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Why would honest men spread dishonest information about Pacifica's finances?
The Pacifica interim executive director and CFA are pushing for Pacifica to go into bankruptcy despite the fact that the majority of the board are against bankruptcy.
Why would honest men spread dishonest information about Pacifica's finances?
Dear Pacifica Supporter –
I was astonished, and a bit angry, to read the false report about Pacifica’s finances just issued by Pacifica’s Executive Director, Bill Crosier, and its Chief Financial Officer, Sam Agarwal. (Their report is attached.)
I had always believed that Bill Crosier and Sam Agarwal were two people who would -- no matter how much we disagreed on strategy – always speak honestly to the Pacifica community. But they have not done so. Which only demonstrates how easily honorable men may stoop to dishonorable actions after convincing themselves that they are Right and everyone else is Wrong.
Crosier and Agarwal are desperately eager to push Pacifica into bankruptcy. They have said so many times, and they say so again in their attached report to the Pacifica community. They claim, in effect, that it has become necessary to destroy Pacifica in order to save it. This is no less absurd than the infamous claim, made by a U.S. major during the Vietnam War, “that it became necessary to destroy the town in order to save it.”
I will say more about the craziness of Crosier and Agarwal’s bankruptcy scheme later in this email. But first I want to deal with the deliberate falsehoods in their attached report. I use the word “falsehoods “with regret, since Bill Crosier has been a friend of mine for years, and I still like him, even though he has apparently become a raving lunatic.
As you may know, the Empire State Realty Trust (ESRT) recently won a $1.8 million judgment against Pacifica for back rent on its antenna lease, which it renewed in 2005. However, the terms of that renewal were clearly extortionate, calling for mandatory (and eye-popping) increases of 9% per year (more than four times the rate of inflation) for 15 years. But Pacifica had no choice. It was forced to sign virtually at gunpoint because the bombing of the World Trade Towers, on 9/11/2001, had eliminated other feasible locations for its antenna. As the only game in town, the Empire State Building played hardball, presenting Pacifica with a non-negotiable ‘Hobson’s Choice’: Accept our terms -- or stop broadcasting.
When Empire State sued for its unpaid back rent, Pacifica’s defense was “unconscionability.”
[Unconscionability: A defense against the enforcement of a contract or portion of a contract. If a contract is unfair or oppressive to one party in a way that suggests abuses during its formation, a court may find it unconscionable and refuse to enforce it. A contract is most likely to be found unconscionable if both unfair bargaining and unfair substantive terms are shown. An absence of meaningful choice by the disadvantaged party is often used to prove unfair bargaining.—Legal Information Institute, Cornell Law School]
However, the Judge couldn’t care less. In fact, he cared so little that he had already written out his verdict before even getting to court to hear the oral arguments. (That was pretty obvious. I was in the courtroom and saw it.) Anyway, the judge said Pacifica must pay. If it didn’t, Empire State had the right to swoop in, any time, and empty Pacifica’s bank accounts. This would be tantamount to putting Pacifica out of business, since it would be unable to pay its employee salaries, its phone and electric bills, or any of its other daily operating expenses. Pacifica would be dead.
So what was Pacifica to do, since it didn’t have $1.8 million lying around? There were 3 scenarios.
1. It could choose to do nothing, let ESRT seize its bank accounts, and go out of business.
2. It could file for bankruptcy. Which means that it would have 120 days to come up with a court-approved plan to pay off its creditors. By which I mean all of its creditors – not merely the $1.8 million Empire State judgment. Because once in bankruptcy, Pacifica would also have to pay approximately $6 million more to other creditors, which it would ordinarily not have to worry about paying. (For example, its $2 million debt to Amy Goodman’s Democracy Now, which Democracy Now wasn’t pressing Pacifica to pay, because Democracy Now doesn’t really need the money, since it has revenues of $10 million per year, plus $20 million in assets, with virtually no liabilities.) If after 120 days Pacifica couldn’t come up with a payment plan of its own, the court would appoint a Committee of Creditors to create one. But either plan -- Pacifica’s or the creditors’ – would require selling some or all of Pacifica’s real estate, or swapping or selling one or more of its stations. It would also require shelling out an additional $750,000-$1 million in procedural costs and legal fees just to be in the bankruptcy process. Not to mention that bankruptcy would be a total crapshoot, the outcome of which -- in this political climate, under this administration (and FCC pressure) -- might prove catastrophic to the network in a multitude of unforeseen ways.
