Auction bids probed in Bethlehem
Originally published in Current,
Oct. 4, 1993
By Karen Everhart Bedford
Scandal is rocking Pennsylvania's Lehigh Valley, where WLVT, Allentown/Bethlehem, has come under intense scrutiny for false bidding practices during its on-air auction.
At the center of the controversy is Sheldon P. Siegel, the station's g.m. for 30 years, who last month admitted that he ordered "house bids'' on auction items to stimulate audience interest in bidding.
He said he voluntarily ended the practice in May 1992.
Front-page stories about Siegel's admission followed a rash of resignations by WLVT board leaders who had sought to reorganize the station's management structure. Responding to the news accounts, Pennsylvania's Bureau of Consumer Protection and CPB's inspector general's office separately began examining WLVT's past bidding practices. By last week, the controversy had escalated into a potential lawsuit after Shelley Brown, who quit as v.p. of development Sept. 18, filed a summons listing WLVT and Siegel as defendants.
Attorney Howard Stevens, a member of the legal team representing Brown, characterized her resignation as a "constructive discharge.'' "In lay terms, that means she was forced out by Shel Siegel,'' Stevens explained.
Brown's suit against the station, according to Stevens, is related to "artificially inflated bids'' that Siegel authorized over Brown's objections during WLVT's on-air auctions.
"Brown objected to that behavior, and when she went to the board with the problem, Shel made her life miserable,'' Stevens said. Siegel allegedly demoted Brown from an executive producer position that she also held, gave her a smaller office, and created what Stevens described as "a hostile environment.''
Oceans of distance
"There is oceans of distance between allegations of any kind and ultimate fact,'' said Siegel, who referred further questions to his attorney, Judge Maxwell Davison.
"This is a matter which is in litigation. I have no comment on the matter,'' said Davison. "This thing will be hashed out in the proper arena — not through the newspaper or the news media.''
For now, the arena Brown has chosen is the courts. Her summons is a "very preliminary'' stage of the Pennsylvania legal process, according to Stevens. He expressed a hope that, when WLVT's board completes an internal investigation of Brown's complaints, legal proceedings will end. For the suit to move forward, Brown's attorneys must file a complaint that specifies her grievances; they are not required to do so under any specified time frame unless the defendants file a "rule to file a complaint.''
Meanwhile, in the Bureau of Consumer Protection probe, a regional office of the bureau is "trying to confirm'' newspaper accounts of what happened during WLVT's auctions, said spokesperson Mike Moyle. "After that, we'll be in contact with officials from the station, and discuss the whole thing with them.'' Attorneys on the case are examining whether WLVT violated the state's Unfair Trade Practices Act, which carries civil penalties for misrepresentation of the prices of items.
CPB's inspector general last week had begun assembling an audit team that will try to determine whether, to what extent, and over what time period WLVT's ``house bids'' affected the station's non-federal financial support, according to spokeswoman Jeannie Bunton. That nonfederal support amount determined WLVT's annual Community Service Grant (CSG) from CPB.
CPB President Richard Carlson on Sept. 22 told the Allentown Morning Call that he would recommend withholding WLVT's 1994 CSG ``until we have all the facts of this situation.''
Midst the swirl of allegations, WLVT's remaining board members last week stood resolutely behind Siegel. At its first public meeting since the controversy erupted, Sept. 21, the board made only passing reference to the controversy surrounding the station while it organized task forces to examine various issues raised by it, according to a report in the Morning Call.
"Misguided enthusiasm''
Siegel on Sept. 24 released a statement to Current laying out his version of the situation. His actions, Siegel explained, were "a case of misguided enthusiasm for the success of the auction, mixed with concern for the feelings of the station's donors, and the desire to have every item universally productive.''
Exactly how many auction items the house bid on, and how much additional income those bids generated, remains in dispute. In his statement, Siegel said house bidding "affected a few items that had received either no bids, or bids far below market price. . . ."
"Every penny raised went to the support of Channel 39 and therefore benefited the public,'' he continued.
Even though he told a local reporter about house bidding after "voluntarily'' discontinuing the practice in May 1992, that admission didn't get into print until last month.
"Now, 16 months later, as part of an internal employment issue, the discontinued practice of house bidding has been used to attack the station, its Board of Directors and myself.''
"Current complaints'' about the station, he suggested, were "motivated by issues of control of the station and its management, more than about the conduct of the auction.''
