BizRadio, Frishberg and Crider – What a tangled web we weave…

Today Daniel Frishberg issued the following email related to BizRadio.  I am showing it in its entirety in blue.  Comments follow in black…

BizRadio Returns: What a story!

Dear Friend,

I’m proud and happy to announce that BizRadio will be back on the air Monday at noon. The truth is, we should never have been off, but a clever legal maneuver by an opposing group got them a temporary order, and we were forced, against our will, to put them on instead of OUR content, on OUR radio station – but only for a couple of days. Once the court got a look at the facts, it cancelled that order and the final result – WE ARE BACK!

NOTE: See the attached…how can Frishberg claim that he didn’t know…come on…  A month passes and Frishberg is just now figuring that something is wrong.  Something here doesn’t add up.

Now back to Frishberg’s email announcement:

In the meantime, there will be rumors and other claims, especially from those who oppose our interests. Now that the court has ruled, their only tactic is a propaganda campaign, which people have already told us is underway. If you have any doubt about the facts after reading my letter, read the news article at the end of this letter, about the same perpetrator, involved in a case almost identical to this one.

We will continue to live our lives and do the best we can, but we do want to make the effort to make sure the real facts get out to everyone interested in BizRadio, whether as investors or just supporters and fans.

I just spent all day in court, in Houston, on Friday, Feb 5, defending the interests of BizRadio, its investors and its supporters. Anyone who wants to read another wild and fascinating story should read the transcript of that court action, which is available to the public. I will make sure there is a link to the court transcript on our website as soon as possible.
Briefly, I will summarize our position, which was supported by the court, so far. Our position, as we told it to the court is as follows:

An unauthorized but related party, Ron Crider, the same person in the Colorado newspaper story below, held himself out, falsely, to be the Chief Executive of BizRadio, and to be authorized to make deals and contracts for the sale of major assets. Our records show that he was not even an employee of our company, never received a paycheck from our company. Though a merger with his company was discussed and considered, it was never consummated.

NOTE:  As part of my inquiry into this strange set of affairs I asked Ron Crider in an email exchage the following:

Why did you take a job with Frishberg without compensation?  That seems highly unusual… Because we were and still are partners in BIZ Radio Colorado 50/50 and I was planning on doing a joint Venture with Biz Radio and my Satellite Network GABradionetwork.com

If, in fact, this is true, then why does Frishberg seem to be willing to roll Crider in front of the bus now, when he was willing to have Crider represent him as his CEO in the January news release when all seemed well?

It now appears that there was no real intention to merge, but that this was all part of a carefully crafted plan to wrongfully take a valuable asset, our Houston radio station, for far less than its real value, harming our company and its investors. This is even more onerous now, because BizRadio has more debt than it should, and it is very important that we use our equity in such assets to reduce the company’s debt and make our lenders whole. That is what BizRadio is determined to do and we went to court Friday, to protect our ability to do this.

The conditions of the unauthorized deal are set out in the court document, but in affect this group tied up the radio station in an impossibly bad deal, forcing the company to sell the asset for a fraction of its value to another group outside BizRadio which would profit mightily at the expense of BizRadio, its investors and its creditors. This is, as I’m sure you will note, almost exactly what they same perpetrator did in the Colorado news story below.

I personally believe they expected me to go along with this scheme, because it would result in substantial ill-gotten gains, but I was not willing to collaborate in this scheme. By the way, not only was the scheme harmful to BizRadio, but I don’t believe BizRadio could even legally have gone along with the deal. There is a concept called “Fraudulent Conveyance” which means when you owe people lots of money, you are not allowed to siphon off the assets to some other entity for your own benefit, and screw your legitimate creditors. I am not a lawyer, but I have been advised by our lawyers that participating in this scheme would have been not only immoral, but illegal. Immoral was enough for me, anyway.

