, Left of the Dial‚ the company that the Gloria Wise Boys & Girls Club officials gave money to, Progress Media, has been defunct since May 2004. That company was run at the time by Evan Cohen who has not had any involvement in Air America Radio since May 2004.
The current owners of Air America Radio have no obligation to Progress Media‚s business activities. We are very disturbed that Air America Radio's good name could be associated with a reduction in services for young people, which is why we agreed months ago to fully compensate the Gloria Wise Boys & Girls Club as a result of this transaction.
We at Air America Radio strongly believe in the mission of Boys and Girls Clubs to provide a safe and nurturing place for young people to learn and grow. As a result, we recently allowed the same club, Gloria Wise Boys & Girls Club, to use our name in a fundraising effort for a summer camp for children in their community.
The funding for Camp Air America was raised and collected entirely by the Gloria Wise Boys & Girls Club, and Air America promoted the camp on air and urged support for it. A link on our web site sent those interested in contributing to the camp to the Gloria Wise web site. Regrettably, the camp did not survive the closure of the Gloria Wise organization. We have offered any individuals who contributed to the camp as a result of Air America's promotion the option of a refund paid for by Air America Radio and the Club offered the alternative option of having their donation redirected to Kip's Bay Boys and Girls Club.
In a highly recommended read, Brian Maloney takes this non-statement apart here, and further has a list of questions:
1. Have you actually repaid the money to Gloria Wise, or did you simply "agree to" repay it at some future time?
2. How much did you pay them, and when? Can we see a cancelled check?
3. If you repaid the money, what happened to it at Gloria Wise? They don't have it, that's why programs were shut. Where did it go, who did you give it to?
4. When you made the decision to repay the money, why didn't you let the public know?
5. If you were above-board on this from months back, why wait until news of a criminal investigation hits the press?
6. If you knew Cohen had put Air America in a bad position with this money, early in 2004, why did you wait until early 2005 to agree to repay it?
7. Again, if you knew Gloria Wise Boys And Girls Club had participated in an unethical or illegal transaction with Air America's previous owner, why would you choose to have further dealings with the organization, months later?
8. Did any current Air America employees or managers have a role in, or knowledge of, this "transaction"?
9. If you had, in fact, repaid the money months ago, why didn't you say so in your earlier press statement? What would have been the use of holding back that important information?
10. Does Air America realize that even if you've since repaid the money, the network had benefit of its use, while inner-city youth and senior programs were threatened? If I rob a bank, but return the money later, does it mean I'm off the hook?
I just don't buy the transfer of ownership excuse they throw around so sloppily in these releases. Have Air America's hosts been this accommodating toward corporate America during their recent scandals?
11. Are your hosts welcome to discuss this matter on the air, or have they been asked not to, by management or the company's legal department? Have any addressed it so far?
To this, I added a few comments/questions about the Air America statement:
[I]t's important to remember in this whole mess, that the group that is actually accused of diverting public funds is Gloria Wise, not Air America. They are, so far as we can tell, at least as ethically culpable here as Progress Media, being that they were the entity that "signed the money away" so to speak.
This has relevance when examining Air America's response to this fiasco. Brian already raises the point that agreeing "months ago" from now to repay the loan is a bit tardy in this case. Also, it raises the question as to whether money has been actually repaid or whether just repaid in agreement. I think the company holding my car note would agree that's a very significant distinction.
Specifically, though, two things about this statement from Air America strike me as a little funny. The first is the method they chose to utilize in their "Let's make it right" campaign:
In seeking to offer evidence that they tried to make this right as soon as they possibly could, they defend themselves thusly:
We at Air America Radio strongly believe in the mission of Boys and Girls Clubs to provide a safe and nurturing place for young people to learn and grow. As a result, we recently allowed the same club, Gloria Wise Boys & Girls Club, to use our name in a fundraising effort for a summer camp for children in their community.
Okay, so - the company switched hands in May of 2004 - presumably, someone at Piquant learned that they had taken a half million in funds from Gloria Wise, and so to make it right, they acted speedily in June and started promoting this Camp Air America. That's a rather nice gesture. The only problem with it is this:
The funding for Camp Air America was raised and collected entirely by the Gloria Wise Boys & Girls Club, and Air America promoted the camp on air and urged support for it.
