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Inside Air America: Al Franken’s Lying Lies
Part of an ongoing investigative blog series
by Brian Maloney and Michelle Malkin
Sept. 7, 2005
(Part II of this installment is at The Radio Equalizer)
Take a close look at this signature.
It belongs to Air America host and crusader for truth Al Franken. It is contained in a legal document we have obtained that exposes the Grand Canyon-sized chasm between what Al Franken says and what Al Franken does.
On July 27, our blogs first reported on a shady loan scheme between Air America Radio and the Gloria Wise Boys & Girls Club (which is now under investigation by both NYC’s Department of Investigation and NYS Attorney General Eliot Spitzer). National mainstream media outlets have failed to give the deal–and Air America’s continued money-flow crisis–the scrutiny they deserve.
Air America has yet to formally offer to pay back the loan in full, and 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.
Along with the network’s current management and shell-game-playing owners, Al Franken has gotten a pass, even from some conservative commentators who have claimed that it’s unfair to blame the liberal radio network’s financial and legal entanglements on its on-air talent.
Those claims are wrong.
According to a November 2004 settlement agreement between former Air American head honchos Evan Cohen and Rex Sorensen and Air America’s current owners and investors at Piquant LLC, Al Franken was smack dab in the middle of negotiations over the debts owed by the liberal radio network–including the Gloria Wise loan. The agreement was signed to clear the decks in advance of the questionable asset transfer from Air America’s old owners, Progress Media and Radio Free America, to Piquant. (This is the transfer being challenged by Multicultural Radio Broadcasting Inc. as a “fraudulent conveyance,” which we first reported exclusively in the first installment in our investigative blog series, “A Trail of Debts.”)
Far from being an innocent party with no knowledge of Air America’s money woes, Franken was a signatory to the agreement. The document, published here for the first time, exposes how Franken misled his listeners and the press about his knowledge of the charity loan.
Let’s flash back to what Al Franken claimed he knew and didn’t know about the dubious loan deal in his August 8, 2005, Air America radio monologue:
FRANKEN: Anyway, so here’s the deal. So the first guy who was the chairman of the board of of Air America, a guy named Evan Cohen, was a crook, it turns out. I guess that’s the only way to put it (laughter) and, but, he got a job…. (interruption)
THE TRUTH: Although Franken claims that Cohen “was a crook,” Cohen has neither been charged nor convicted of embezzling any of the Gloria Wise Boys & Girls Club money. Franken himself acknowledges just a few moments later (see below) that he believes the money was probably used “for [Air America] operations,” including Franken’s salary. Thus, Franken’s insinuation that Cohen stole the money is unsubstantiated.
In a phone interview from Hawaii this week, Cohen (who we reached through a relative) told us: “Was what I did stupid? Yes. Illegal? No.” He emphasized that “not a dime” of the $875,000 in question went to him. Apparently, Franken got at least one thing right.
FRANKEN: Ok, it turns out he was on the board, or worked for, this Gloria Wise Boys and Girls Club in the Bronx or something.
“Or something.” Make a note of that.
And he uh, borrowed (laughter) $875,000 from, I don’t know why they did it, and I don’t know where the money went, I don’t know if it was used for operations (softer, especially fast), which I imagine it was. I think he was robbing Peter to pay Paul.
THE TRUTH: Again, if the money was borrowed from Gloria Wise to cover Air America’s operating costs, as Franken imagines and Cohen alleges, then there is no basis for Franken’s insinuation that Cohen stole the $875,000 in question.
Now, for a Burger King whopper:
FRANKEN: And about three weeks into the life of Air America, I became an involuntary investor. I stopped being paid.
So now, we started to make arrangements, and I didn’t know anything about this until late last week…
THE TRUTH: Franken signed the settlement agreement, which includes detailed information about the Gloria Wise loan, on November 22, 2004. (See signature above.) The document shows that the signatories knew about the Gloria Wise scheme and other liabilities…
…likely since at least May 2004:
In other words, Franken claimed on the air he knew nothing of the Gloria Wise “or something” fiasco nine months after he signed a legal agreement that specifically outlined the loans to Gloria Wise and required Air America to pay them back.
Cohen told us: “Al Franken calling me a crook is a little like the pot calling the kettle black.”
