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November 19, 2005

Air America to settle Multicultural Radio Broadcasting lawsuit

Multicultural recently sued AAR relating to the very first AAR scandal, way back when they were pulled from their Chicago and Los Angeles affiliates because they didn't pay their leases. Now, that lawsuit has been settled.

Do you remember those lazy, hazy days of the first scandal? AAR leased time on two of MRB's stations, but, in April 2004, they apparently forgot to pay $100,000 for the time. As Evan Cohen said at the time:
Air America Radio is temporarily unable to be heard on WNTD in Chicago and KBLA in Los Angeles, but Chicago and Los Angeles listeners can still hear our broadcast on the web at airamericaradio.com and on XM Satellite Radio (channel 167).

"MultiCultural Radio Broadcasting's conduct in this matter has been disgraceful. To shut off a broadcast that listeners rely on without warning and in the middle of discussions is the height of irresponsibility and a slap in the face of the media industry. In addition, it is a clear violation of their contractual obligations, and we are seeking legal remedies against them in court.
Now, Multicultural is reportedly "very satisfied" with the terms of the settlement.

The NY Sun article provides a rundown of the various interlocking AAR scandals:
In May 2004, Air America's board members learned of alleged financial improprieties and mismanagement by the network's director, Evan Montvel Cohen. This prompted board members to transfer ownership from Radio Free America and Progress Media, owned and controlled by Mr. Cohen and his partner Rex Sorensen, to Piquant LLC, the network's current owner. According to Mr. Mastro, the transfer of ownership was a "sham" intended to maintain the network's assets while deceiving its creditors, including Multicultural.

In November 2004, the New York Supreme Court ruled that the prior owners of Air America, Radio Free America, owed $255,000, plus interest, to Multicultural. According to the complaint, the new owners of Air America, Piquant, had not paid the old debts.

In the suit filed in May 2005, Multicultural sought to claim its damages from Piquant, charging it had conducted a "fraudulent conveyance" of ownership. They sought a maximum of about $1.5 million in damages, which included the outstanding airtime lease payments for both the Chicago and Los Angeles stations, rent for studio space and equipment, lawyers' fees, and interest.

As part of the now settled suit, Mr. Mastro referenced an ongoing probe by the city's Department of Investigation, in conjunction with the state attorney general's office, into allegations of "inappropriate transactions" by the Gloria Wise Boys & Girls Club in the Bronx that included the transfer of $875,000 to Air America.

At the time of the transfers, Air America was run by Mr. Cohen, who simultaneously served as the development director for the boys and girls club. Mr. Cohen and Air America cut ties in May 2004. In September, Air America wired money into an attorney-controlled escrow account to be handed over to the boys and girls club when the Department of Investigation completes its inquiry and authorizes payment.



Posted in Meta at November 19, 2005 12:07 AM

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