For those of you who are interested in contracts and such, I’ll repeat for you the analysis of the contract that I gave to the judge on Friday.
The contract, which was kept hidden and created and signed only by an unauthorized party provided for the following absurd provisions:

  • A 5 year contract to broadcast on our station at $50,000 per month, and with NO INFLATION PROTECTION AT ALL. 5 year contracts are never granted because of the potentially volatile situation. We have only engaged in 1 year, with an option to renew. Always there is a clause that provides for escalation due to inflation.
  • They put in a clause that specifically says that the lease cannot be broken even if we sell the station to someone else.  THE RESULT OF THIS IS THAT WE COULD NOT SELL THE STATION TO ANYONE BUT THEM!
  • They put in the contract an option to purchase the station for $3.5 million. NOTE THAT WE BOUGHT THE STATION TWO YEARS AGO FOR MORE THAN $7 MILLION.
  • The judge seemed to be persuaded by the fact that if the station earns $600,000 per year in rent, it must be worth at least $6 or $7 million.
  • That’s not all. The contract also provided for the purchase option to be good for a year, and to take the entire rent payment off the purchase price. Thus at the end of the year, you would be forced to sell our $7 million station for $2.8 million.

It was not disclosed until recently, that the purchaser did not have the means to make such a purchase, and was relying on financing from Crider, who recently failed to live up to financing commitments to BizRadio this month. IT WAS NEVER DISCLOSED THAT CRIDER WHO WAS SUPPOSED TO BE REPRESENTING BIZRADIO WAS INVOLVED ON THE PURCHASER SIDE AS WELL. WHAT A CONFLICT OF INTEREST – UNDISCLOSED!

I explained to the court that the only possible outcome would be that the optioner, who had no means with which to buy the station, would be able to run around and find someone to buy the station at $4 or $5 million, and pocket the difference, at the expense of BizRadio, its investors and its creditors.

Personally, I believe that this is why the perpetrators thought I would go along with this scheme- because there was lots of money in it if they got away with it. They were wrong. It is only my opinion, but I believe people like that can’t imagine anyone who believes you come out better in the long run by playing it straight.

This is a long story. The positive outcome is that BizRadio has been able to continue to live. The radio station can be used for the benefit of our investors and creditors, and could be enough to reduce our debt to near zero.

NOTE:  Is it really mathematically sound to assume that the life of BizRadio will, in fact, produce profits sufficient to retire its substantial debt, pay off investors and produce a realistic profit?  Or is this just more hype to encourage investors to keep the flow of funding coming?  Otherwise, based on what I’ve seen thus far, BizRadio has financial problems with it’s continued operation.  Maybe, I’m wrong, but it seems that BizRadio failed to provide the security deposit and therefore had no choice (if they wanted to stay on the air in Houston), but to back out of the deal with Siddiqi.  See below:

We know there will be all kinds of rumors, but we want you to know the truth.

As promised, I am also including exerpts from a newspaper article describing another case where the same guy did almost the identical thing. I would characterize it as a scam, but you can make your own judgement on it.

I guess in a difficult economy, there are all kinds of people desperately doing all kinds of things. You can be certain that we will continue to play it straight with you and with everyone.
Happily, BizRadio will be back on the air on Monday at noon.

We are making a special offer to jumpstart our return. We will be offering spots on BizRadio for $50 per one minute commercial  — far below the market rate. If you are a businessman or know a businessman who can benefit from this, please take advantage of this giant sale. It will not last forever, and we will allow the immediate supporters to keep that below market rate for an extended period of time, in appreciation of your support.

We have always been there for you, and will be there now, but right now we could use your help.

Thanks again for the love and support..