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Current's home page |
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Later articles: Siegel retires, CPB takes back $81,000 from WLVT. |
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Outside link: Website of WLVT, Lehigh Valley. |
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| Later
articles Originally published
in Current, Nov. 29, 1993 The first of two outside examinations of on-air auctions at WLVT, Bethlehem, Pa., moved closer to conclusion last week, when the state attorney general's office announced that the station's past house-bidding practices violated Pennsylvania's Unfair Trade Practices and Consumer Protection Act. Rather than file suit against WLVT for violating the law, the state's Bureau of Consumer Protection will take the "low-level court action'' of asking the station to sign an "assurance of voluntary compliance,'' said bureau spokesman Jack Lewis. The procedure basically serves as first notice that the alleged procedures appear to violate the law. By signing the assurance — now being drafted by a consumer protection attorney — WLVT would pledge not to engage in the offending practices but would not have to admit any wrongdoing. Violations of the law carry civil penalties of up to $1,000, according to Lewis. But since WLVT is a public TV station, taking the case to court to impose such a fine would "penalize the public,'' he said. The state's investigators found no indication that any individual benefited from the rigged bids, he added. "This is all moot,'' said WLVT General Manager Sheldon Siegel, because the station voluntarily discontinued the practice of "house bidding" more than two years ago (article at left). He declined further comment on the consumer protection bureau's findings. State authorities and CPB launched separate investigations of WLVT's on-air auctions in September, when Siegel admitted that he had ordered "house bids'' on auction items to avoid embarrassing donors and to stimulate audience bids. He said he voluntarily discontinued the process in May 1992 when he "realized the possible negative interpretation of something that was being done with the best intentions.'' Former Development Director Shelly Brown also has indicated that she will file a civil suit. In preliminary court proceedings, Brown named Siegel and WLVT as the defendants in a case that, according to an attorney representing Brown, centers on the station's auction practices. CPB audit results awaitedWLVT officials are awaiting a report on CPB's audit of the station, which was completed about a month ago. In an exit interview at the end of October, CPB's auditors told station officials that a written report would be "in hand'' in 10 days, said Ann Creveling, new chairman of WLVT's board. "That's way long gone, and we still have not received the report.'' She declined to say what the auditors had told station officials during the meeting. One reason CPB has delayed releasing the report is that it must determine its authority to penalize the station if it finds grounds to do so, said CPB spokeswoman Jean Bunton. "We're in the process of evaluating what the appropriate course of action would be.'' Until the corporation completes that evaluation, WLVT is having to forgo CPB payments on its Community Service Grant. "Obviously, it's made a significant impact,'' Siegel said of the withheld grant. WLVT expected to receive two payments of $350,000 in its next CSG. "I'm confident that we will receive a significant part of the first payment in a very short time.'' Under the leadership of former school board member Creveling, who accepted the chairmanship after the station came under intense scrutiny, a governance committee of WLVT's board is examining major issues raised in the local press, including auction, station finance and personnel policies. The process has been "extremely slow,'' said Creveling, because the board is made up of volunteers and "there are only so many hours of the day that people have available.'' In addition, the board is unaccustomed to having an operational, task-oriented structure, something which she is working to correct. "This is not something that's done overnight. You have to get people to think in a different mode than what they've been accustomed to.'' One group that's already well into its investigation is the auction subcommittee. In response to a solicitation for public comments on the auction, the subcommittee recently received about 85 signed letters, according to Sue Barr, chairman. Although she had not yet collated all the responses, Barr said that about two-thirds of the letters expressed support for continuation of the on-air auction; the remaining third suggested a "willingness to support the auction when we feel that you have tightened up the process.'' Two other letters came from former WLVT employees, Barr said. "There's litigation involved, and I'm not at liberty to discuss them.'' The subcommittee now must determine whether it needs to "go into anything any further'' before developing recommendations on the auction and whether it should be restructured. Auditors hit 'deception' at WLVT Partial copy of article originally published in Current, Jan. 17, 1994 Unable to determine the extent to which phony bids inflated on-air auction revenues at WLVT, Bethlehem, Pa., auditors for CPB are recommending that the station be denied federal matching funds for nearly $1 million in auction income going back to 1988, according to a preliminary report by the CPB Inspector General's office. Alleged errors in the station's claims for other revenues bring the total of disallowed income to $1.8 million. If CPB opts to disallow the whole $1.8 million in nonfederal financial support (NFFS), WLVT would lose more than $110,000 in federal monies. (The estimate is based on the rough formula of 6 cents in federal matching funds for every dollar of NFFS under question.) Sharply critical of the station's past bidding practices for "[impugning] what has come to be regarded as one of the hallmarks of public broadcasting — its reputation for honesty," the draft report also faults the management, actions and internal control exerted by Sheldon Siegel, longtime g.m., and calls ont eh board to "take a more active role in fulfilling its duties ... in an effective and efficient manner." Siegel said the proposed penalties are unfairly severe and he implied that CPB is trying to make an example of his station. The station's board of directors has not yet formulated its response. |
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