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Investor pleads guilty in criminal case that felled hedge fund, damaged B. Riley

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Investor pleads guilty in criminal case that felled hedge fund, damaged B. Riley

Businessman Brian Kahn has pleaded guilty to conspiracy to commit securities fraud in a case that brought down a hedge fund, helped lead to the bankruptcy of a retailer and damaged West Los Angeles investment bank B. Riley Financial.

Kahn, 52, admitted in a Trenton, N.J., federal court Wednesday to hiding trading losses that brought down Prophecy Asset Management in 2020. The Securities and Exchange Commission alleged the losses exceeded $400 million.

An investor lawsuit has accused Kahn of funneling some of the fund’s money to Franchise Group, a Delaware retail holding company assembled by the investor that owned Vitamin Shoppe, Pet Supplies Plus and other chains.

B. Riley provided $600 million through debt it raised to finance a $2.8-billion management buyout led by Kahn in 2023. It also took a 31% stake in the company and lent Kahn’s investment fund $201 million, largely secured with shares of Franchise Group.

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Kahn had done deals with B. Riley co-founder Bryant Riley before partnering with the L.A. businessman on Franchise Group.

However, the buyout didn’t work out amid fallout from the hedge fund scandal and slowing sales at the retailers. Franchise Group filed for bankruptcy in November 2024. A slimmed-down version of the company emerged from Chapter 11 in June.

B. Riley has disclosed in regulatory filings that the firm and Riley have received SEC subpoenas regarding its dealings with Kahn, Franchise group and other matters.

Riley, 58, the firm’s chairman and co-chief executive, has denied knowledge of wrongdoing, and an outside law firm reached the same conclusion.

The failed deal led to huge losses at the financial services firm that pummeled B. Riley’s stock, which had approached $90 in 2021. Shares were trading Friday at $3.98.

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The company has marked down its Franchise Group investment, and has spent the last year or so paring debt through refinancing, selling off parts of its business and other steps, including closing offices.

The company announced last month it is changing its name to BRC Group Holdings in January. It did not immediately respond to requests for comment.

At Wednesday’s plea hearing, Assistant U.S. Atty. Kelly Lyons said that Kahn conspired to “defraud dozens of investors who had invested approximately $360 million” through “lies, deception, misleading statements and material omissions.”

U.S. District Judge Michael Shipp released Kahn on a $100,000 bond and set an April 2 sentencing date. He faces up to five years in prison. Kahn, his lawyer and Lyons declined to comment after the hearing.

Kahn is the third Prophecy official charged over the hedge fund’s collapse. Two other executives, John Hughes and Jeffrey Spotts, have also been charged.

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Hughes pleaded guilty and is cooperating with prosecutors. Spotts pleaded not guilty and faces trial next year. The two men and Kahn also have been sued by the SEC over the Prophecy collapse.

Bloomberg News contributed to this report.

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FCC takes aim at talk shows in fight over ‘equal time’ rules for politicians

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FCC takes aim at talk shows in fight over ‘equal time’ rules for politicians

The Federal Communications Commission is taking aim at broadcast networks’ late-night and daytime talk shows, including ABC’s “The View,” which often feature politicians as guests.

On Wednesday, the FCC’s Media Bureau issued a public notice saying broadcast TV stations would be obligated to provide equal time to an opposing political candidate if an appearance by a politician falls short of a “bona fide news” event.

For years, hosts of “The View,” ABC’s “Jimmy Kimmel Live!” and CBS’ “The Late Show with Stephen Colbert,” have freely parried with high-profile politicians without worrying about being subjected to the so-called “equal time” rule, which requires broadcasters to bring on a politician’s rival to provide balanced coverage and multiple viewpoints.

With the new guidance, the FCC appears to take a dim view of whether late-night and daytime talk shows deserve an exemption from the “equal time” rules for stations that transmit programming over the public airwaves. The move comes amid FCC Chairman Brendan Carr’s campaign to challenge broadcast networks ABC, CBS and NBC in an effort to shift more power to local broadcasters, including conservative-leaning television station groups such as Nexstar Media Group and Sinclair Broadcast Group.