Sincerely,

Daniel Frishberg

P.S. For more information, please read the following news story from 1994

TALK ISN’T CHEAP
A JURY AWARDS BIG DOLLARS TO ERSTWHILE KNUS OWNER PAUL STEBBINS.
By Michael Rider, Denver Westword News, April 13, 1994
“My dream was to own and operate KNUS,” he says, “but I might have to make a business decision to sell it. And if I get my money, I will walk away and live to see another day.
The case is strewn with claims and counterclaims revolving around a host of financial and legal sticking points (“Technical Difficulties,” September 22, 1993). Exactly how much money Martishang and his company, Alameda Enterprises, will have to pay Stebbins–whose Mile High Broadcasting was issued the broadcast license to operate KNUS but has had nothing to do with running it for nearly a year–is not yet known. But it could be as much as $1.8 million. Jefferson County judge Ruthanne Polidori will rule by April 28 on the question of who owns KNUS.
Bill Meiers , a mechanical engineer who served as jury foreman, admits that it was a dramatic moment, but says it did not affect the jury’s deliberations. “The decision was based 100 percent on the evidence,” he says. “It wasn’t based on whether Mr. Stebbins was blind and emotional. If he’d been able to see and hadn’t broken down, I’m sure the verdict would have been the same.”
That decision against Martishang included $200,000 in punitive damages for outrageous conduct and $250,000 for fraud. When asked to respond to the jury’s verdict, Martishang refers all questions to his attorney, Glen Keller , whom he says “is good at telling you people to go to hell.” Keller declines to comment, saying it’s because Judge Polidori has not yetmade a final determination about KNUS ownership.
If Polidori decides that Alameda is the rightful owner, the jury has directed Martishang to pay Stebbins over $1.8 million; when money Stebbins has been told to pay Martishang in connection with additional findings is subtracted, the total amount of damages comes to approximately $1.68 million. If Mile High is named KNUS’s owner, Martishang still must pay Stebbins $1.05 million, while Stebbins would owe Martishang nearly $800,000, leaving Stebbins with approximately $250,000 in addition to the station itself.
These awards come a little more than three years after Stebbins, a Chicago-born radio engineer who’s been blind since he was only days old, purchased KNUS from Boulder entrepreneur David Corman . Stebbins paid $460,000 in cash and signed a note with Corman for $500,000 to complete the transaction. By mid-1992, though, KNUS was losing a great deal of money, and Stebbins was unable to turn the situation around. Desperate, he hired Ron Crider , a colorful Floridian who claims to have served as a communications consultant to former Nicaraguan dictator Anastasio Somoza , to act as general manager. In short order Crider arranged with Martishang, a wealthy real estate developer, to move KNUS into one of Martishang’s buildings, at 5800 West Alameda. According to Stebbins, Crider subsequently started spending money at so prodigious a pace that Stebbins feared he would go bankrupt. Former staffer Owen Beaver adds that Martishang denounced KNUS employees as “nothing but fags, queers and perverts,” and once demonstrated his control over the station by throwing a switch that threw it off the air.
In the midst of this turmoil, Stebbins missed a payment on his $500,000 note; Stebbins says Crider used money earmarked for this purpose to pay staff salaries. Later, Stebbins learned that Martishang had purchased the note from Corman and was threatening to foreclose on it unless Stebbins sold KNUS to him. Stebbins eventually agreed, accepting a letter of intent from Martishang to purchase the station for $1.665 million.

This deal was never formalized, however, and when Stebbins determined in June 1993 that Crider was secretly working with Martishang to seize control of KNUS without meeting the obligations set forth in the letter of intent, he gave Crider his walking papers. Stebbins’s attempt to hire a replacement was thwarted when Martishang filed suit, requesting the appointment of a receiver to run the station until the sale was completed (this request was soon granted). The suit also sought to foreclose on the station’s collateral as security for the $500,000 note.

WHAT A TANGLED WEB WE WEAVE…

COMMENTS ARE WELCOME



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2 Responses to BizRadio, Frishberg and Crider – What a tangled web we weave…

  1. [...] prior reports and you’ll get a sense of the broader picture.  Blog 1.  Blog 2.  Blog 3.  Blog 4.  Blog 5.  Blog 6.  Blog 7.  Blog 8.  Blog 9.  (O.K. it’s a big [...]

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