Investors say Citadel's CEO and Board are thieves
* October 11th, 2010 6:19 am PT
* By Brad Kava, SF Radio Examiner
Citadel, which emerged from bankruptcy with its CEO Farid Sulemann $55 million richer and investors completely unfunded and broke, has been sued by some of those who put in their hard earned cash.
For those who think business is the way to run a state, or a business, take a lesson in this. Most business is run for the people on top, at least that's what's demonstrated in this case. If grassroots investors happen to make some money too, well, good for them. But when sacrifices are needed, they are the first to go.
Let those who claim our governments should be run as businesses take heed.
Here are some paragraphs written by Radio-Info's sage Tom Taylor about the suit filed by Citadel victims.
Citadel investor R2 claims Farid and the board perpetrated “one of the most egregious frauds.”A “shocking display of corporate greed and dishonesty” is just one of the many slams against the Citadel CEO and the board, in a U.S. Bankruptcy Court filing.
R2 (like “R Squared”) Investments alleges that Citadel management was in cahoots with the board as it came out of Chapter 11 bankruptcy protection. It says the result – a claimed eventual “$55 million in value for Farid Suleman himself and more than $1.35 million in value for each of the board members” – directly contradicts what Suleman promised during the re-organization.
R2 says “Despite having just emerged from bankruptcy (with substantially the same management that caused the company to file bankruptcy), Citadel now has the highest-paid management in the terrestrial radio broadcasting industry.” R2 says that's not only wrong, it robs the creditors – “the consequences of the actions of Citadel and its management are devastating to R2 and the debtors’ other creditors.”
It claims that Suleman’s actions “are the equivalent of each new shareholder writing a check for approximately 7.5% of the value of its shares and sending it directly to the management team and the board.” How did this happen? Simple. R2 says that instead of getting the expected stock options, management received restricted stock – hardly an incentive to manage for excellence. R2 asks the court to order Citadel to revoke its grants of restricted stock, and to issue stock options, instead. There’s a court hearing on November 3.
San Franciscans: Keep all this in mind as we watch the company dismantle the great local talk station, KGO-AM. I think CItadel realizes it can make more money from a 15th ranked station with low salaries, than a top community-minded station with big expenses for talent and quality.
Sad days indeed. But once again we see that the dollar speaks louder than community concerns.
My is opinion is posted from time to time..