FRANKEN: So, um, we had to do, forensic, or not we, but the guys who run the thing, the new management, did forensic accounting, and discovered this big loan from this Boys and Girls Club, and Rob Glaser, the new guy, who is the head of this new company Piquant, said OK, we don’t legally have to pay it back, because we’re a different company I guess, but we morally do, so they start making arrangements to pay it back.
THE TRUTH: Franken suggests that Piquant had no legal obligation to repay the Gloria Wise loan. This is patently false. The settlement agreement, which is legally binding, requires Piquant to pay back the loan. Franken signed that agreement (see above) and unless he has an evil twin, he knew exactly what he was doing and what was in the agreement–and signed it knowingly and freely:
Yet another Franken untruth:
And just as that was happening, the Gloria Wise Boys and Girls Club went belly up, and started being investigated by the state, or the city, or something, and so this all halted that.
THE TRUTH: Franken suggests that Piquant’s decision to repay the loan in May 2004 occurred at the same time that the city’s investigation began. The New York Sun, however, has reported that the city began its probe 19 months ago–5 months before Piquant LLC agreed to pay back the loan in May 2004. If the Sun’s reporting is accurate, it directly contradicts Franken’s timeline.
Also false: Franken’s claim that “the Gloria Wise Boys and Girls Club went belly up.” The Club is still operative.
Another big whopper (buried in an ad hominem attack):
Now the Washington Times started making a big deal out of it, and the New York Post, and a woman named Michelle Malkin, (laughter)…
GUEST: So you’re getting pretty close to the bottom of the barrel. (laughter)
FRANKEN: Yes, the bottom of the barrel, now and I don’t get it because in the Post, they just put my picture up, not only that, they show pictures of the last article they did too, you know how they do that in the Post? (laughter)
So they show a picture of me and a picture of me (laughter)….
So I’m trying to be as responsible as I can, to know as much as I can about this, but I really have nothing to do with it. (laughter)
THE TRUTH: Franken’s signature is on the settlement agreement in which Piquant LLC agreed to repay the loan. (See above.) This directly contradicts Franken’s statement that he had “nothing to do with it.”
As for Cohen, the man Franken publicly distanced himself from as a “crook,” the settlement agreement that Franken and his colleagues signed secures “continuing assistance” from Cohen and his former Air America officer/business partner Rex Sorensen in any controversy or legal matter involving Piquant and provides for reimbursing them for their consulting services:
By his own word and hand, Al Franken is a man who has done and will do business with a “crook.” Ain’t that the truth, Al?
In his August 8, 2005 radio monologue (now we know why he sounded so nervous), Franken concluded:
So that’s that. If anyone wants to know more about it, we’ll talk about it again.
We’ve been all ears, but Air America has not returned phone calls seeking comment on our reports. Perhaps Franken is saving it up for his new book, scheduled for release in October.
Our exposé of Franken, Air America, Sheldon Drobny, and Piquant’s lies continues over at The Radio Equalizer. Don’t miss it.
Denver Post critic Joanne Ostrow gets it: “Air America’s shame aired.”
Update by Michelle, 7:08 am EDT: About two and a half hours after this post was published, the New York Sun published this article by David Lombino. The article includes a fascinating quote from Franken about the Settlement Agreement:
In an interview with the Sun on August 1, Mr. Franken said he did not know anything about the transfers from the Gloria Wise Boys & Girls Club until late the previous month. He said he did not know whether the $875,000 was absorbed by the radio network or not, and he characterized the network’s decision to pay back Gloria Wise as a “moral obligation.”
Yesterday, Mr. Franken stood by his earlier statement. He said that, on the advice of his lawyer, Gunnar Erickson, he signed the agreement last fall that erased legal claims he had against Messrs. Cohen and Sorensen because they owed him money, but he said he did not see the list of liabilities that included the Gloria Wise transfers.
“I am not an investor, and I didn’t see this thing,” Mr. Franken, the comedian and best-selling author who hosts Air America’s daily show “The O’Franken Factor,” said.
That’s right, he
smoked a joint but didn’t inhale signed the document but didn’t read it. This is the “the other guys are crooks, I’m just an idiot” defense. As Franken’s former colleague Dana Carvey aka Church Lady might say, “How conveeeenient!”
