Thursday, December 20, 2018

Hush money?

Sometimes a comment is justified in real time. This concerns the PNB currently in progress. It's an emergency meeting called by most of the minority grouping/faction: Adriana Casanave, DeWayne Lark, Joseph Davis, & William Heerwagen. (livestream)

Just now, at 9.17pm ET, the PNB Chair, Nancy Sorden, acted egregiously, exceeding her powers by taking the PNB into immediate private session. The item was the $3.265m loan from the Foundation for the Jewish Community (which uses the abbreviation FJC). She had reprimanded Adriana for mentioning the word 'FJC', saying this is confidential, & when Chair Nancy heard the obscenity again she cut the stream.
The thing is, the PDF of the agenda mentions the unmentionable twice (page 1). It also appears twice in a link from the grid calendar: "[p]urpose: Special meeting to discuss the FJC loan and WBAI motions from Heerwagen" (the 8.30pm public session); & "[p]urpose: Special meet to discuss FJC Loan and the financial information related to it" (the 11.30pm private session).

In a few of my comments here I've mentioned Pacifica's proud press release of F6Apr, announcing the Empire State Realty Trust settlement. It also says this:
"[funding for the settlement was provided through a loan from the non-profit lender FJC, which includes a reserve amount that frees Pacifica from making payments for the first eighteen months of the loan and interest payments only for the following 18 months before the loan matures after three years."

Moreover, the press release cites Chair Nancy even referring directly to FJC! This is what she said:
"'I’d like to first thank the Pacifica National Board, for deciding on this approach and the enormous amount of work they put into it to get us to this point. Second, to FJC for providing this loan at a very difficult time for Pacifica, and third to the team of professionals that helped [blah, blah] as well as Marc Hand of the Public Media Company, who helped negotiate the settlement with ESRT and provided brokerage services with FJC.'" 

The statement ended with descriptions of Pacifica, Public Media Co., and . . . FJC:

"About FJC[:]
FJC, A Foundation of Philanthropic Funds, is a 501c(3) public charity whose mission is advancing donors’ charitable goals and financial planning through creative and pioneering solutions including its non-profit Agency Loan Fund (ALF). FJC offers the ALF as an investment option to donor advised funds and to qualified tax exempt not-for-profit organizations. ALF loans have helped finance projects for public radio and television stations, the establishment of group homes for the disabled, classes for special needs children, programs at community centers for the aged, adult literacy programs, cultural institutions, and arts programs."

This press release, as I write, is still being carried by at least two Pacifica stations, WBAI & KPFK:

Guess Chair Nancy needs to get out more, or, if she insists on staying stuck in her basement, to at least keep up with what's on the station websites – indeed, she can even ask the Chair of her LSB, Mr Simms, for a copy of the email he's withholding, the one I sent to her & all the other delegates of the WPFW LSB, which has a link to the Pacifica press statement at WBAI.

Every Pacifica officeholder needs training in what counts as confidential in the meaning of FCC rules. It is pathetic that delegates & directors can just mention 'confidential' & get away with it every f'ing time. Tonight this corrosive & self-harming secrecy culture plummeted to a new nadir.

The ignorance, in both senses, of Pacifica's 'leaders' is truly breathtaking.

(Jara Handala's lengthy 3-part réponse to one of the comments can be downloaded here in PDF format). 


  1. In a sense Pacifica is nicely reflective of the embittered and embittering shambolic madness that defines what passes for contemporary American culture.

    There is I believe a line from St Bob the Dylan to the effect of becoming our enemy in the instant that we preach.

    Something like that.

    Pacifica would seem to have had that one down for decades now.

    Then again perhaps a more accurate comparison would be Swift's Yahoos.

    I don't see any Houyhnhnms anywhere.

    Nary a one in sight.

    ~ 'indigopirate'

  2. Here is another "secret" blown up: the interest rate on the FJC loan.
    Checking at we find the statement, "The loans are made at a floating interest rate of the prime rate plus three percent."