Since becoming chairman of the FCC a year ago, the President Trump appointee has been critical of CBS, NBCUniversal and Walt Disney Co. He launched investigations into Disney and Comcast’s diversity hiring practices and reopened a “news distortion” probe into CBS’ edits of a 2024 “60 Minutes” interview with then-Vice President Kamala Harris after Trump sued the network for more than $10 billion.

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Carr withheld approval of CBS parent Paramount’s sale to billionaire scion David Ellison’s Skydance until after Paramount agreed to pay Trump $16 million to settle the suit, which several legal observers had deemed frivolous.

During a social media storm over Kimmel’s comments in the wake of the killing of conservative activist Charlie Kirk in September, Carr suggested the FCC might use its regulatory hammer over ABC parent Walt Disney Co. if the Burbank giant failed to take action against Kimmel. “We can do this the easy way or the hard way,” Carr said at the time.

The FCC oversees television station broadcast licenses, and those stations have obligations to serve the public interest.

On Wednesday, the FCC rolled out the new guidance aimed at late-night talk shows and “The View,” saying there’s a difference between a “bona fide news interview” and partisan politics.

“A program that is motivated by partisan purposes, for example, would not be entitled to an exemption under longstanding FCC precedent,” the Media Bureau said in its unsigned four-page document.

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The bureau encouraged broadcasters to seek an opinion from the FCC to make sure their shows were in compliance — an advisory that will likely raise anxiety and potentially prompt some TV station groups to scrutinize shows that delve deeply into politics.

ABC, CBS and NBC declined to comment.

Since Trump returned to the White House a year ago, the FCC has stepped up its involvement in overseeing content — a departure from past practice.

Trump has made no secret of his disdain for Kimmel, Colbert, NBC comedian Seth Meyers and various hosts of “The View.”

Recently, “The View” featured former U.S. Rep. Marjorie Taylor Greene, once a Trump acolyte who has become a fierce critic of the president.

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Daniel Suhr, president of the conservative Center for American Rights, applauded the FCC move in a statement.

“This important action puts Hollywood hosts and network executives on notice — they can no longer shower Democrats with free airtime while shutting out Republicans,” Suhr said. The organization has lodged several complaints with the FCC about alleged media bias.

Anna M. Gomez, the lone Democrat on the three-person commission, quickly blasted the move.

“For decades, the Commission has recognized that bona fide news interviews, late-night programs, and daytime news shows are entitled to editorial discretion based on newsworthiness, not political favoritism,” Gomez said. “This announcement therefore does not change the law, but it does represent an escalation in this FCC’s ongoing campaign to censor and control speech.”

“The 1st Amendment does not yield to government intimidation,” she said. “Broadcasters should not feel pressured to water down, sanitize or avoid critical coverage out of fear of regulatory retaliation.”

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The precedent was established in 2006, when the FCC determined that then-NBC late-night host Jay Leno’s “Tonight Show” interview with actor Arnold Schwarzenegger, who announced his bid for California governor, was a “bona fide” news event, and thus not subject to the FCC rule.

The FCC said that station groups need not rely on that 2006 decision because the agency “has not been presented with any evidence that the interview portion of any late night or daytime television talk show program on air presently would qualify” for such an exemption.

The FCC’s guidance does not apply to cable news programs — only shows that run on broadcast television, which is subject to FCC enforcement actions.

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Fight over L.A. County’s oldest cafe boils over in trademark claims, court filings

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Fight over L.A. County’s oldest cafe boils over in trademark claims, court filings

After the longest-operating cafe in L.A. County announced in late December that it would shut down after 139 years, customers of the Original Saugus Cafe began buying up its branded hats, T-shirts, mugs and other merchandise.

When the merch sold out, some took to filching from the tables: glassware, salt and pepper shakers, and even utensils.

