BizRadio to Salem Communications Business 1110 – Frishberg’s Fraud Follies?

July 13, 2010

Have you even awakened in the morning with breath so nasty that you had to brush your teeth before talking to anyone?  I mean “nasty breath” that would turn your dog against you?  Well…if I were a betting man, I would say that Salem Communications (purchaser of BizRadio 1110 am from Dan Frishberg) either has stinky breath today or is smelling it from their “good buddy” Dan Frishberg.

This story just keeps getting better.  I will say (for those who think I am jubilant about what’s happened to Dan) – I’m not!  In fact, frankly for Dan and his family it is sad.  Sad that Dan is so caught up in himself that he is digging a hole so deep that few could ever recover.  But…let’s look at what has happened so that those of you who are following can judge for yourself – whether you think Dan Frishberg is more focused on his well being than being ethical about his transactions and protecting the many who invested their savings only to find it lost.

UPDATE:

On July 12, 2010 Rehan Siddiqi and Asia Vision, Inc. brought suit against Dan Frishberg, Al Kaleta, Elisea Frishberg, Salem Communications, BizRadio and a host of related companies and individuals for tortuous interference, fraud, conspiracy, perjury, theft and a host of other claims. Now…I am not judge nor do I have any connection with the outcome of this claim by Siddiqi.  However, the case illuminates and illustrates patterns of behavior that I would judge to be unethical and probably fraudulent.  So…let’s look at what we do know and you be the judge.

BACKGROUND:

Sure seems like a long time ago, but in late 2009 Rehan Siddiqi (Asia Vision, Inc.) entered into an agreement with Dan Frishberg to lease – purchase – 1110 AM.  Siddiqi paid Frishberg a deposit and the lease in advance for six months – the sum – $180,000.  The agreement provided that Siddiqi would have the option to purchase the station for $3.5 million.  The agreement can be clicked on here.  Frishberg – Siddiqi – Biz Radio Purchase Agreement

No only was there the purchase agreement but the simple terms were listed on the agreement at the end of December 2009.  See here: BizRadio lease purchase agreement

Now why would Frishberg agree to sell his station to Siddiqi?  On the surface it seems clear: (1) Frishberg needed the money!; (2) Kaleta, Frishberg’s financial source of funding (from now some real unhappy investors) was busted by the SEC and Dan was broke; (3) if Dan could move to a more powerful station for just the cost of monthly lease…he might survive; and (4) Siddiqi was willing to provide a quick influx of cash that Frishberg desperately needed.  Understand now?

The announcement of this transaction is reflected here in an email announcement.  BizRadio Station Change Talk about spin…

Then it all falls to pieces.  Apparently Frishberg – seemingly happy with his new station – can’t pay or provide a letter of credit to continue and thereby is facing the loss of his show – the same show that is a feeder to his investment business – the business that feeds he and his family.  So what does he do?  What any self-respecting unethical person would do (sorry, but at times I have to share my feelings) – he screwed Rehan Siddiqi.  He kept Rehan’s money and kicked him off the station that he, just a month before, leased with an agreement to purchase.  See statement from Ron Crider.  Ron Crider Statement

Outcome…Rehan Siddiqi brings suit against Daniel Frishberg and BizRadio for $18 million and YES this is old news but it sets the stage for the rest of the story…

NEXT STEPS:

On March 2, 2010 Rehan Siddiqi filed notice with agent for Salem Broadcasting of his intention to exercise his option under the lease purchase agreement.  His exercise would have Siddiqi paying $3.5 million for 1110 AM.  The proceeds would have been a cash sale and represented a substantial inflow of cash to BizRadio and their respective investors – cash that would have been much needed to those who have lost literally millions.  See offer here.  Siddiqi Purchase Exercise

But according to the lawsuit there are several interesting twists!

INTERESTING TWIST ONE:

BusinessRadio Houston, LLC forfeited its charter to exist, operate and do business as of October 30, 2009.  WHAT?  That’s right…Dan Frishberg continued to operate and do business as if he had the protection of his LLC, but it appears that it lapsed and he was flying blind or “unprotected” if you will.  The BIG QUESTION this raises is – is Dan Frishberg now personally liable for the actions of BusinessRadio Houston, LLC – an entity that seemingly conducted business through at least part of March 2010?