    I assume "floating" means the payment is recalculated as the prime changes. Back in April the prime was at 4.75%. Adding 3% gave 7.75% FJC loan rate. But the prime follows the fed funds rate, which just rose 0.25% yesterday, giving a prime of 5.5%. Jerome Powell has indicated at least two more increases next year. Assuming the same modest 0.25% increase, that leaves the prime at 6%, and the FJC loan rate at 9% when interest payments begin.

    The monthly payment would be $24,487.50 on a loan of 3.265 million at 9%.

    It's unclear what happens during the first 18 months of no payments, but it's a good bet that if the creditor is charging interest at all, then they are charging interest during that initial 18 months, which would swell the principal by another $300,000. The monthly payment would then be close to $27,000.

    $27,000 per month added to current expenses. Comments and corrections?

    1. 1 of 3
      Nice comment, & yes, 9% is the prudent working assumption one should make. The spurious FJC loan summary, mentioned during the PNB meeting, was composed before 22 March, when Fed prime was 4.5%. It's now 5.5%, making the loan 8.5%. And as you say, & as I predicted the other month, there'll be more rises before Pacifica has to meet from its general account the quarterly interest payment due on c. 31Dec19, the first of six from that account. I'll make six points.

      1) Interest is being earnt by FJC's investors from day one of their loan. According to the spurious summary, Pacifica has to hold in a restricted, dedicated account a sum equivalent to the first 18 months of interest, six quarterly payments, the last due c. 30Sep19. That's why the 7 June PNB private session (after the Nakapon sale, which was being used in part as collateral for the FJC loan) acknowledged the new reality by agreeing to "reduce the amount of reserved interest needed for the first 18 months to $379,556". Why that amount? $3.265m x 7.75% (the rate on 7 June) x 1.5 (years) = $379 556.25. Violà.

      These hundreds of thousands of $$$ isn't money Pacifica had lying around: *it came out of the FJC loan itself*. It seems little appreciated that this means the directors – probably at the insistence of FJC – accepted that the listeners were incapable of reliably feeding them each month c. $21k (@ the 7.75%), again & again, 36 times. Instead, Pacifica borrowed from FJC a sum to pay the first six quarterly payments: ignoring compound interest (& interest rate rises), that's c. $21k x 18 = $378 000 . . . violà. In other words, Pacificans never get to see 11.6%, almost ⅛th, of the principal: it goes straight back to the secret holders of the donor-advised funds lodged at FJC. ('Secret': that's one reason why I would never call FJC a provider of a "Jewish loan" – Chris' inaccurate headline.)

      2) It's also little appreciated that Pacifica cashflow has been harmed since severing the tie with ESRT & the Nakapon sale, with new expenses, some having to be paid month after month: fees to Pacifica's lawyers/advisors re ESRT settlement; WBAI transmitter costs at 4 Times Sq (rent, plus instalments on the new equipment); renting rooms at Nakapon for Pacifica's Mary Celeste, the National Office; 2018 election cost; the forthcoming 2019 election cost; pension management fees; pension audit fees; pension legal fees; likely pension penalties; other legal fees, not least re IRS & DOL investigations; wages, etc. for Larry Dankner, the new iCFO; more comprehensive bookkeeping & accountancy services performed by NETA compared with those done sporadically by Pacifica workers (can anyone believe this extra work reduces total costs?); FY2017 & FY2018 general audit fees; wages, etc. for the soon-to-be-announced KPFT GM; jobs created for station & national programme directors; starting c. 1Oct19, paying FJC interest at a rate of c. $25k per month (@ 9%, as you gave as illustration); . . . ; . . . One could go on.

      The three-year FJC interest charge, at an average 8%, will be c. $800k – just to stand still, leaving untouched the principal of $3.265m. *Pacifica needs to generate, for the second half of the life of the loan, a net income of c. $300k a year just to pay this one charge* – & Sunday's KPFK LSB reported that the current fund-drive is running at a shortfall of "$100k" (treasurer Ken Aaron, 49:10). This on top of the historic data, with the last time Pacifica generating a net annual income being FY2006: the last 10 audited years are losses, totalling $12 659 328. Wishful thinking meets cold concrete. A very sad unicorn. Very unfair.