NOTE: It is believed by many (myself included) that some of those who have been trying to push Pacifica into bankruptcy are doing so for personal advantage in pursuit of a private agenda. Their hope is that, once Pacifica enters bankruptcy, they can suspend its bylaws and dismember the network. This would give the owners of a shady corporation named “KPFA Foundation” a chance to scoop up Pacifica’s licenses (worth an estimated $100 million) and place them under their private control. Those owners are two former Pacifica National Board members. One of them is Pacifica’s former Corporate Counsel, Dan Siegel; the other is Pacifica’s former Chair and Executive Director, Margy Wilkinson. They secretly (and illicitly) formed “KPFA Foundation 3 ½ years ago for the express purpose of acquiring Pacifica’s assets and FCC licenses, just in case, you know, by some weird, totally accidental happenstance, it happened to file for bankruptcy. This is not speculation. Siegel admitted (but only after its secret existence had been exposed) that this had indeed been his purpose in forming “KPFA Foundation.” I have written extensively about the “KPFA Foundation,” but you will find a better summary on the website of Pacifica Radio in Exile at Secret "KPFA Foundation" created to steal Pacifica's licenses
3. The last option – the one recommended by national board members – is for Pacifica to simply take out a quick loan to pay off the Empire State judgment, which would prevent it from seizing our bank accounts and putting Pacifica out of business. Then, with Empire State off our back, Pacifica would have at least 3 years of breathing space in which to reorganize, rebuild its audience, and reestablish its financial health. An additional advantage of the loan option over bankruptcy is that (1) Pacifica would not have to pay $750,000-$1 million simply to go through the bankruptcy process. (2) Pacifica – not the court and not the creditors – would be in charge of its own destiny, able to control which assets, if any, might have to be sold to satisfy debts.
National Board members chose option (3) in favor of taking out a loan and against filing for bankruptcy But Crosier and Agarwal had other ideas, and it didn’t seem to matter what the board wanted. They were determined to push Pacifica into bankruptcy, by hook or by crook. First, they tried to prevent board members from investigating even the mere possibility of a loan. They did this by launching a campaign of dirty tricks. In the beginning, they simply dragged their heels when asked to sign the standard permission form (an officer’s signature is required) that allowed board members even to look for a loan. They said they were “too busy.” When the board would no longer accept that, they just outright told the board they wouldn’t sign it.
That was brazen insubordination or, as they call it in polite society, giving the board the finger. In my opinion, that should have got Crosier and Agarwal fired on the spot. But the Pacifica board didn’t have the stomach for confrontation. So instead, it simply passed a motion allowing a board member to sign the loan permission form, in lieu of an officer.
But that didn’t stop Crosier and Agarwal. Their next dirty trick was to slyly leak, then publicly proclaim – falsely -- that they were about to put Pacifica into bankruptcy, even though the board had expressly told them not to file for bankruptcy. So why did Crosier and Agarwal spread that false information? To scare away potential lenders, of course – since no one wants to lend money to an organization about to enter bankruptcy.
But by spreading such false and detrimental information about Pacifica, Crosier and Agarwal had crossed the line from insubordination to what might well be called “treason.” Especially since board members had already told Crosier and Agarwal not to waste precious time, personnel, and money preparing for bankruptcy. Instead, the board said, they should devote those scarce Pacifica resources to completing and submitting Pacifica’s audit. Which was terribly late. And as we know, lateness in submitting previous audits had already cost Pacifica more than $3 million worth of forfeited grants from the CPB (Corporation for Public Broadcasting) – a far larger sum than the $1.8 million owed to Empire State.
But that’s just one reason the board told Crosier and Agarwal to focus on completing the audit. The other reason – a chilling one -- is that the California Attorney General had recently told (actually, warned) Crosier and Agarwal that if they failed to complete the audit by February 2018 (only weeks away), Pacifica might not only forfeit millions of dollars worth of CPB grants – it would also forfeit its all-important 501c3 tax-exempt status.
So why, then, did Crosier and Agarwal pay no attention? Why did they (1) continue to let the audit slide, (2) continue to block Pacifica’s efforts to get a loan, and (3) continue pushing Pacifica towards bankruptcy? Because They Knew They Were Right. As True Believers, they felt justified in disobeying the national board, forfeiting millions of dollars in potential CPB grants, and ignoring a threat from the Attorney General to terminate Pacifica’s precious tax-exempt status.