Somehow I see more lawsuits being filed and perhaps the concept of “piercing the corporate veil” is effectively won.  This will be interesting to watch.

INTERESTING TWIST TWO:

Keep in mind the date of the Siddiqi offering – March 2, 2010.

Frishberg (perhaps realizing that his old corporation was nonexistent) filed to do business as BusinessRadio Houston Licensee, LLC on March 4, 2010.

O.K. so Siddiqi makes the offer on March 2nd and two days later Frishberg forms a new company in order to sell what his old company (remember the one that ceased to exist back in October 2009) could not sell.  Hum?

Now…I’m curious as to legally what happens to the license if the entity that holds it ceases to exist?  Who owns the station?  Who has access to the assets?  Who is liable for the actions of the station when the corporate enterprise or LLC fails or dies?  This is getting more twisted as each day passes.

THE SALE:

Oh my…now it gets interesting.  It is fairly common knowledge among those connected with Dan Frishberg and BizRadio that Salem and Dan were discussing the transfer of the station back to Salem back in February of 2010 even though Siddiqi had a purchase option agreement signed by Frishberg at the end of 2009.  So on March 5th – three days after Siddiqi exercised his purchase option for $3.5 million the station was sold FOR SUBSTANTIALLY LESS THAN THAT from Frishberg back to Salem.  Here’s the purchase agreement.  Salem Purchase Agreement

Terms:

(1) Payment of $800,000 to Frishberg

(2) Forgiveness of $1,260,000 of debt to Salem from their initial sale to Frishberg (in other words he had not yet paid them for his purchase in the first place).  Now why they didn’t foreclose and take it back I still, to this day, don’t know.  And…forgiveness of debt creates a taxable event, so I wonder what position the IRS will take on this or if Dan will ignore this and expose himself to tax fraud?

(3) An agreement of $1,640,000 in air time for Frishberg to keep his program on the air – again it would appear that this is a taxable transaction, but that’s Dan’s issue?

A MATTER OF ETHICS:

Let me get this straight…Dan Frishberg who said BizRadio was a loss leader: (a) sold his RIA or DFFS to Bill Heath (ostensibly to protect the quarterly income it generated) instead of having that income inure to the benefit of the BizRadio shareholders; (b) turned down a $3.5 million offer (again that would have benefited those who trusted Dan by investing in BizRadio); and (c) he structured a deal that clearly benefited him – so he could continue his show and remain the master of illusion.  Now is that in any way ETHICAL?

THE REST OF THE STORY (Thus Far):

Well…it appears that the SEC is taking a different look at this whole agreement between Salem and Frishberg (perhaps as a result of this new suit and the information it uncovers).  It looks like Siddiqi wasn’t just filing a lawsuit for the joy of creating a legal nightmare.  Rather, Siddiqi seems to have a legitimate claim.  Several things seem for sure:

  1. The SEC (according to my sources) seem to feel that Frishberg might have fraudulently conveyed the station for purposes of hiding assets and personal gain.  Keep in mind the SEC has no criminal authority, but the use of “fraudulently” might infer that others who do have criminal authority are waiting in the wings for Dan “The Money Man”.
  2. The SEC Receiver would appear to be interested in seeing if Siddiqi (or perhaps other parties) are interested in the station for a sum greater than $800,000 which (obviously) would give the SEC a greater pool of funds from which some form of “restitution” shall we say can be made.
  3. Salem is a substantial entity and while BizRadio is defunct – Salem’s pockets are deep – and one might assume that if Salem somehow “conspired” as the lawsuit alleges the outcome might be beneficial for those who invested in BizRadio.
  4. Likewise, if it is deemed that Salem “tortuously” interfered with Siddiqi’s agreement with Frishberg – again the pocket book might be open either to damages or a settlement – either of which changes the landscape of what seemed somewhat hopeless to date.

WHERE FROM HERE?

