I am a lawyer, admitted in New York State since 1992, 
    with a fair amount of experience in corporate 
    transactions (I used to do a lot of corporate/SEC work -- 
    I'm mostly in litigation, these days). I also was on the 
    board of directors of a not-for-profit corporation for 
    over a decade, serving as one of that corporation's 
    officers as well. Please excuse any rambling that occurs 
    in the following text (which you may quote from, freely, 
    as I use no names other than my own). 

    Frankly, I'm aghast that the directors and officers of 
    Gloria Wise approved the loans to the Air America 
    affiliate, as has been reported. Aside from the obvious 
    fact that there would be problems in taking funds 
    earmarked for specific purposes (possibly violating the 
    terms of the monetary grants -- had the monies come from 
    a foundation, and the foundation was made aware of the 
    diversion, Gloria Wise's name would be mud forevermore, 
    and word gets around the foundations pretty fast), and 
    aside from the fact that this would have been a very 
    large chunk of Gloria Wise's liquidity (assuming a 
    $400,000+ series of loans -- where the hell were Gloria 
    Wise's accountants in this?), I would imagine it would be 
    highly problematic, under the charter and by-laws of 
    Gloria Wise, to make such loans to Air America's 
    affiliate. 

    Typically, the charter and/or by-laws of a not-for-profit 
    spell out what restrictions there are on investments that 
    can be made. (Query: what's in the charter and by-laws of 
    Wise?) It's been a while since I've looked at the New 
    York Not-for-Profit Corporation Law, but I can well 
    believe that the loan to the Air America affiliate would 
    not be allowed, especially (as I'll bet is likely) it was 
    unsecured, or secured only by unregistered and illiquid 
    stock. At my not-for-profit, we stuck to bank accounts 
    and CDs for any cash waiting around to be applied for the 
    purposes for which it was earmarked. The insurance 
    company that provided the "D&O" insurance for Gloria Wise 
    must be having (to use the, ahem, non-legal phrase) the 
    screaming whim-whams.

    Follow the money, but also follow the minutes of the 
    meetings of Gloria Wise's board of directors. There 
    should be some discussion in there, and (ideally) a 
    written presentation to the board discussing the 
    investment, considering this would be a material amount 
    of Wise's cash resources. That is, if the directors of 
    Wise were doing their job properly.

    (This doesn't even get into the mind-bending conflict-of-
    interest issues here, which others have pointed out. On 
    my board, we had long and involved discussions on the 
    subject of officer and director conflicts, and we 
    eventually adopted a conflicts procedure, after getting a 
    lot of advice on the subject from experts in the field. 
    This was funded by a grant from a foundation that wanted 
    to strengthen our corporate structure and activities. 
    Thanks be to God, the other officers and directors of my 
    not-for-profit were blessed with sense, both of the 
    common sense and moral variety.)

    The use of the term "forensic" by Al Franken is 
    interesting. "Forensic accounting" is a term well known 
    in the legal community. I've attended CLE [continuing 
    legal education] courses on "accounting for lawyers" that 
    talk about exactly that -- and usually this comes up 
    *after* the fact, after some corporate entity has gone 
    ker-splat (another legal term there, forgive me). It 
    strikes me that if Franken is using the term correctly (I 
    admit, a good question), this would imply that the new 
    owners of Air America didn't know of the issue before 
    they bought in, possibly because of poor documentation of 
    the loans (i.e., no note, no record). Poor documentation 
    of loans is a Bad Thing, to use yet another legal term.

    By the way, anyone know the terms of the loan(s)? What 
    interest rates, what term, what security? Was this a 
    sweetheart loan, on terms that Air America couldn't have 
    received at, say, Bank of America or J.P. MorganChase (or 
    other Enron lenders). Any personal guarantees by 
    individuals here, considering this was a startup? If so, 
    anyone collecting on them? If not, why the hell not?

    Finally, one last point: I doubt the FCC or SEC has 
    jurisdiction over this matter (private firms, and Air 
    America doesn't own stations, as far as I know), but you 
    know who has statutory oversight over New York State not-
    for-profits? The New York Attorney General's office. 
    That's right, ladies and gentlemen, E. Spitzer, Esq., 
    Scourge of Wall Street, with an assorted collection of 
    trophies mounted on his wall, would be the point man for 
    any investigation of this matter. Surely (we ask 
    rhetorically) Spitzer will be eager to investigate such 
    blatant conflicts of interest, risky lending, and other 
    sort of malfeasence, no? That is, unless his run for 
    governor is putting a crimp on his time.

    Even if Graves is telling the truth, *somewhere* there's 
    got to be something in the board minutes of Wise. We had 
    regular updates on the budget and balance sheet of my not-
    for-profit, complete with hard-copy presentations, and it 
    would strike me that a $400,000+ loan is going to show up 
    on the balance sheet *somewhere*, and any director worth 
    his or her salt is going to ask questions about this, 
    rubber stamp or no.