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GBS Founder “Took Advantage of My Father”

Son of a former business associate of Chris Devine calls GBS statements "blatantly inaccurate"

The no-holds-barred public battle over proposed geotargeting on the FM band has taken another turn.

The National Association of Broadcasters is calling attention to a letter sent to the FCC by the son of a man who had a business relationship with Chris Devine, founder and CEO of GeoBroadcast Solutions. That relationship apparently turned sour.

The comments come from Luke Allen, son of C. Robert Allen III. According to the letter, the senior Allen loaned Devine more than $90 million in the early 2000s to purchase radio stations near large and mid-market urban areas.

Allen claims that Devine misappropriated his father’s loans to Superior Broadcasting Co. and never purchased a single station. Devine was president of Superior, and Allen had a majority interest in the company, he wrote.

“Devine took advantage of my father when he was in declining health and suffering from diminished mental capacity,” he wrote.

GBS denies the allegations.

Ongoing fight

This is the continuation of a fight before the FCC that has gotten increasingly nasty. The NAB in September questioned Devine’s business character and past behavior. GBS has blasted NAB for making “meritless claims” and for seeking to create “a sideshow.”

Allen’s son claims that starting around 2000, “Devine induced my father to make a series of loans to Superior Broadcasting Co. totaling nearly $70 million.”

He described more alleged mismanagement: “Later, Devine told my father that Superior needed more money in order to participate in FCC auctions for FM station construction permits. Then, after my father had exhausted all of his liquid assets, Devine told him that Superior was in financial trouble and that he needed to put additional money into the company or (my father’s) prior investments would be lost. This led my father to take out over $20 million in loans against his bond portfolio and provide those funds to Superior.”

Allen alleges that Devine did not purchase stations for Superior with his father’s investment. “Instead, Devine misappropriated my father’s money for his own benefit. For example, he diverted millions of dollars from Superior to Lakeshore Media, Devine’s management company and a company in which my father had no interest. Devine diverted other funds to his own radio and marathon businesses, entities in which my father also had no interest and of which he had no knowledge. Devine also authorized millions of dollars to be used for travel and entertainment expenses, including private jet charter service for non-business travel.”

Allen alleged that Devine was providing his father with fraudulent one-page weekly cash-flow statements showing that Superior was in good financial health and collecting substantial amounts of revenue. “In reality, Superior was nothing more than a shell company. It owned no assets and had no collections or operating revenue.”

In 2008 Allen says he was appointed guardian of his father’s property, at which point he filed a lawsuit on behalf of his father in U.S. District Court for the Eastern District of New York against Devine and his companies alleging fraudulent conduct.

Allen took exception to comments in September in which GBS called NAB’s criticisms baseless.

GBS’ letter stated in part: “The (NAB) letter repeats a variety of meritless claims from the lawsuit and misleadingly suggests the case was settled because of its merits. In fact, this baseless lawsuit grew out of a sad, intra-family dispute and was voluntarily withdrawn by the plaintiff with prejudice because in fact Mr. Devine’s conduct in the matter was appropriate.

“As any entrepreneur knows,” the GBS letter continued, “baseless lawsuits happen in business and this meritless suit was handled the way it should have been; with the plaintiff dismissing the suit with prejudice and not receiving a penny in damages.”

Allen disputes the assertion by GBS that the lawsuit was withdrawn voluntarily and that Devine’s conduct in the matter was appropriate. He called these comments “outrageous.”

“In fact, the lawsuit was resolved through a settlement agreement on the record in the District Court; it was not withdrawn because my family and I believed that Mr. Devine’s conduct was somehow appropriate or lawful,” Allen wrote.

“Based on my family’s dealings with Devine, I would urge the FCC to fully research and independently verify any assertions or representations made by Devine or his company before approving any proposal in this proceeding. I would also caution the commission about empowering Devine and his company, GBS, to take advantage of radio broadcasters throughout the United States.”

GBS in an email to Radio World said of the claims made by Allen: “There’s no point in relitigating this matter, which was long ago resolved. The conclusion of the litigation speaks for itself.”

GBS wants the FCC to approve its geotargeting technology, which the company calls ZoneCasting. It uses a series of synchronized FM boosters to originate content for a few minutes each hour in order to reach very localized listening areas with programming that differs from the main channel.

NAB and most major U.S. radio broadcast groups including iHeartMedia have claimed the proposed geo-targeting technology will create additional interference and upend the radio advertising business model by fragmenting radio markets and depressing radio advertising rates.

GBS says its booster technology is designed to minimize self-interference between a primary signal and a geo-targeted booster. Its allies, including the National Association of Black Owned Broadcasters, say broadcast radio is the only medium that cannot geo-target content and use of the proposed technology would benefit small and minority owned radio broadcasters. FCC Commissioner Geoffrey Stark has also spoken supportively, and did so again this month.

GBS has cited support from some specific broadcast companies, but several have since told the FCC they were unaware that an attorney had filed comments expressing their support.

 

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