Berkeley – Law firm Foster Garvey has revealed that $80,000 was secretly wired from Berkeley radio station KPFA’s operating account in October of 2019 to the law firm that was defending the failed WBAI shutdown. The amount represents approximately one out of every five dollars donated in KPFA’s September/October fall fund drive.
In an email from Foster Garvey’s collections coordinator to Pacifica’s counsel, the law firm stated:
We received a panicked call from the Executive Director [John Vernile] that Pacifica had been sued and we needed to respond to a TRO that night on 10/7/2019. We sent Kara Steger from our NY office to meet the judge in his condo lobby with you that night. We do not have a formal engagement letter on this. We did not know the ED had a deadlocked board until later, and the opinion of Pacifica’s California corporate counsel was that some of the members not supporting the ED’s decision had a conflict of interest. The ED arranged to pay us an $80K advance on fees relating to the litigation. It came from one of the West Coast Pacifica stations to fund our work. See attached wire confirmation email.
The Foster Garvey firm is attempting to collect an additional $150,000 for their failed defense of the WBAI shutdown for a total of $230,000. In the email thread, Pacifica counsel Arthur Schwartz states:
I have been told by my predecessor, Ford Greene, that he advised Vernile that the action he was planning was ultra vires [taken without the proper authority], and then he went off, without getting the consent of the Board.
The secret wires were made on October 18 and October 29. This document confirms the first $40,000 installment on October 18th and is from KPFA business manager Maria Negret and copied to KPFA general manager Quincy McCoy and Tamra Swiderski, an employee of financial consultant NETA. The second wire transfer on October 29th was apparently conducted by telephone.
The Pacifica National Board, by majority vote, had suspended Vernile from the executive director position and placed him on leave on October 13, 2019 and again on October 20, 2019. Pacifica National Board members have stated they were told in closed session meetings that Foster Garvey was litigating against WBAI and the Pacifica Board to defend the shutdown on a “pro bono” basis. Those statements were false.
The National Board was unaware $80,000 in KPFA member donations had been sent to Foster Garvey by KPFA management because the transactions were not recorded as an expense. According to financial consultant NETA, KPFA business manager Negret recorded the withdrawals as a “loan” to the Pacifica National Office. Financial consultant NETA, although copied on the October 2019 transactions, released profit and loss statements on February 24th for the 3-month period ending on December 31, 2019 that did not show the $80,000 in additional legal expenses in October. Profit and loss statements released to the finance committee and the PNB did not show the expense again on January 31, February 29, and March 31, 2020.
You can listen to a portion of the National Finance Committee’s discussion of the secret wire transfers to Foster Garvey on May 12. The committee was asked by the PNB to investigate the unauthorized expenditures. The 10 minute clip is somewhat astonishing with 2019 national treasurer Chris Cory from KPFA saying the wire transfers “slipped through the cracks” . Anita Simms, from financial consultant NETA, said the vendor that is charging Pacifica more than a quarter million dollars a year for outsourced accounting, had to investigate where the transfer – that NETA staff were copied on – was located.
Present at the meeting were KPFA’s local station board treasurer Sharon Adams as well as 2019 national board treasurer Cory, also from KPFA. Neither indicated whether they were aware of the wire transfers when they occurred. Adams had previously insisted that KPFA was “completely uninvolved” with the WBAI shutdown, apart from KPFA general manager Quincy McCoy’s role in arranging for piped in content to be aired on WBAI’s signal during the shutdown. KPFA’s local station board, which is responsible for oversight of the station’s budget and ongoing expenditures, was not told $80,000 removed from KPFA’s operating account by KPFA management and directed to the Seattle-based Foster-Garvey law firm. Foster Garvey’s litigation was defeated in NY’s State Supreme Court on November 6, 2019 after the law firm tried and failed to transfer the litigation to the federal courts.
A revision of the Pacifica Foundation bylaws which would have replaced the member-elected Pacifica Foundation board with a majority self-appointed board was unofficially championed by a majority of the KPFA local station board, but overwhelmingly rejected by the network’s members and staffers in March of 2020.
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Started in 1946 by conscientious objector Lew Hill, Pacifica’s storied history includes impounded program tapes for a 1954 on-air discussion of marijuana, broadcasting the Seymour Hersh revelations of the My Lai massacre, bombings by the Ku Klux Klan, going to jail rather than turning over the Patty Hearst tapes to the FBI, and Supreme Court cases including the 1984 decision that noncommercial broadcasters have the constitutional right to editorialize, and the Seven Dirty Words ruling following George Carlin’s incendiary performances on WBAI. Pacifica Foundation operates noncommercial radio stations in New York, Washington, Houston, Los Angeles, and the San Francisco Bay Area, and syndicates content to over 180 affiliates. It invented listener-sponsored radio.
I’m writing just to clarify one point, which is that NETA has been asking KPFA for more information on the wires since they were sent and, to my knowledge, hasn’t received a response.
Anyone moving funds out of an organization should present full documentation: the request *in writing* from an authorized party that describes the purpose of the payment, the authorization *in writing* to release the funds by an authorized party, and the complete — not cropped — copies of the wire transfer confirmations. These normally show who electronically set up and who electronically approved the transfer, the accounts it went out of and into, dates, amounts, etc.
Standard procedure: whoever actually performs the actions to move funds should have the written request and authorization in hand *before* making the transfer. This protects that person from any appearance of wrongdoing. This shouldn’t be hard to do unless one is being rushed or directed by a superior.
In a case like this, where the payments were shown in KPFA’s books only as a loan to the National Office, all the documentation should have been forwarded to the NO’s bookkeepers — that is, NETA — but apparently never was. You can’t really book something if you don’t have the relevant information.
And that’s my two cents. I’ve sent hundreds of wire transfers in my time.
Hi Eileen,
I’m in agreement regarding what standard operating procedures should be regarding moving money out of an organization: obviously it shouldn’t happen on the sole instruction of an executive director who has been suspended by the board, but it isn’t clear to me why you say NETA was asking for information or NETA needed documentation forwarded. NETA employee Tamra Swiderski was copied on the transaction in real time when it occurred, including who asked for it, who performed it and what it was for. There was no reason for NETA not to inform the board of directors immediately and even less reason not to expense it on the very next income statement they produced.
I always look forward to your insight and analysis regarding Pacificas neverending drama. Thank you.
It seems everyone involved in this “loan” would be immediately fied from Pacifica, and with no recourse to sue, due to their clearly and blatent misappropriating funds?