To Jessie Mercado, 31, and her father, Alfredo — who has owned the beloved cafe in Santa Clarita for 30 years — it was amusing and sweet that many held the establishment so close to their hearts that they wanted to take pieces of it home with them.

A sign posted to the Saugus Superette, the liquor store adjacent the Original Saugus Cafe, promises the reopening of the restaurant.

(Jenn Harris / Los Angeles Times )

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But a property manager who took over handling their lease in recent months saw it differently. He left an angry voicemail for her 59-year-old father, reviewed by The Times, telling him to “get the Godd— s— back,” or he would sue.

Customers of the Original Saugus Cafe didn’t have long to mourn the loss of the landmark. The restaurant, which closed on Jan. 4, has already reopened under new management. Meanwhile, behind the scenes, a dispute over the cafe’s ownership has boiled over into a lawsuit as the Mercados insist that they were pushed out.

For decades, Mercado’s father said he had a friendly relationship and verbal lease agreement with the property owner, Hank Arklin Sr., a former state Assembly member who owned several commercial spaces in the area.

But difficulties arose after Arklin died at the age of 97 in August, the Mercados said, and they began dealing with Larry Goodman, who handles properties on behalf of the Arklin family’s company, North Valley Construction.

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The Mercados alleged in a lawsuit filed last week that Goodman, North Valley Construction and Arklin’s wife, Louise, had treated the family poorly, tainted the brand, ignored their legal claim to the business and equipment so they would abandon the restaurant.

Despite the ongoing legal challenge, the cafe reopened on Monday at 5 a.m. under new owner Eduardo Reyna and with a slightly different name: Saugus Restaurant. Much of the furniture appears to have remained the same, along with menu items and even some of the employees.

Jan. 4 photo of people waiting in line to eat at the Original Saugus Cafe.

People wait in line to eat at the Original Saugus Cafe during what was thought to be its last day of business after nearly 140 years in Saugus.

(Juliana Yamada / Los Angeles Times)

“People think we lied to them [about shutting down]. That it was a publicity front. I want them to know we were scammed into this,” Mercado said. “It’s sad it had to go down this way.”

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Steffanie Stelnick, an attorney representing the Mercados, said that for the new owner and landlord “to open up and run [the cafe] in the same location, representing it as the same business without purchasing it or without permission” is effectively stealing.

Stelnick said she planned to amend the lawsuit to include Reyna.

Reyna did not respond to a phone call request for comment.

Goodman did not respond to multiple phone calls and messages from The Times requesting comment. Louise Arklin also did not respond to requests for comment.

But earlier this month in an interview with the Santa Clarita Valley news outlet the Signal, Goodman disputed that the Mercado family owned the business and said the father had wavered about keeping the restaurant going.

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“They don’t have nothing to sell. I own everything,” Goodman said. “We own the cafe. We own the building. The stove. The dishes. The forks. We own everything in there.”

The cafe, in a long, narrow building, was beloved by Santa Clarita residents and was locally renowned for its long-running operation, its cameos in various films and television shows, and visits by Hollywood stars such as Frank Sinatra and John Wayne.

Mercado said her family hadn’t wanted to close. They wanted to continue supporting the 17 employees who worked there. But, she said, they entertained the possibility of selling the business if the right offer came along. Dealings with Goodman, however, had felt hostile and left her father feeling “humiliated” and like they had no option but to leave.

A sign on the door posted in late December announced the cafe’s closure, noting that the “decision was not made lightly.”

On its last day of operation, the line stretched down the block. Among customers saying their goodbyes was Charlane Glover, who shared countless Sunday morning breakfasts with her husband there before his death.

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“I can’t imagine it being gone,” said Glover, who waited for over an hour for a table for her and her granddaughter. “We are losing all of our history.”

Mercado’s father got a shock the next morning, his daughter said, when he arrived to pack up only to find the locks had been changed and a sign posted saying the cafe would be “reopening under new ownership soon!”

Alfredo Mercado had started at the restaurant busing tables and washing dishes, she said, working his way up the ladder to bartender and cook positions to eventually acquire ownership of the cafe and its name in 1998. Her father is the sole name listed on the LLC.