Dandy question!  The twist and turns seem, in the matter of BizRadio, to always bring a new challenge and varied and different outcomes.  But, if I were a betting man (and I am not) I would suggest that the following would be logical outcomes:

  1. The SEC Receiver will make dog gone sure that he gets his money for the defrauded shareholders of BizRadio…so the station will be sold for more than $800,000 (I think) and the SEC Receiver will get those funds.
  2. Salem Communication will clearly want to make this go away.  The publicity (and I understand that several media outlets are considering stories) will do no good for Salem.  In fact, I have had multiple inquiries asking why Salem wanted to get into bed with Frishberg considering all the baggage he brings with him?  Damn good question!
  3. Siddiqi will either end up with the station for some amount (likely less than $3.5 million) as it’s value and brand has diminished with all the negative publicity surrounding it or he will end up with a settlement for Frishberg and Salem’s interactions in deference to Siddiqi’s agreement.
  4. Frishberg continues to dig his hole deeper and, yet once again, has shown the SEC that he cares little for those who invested in his vision and cares mostly for Dan Frishberg.  The outcome – I predicted and continue to hold to the belief – the SEC will bust Frishberg and strip him of any investment license he might currently have.  That’s likely the most they can do.
  5. I believe the law enforcement community (at the Federal level) will indict Dan Frishberg and, perhaps, Al Kaleta for wire fraud, conspiracy and other crimes – especially if there is sufficient notoriety with this case.  Could be wrong here, but it’s hard to believe that the justice department will just let this one slide – especially since Frishberg has stayed on the air and continued the charade.

Stay tuned…there’s plenty more to come including an interview with Rehan Siddiqi.  IF you wish to read the Siddiqi lawsuit a copy is here.  Siddiqi Lawsuit July 2010

As always – YOUR COMMENTS WELCOME!


Clifford Wayne Robertson – Real Estate Radio Talk Show Host Pleads Guilty to Bank Fraud

January 18, 2010

He was heard on CNN 1190 in the Dallas, TX marketplace.  His topic – real estate investment strategies.  What folks apparently did not hear was “the rest of the story.”  It seems that, now former Dallas radio host, Clifford Wayne Robertson, 43, pleaded guilty to  charges of bank fraud.

The original indictment alleged that Robertson admitted to using the identity of another person to send fraudulent personal financial statements to a lending institution, the U.S. Attorney’s Office alleged. He submitted the statement to obtain money under false pretenses, prosecutors said in a statement.

The loss caused by his actions is estimated to be in the $3 million range.

Robertson was indicted by a federal grand jury on Sept. 10, 2009. He faces a maximum sentence of up to 32 years in prison. A sentencing date is still to be determined.

COMMENTS:  Since there are three components to the commission of a white collar crime like this – NEED, OPPORTUNITY and RATIONALIZATION – the question is, first, what motivated Robertson to commit such a fraud?  And, equally as important, how could he rationalize that statements issued under false pretenses would be O.K.?

I’m interested in your thoughts.

As a business ethics speaker and author, I know what Robertson is facing.  I, too, faced federal prison for crimes committed in the ’80’s.  Speaking from experience, the consequences of fraudulent actions are no fun.  And, the higher your profile the more likely you are to receive a more severe sentence – just ask Bernie Madoff.

If you have insight into what Robertson might have been thinking…feel free to share.


Theft of Dead Mothers VA Benefits Earns Lyndell Simmons 5 Years in Prison!

May 17, 2008

And who says that every choice has no consequence? Bull! No matter what you do, the choices you make today will have a profound impact on you tomorrow and in the future.

A Lubbock man, Lyndell Simmons,age 46, who pled guilty in January to theft of government money or property, was sentenced to 60 months (five years) in prison and ordered to pay $21,529 restitution to the Department of Veterans Administration (VA).

According to documents filed in Court, Louise Simmons, Lyndell Simmons’ mother, was a beneficiary of VA Dependency and Indemnity Compensation Benefits. In March 2007, an investigation was initiated by the VA, Office of Inspector General, Criminal Investigation Division, after a complaint alleged that Ms. Simmons had not returned a marital status questionnaire. An investigation revealed that Ms. Simmons died on November 10, 2004.

