***235pm EDT: Updated with just-released statement from NYC Department of Investigations***

Yesterday, in our latest joint investigative piece on Air America and the Gloria Wise Boys and Girls Club loan scandal, Brian Maloney and I reported that “knowledgeable sources tell us the liberal radio network is contemplating how to stem the lingering bad publicity. Anticipating further negative press, the company is apparently poised to ’settle’ the matter very soon.”

And now…

Nine months after acknowledging the liability in a signed settlement agreement with the network’s former owners, Air America Radio wired $825,000 into an escrow account for the Gloria Wise Boys & Girls Club, the New York Sun and New York Post report today.

The escrow account is controlled by Air America’s lawyers. Air America says it will release the money in the account to Gloria Wise when the city Deparment of Investigations “completes its work and authorizes payment.” Last month, in the wake of negative publicity over the shady deal, Air America deposited $50,000 to the account.

The Sun reports that the loans/transfers were interest-free. (Gloria Wise’s money managers know a shrewd investment when they see one, eh?)

The New York Times has had no coverage of the liberal financial scandal in their backyard since its botched August 12 article, which misquoted Al Franken and attributed the quote to a city Department of Investigation transcript that the department says does not exist. The New York Daily News has not mentioned the controversy since August 11. Still no WaPo.

The Sun’s Lombino, who continues to make headway in the MSM, includes a quote from Air America’s CEO, Danny Goldberg regarding Al Franken’s signature on the Settlement Agreement featured in our and Lombino’s reports:

Yesterday, Air America’s CEO, Danny Goldberg, defended Mr. Franken. He said Mr. Franken’s role in the agreement “was simply to waive his own claims in order to facilitate the transaction and allow the network to survive under new ownership.”

Mr. Goldberg said the portion of the agreement that listed the Gloria Wise claim of $875,000 did not apply to Mr. Franken, who was not an investor.

“Al Franken does not have and never had any responsibility for this loan,” Mr. Goldberg said in a written statement. “His role at Air America was then and remains today as on-air talent.”

The “just the talent” line doesn’t wash. Franken was and is the public face of Air America, and by November 2004, he was well aware that previous owners Evan Cohen and Rex Sorensen had been involved in financial shenanigans that deserved nothing less than eagle-eyed scrutiny.

In case Franken needs reminding, he was the subject of a June 2004 page 1 Wall Street Journal article detailing the mess–an article that ends with Franken expressing “some gratitude” to Cohen for getting him and the network on the air despite Cohen’s exaggerations.

In case Franken needs reminding, HBO broadcast a full-length documentary on said troubles.

Some Franken defenders say it’s unfair to expect him to have read the November 2004 settlement agreement and paid attention to the copious debts and liabilities racked up under Cohen and Sorensen.

If Franken wants to continue arguing he was a fool who passed the buck to his lawyer, Minnesota Republicans won’t stop him. And neither will we.

***

Neither Goldberg nor Franken addressed the unsubstantiated insinuations and misstatements Franken made on the air about Evan Cohen and Gloria Wise, which we documented here yesterday.

Several lawyers raise a question about whether the settlement agreement included a direct or indirect obligation to pay back the Gloria Wise loan. This is a focus of the ongoing legal dispute between Multicultural Radio Broadcasting Inc. and Air America. (See here and here.)

As for Franken, since he has expressed a “moral obligation” to do right by Gloria Wise, may we suggest perhaps a donation of some of the proceeds from his next book, The Truth (With Jokes), sure to be a New York Times best-seller, to the inner city charity and its underprivileged clients?

***

Update: Just in from the city Department of Investigation…

FOR IMMEDIATE RELEASE
CONTACT: EMILY GEST 212-825-5931
THURSDAY, SEPTEMBER 8, 2005

STATEMENT FROM DOI REGARDING AIR AMERICA’S REPAYMENT OF $875,000

During the course of DOI’s investigation into allegations that officials at Gloria Wise Boys & Girls Club had falsified documents submitted to various City agencies and had approved significant inappropriate transactions, DOI discovered that Gloria Wise had transferred $875,000 to Air America. DOI asked Air America to repay the $875,000 to an escrow account controlled by DOI. Thereafter, Air America repaid only $50,000 to an escrow account that is not controlled by DOI. DOI is pleased that Piquant LLC, the current owner of Air America, has agreed to DOI’s request that, in lieu of making $50,000 quarterly payments, Piquant transfer the full $875,000 to the escrow account. While the total reimbursement reportedly has been made, DOI does not control the escrow account, although Air America’s attorneys have represented that the money will only be disbursed with DOI’s authorization. DOI’s investigation is ongoing.

DOI is one of the oldest law-enforcement agencies in the country. The agency investigates and refers for prosecution City employees and contractors engaged in corrupt or fraudulent activities or unethical conduct. Investigations may involve any agency, officer, elected official or employee of the City, as well as those who do business with or receive benefits from the City.

So, just to make this redundantly clear: Air America claims it’s putting the total sum into an escrow account, but the account is controlled by Air America and the city DOI has no access to it.

Update: Reader Jim H. writes…

Also please note that the lawyers or Air America will earn the interest on that money, not the Boy and Girls Club, until the DOI can convince the lawyers to give up the money.

One other note, since this is an escrow account and not a Trust, if Air America files bankruptcy this money would become an asset that the lawyers would have first claim on it, under the bankruptcy law, to cover “any” legal bills wouldn’t they? If they give the money to the DOI they would have a lesser chance to get it pack. What do the lawyers know that Air America has not said publicly?

Sure looks like continued financial shell games being played.

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