So, in order to make amends for taking money from Gloria Wise, they sponsored a camp at one of their locations which Gloria Wise paid for? Jeez, that's awfully big of them, I guess. Plus, there's the rather obvious question (at least, it's obvious to me) of why anyone would trust an organization that they knew to be crooked in the first place to handle the fundraising for their "Let's make it right" campaign.
I don't expect I'll receive a response to that question, or these either:
If Gloria Wise went under, was that due to the fact that they were short about half a million in cash? If so, it more or less leads you to believe that the money has not been "actually repaid" but is still in "agreed to be repaid" land.
Second, given that Gloria Wise is now closed, how will the money now be repaid? Isn't this a handy loophole for Air America to jump through? "Gosh, we'd really like to repay them - in fact, we agreed to repay them, but due to some unforseen circumstance, they went under. Weird. Oh well, nothing to be done now."
Unless I am missing something in this statement, that is exactly the position Air America is currently taking: we agreed to repay this months ago, but Gloria Wise doesn't exist anymore. They then offer in the last paragraph an offer to repay, but careful readers will notice that it is not an offer to repay the half million misappropriated from Gloria Wise funds:
We have offered any individuals who contributed to the camp as a result of Air America's promotion the option of a refund paid for by Air America Radio and the Club offered the alternative option of having their donation redirected to Kip's Bay Boys and Girls Club.
In other words, if you contributed to the club through us, we'll give your money back. Give the half million back to some other Boys and Girls Club? Who said anything about that?
More updates as the story unfolds.
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Air America Embroiled in Scandal 17 Comments (0 topical, 17 editorial, 0 hidden) Post a comment »
That's the most concrete thing I've been able to nail down. At some point before May of 2004.
These people and their "businesses" are "progressive" and have only the good of mankind as an agenda. If they run afoul of some technical aspect of the law, that is not such a bad thing. It isn't like when some bloody-minded GOP-type carefully avoids breaking the law, but is up to no-good anyway, which demands an investigation and a new law post haste.
There is no here here.
The only reason for this website to publish anything about it is because you are in favor of censorship.
[Joel is on vacation, his evil twin is filling in for now.]
....quite possibly, one of the terms of the sale to Piquant was that the old entity had to take responsibility for the consequences of the action. This happens all the time. When my company was sold, there were several lawsuits against my company that stayed with the old company. That's just the way it goes. If those are the terms, then it is purely out of good will (or rather wanting to avoid bad will) that Air America will repay the money. Given AAs finances, where they just sacrificed exposure for profit (though an exclusive deal with XM that took them off of Sirius), I doubt they'd even be able to pay it all back at once.
- the old entity had to take responsibility for the consequences of the action. This happens all the time.
Except when it is so obviously a dodge. Here it turns out that the new owners are the same guys as the old owners, except now they're hiding behind a different piece of paper.
It would appear that Mr. Cohen transferred a half-million in taxpayer money into Air America in the form of a loan. The owners of Air America then structured a transaction in which they had their old piece of paper sell Air America to their new piece of paper, thus leaving the Pile Of Ugliness behind. If a jury can be made to believe that their intent was also to leave the debt behind, they are on their way to jail.
If it can be shown that the half-million was a bridge loan that was necessary to keep the doors open while other funding was lined up, things get even nastier.
Ah, manufactured outrage, we love you so.
No one, but no one, does manufactured outrage like Michelle Malkin. She is a true artist.
The aroma of those pungent little bundles hitting the fan. It is so reassuring to see the sanctimonious left caught in the pig pen doing things they accuse their enemies of doing. There is a God.
But, hey, they're liberals. They can commit any crime as long as they do it with good intentions. They are, after all, on a sacred quest. They are progressives protecting the world from the evil hordes of conservativism.
"Except when it is so obviously a dodge. Here it turns out that the new owners are the same guys as the old owners, except now they're hiding behind a different piece of paper."
I don't think that is the case. This is what I found out.