It sure is nice to know that O’Franken is around to blow the whistle on the “lying liars” who don’t tell The Truth.
Finally, let’s not forget Air America’s statement, still on its web site, that “The current owners of Air America Radio have no obligation to Progress Media’s business activities.” Did anyone at Air America read the Settlement Agreement? Just wondering.
Air America’s call-in number is 1-866-303-2270. Listen live here. Tell them what you read here, and let us know if they respond.
Update II: Captain Ed wants to know when the MSM will start giving Franken, a possible candidate for the U.S. Senate, the scrutiny he deserves:
Now we have a presumed candidate for Senator in 2008 who participated in an arguably fraudulent shell game with Lyndon LaRouche supporters in order to stiff creditors, among them a non-profit whose earmarked grant money went into their pockets. Will anyone here at the Minneapolis Star-Tribune or the Saint Paul Pioneer Press find that interesting enough to publish?
Power Line’s Scott Johnson is also pressing the local media:
Some day the Minneapolis Star Tribune will take notice of the Air Ameriscam scandal involving Minneapolis’s own Al Franken, but apparently not any time soon.
And PostWatch is still searching in vain for Washington Post coverage of Air America’s money pit.
Some reader feedback from corporate lawyer Phillip A.:
The Settlement Agreement says that Piquant “assumed certain specific liabilities” from Progress (1.10), but doesn’t specifically identify them. The schedule of liabilities (Schedule 15.2.4) is referenced in Sections 15.2.4 and 15.3.4, pursuant to which Cohen and Sorensen represent that those are all of the liabilities that could possibly encumber the AAR assets. This implies, but doesn’t guarantee, that Piquant has assumed those liabilities. In fact, we know from Multicultural’s lawsuit that Piquant didn’t assume that liability. In sections 21.7-9 Piquant indemnifies Cohen and Sorensen against claims arising out of those liabilities (excluding Multicultural’s claims). Again, this is not the same as Piquant directly assuming the obligation. In paragraph 87 of Multicultural’s claim from May 24, 2005, Multicultural states that Piquant has assumed the Gloria Wise obligation, but it makes this assertion “information and belief” and cites no source.
Despite significant evidence that it did so, a couple of things still lead me to question whether Piquant really assumed the Wise debt under the Asset Purchase Agreement. First, the description of the debt on the schedule refers to money “purportedly advanced to Progress” from Gloria Wise. This sounds to me as if Piquant is trying to preserve the position that no real obligation exists. Second, as you point out, Air America’s website still says: “The current owners of Air America Radio have no obligation to Progress Media’s business activities.” If Piquant assumed the Wise debt under the APA, this is just a bald-faced lie. Piquant apparently is advised by Latham & Watkins, one of the country’s premier law firms. I can’t believe that L&W would let them post that. But, ultimately, only the Asset Purchase Agreement can provide a definitive answer.
Some reader feedback from lawyer Bill C.:
I’m a lawyer and any of Al’s talk about how he didnt read the agreement before he signed it would mean nothing if it were ever before a court. In other words, any statement by Al that he didnt read the agreement before signing or was just given the signature page by his lawyer to sign means nothing and the law would impute to him knowledge of the entire agreement. Every word.
New York law: “A party that signs a document is conclusively bound by its terms absent a valid excuse for having failed to read it.” Guerra v. Astoria Generating Co., L.P., 8 A.D.3d 617, 779 N.Y.S.2d 563 (2d Dep’t 2004).
Wisconsin law: “Failure to read a contract before signing it will generally not affect its validity.” State Farm Fire & Casualty Co. v. Home Ins. Co., 88 Wis. 2d 124, 129, 276 N.W.2d 349, 351 (Ct. App. 1979); see also Caulfield v. Caulfield, 183 Wis. 2d 83, 93, 515 N.W.2d 278, 283 (Ct. App. 1994) (“[B]y failing to read the contract before signing it, [plaintiff] was negligent as a matter of law and barred from proceeding on her claim that the [defendant] fraudulently induced her to sign the note.”)
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Inside Air America: The Lizz Winstead case
Multicultural Radio says Air America owes it $1.5 million
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Inside Air America: An investigative blog report (Part I)
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Air Enron: Franken speaks again
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