    2. 2 of 3
      3) The principal was reduced from $3.7m to the current $3.265m when the Berkeley Nakapon building was sold, as that $435k sum was secured against it, & so handed over from the proceeds. Another specific sum in the loan, when it was $3.7m, was using as collateral the KPFK transmitter tower on Mount Wilson, valued at c. $1m; the value-to-loan ratio, according to PNB chair Nancy (yes, she is as wooden as a chair), is 3:1, so $333k (see the spurious summary). The Forest Service wouldn't give the necessary permissions, so that money couldn't be released to Pacifica. Which poses the question, why hasn't the principal been reduced by this $333k? Why is interest still being paid on this withheld amount? No public meeting audio has mentioned this puzzling fact.

      4) Directors differ on what they tell the PacificaPlebs about what's collateralised. Director Medusa, aka Grace Aaron, keeps saying, including at November's KPFK LSB, that it's buildings & land. Note, she never says 'solely . . .'. Perhaps this is because chair Nancy's spurious summary says "[i]n addition [to the real property: buildings & land], the Collateral includes accounts receivable, tangible goods, equipment, rental income, sales proceeds, contracts, intellectual property, furniture, cash and proceeds of insurance or sales – in short, virtually every real, tangible and intellectual property right in which Pacifica has an interest”. Why does Medusa spread misinformation? Why does Medusa talk this way about what's collateralised, the same way she focuses on the loan "defaulting" when FJC apply a different test, "potentially impaired"? Why?

      5) The strategy used by the core of the Medusa faction, & so followed by their less talkative supporter-directors, is the Malcolm strategy: by all means necessary, here doing whatever is takes to stay in control. Hence director Carole 'I co-founded the Sojourner Truth Organization' Travis raring at the bit, pouncing as soon as a new item is tossed on the floor: dripping red in tooth and claw. Pacifica's very own rottweiler. And given the nature of the Pacifica polity, moribund in extremis, sub-atomic in its organisation of solidarity, sitting happy with a majority, the strategy of least effort is to practise the politics of arrogance, ignoring all others, be they fellow directors or the great unwashed. The members & listeners don't need to know anything. The less, the better. Info can be interpreted the wrong way. The wrong questions asked. Even new options identified, &, heaven forbid, advocated. That's why the secrecy culture exists, & why it's defended so ferociously. It's not paranoid, it's worse than that, as shown last night: it's paranoid paranoia, denoted in DSM-5 as PacificaP². But even though the members & listeners are treated as ciphers, they have their uses, albeit episodic: enough members voting, so satisfying the 10% quorum; enough listeners coughing up a minimum $8m net a year, so making bearable Pacifica's insolvency (the last audited balance sheet, at 30Sep16, gave net current liabilities of $6.7m, a factor of x11.5, so $11.50 of creditors chasing every $1 Pacifica had available that day to pay these short-term liabilities).

    3. 3 of 3
      6) And don't get me started on the Marty & Dorothy Silverman Foundation (MDSF), which FJC sell their dodgy loans to – never forget they never wait for a loan to default, or go to court: they sell it when, as their auditor puts it, the loan is "potentially impaired". As the JLens Investor Network report on FJC put it, based on an interview with FJC's boss, Lorin Silverman,

      "[t]he Agency Loan Fund has a 100% repayment rate, but not because organizations don't occasionally default on their loans. When a loan is in danger of default, [Lorin]'s family foundation will purchase the loan to provide a first[-]loss fail[-]safe to the fund's other investors [...] The [family] foundation continues to pursue repayment and has a strict policy to not forgive loans [no: the MDSF 990s indicate otherwise, with its loans write-offs]. The unappealing task of chasing nonprofits for repayment is one of the reasons there isn't more capital available to the nonprofit sector; banks do not want the resulting unfavorable media attention. However, the family foundation believes that repayment is critical to ensure capital is available for future [FJC] loans and to uphold the confidence of the [FJC's ALF] fund's investors."