Progressive Media was the company that owned Air America's trademarks and assets. They borrowed some money from Gloria Wise Boys and Girls Clubs. Evan Cohen was part owner and also Chairmen of the Board of Progressive Media. I think he served as a development director for the Boys/Girls Club. So you have some self dealing there.
The assets were sold to Piquant. They paid Progressive. Progressive should have paid its liabilities. They didn't pay this one. Piquant agreed to pay it later, I assume for Goodwill reasons. I would suspect there are other liabilities that didn't get paid. That's one reason one does an asset purchase instead of a stock purchase.
The new investors are not the old investors. There is a lot of this talked about in the HBO Special, "Left of Dial". The company almost went belly up early on.
From Wikipedia:
"Air America was started as part of Progress Media, which said it had amassed $30 million in venture capital prior to its debut, a claim which later turned out to be untrue (only $6 million was initially collected). Two individuals from Guam, Rex Sorensen and Evan Montvel Cohen, were involved in raising the capital but denied any wrongdoing. [2] Cohen had an unusual history for his position in a progressive-left radio network since he was a Republican political operative in Guam and former chief of staff for Republican Governor Tommy Tanaka."
From HBO:
"With Air America facing severe financial problems, and the conservative media reporting every minute of its travails, Cohen abruptly disappears, leaving Goodfriend and the network's executive producer, Carl Ginsburg, in the lurch. Silent investor Doug Kreeger steps up to take a more active role in the venture, navigating the staff through a crisis when employees temporarily lose their health benefits. Eventually, Cohen signs over his interest in Air America, and Goodfriend resigns, feeling betrayed by his good friend...
In December 2004, a new round of investors brings Air America a measure of financial stability."
Searching the web, doesn't seem to be much going on with this story.
Stanford
- From Wikipedia:
Keep going. You'll find this: "As part of a reorganization, investors in Progress Media bought the assets of that company, creating its current owner, Piquant LLC."
- Searching the web, doesn't seem to be much going on with this story.
Of course not: it's a serious fraud that touches on a liberal cause. You guys always think we're wearing tinfoil hats when we say that the media is full of liberal activists posing as journalists, but this is exactly what we mean. Here's a half-million dollars stolen from a charity funded by the government, and you can't find squat about it in the mainstream media.
Ten bucks will tell you all you need to know.
Normally everything you say about liberals makes my blood pressure rise and I start glaring at the computer and muttering, but for some reason I find this post quite funny. Dunno what's wrong with me =)
First, the initial loan was clearly not an "arms length" transaction. It would be interesting to dig into the books at Gloria Wise Boys and Girls Clubs. No doubt that either their sources of funds or their own incorporation bylaws restrict what can be done with the money.
Second, to the extent that it was proper for Gloria Wise Boys and Girls Clubs to make the loan to Progressive Media, then it would be an obvious violation of GWB&GC's fiduciary responsibility if they failed to obtain a security interest in all of PM's assets. I've been involved in deals that are similar to this: If a company has lots of assets and lots of debts, you can not dis-encumber the assets by simply selling them to a new entity and leaving the debts behind. Assuming those who loaned the money were even borderline competent, the debt is attached to the assets themselves, not just the corporate entity. If that was not the case here, then it is more evidence that the original loan was fraudulent in nature.
....that our talk show stations are journalism.
The terms I think of are:
- Fraudulant Conveyance
- Structuring
FC is when you move property from one entity to another, to avoid a tax,fine or, debt.
Structuring is the use of many small payments vs. a large payment to avoid a tax or fine.
If Progressive Media were liquidated, then Gloria wise boys & girls club would have been paid
according to the law, and PIQUANT LLC would have written the check.
The key is the books, to see how the money move from one set of books to another.
This is what I love about Liberals: Their ideas never gain any traction because they are so thoroughly saturated in generalizations and innuendo. I regularly read "Crooks and Liars" and am constantly amused by the profanity/hatred so evident. Then, they wonder why nobody takes them seriously. They simply rattle on to themselves as though they were changing the world.
This site is refreshing in the tone it sets.
insert a small cheer here
I've been all over the web looking for this, and I can't find one simple fact: When was this loan made by Gloria Wise to Progressive Media?