Monday, February 22, 2016
Exile Newsletter: February 21, 2016
Fraud Is A Major Concern Of The Auditor
Berkeley-While Pacifica waits and waits and waits for an audit of the 2014 fiscal year, which ended 17 months ago, new CFO Sam Agarwal informed the national finance committee that "fraud was a major concern of the auditor", currently Armanino LLP. In fact, he said it twice in a minute and a half. Agarwal added that "we don't know if all the donations have been accounted for" and that "it would be very easy for anyone to open up a bank account and deposit the donations and that would not be recorded in the Pacifica books". You can hear his comments here.
Contradictions between Pacifica's self-generated financial statements and observable reality broke out into the open after Agarwal reported at the same meeting that the radio network came within a hair of completely defaulting on the network's payroll. Agarwal stated at the February 9th national finance committee meeting per commitee secretary R. Paul Martin: "Recently Pacifica had to borrow $90,000 from a bank in order to make payroll. He said that Pacifica does not have a line of credit and that the bank had made an extraordinary accommodation for Pacifica, had it not done so all of the Pacifica payrolls would have failed to be paid on time". Here is the audio.
This announcement followed by a mere two weeks the release of a financial statement that showed a $468K surplus above operating expenses for the three months ending December 31, 2015.
The reported payroll shortfall is bizarre because the two stations showing the worst financial performance (WPFW and WBAI) have small payrolls at $20K semi-monthly and and even with the addition of the archives unit payroll, the total of all three does not exceed $60K. The national office reported independent income from affiliate payments and SCA contracts in excess of its direct payroll obligations for the last quarter, so the size of the shortfall reported by Agarwal indicates that units reporting operating surpluses did not forward payroll amounts for their employees in time to meet the deadline for the issue of payroll checks. Agarwal has not stated which units failed to forward payroll funds to create the $90K emergency in January.
WBAI host and alternative health author Gary Null, filed a copyright infringement, piracy and premiums fraud lawsuit in the United States District Court, Eastern District of New York (federal court). The civil action #1:16-CV-241 was filed against the Pacifica Foundation and individually against WBAI general manager Berthold Reimers, former ED Lydia Brazon, former ED Margy Wilkinson, former ED John Profitt and former local station board chair Mitchel Cohen. The suit requests injunctive relief, statutory fines and says the behavior has been ongoing for at least a decade.
The complaint can be read here.
Former WBAI program director Bob Hennelly addressed some of the lawsuit's subject in an email he wrote on February 4, 2014. The email reads:
"The fact that so many well meaning people volunteered their time to try and salvage a poorly executed and under capitalized business plan is truly unfortunate. There is a word for soliciting over the airwaves from listeners pledges for tens of thousands of dollars worth of premiums and not fulfilling those commitments in a timely and professional manner. When any entity does that, even a non-profit like Pacifica, it is fraud. When you do it repeatedly it is a 'pattern and practice' fraud."
Add in the widespread issues surrounding bootlegging illegally CDs that cropped up and you don't have a community radio station, you have an enterprise that invites both civil and criminal prosecution.
Interim Program Director
Pacifica staff and boards, while understandably upset about the lawsuit, have displayed a lack of understanding of the wholesale distribution process for documentaries and copyrighted CD/DVD products and the problems with piracy in their social media and email discussions.
KPFA local station board member Mark Hernandez demanded copies of premiums like Stanley Nelson's "Black Panthers, Vanguard of the Revolution", Alex Gibney's "Kissinger", Oliver North's "People's History of the United States", Don Goldmacher's "Heist" and Mario Martinez' "Mind Body Code" be provided to Pacifica for no more than $3 per disk. (The wholesale prices range from $7-12 a disk). Hernandez accused producers of "profiteering" by charging Pacifica stations $7-$12 prices for their products. Pacifica stations mark the wholesale price up by a factor of at least 10 and provide the products in exchange for donations of $80-$150.
WBAI/KPFK programmer Don De Bar then suggested that Pacifica producing unauthorized copies by using a duplicating machine at no cost should actually be a relief, and not a burden, to producers.
