One blog. Three stories – OOPS now four. All part of the tentacles of Biz Radio.
TENTACLE ONE: The question was asked – what motivated Dan to make the choices he has made? The answer is not scientific, in fact, the answer may be as varied as the opinions of the readers. And as for the readers, the comments I am receiving privately and publically via other forums is interesting – to say the least. Here’s a link to one of the forums here.
Allow me the opportunity to speculate for a moment – then we’ll get on to the meat of the blog and other tentacles of substance.
Dan Frishberg did not start off to create a scam or fraud (if you wish to call what has happened either or fraud or scam). I state that as if I have facts to prove it. I don’t. What I do know, however, is the mind of a fraudster. And, from all that I’ve been involved with in uncovering, discovering or participating in frauds (yes, I would prefer not to have to say that, but it is the truth – at least truth 25 years ago), I know that most people who find themselves in situations like Dan Frishberg, Elisea Frishberg, Al Kaleta and perhaps others – do not start out to defraud. But how things start and the choices that are made toward the end may be very different.
Speculation: Dan Frishberg has talent or at the minimum knowledge when it comes to investments and the operations of the equity markets. Likewise, Dan Frishberg has no fear of putting himself out in the public as an expert in investments which includes broadcast media – radio. Finally, Dan comes to understand the power of media when it comes to public awareness and the ability that media affords when it growing a business.
Now, all of the above are fine. Likewise, creating a company to capture the economic benefit of those attributes is fine. What is not fine is deceiving investors. The challenge is this: if investors were told by Dan Frishberg and team that BizRadio was a viable investment that should produce a positive investment return on one hand, and on the other Dan Frishberg told people (employees, etc.) that BizRadio was a “loss leader” (I’ve been told this term by a number of people) that was never intended to earn a profit, then it is highly likely that investors were deceived and that may easily be considered fraud.
Note: The following is claimed in a recently filed lawsuit:
- Breach of Fiduciary Duty
- Fraud by Nondisclosure
- Negligent Misrepresentation
The full suit can be found here Frishberg Lawsuit
While I am not (no do I wish to be) judge and/or jury, I know what happens all too often in situations like this. So, why? Simple. Dan Frishberg – fueled by his ambitious wife Elisea – felt that BizRadio could be his ticket to fame and fortune. He could be recognized as a household name in the financial community. The only problem was – in order for BizRadio to work – he needed money to fund the ever expensive cost of being on the air. At some point, greed had to play into the equation, as he seemed unwilling to allow the profits from his RIA to inure to the benefit of the investors of BizRadio. It appears that Dan felt that those earnings (substantial in nature – reported to be over $700,000 per quarter) were his – the fruits of his show and therefore, the earnings should support he and his family. What he appears to have missed is that the investors that funded the BizRadio “loss leader” really were the owners (or should have been) of what came in… Dan’s fiduciary role is to the investors not to himself.
Beyond the above…Dan Frishberg, in my opinion, became a victim of his own greed which clouded his judgment. Which brings us to the next Tentacle
TENTACLE TWO: Several investors have filed for involuntary bankruptcy against BizRadio. Why? Seems obvious that if they don’t stop the pillaging, then Dan will continue to make ineffective choices and continue to damage the shareholders, lienholders, or investors in, what was formally, BizRadio.
For example…it has been reported that Dan Frishberg is dispersing BizRadio assets at will without regard to investors. How? Per the report:
- The BizRadio master control center has been totally dismantled and either dispersed or put in storage.
- Dan is offering for sale via hired contractors, various expensive network systems, studio and office systems. Question, who will get the proceeds or will the sale of these assets be eaten up by expenses?
BizRadio is over. Yet an interesting fact remains. The domain name – bizradio.com – is being used by Dan Frishberg as a link to his personal site for his continued radio show. Maybe I’m missing something, but to take the BizRadio domain and use it or “convert” it for personal gain, would – once again – be a dumb decision that continues to show a disregard for the investors in what they thought was a viable business enterprise.