Stelnick, the family’s attorney, wrote in a Jan. 6 cease-and-desist letter to Goodman that he made a “wrongful attempt” to take her client’s business and that his alleged “ongoing threats and force have already caused significant damage.”

The Mercados filed suit Jan. 14 in Los Angeles County Superior Court and are pursuing damages — including the taking of their personal property — of at least $500,000.

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The complaint alleges that, in August after Arklin’s death, Goodman pressured Mercado’s father to sign a lease that stated that, in addition to the premises, all manner of appliances and utensils were under the purview of the rental agreement — including “kitchen equipment, booths, counters, stools, chairs, registers, utensils, pots, plates, cutlery, and other cooking & mechanical systems” — even though the Mercados had purchased and maintained those items, the lawsuit argued. Goodman, the lawsuit alleged, had indicated the Mercados would not be able to remain on the property as tenants if they did not sign.

At the end of August, the Arklin family’s company, North Valley Construction, submitted trademark applications for the names “Saugus Café,” “The Original Saugus Café” and “Saugus Café1.”

The lawsuit said the filing of applications showed the property owner was pursuing a “confusingly similar” name and that infringement on the Mercados’ business was thus “willful, deliberate, and malicious.”

Mercado said her father hadn’t acted sooner because he didn’t understand the extent of his claim over the business.

“We just didn’t know our rights,” Mercado said.

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Staff photographer Juliana Yamada contributed to this report.

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Helped by ‘Stranger Things’ finale, Netflix lands strong fourth quarter

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Helped by ‘Stranger Things’ finale, Netflix lands strong fourth quarter

Netflix reported a strong finish to its fiscal year Tuesday, with revenue climbing 18% in the fourth quarter to just over $12 billion compared with a year ago.

The streaming giant’s profits during the same period reached $2.4 billion, or 56 cents a share, up from $1.87 billion, or 43 cents a share, a year earlier, the company reported.

The results were slightly ahead of Wall Street estimates and driven by growth in the company’s advertising business, higher prices and increases in paid memberships, which surpassed the 325-million mark, Netflix said in a letter to shareholders.

Netflix said total engagement on its platform, meaning the amount of time its users spent watching content, rose 2% in the second half of the year.

The company got a big boost in the quarter from the final season of its hit series “Stranger Things,” among other popular shows, documentaries and movies, including Guillermo del Toro’s “Frankenstein” and “Wake Up Dead Man: A Knives Out Mystery.”

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Netflix said “KPop Demon Hunters” broke records as its most-watched movie with 482 million views in the last half of 2025. Users wanted to sing along with “KPop Demon Hunters Lyric Videos,” which scored 32 million views.

The streamer’s top series was the second season of “Wednesday,” which pulled in 124 million views. The first season of the series also popped with 47 million more.

For the year, the Los Gatos-based company reported revenue of $45.2 billion, up 16% from 2024.

The latest earnings report follows news earlier Tuesday that Netflix modified its offer to buy Warner Bros. Discovery, making it an all-cash bid. The companies agreed on the deal, valued at $82.7 billion, in December.

The agreement between the most successful streaming platform and the storied movie studio behind “Casablanca,” Harry Potter and “Batman” has its share of supporters and detractors. Netflix shares have been on a decline since the December announcement.

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“Investors will ponder whether Netflix becoming HBO faster than HBO became Netflix serves their interest,” said Emarketer senior analyst Ross Benes. “So far, markets have not responded kindly to the acquisition.”

Rival bidder Paramount has made clear it will continue its hostile takeover attempt for Warner Bros., despite some setbacks. It has given the company’s investors a Jan. 21 deadline to tender their shares. It remains to be seen whether Paramount opts to extend that deadline.

Warner Bros. has rejected Paramount’s overtures multiple times in recent months, while expressing its preference for its deal with Netflix.

The results were released after markets closed. Netflix shares ended the day at $87.05, down 1% on Tuesday.

Times staff writer Meg James contributed to this report.

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