STOP…She died in 2004? Well, how in the world did a dead woman cash checks? That is the question that began Simmons undoing!

Further investigation revealed that from approximately December 1, 2004 to March 1, 2007, Lyndell Simmons cashed approximately 22 VA benefits checks made payable to his mother, forging endorsements on each check. He cashed the checks and used the money for his own personal use.

NOTICE: Often it is not the magnitude of the crime and causes the time. In this case it seems the judge considered in the sentence not only the amount stolen, but the form the crime took. Stealing from the government your dead mothers benefits is cold.

White Collar Crime speaker – Chuck Gallagher – signing off…


Mortgage Fraud Speaker Chuck Gallagher Comments: Mortgage Fraud in California – Iftikhar Ahmad Pleads Guilty!

May 13, 2008

Like many of my readers, I lived through the Savings and Loan crisis several decades ago and it wasn’t pretty. My fear – with the magnitude of potential mortgage fraud rising to the surface, what we might see in the future could dwarf the problems that were created by the S&L crisis.

And another man pleads guilty! IFTIKHAR AHMAD, 36, of Stockton, Calif., pleaded guilty to two counts of mail fraud and one count of engaging in monetary transactions involving criminally derived property. The charges relate to a widespread mortgage fraud scheme centered in the Stockton, California area.

After an extensive investigation conducted by the Federal Bureau of Investigation and the Internal Revenue Service–Criminal Investigation (IRS-CI), Ahmad saw the light and knew that a guilty plea would be best for him considering the circumstances. investigation remains ongoing.

But how did this massive fraud get uncovered?

Rebecca Wood knew something was wrong when she got a call from Washington Mutual about a late house payment. Her response helped the FBI uncover millions of dollars in mortgage fraud.

According to property records, someone using Wood’s identity bought two houses in Stockton in 2003. When the loan for one of the homes went bad, Washington Mutual called Wood.

According to the US Attorney’s office, AHMAD admitted that from July 2003 through October 2005, he participated in a scheme to defraud Long Beach Mortgage, a wholesale lender, in connection with the sale (and in one instance resale) of 10 residential real properties primarily located in the Stockton, area. Between July 2003 and January 2005, AHMAD, through a company called I & R Investment Properties, LLC, fraudulently sold (and in one instance resold) 10 residential real properties, obtaining in excess of $1.5 million in loan proceeds. In each of the transactions, the purchaser financed the property with money borrowed from Long Beach Mortgage.

The scheme involved the use of some straw purchasers— purchasers who lent the name and credit to real estate transactions in which they in fact had no interest. The scheme also involved false statements on loan documents, including those that related to income and occupation, and undisclosed payments by AHMAD of the down payment on behalf of the purchasers.

The use of false documents is common among mortgage fraud convictions. However, based on my experience speaking about mortgage fraud to realty associations and mortgage groups, it is clear that many people somehow feel that simple “financial positioning” is acceptable. More times than not, on close examination – “financial positioning” can be construed as fraud.

In this case, AHMAD is the fourth defendant to plead guilty as a result of the investigation in the case. On December 17, 2007, JOHN NGO, 27, of San Ramon, California, a former Senior Loan Coordinator for Long Beach Mortgage, pleaded guilty to perjury for falsely stating in testimony before the grand jury that he had not received money from a mortgage broker who referred borrowers to Long Beach Mortgage, including borrowers involved in transactions with AHMAD, when in fact he had received more than $100,000 from the mortgage broker.

On March 31, 2008, MANPREET SINGH, 24, of Stockton, entered a guilty plea to a single count of mail fraud. She admitted as part of her plea that she had participated as a straw purchaser and borrower in connection with two properties that she purchased from I & R Investments in late 2004 and early 2005. She further admitted that AHMAD paid her in excess of $22,300 for her participation in the scheme. Clearly here a case of fraud for money!

On April 17, 2008, JOSE SERRANO, 44, of Stockton pleaded guilty to a single count of mail fraud. As part of his plea, SERRANO admitted that AHMAD had paid SERRANO to recruit straw purchasers, and that AHMAD and SERRANO caused several purchasers to be paid for participating in the scheme.

