On February 26, infamous Royce International Broadcasting owner Ed Stolz filed an appeal of his ongoing litigation over unpaid music royalty fees, which led a Federal District Court judge in California to place Stolz’s three FM stations in the hands of a receiver — respected veteran broker Larry Patrick.
It appeared the United States Court of Appeals for the Ninth Circuit would be hearing Stolz’s plea, with Dariush G. Adli’s role as Stolz’s attorney still in question.
RBR+TVBR has now learned that the higher court has dismissed Stolz’s appeal; the District Court Judge, Jesus Bernal, is beyond furious with Stolz; and new revelations that suggest Stolz committed perjury could very well put Stolz behind bars once again.
This time it could be longer for 24 hours.
In a lengthy interview with Patrick, an update on the legal journey he and Stolz have taken in the last two months was shared.
First and foremost, Stolz’s appeal from the U.S. District Court in Riverside, Calif., where Bernal presides, to the Ninth Circuit was dismissed, Patrick shared. Why? A $600 fee was supposedly unpaid, he added.
This is in conflict with the court docket that appears on the PACER legal website. There, a March 25 assessment conference to discuss mediation is on the calendar, as of Monday.
Since then, however, there’s been much to share from Bernal’s court, where a two-part virtual hearing on Wednesday (3/10) sparked fireworks between the judge and Stolz’s legal counsel, which remains Mr. Adli.
How so? Despite Adli’s requests to be removed as legal counsel due to nonpayment by Stolz, a judge’s permission is needed at the federal judicial level for this to take place. Judge Bernal said no to Adli’s latest request, made on Jan. 6, 2021. According to Patrick, Adli has been seeking to remove himself as Stolz’s attorney since August 2019. Bernal’s response? He should have known of the full consequences, given he’s the fourth legal counsel to represent Stolz. In previous instances where a new lawyer was introduced, a delay in the trial resulted from bringing the new counsel up to speed on the facts in the case.
With Bernal now in total control of the fate of Class A KRCK-FM 97.7 in Palm Springs, Calif.; Class A KREV-FM 92.7 in Alameda, Calif., with coverage of the city of San Francisco and Oakland; and Class C KFRH-FM 104.3 in North Las Vegas, Nev., Stolz is on the verge of a perjury charge. Why? Bernal is reviewing answers to questions from Stolz that are believed to be factually incorrect.
A DESPERATE FINAL APPEAL
Wednesday’s two-part hearing began with Adli, representing Stolz, revealing that after nearly three years of legal tussles with the court, $1.8 million had been posted. This payment would cover the original claim and, according to Adli, nullify any need for a receiver and, subsequently, erase an already-consummated sale of the three FMs to non-secular broadcast ministry VCY America of Milwaukee for $6 million.
Judge Bernal has been sitting on this argument for 2 1/2 months, Patrick said.
This brought up several concerns for Patrick that also troubled Bernal. They wholly concern unsecured creditors. In Las Vegas, Crown Castle owns the tower leased by Royce International for KFRH; it is owed $880,000. In San Francisco, the present tower site’s is seeking $205,000 in past-due rent.
The previous tower owner Royce International had a contract with for its KREV is a secured creditor. As such, they are guaranteed $306,000, Patrick says.
Then, there’s the $90,000 to unsecured creditor BMI, the main plaintiff in what is officially WB Music Corp., et al v. Royce International Broadcasting.
BMI is also an unsecured creditor, and without resolution of payment, any sale to VCY of the three FMs would be problematic. And, as Patrick sees it, a “balancing of equities” is justified. Bernal agreed, going through past claims as low as $10,000. This led Stolz to rule against Stolz, as VCY as the pending acquisitor of the three FMs would be harmed.
As such, Stolz’s petition to dismiss Patrick as the court-appointed receiver was denied.
Importantly, it is not appealable — setting the wheels in motion on the end of Royce’s operation of the FM trio.
The second half of the Wednesday virtual hearing was punctuated by a very agitated Bernal, who scolded Adli and twice told him to cease speaking. Fueling Bernal’s ire: a lack of full disclosure of facts by Stolz and Adli.
A PAY-FOR-PLAY WAY?
The second half of Wednesday’s hearing also brought to light long-held suggestions that KFRH-FM, in addition to Stolz’s San Francisco FM, is fueled largely by independent promoter funding.
KFRH works with a longtime independent record promoter. At the station, Program Director James Palomares is reportedly in control of music scheduling.
While some sample hours could suggest the influence of an independent promoter seeking airplay for their own benefit, there is a counterargument that KFRH holds a unique place in a market where the songs one can hear in an adult entertainment establishment.
Patrick’s claims, which are unproven and based on his inferences and collection of materials submitted to Bernal’s court, are scandalous yet perhaps not germane to the key focal point of Patrick’s battle with Stolz.
Patrick claims the independent promoter, based in Los Angeles, has for three years furnished Royce International with a $200,000 budget for promotional efforts at KFRH and in San Francisco at KREV. Such arrangements typically allow an independent promoter to serve as a middle man of sorts, reporting to record companies what the client radio station pays. Many companies, including Alpha Media and, most recently, Saga Communications, contract with independent promoters.
According to Patrick, in 2020 some $225,000 was paid by the independent promoter contracted with KFRH to directly settle outstanding debts by check.
Patrick claims this practice continues; the allegations have not been confirmed by independent sources.
However, the number of payments the independent promoter paid for Royce International is at the heart of the threat of contempt of court by Stolz. As Patrick recounts, Stolz told the court that the L.A.-based promoter paid two of Stolz’s tower rent bills. However, the promoter provided the total ledger for 2020 to the court, and it was formally introduced into the record. This shows $302,000 was paid by the promoter, with roughly 70 checks cut to cover a variety of outstanding bills.
This 20-page document unleashed Bernal’s fury. If Stolz is found to have lied in court, Bernal said he would forward Stolz to the U.S. Attorney’s Office on perjury charges. Adli could be charged with supporting perjury, too. This would return Stolz to jail, and likely longer than the 24 hours he was held after turning himself in to U.S. Marshals on Bernal’s warrant, on February 18.
With Stolz’s time running out, Patrick shared a fact that’s been unreported until now: Stolz could still pocket a hefty sum of cash, even after all who are owed — including all unsecured creditors — are paid.
“Stolz could still get $1 million to $1.5 million when all is said and done,” Patrick said.
But, that’s easier said than done. Stolz has a Petition to Deny the transfer of the three FMs to VCY America from Patrick, and reply comments are being filed by Patrick’s team.
While that may be another wrench thrown by Stolz, it may also be his final obstruction in another ugly legal fight he refuses to concede, even in its final days.
Editor’s Note: This story was updated at 9:45am on March 15 to address RBR+TVBR’s initial coverage of this story with respect to accusations by Larry Patrick made toward a Los Angeles-based independent promoter who has a business relationship with Royce International Broadcasting. The claims made by Patrick, while introduced in court, are based on inferences and understandings gathered by Patrick and his legal team and have not been proven true by independent sources. Given the nature of these accusations, RBR+TVBR has agreed to withhold the identity of the independent promoter, as it is not germane to the focal point of this news story. RBR+TVBR strives for editorial integrity and fairness in its reporting, and will continue to report on this story with the utmost care.