Questions regarding Form 990

Dear PNB Members, Tom Livingston and Eileen Rosen - 

Thank you for posting the FY 2017 990 on pacifica.org. [The 990 Form as posted by Pacifica] Having reviewed it, I have some serious concerns. 

Tom Livingston signed this Form 990 on August 15 but I wonder if he reviewed the contents or knows enough about Pacifica’s finances to review the contents without outside help. A cursory look at the Form shows many serious discrepancies and omissions. 

For starters, on page 6, Section C, question 18, which “requires an organization to make its Forms… 990… available for public inspection,” Tom checked the box to provide this Form 990 on “Own Website.” I asked several times publicly for it to be made available to the public on pacifica.org. On September 13, I sent a formal letter requesting a copy per the IRS code. This was all unnecessary. As of a few days ago, this 990 can now be found on pacifica.org. 

This 990 was not authorized for filing by the PNB as they would have had to take a public vote. Even in closed session, there would have to be a report out. 

I am listing some of the serious shortcomings that I am able to identify.

1. Page 7 – Compensation: The form does not specify the amount paid to two Directors, Kathryn Davis and Mansoor Sabbagh, although both were paid compensation.

2. Also on page 7, the hours listed for Jonathan Alexander are two whereas he is a full time employee. The hours should be 35 or 40. 

3. I believe Bertold Reimers and Quincy McCoy should also be listed as high-salaried employees. 

4. Balance Sheets are not prepared monthly. These are prepared only during the audit. We have also been told that the books were not ready for the audit. Therefore, any numbers that relate to a Balance Sheet for FY 2017 like Cash Balances, Liabilities, etc., can only be considered as “made up.” Some of the balances do not make sense:

a. Page 1, Line 21. It shows that Liabilities have gone up by about $172,000 during FY 2017. This does not seem right. WBAI did not pay Empire State rent for the full year and accrued penalties and late charges. This alone would add roughly $700,000 - $800,000 to the liabilities. 

b. We know that pensions have not been paid for the last several years. The unpaid amounts, interest and penalties have to be accrued in the books. This will also increase the liabilities significantly. 

c. Page 11, Line 1 shows Cash Balance of $944,879. How is it possible there was almost $1 million sitting in the bank? 

5. Revenue and expense numbers will change substantially when the books are ready. I believe Empire State charged hundreds and thousands of dollars in late fees and penalties which were never accounted for. When this is accounted for it will increase the losses substantially. This is just one example and clearly the income statement numbers that are stated in Form 990 are not correct. 

6. It is not mentioned anywhere that these financial numbers are based on unaudited statements and will change after the audit is complete. It is a serious mistake to let readers believe these numbers are final. 

7. On Page 6 and 30, Tom certified that the books are in the care of Sam Agarwal. Tom’s signature is dated Aug. 15, 2018. Sam resigned in March, 2018 and left a month or two later. This statement is easily identified as completely false and makes it easy to question if anyone reviewed this.

8. Several Declarations on Page 6, Section B Policies are questionable. For example, Line 12a and 12b asks for a Policy regarding Conflict of Interest. I never saw such a policy when I was on the PNB and I am sure none was made since then. If there is any such policy, please provide a copy so the public is assured there is one. 

9. Page 27, Schedule O, Part VI, Section B, line 11b – Notwithstanding the process described is unrecognizable as Pacifica practice, it states: “After a full review (with modifications where necessary), the final version of the tax return is provided to all members of the Organization's voting body.”

a. I think Tom is providing a false certification here as I do not believe the Form 990 was presented before the PNB nor reviewed by them. It was not approved for filing.

b. I do not believe Tom has the authority to approve the return for filing on his own. Nevertheless, it is the PNB who has the ultimate responsibility for presenting truthful or untruthful information to the IRS and the public. 

Tom signed this return “under penalties of perjury,” that he examined this return and “it is true, correct and complete.” I have serious doubts about such certification based on the shortcomings I have pointed out above. This falls under the Sarbanes-Oxley Act of 2002. Although Sarbanes Oxley, passed by congress in the aftermath of the collapse of Enron and its subsequent litigation, was written for public corporations, guidelines I have read indicate that non-profits should also follow those rules, especially where it disallows a CEO, or ED, from claiming they “didn’t know” what was going on in the company or organization.

The Form 990 is supposed to be accurate and complete information about a non-profit organization. It appears that the Auditor, and designated tax preparer, has also failed to ask questions or verify the information provided by management. This is serious.

The PNB has the ultimate responsibility to provide correct information to the public. I have based my analysis on publicly available information plus my knowledge and experience with Pacifica. If any of my statements turn out to be incorrect, please provide documentation or explanation. I would also expect the PNB to publicly report what action they plan to take, including if substantial changes are required. 

But, more importantly, why was such misleading information allowed to be filed with the IRS? Who is watching Pacifica’s compliance with laws and reporting? 

I am making my comments public and request that any responses also be made publicly.    —Kim