“This prosecution begins to bring into focus the ways that fraud occurred in the subprime lending market in the Stockton area in the 2003 to 2005 time frame,” said United States Attorney Scott. “False representations were made in loan documents; down payments were secretly made “This prosecution begins to bring into focus the ways that fraud occurred in the subprime lending market in the Stockton area in the 2003 to 2005 time frame,” said United States Attorney Scott.

“False representations were made in loan documents; down payments were secretly made by the seller on behalf of borrowers; buyers and recruiters were paid to participate in the scheme; and a loan coordinator working for a wholesale subprime lender was paid by a mortgage broker handling the transactions. The investigation continues.”

Every choice has a consequence! Considering the wide spread incidences of mortgage fraud, I suspect that this case is just the tip of the iceberg when it comes to what has been done and how many are yet to be discovered. As a mortgage fraud speaker, I am finding more and more that people are just now beginning to understand how wide spread mortgage fraud is and how easy it can be to be caught up in a mortgage fraud investigation.


West Virginia Dentist James E. Kirkpatrick, III Sentenced to Prison for Drug Fraud

May 10, 2008

Going to prison for drugs isn’t limited to “so called” drug dealers. An Ohio man was just sentenced to prison for his role in obtaining drugs illegally.

JAMES E. KIRKPATRICK III, DDS, 44, who resides in Belpre, Ohio, was sentenced to eight months in prison for fraudulently obtaining hydrocodone. KIRKPATRICK previously pled guilty in January 2008, to a one-count information. DR. KIRKPATRICK’S office is in Parkersburg, WV. He began practicing in West Virginia after losing his Ohio dental license.

Information related to his Ohio license is here.

The conviction is the result of an investigation conducted by the Drug Enforcement Administration and the Washington County, Ohio, Major Crimes Task Force. The investigation revealed that at least three patients received prescriptions for controlled substances from KIRKPATRICK and then gave some or all of the drugs back to KIRKPATRICK for his personal use. Pharmacy records indicate the patients received multiple prescriptions for controlled substances from KIRKPATRICK in 2006 and 2007.

At sentencing, DR. KIRKPATRICK apologized to one of the patients from whom he attempted to fraudulently obtain hydrocodone following his January 2008 plea of guilty in Federal Court.

Every choice has a consequence. Often, as a speaker, I share that statement with my audiences. But, what is also true is – behavior changes only when the consequences become so significant that you want behavior to change. While losing his Ohio license may not have been directly related to the drug charge that sent Kirkpatrick to prison, certainly prison will be another consequence that will change his life.

Perhaps upon his release, Kirkpatrick can use the experience in a positive way to benefit others.

For now, business ethics and white collar crime speaker – Chuck Gallagher – signing off…


Facing Federal Prosecution – Here’s a Book You Might Need! White Collar Crime Speaker Chuck Gallagher makes Recommendation.

May 4, 2008

Let me say on the front end, as a business ethics speaker, I try to make sure that when I write I do so in an ethical manner. Full disclosure is critical to living an honest and ethical life. So with that said, I am exposing a book here that I am told that it is the best of its kind. I have no financial interest in this book, the publisher of this book or the author, so my recommendation is based on value. So here goes…

Whether you are facing federal charges or are being sentenced into federal prison, this book provides helpful information that can help provide a successful outcome.

About the Author of Busted By the Feds: A Manual for Defendants Facing Federal Prosectuion –

The federal sentencing guidelines took effect in November 1987. I spent the following two years working with inmates at the federal prison in Phoenix, Arizona helping with appeals and post-conviction motions.

The inmates at Phoenix in those years came from all over the country (and all over the world), and I heard hundreds of stories from my clients about how they had been mistreated, tricked, lied to, and just generally screwed by the system as they tried to defend themselves against federal charges under the new guidelines system.

Although I tended to believe their stories, I also found it hard to completely accept many of the tales that I heard, and I always took them with at least a grain of salt. Then I moved to Tucson, where I spent 1990, ’91 and ’92 working with inmates in that federal prison.