Here’s a screen shot of what bizradio.com looks like today. Clearly, Dan is all about promoting Dan and, unless there is a deal that no one is talking about, no investor, shareholder or lienholder is gaining anything from Dan’s personal show.
BizRadio – estimated by some to be $10,000,000 in the hole and the only folks who seem to have gained were: Dan Frishberg, Elisea Frishberg (via salary) and Al Kaleta. With salaries to Dan of $275,000, Elisea $83,000 and Al Kaleta $180,000, and a growing RIA for Dan – life was rosy till the “card” was pulled in this apparent sham and it all began to collapse. The unfortunate victims – the investors who had no clue.
Now, however, the SEC is seeking assets that Al Kaleta was connected with. Investors have filed for involuntary bankruptcy to protect their interests. Several lawsuits have been filed against Dan Frisberg and, at least based on my last conversation, David Wallace – agent for many investors – is sitting on the sideline waiting to see what happens next in bankruptcy court. Meanwhile, it appears that Dan is continuing to use BizRadio assets for personal gain and liquidating as quickly as possible before being forced into bankruptcy.
And, I have a question that I would love to receive an answer to. Salem Communications agreed to “buy back” 1110 AM from “BizRadio” and/or Dan Frishberg for $800,000 cash and $1.6 million in radio time for his show. If the involuntary bankruptcy stops the sale…HOW CAN DAN CONTINUE TO RUN HIS SHOW? IS SALEM GIVING HIM THAT AIR TIME FREE? ISN’T THAT A TAXABLE TRANSACTION? A little help here please!
Before the last tentacle – what happened to Rehan Siddiqi who was willing to purchase the station for $3.5 million? Wouldn’t that be a better deal (if that can be resurrected) for the shareholders of BizRadio than what Salem is offering to Dan?
TENTACLE THREE: This next area is just being explored. I can’t draw any conclusions (at least not yet), but as I was researching the other day, I came across something that just caused me to scratch my head. I have heard since this story broke in the Houston Chronicle (about Kaleta and BizRadio) – that Dan and Elisea Frishberg live in a home that is leased for some $9,000 per month. Perky little amount per month, but O.K. folks lease homes. No big deal. Then…
I noticed that Dan and Elisea sold their home in Houston to Rhonda Hartmann…
|Ownership History: 0410280020182|
| 634 VOSS RD
HOUSTON TX 77024
|FRISHBERG DANIEL S
FRISHBERG ELISEA T
So just before Al Kaleta get’s busted (publically) by the SEC…Dan unloads his house – tax value $775,000 (rounded). Now most readers know that the tax value is lower than the typical true value. So, best guess, its a $1 million home (give or take a bit due to the current economy).
But here’s whats strange. In 2008 according to the Harris County records – Rhonda Hartmann lived in a house with a county appraised value of $275,000 (likely a $325,000) home. She went from 2056 square feet to 4341 square feet and triple the value. Now I don’t know about the rest of you, but in the worst economic recession we’ve seen since the great depression, I find it interesting (to say the least) that a buyer could be found that would double sq. feet and triple value.
If you don’t take my word…research it for yourself – here’s the link.
Possible? Yes. Fishy (or as I put it “frishy”) – Definitely. I would venture to say that investigators are looking into that transaction just to see if there is any related party transactions taking place. The question practically is – Is Dan hiding assets or attempting to protect them by moving them away from himself with hopes that when all of this dies down he can reclaim some of his former possessions.
More to come…
TENTACLE FOUR: Unverified, but it is reported that Dan Frishberg has yet to pay any of his payroll tax this year. If that is true, that is the kind of thing that raises the ire of the IRS. Guess the truth will come to light soon. For Dan’s sake, I hope the payroll tax issue is a non-issue.
For now – YOUR COMMENTS WELCOME