Tug of War Over Houston’s KTEK-AM
The fall of one man, Albert Fase Kaleta, has thrown the operation and ownership of Houston’s KTEK-AM radio station into dispute as the federal government, a receiver, and several putative operators fight for control.
The disputes began in November 2009 when the Securities and Exchange Commission (SEC) brought a case against Kaleta and his company Kaleta Capital Management (KCM) for fraud. The SEC alleges that KCM fraudulently obtained about $10 million from investors that Kaleta duped into believing they were buying promissory-note securities. Through KCM, Kaleta actually loaned about $6.7 million of the investors’ cash to two affiliates in precarious financial condition: BusinessRadio Network (BizRadio) and Daniel Frishberg Capital Management.
Once Kaleta was sued by the SEC, the whole chain unraveled. The investors’ money was traced to KCM and then BizRadio, the owner and operator of KTEK-AM. The SEC wanted the investors’ money back, and BizRadio, unable to pay back the money and stay in operation, was forced into receivership. A federal judge appointed Thomas L. Taylor III as receiver for the assets of Kaleta, KCM and BizRadio in December, but he didn’t take possession of KTEK-AM’s FCC license until July 2010.
In the meantime, Kaleta apparently tried to sell KTEK-AM to another company: Asia Vision Inc. Apparently, under a deal with BizRadio, Asia Vision began broadcasting on KTEK-AM on January 1, 2010, and exercised an option to buy the station from BizRadio. But in early February, Asia Vision’s broadcasts were dumped from the airwaves and broadcasts by Salem Communications took their place. The receiver, who had full exercise and control over KTEK-AM and its FCC license, signed a local marketing agreement (LMA) with Salem Communications, a former owner of KTEK-AM, to operate the station. Salem Communications plans to buy back KTEK-AM.
If Salem Communications does buy KTEK-AM, the proceeds will go to the receiver to pay back KCM’s investors who lost money after Kaleta’s fraud.
In July, Asia Vision filed a state court claim alleging breach of contract against Kaleta, KCM, BizRadio and Daniel Frishberg, and a claim for tortious interference against Salem Communications. Asia Vision’s suit asks for $18 million in damages.
A competitor’s tortious-interference claim should never be taken lightly and SEC charges demand immediate help. Businesses and their principals need an experienced and knowledgeable business law attorney when threatened with complex business litigation matters.