F.C.I. Tucson is unusual in the federal system in that it was originally built as an M.C.C., essentially a local jail to house pre-trial prisoners, then was changed over to an F.C.I. for sentenced inmates before it even opened its doors. As a result, it continued in both roles: a mix of sentenced prisoners serving their sentences there and pre-trial prisoners held in the Yucca Unit while they fought their cases.

As I had in Phoenix, I began to help sentenced inmates with their appeals and writs, but very quickly the pre-trial inmates began coming to me for help. As word got around, hundreds of them sought me out for advice.

During the 2-1/2 years I worked in the law library at F.C.I. Tucson, I assisted over 500 pre-trial inmates who were fighting their cases. It was during this period that I began to experience, first-hand, many of the tricks and deceits that I had been hearing about in Phoenix.

Prison inmates who read Busted by the Feds invariably tell me, “That’s exactly what happened to me!” By now I have personally experienced everything that I describe in this book many times over, albeit vicariously.

From 1987 through 2008, I have worked with pre-trial inmates fighting their cases in Louisiana, Arizona, New Mexico, Texas, and Colorado, in addition to more than a thousand sentenced inmates from all over the country, and everything that I describe in this book has occurred time after time after time in every federal district in the nation.

Larry Fassler,
Tucson Arizona, 2008

If you wish to obtain a copy…e-mail: sales@bustedbythefeds.com

White Collar Crime Speaker – Chuck Gallagher – signing off…


White Collar Crime’s Surge – Mortgage Fraud – FBI Director’s Comments

May 2, 2008

As a white collar crime speaker, most of my presentations on the subject centered around corporate fraud and how to prevent it. Lately, however, more and more organizations from real estate firms, to associations, to mortgage companies are interested in the new hot topic – MORTGAGE FRAUD. They want to know how it happens, what to look for and how to prevent it.

Below are comments reprinted from the FBI web-site. The entire document can be found here.

A day after warning the Senate about a “tremendous surge” in the FBI’s mortgage fraud investigations, Director Robert Mueller talked in more detailed terms about the growth in both corporate fraud and public corruption cases at the annual conference of the American Bar Association’s Section of Litigation in Washington, D.C.

Despite limited resources, Mueller said that the FBI’s corporate fraud cases have grown more than 80 percent since 2003. Last year, we had more than 490 corporate and securities fraud convictions.

He predicted that the problem will only worsen because of the “ripple effect of the sub-prime crisis and its impact on the credit market.” The FBI, he said, has already “identified 19 corporate fraud matters related to the sub-prime lending crisis … targeting accounting fraud, insider trading, and deceptive sales practices.” And, we’re currently investigating more than 1,300 mortgage fraud matters.

Years past, the FBI was involved in other forms of white collar crime. Today, that is shifting. That is not to say that corporate and public corruption do not exist – they do, but this new wave of crime seems to have caught on right under the public’s nose as mortgage money came easy.

Mueller goes on to say, In my days as defense counsel with a firm representing corporate targets, I met a number of executives who could rationalize every bad decision. They would say it was “business as usual”—that they were acting in the best interests of the company, given financial constraints and the pressures of running a business.

And I would think to myself, “You broke about 14 laws before breakfast. How could you fail to see you were doing anything wrong?”

I saw executives who did not start out intending to break the law. They would argue they were playing by the same rules as everyone else. They began to believe their own explanations. But it is a slippery slope from behavior that skirts ethical or legal boundaries to behavior that crosses the line completely.

It calls to mind the saying: If you jump out of a window on the 100th floor, and you seem to be doing fine as you pass the 40th floor, that doesn’t mean you don’t have a big problem. Rationalization will not provide much padding when you hit the pavement.

Mueller points out a valuable truth that often comes out in my business ethics presentations, just because some one else does some thing does not mean that it is ethical, right or that you should make the same choice. Every choice has a consequence.

If your organization deals with the sale of real estate it is worthwhile to explore MORTGAGE FRAUD – how it happens, what to look for and how to avoid the outcome – PRISON. For more information contact me through my web site: www.chuckgallagher.com

Mortgage Fraud Speak – Chuck Gallagher – signing off…