      Finally, there was a landmark exchange at Sunday's KPFK LSB (Indigo draws attention to other matters in his report posted by Chris). It was between delegate Polina Vasiliev & director Medusa (17:49). Polina, who to her great credit had asked a question about FJC at the last PNB Audit Cttee (3 December), asked Medusa about the FJC loan. Polina became the first to say in a recorded Pacifica meeting that FJC doesn't wait for a borrower to default, instead selling on "potentially impaired" loans to MDSF. Medusa wouldn't have been surprised by this line of questioning as she's marked Polina's card, & Medusa knows the facts. Nevertheless, Medusa found herself in a corner, snakes frantically swaying, obviously facing someone who knew facts . . . so she admitted that FJC can indeed sell on their Pacifica loan to whomever they want. Bit different from a PNB interaction, yes? But the rottweilers are obviously scenting blood: Cruella Carole is already on the case.

    4. Thanks for your ongoing efforts, JH. You're far more comprehensive and in-depth than any other observer at this point, including myself. So kudos and thanks.

      A question: This falls in the Wait A Fucking Minute Category: You quote a list of categories and items to which FJC (and anyone to whom they may pass on the loan) may make claim. It's a comprehensive list and it includes intellectual property. Does this mean that, without any discussion the Pacifica Archives have become entailed?

      Thanks again,

      ~ 'indigo'

    5. Yes, 'indigo', "without any discussion" the Pacifica Archives has been collateralised: as quoted in my point #4 above, Wooden-as-a-chair Chair Nancy put it this way in her 16 June FJC-approved email to Bill Eisen, a KPFK listener, currently standing for the LSB (email provided to me by Grace Aaron): "[...] the Collateral includes [...] intellectual property [etc., etc.] – in short, virtually every real, tangible and intellectual property right in which Pacifica has an interest.”

      Crucially, rather than simply packaging assets for a loan, what's been packaged is *Pacifica*, a set of five radio stations (mis-described as a network). The PNB has agreed to Pacifica – so *all of it*, not just buildings & land – being packaged as a saleable asset: FJC can sell the Pacifica loan, with *all* Pacifica's property collateralised, to whomever it wants, whenever it wants.

      As I said, with due dignity & decorum, Pacifica is FJC's female dog.

    6. Do we know any of the following, or are they in the Super Duper Special Pacifica Secrets Mystery Category:

      If FJC chooses to collect, or to hand off the loan to another party are they (and or the other party or parties) restricted to only liquidating enough of what they control to cover the loan amount (plus arrears and fees) or do they simply get to take control of Pacifica as a full and complete entity?

      That would depend, I'd guess on the particular language, the particular terms, and there has been great effort to keep all that 'Confidential'.

      Have we, as the public, and knowledge of any of that?

      ~ 'indigo'

  3. Hi Jara -

    The two Berkeley buildings, aka Nakapon, was not used as collateral for the FJC (there I said it!) loan. Those buildings were sold separately. Part of the proceeds went to pay back Jan Goodman's "Friends" loan, which was used to pay off a portion of ESRT the FJC loan didn't cover. The $379,556 interest came out of those proceeds. The original $3.7m loan was based on using KPFK's tower as collateral but when the US Forest Service wouldn't go for that, the loan amount was lowered and also the interest. The original intent for the $3.7m loan was for the interest to come out of that - in other words FJC was going to lend Pacifica the money for the first 18 months interest and Pacifica was going to pay interest on the interest payments! The intention of selling Nakapon was to have some extra working capital which, oops, didn't happen.

    The interest now in some bank account was calculated at the rate of the loan date. I suspect that the with the interest rate hikes, more $$ will be needed to fulfill the 18 months interest payments.


  4. I made my above commment based on only reading your comment #1 but I think it was corrected in your comment #2.