Radio Station Fined for Paid ‘Interviews’

Radio station KMNY-AM, licensed out of Pomona and Anaheim, has been fined $10,000 by the Federal Communications Commission, in part for failing to disclose to listeners that stockbrokers and investment counselors interviewed on its financial programs had paid for their air time.

In a notice to KMNY, which broadcasts at 1600 AM and bills itself as the nation’s first all-business radio station, the FCC said the outlet:

* Failed to disclose that Tom Reese of Reese Financial Group, Ron Johnson of Jack Carl 321 Futures and Dennis Hardaker of International Assets had paid for their appearances on interview-style programs in late 1989.

* Left its transmitter unattended for several hours a day and had unlicensed operators at the transmission tower for at least two weeks in February, 1989.

* Without FCC approval, closed its main studio in Pomona for four months, starting in December, 1989, in order to operate out of Anaheim.

* Failed to maintain a public inspection file or allow public access to its facilities for the same four months, until the FCC brought the matter to the station’s attention.

The FCC’s “notice of apparent liability,” a copy of which was obtained by The Times, was sent in the form of a letter to KMNY, dated July 16. KMNY has 30 days to pay the fine or request a hearing to contest the allegations.

Edward (Buz) Schwartz--president of Money Radio Inc., which operates the station, and founder of the National Investors Club of the Air, which owns 80% of it--said Monday that he had not yet read the FCC’s notice but added that he does not expect to contest the fine.

“If you go to a lawyer, it will cost you $20,000, as opposed to $10,000 to pay the fine,” said Schwartz, a former remote-control pager salesman who bought the station with money he raised after buying time on Glendale radio station KIEV in 1986 and 1987 to promote the purchase. “I’ll read the letter, read what they say, and if it’s grossly out of line, we’ll contest it. Otherwise we’ll pay.”

Roger Holberg, assistant chief of the FCC’s complaints and investigations branch, said the agency has been watching Schwartz since his days on KIEV. In 1988, the FCC fined KIEV owners Ron and Fred Beaton $10,000 for airing a program hosted by Schwartz called “The Investors Club of the Air,” during which he allegedly interviewed subjects who had paid for their appearances.

Holberg said KMNY featured guests who paid to be interviewed on two programs, “The Investors Club of the Air,” hosted by Schwartz, and “Vera’s Voice,” hosted by his partner, Vera Gold.

“Their appearance on the station was a result of the purchase of advertising,” Holberg said. “They would buy advertising time if a person associated with (their company) could appear on an interview program. Or some of them would buy package arrangements, where they buy guest appearances as well as advertising.”

It’s not illegal to sell the time, Holberg said, but the station must identify to listeners that the time has been sold. “Whether it’s snake oil or securities, the same rule applies,” he said.

The FCC said its investigation of KMNY was prompted by a letter of complaint. The regulatory agency would not disclose the name of the whistle blower, but The Times has learned that it was a former employee.

Since the FCC’s initial inquiry, some of the violations have been remedied, according to Schwartz and Holberg.

For example, the station was granted permission to operate out of Anaheim as long as it maintains a working telephone and staff in Pomona and allows residents access to its public files for licensing purposes. And the station has told the agency that the transmitter is now being operated by licensed engineers, according to Holberg.