Playing With Insurance Fire

• In 2012, Pacifica’s director’s liability insurance bailed due to excessive litigation. 20 providers turned Pacifica down before one agreed to pick up the policy, at 2X the deductible and 3X the premium. Insurance broker Don Cooper warned the board in writing that employment suits had to stop.

• The Board fired the executive director without cause or a performance evaluation, then re-hired a CFO without investigating 5 pending workplace complaints and a very poor performance evaluation on the record.

• The loss of directors liability insurance will end the operations of all the Pacifica stations due to requirements to indemnify the board of directors from lawsuits.

Accounting Chaos

• The 2012 fiscal year audit placed $7 million dollars (more than ½) of the funds taken in at the stations in suspense accounts, meaning the documentation was inadequate to identify where the money came from.

• Books at two divisions have been unreconciled for the last 12 months with more than a year’s worth of event income unprocessed in Berkeley until very recently.

• The ability to monitor embezzling and audit deficiencies is nonexistent due to the termination or threatened termination of any accounting or executive staff who try to implement corrective procedures.

• The annual audit is 4 months overdue.

Illegitimate Board Configuration

• The chair of the board was found likely to have committed a breach of fiduciary duty against Pacifica in 2010, in a 2012 preliminary ruling by the CA Court of Appeals. This was for diverting funds away from the station’s fundraiser to a private fund. Her election as chair was wrong per the bylaws and the continuing breach has never been corrected.

• The vice-chair of the board was an elected public official in DC, although the bylaws prevent elected public officials from serving on Pacifica’s boards so they can’t impact news coverage.

• The secretary of the board was banned from the NY station in 2009 for acts of physical violence.

• The board treasurer position has been empty for four months.

• The board contains at least 1 and possibly 2 individuals with past felony convictions. Such convictions can interfere with relicensure per the Communications Act of 1934. Neither board member disclosed their previous felony convictions despite having two of the organization’s five radio stations up for relicensure this year.

Conflicts of Interest

• The corporate attorney quit the organization within 60 days of the seating of the 2014 board. The board has secured no replacement and has operated for months without an independent attorney, replying on the ad-hoc advice of “interested directors” who are attorneys.

• The organization’s legal business was routed to a firm that employs one of the directors, and the attorney in question himself left the board in January of 2014. (He was replaced on the board by his employee ,who then routed Pacifica’s litigation to his own firm).

• The conflicted retention was delegated to a 2-person committee and never ratified by the full board as required by the CA Corporations Code.

Ad-Hoc Legal Interference

• Two attorneys on the 22-person board have repeatedly confused their roles as directors and as attorneys. Both repeatedly interrupted, prevented from being heard, and over-ruled legal and human resources advice from independent attorneys and HR consultants hired to provide objective guidance to the board.

• One attorney-director threatened a “campaign of malpractice” against the firm of a DC attorney in retaliation for legal advice not to his preference. On receipt of a bar complaint with supporting evidence, the CA Bar Association recommended the board take action to “remove the individual from the board of directors”.

Employee Safety and Retaliation

• Board members have written emails to employees threatening them for consulting attorneys and federal agencies over unaddressed safety and harassment concerns. Employees were told to “submit to every need and desire of the chair of the board” and that “interlopers would not be tolerated”. Board members also exerted rights to retaliate against employees who complained of workplace discrimination by “removing them from the plantation” if their complaints were not upheld.

Structural Breakdown

• The currently appointed interim leadership has stated publicly he intends to stay in the job for “just a few months” and previously announced relocation to New Zealand in July. It is now almost June. No search has been started for a replacement, meaning there will be 3 interim leaders appointed in six months.

• The board has failed to issue minutes from meetings going back to January. Minutes that have been issued have been objected to by 45% of the board as deliberately falsified and the objections have not been entertained on the basis of “time running out” at meetings.

• Unauthorized parties have requested access to foundation bank accounts and payroll information from vendors on repeated occasions.

• Payroll data with personally-identifying information on employees has been released in unencrypted electronic communications to some board members on at least two occasions, without employee permission.

Failures of the Duties of Care and Loyalty

In 4 months of service (1/3 of their entire year-long term), the 2014 board has done only 3 things:

• Fracture the organization’s leadership

• Eviscerate some of the only new local community programming developed by the network in the past 5 years

• Publicly advocate for the breakup and dissolution of the 501c3 organization