(This should not be taken as an admission that Pacifica is actually pirating copyrighted materials without permission. De Bar is not an official spokesperson for Pacifica).
The national finance committee has still not completed budget preparations for the fiscal year that began four and and a half months ago and the national board has never approved an operating budget for the fiscal year now underway. Budget drafts for each unit appear to be incomplete or erroneous. Berkeley's KPFA turned out to be using a 90% fulfillment rate in their budget draft when internal reports for the period September 2014 to May of 2015 documented that the fulfillment rate (the amount of pledged dollars that actually come in after on-air fund drives) had slipped to 85%.
A similar failure to use correct fulfillment rates to estimate revenue had dire consequences at LA's KPFK, after the 2014 national finance committee and then the national board allowed a KPFK draft budget to remain unchanged after internal reports documented the fulfillment rate used was 8% higher than the actual fulfillment rate. The station's employees were involuntarily shifted to half-time pay for 4 months in September of 2015 as a result of the $250,000 revenue shortfall created by the failure to correct the fulfillment rate in the FY2015 KPFK budget.
Mozart did not make an appearance at the Feb 4th disrupted national board meeting, but while the sounds were less than musical, the outcome was the same: meeting interuptus. Doubling down on their outrageous stripping of all national voting rights from NY station WBAI and the seating of two bogus affiliate directors from non-affiliated stations, the rump majority did not even keep their promise to allow WBAI's 2015 directors to "participate, but not vote". They didn't send WBAI the meeting codes and hung up on them when they called in. In fact they hung up on everybody, including duly elected directors from other stations as KPFT director Bill Crosier stated: "I was repeatedly disconnected from the call. I have not been making any interruptions, but tried several times to raise a point of order and was never recognized, but my call was disconnected several times. This is highly improper. Whoever is controlling the conference call has no right to just disconnect anyone they don't want to talk, even when making valid points of order".
A sound clip of the meeting "highlights" can be heard here in a 26 minute version. The full meeting (of about two hours duration) has been posted on the NY-based blog, WBAI-nowthen .
The rump majority then claimed after the meeting that a motion to re-install termed out director Lydia Brazon as a "volunteer ED" had passed with no vote taken because there were "no objections". LA directors Jan Goodman, Grace Aaron and Houston director Bill Crosier can be heard on the audio record above the cacophany clearly objecting 8 different times. Here are the time stamps (on the full meeting audio posted here).
38:32 to 39:20, 41:40 to 41:45, 45:27 to 45:40, 46:57 to 47:55, 52:14 to 52:58, 54:10 to 54:15, 54:27 to 54:40, 56:15 to 56:30
The controversial late night program change in LA which exiled the beloved overnight long-time overnight host Roy of Hollywood to the 3am hour has been taking a toll on KPFK's current fund drive, the first after the program change took effect. The Something's Happening program has taken in a whopping $15,195, already surpassing its totals in the last fund drive in 1/2 the broadcast hours, while the replacement program Safe Harbor hasn't yet cleared $3,000 after 30 hours of broadcasts over 10 days.
A petition to restore the popular overnight program curated by Roy of Hollywood (Something's Happening) can be found here.
Replacement program Safe Harbor has focused on the FCC's safe harbor rule by featuring curse words in the late night slot. The programs themselves are a disorganized compendium of rap and hip-hop music, call-in on air therapy, a sex-focused show, rebroadcasts of old political programs like a 2013 tribute to Hugo Chavez, plays of old comedy albums from George Carlin, Richard Pryor and Dick Gregory, and some slam poetry.
Here's a few samples. (These are from late January. Pacifica in Exile apologizes for being a little tardy preparing these).
Safe Harbor: Dead Into Mickey Mouse
Safe Harbor: Vacationing Therapist: Where's Roy?
Safe Harbor: Erotic Electrocution
Safe Harbor: Reality TV Therapy
Pacifica in Exile readers may write to the board at firstname.lastname@example.org.