Of course, Crosier and Agarwal’s attached report doesn’t mention any of that.
What other dirty tricks have Crosier and Agarwal been using to kill Pacifica’s chances of getting a loan to pay off Empire State? They began with secret phone calls to Pacifica’s local station managers and staff, trying to alarm them with stories of how close Pacifica was to disaster (and therefore how close they were to losing their salaried jobs and air time). They said that bankruptcy was Pacifica’s only salvation. If some of them asked, “Why can’t Pacifica just take out a loan?” they just laughed and claimed that Pacifica couldn’t possibly get a loan.
But their claim that Pacifica couldn’t get a loan was not just a falsehood; it was an out and out lie. Because, as Crosier and Agarwal knew, Pacifica board members had already received at least 3 good-faith loan offers, from bona fide lenders, for $2 million or more. And once a loan was secured, Pacifica could pay off Empire State’s $1.8 million judgment in full, including interest and legal costs. And Pacifica was virtually certain of securing such a loan because it would be collateralized by its real estate holdings, which were valued at $10 million.
But not if Crosier and Agarwal had their way. For as you can see from the attached report, they are still determined to push Pacifica into bankruptcy. Which means they are still dragging their heels and doing their best (their worst?) to block the efforts of Pacifica board members to finalize a loan. They are still claiming they are “too busy” to perform due diligence on the loan offers received by Pacifica board members. (Although, to be fair, they did claim that they found one loan to be “unacceptable” because of certain clauses in the 129-page contract. But of course, they never took the next step, which is to send the contract back to the lender, with suggested revisions, which is standard industry procedure for loans like this. Instead, Crosier and Agarwal have chosen to do … nothing. Which means that Pacifica’s loan offers may be sitting under a foot-high pile of papers on someone’s desk, while the lenders presumably sit about waiting for the expected revisions from Pacifica’s national office. Which of course they will not get any time soon, if ever, since the national office is run by Crosier and Agarwal.)
This tactic is called ‘running out the clock.’ Which, in this case, is a game of chicken with Pacifica’s life in the balance, since Empire State could swoop in and seize Pacifica’s bank account at any moment, effectively putting the network off the air and out of business. This is not the kind of open – let alone honorable -- behavior that Pacifica is entitled to expect from its officers. Which brings me to the biggest lie of all in the attached Crosier-Agarwal report.
Once it became obvious, contrary to the claims of Crosier and Agarwal, that Pacifica could indeed get a loan to pay off the Empire State judgment, they switched their tactics. Now they claim that getting a loan is no good because “there is no realistic plan to repay it.”
Huh? That’s like telling someone who is being drenched in a rainstorm that it is not raining. In other words, when a lie is so obviously a lie, you wonder who in the world would even bother to tell it. (Excluding Trump, of course.) The fact is, although Crosier and Agarwal lie in their report, by saying that no repayment plan exists, they know very well that there is a repayment plan, and that it has been publicized often and widely. In fact, if you are on this email list, you have probably seen it at least a dozen times. As have Crosier and Agarwal.
So what is the loan repayment plan that Crosier and Agarwal say doesn’t exist? (I hope you won’t mind me repeating it, if you already know it.) It’s simply to sell a portion of Pacifica’s real estate holdings. Clean, simple, and quite do-able. Especially when you realize that part of that real estate is currently being used for the important task of storing cartons full of old Pacifica phone bills and bookkeeping records! Of course, Crosier and Agarwal would prefer to pay the Empire State judgment by selling some of Pacifica’s radio stations. I wonder if they got the idea from Trump’s plan to sell off our national parks to frackers? The sad fact is that, once a precious FCC license is swapped or sold, it can never be replaced; whereas real estate can always be replaced, once Pacifica has rebuilt its audience and recovered its financial stability.
That’s why board members prefer the (safe) loan scenario over the (risky) bankruptcy scenario. Especially since Pacifica real estate would have to be sold no matter which scenario was adopted – where else would the money come from? The difference is that, under the bankruptcy scenario, Pacifica would also have to pay $750,000- $1 million extra for the bankruptcy process itself -- money that would be totally wasted. After all, why pay $750,000 to $1 million to do something inside bankruptcy that we can do just as well outside of bankruptcy? Not to mention that, under the loan scenario, Pacifica would remain in charge, instead of being at the mercy of a judge and its creditors.
NOTE: When Crosier and Agarwal suggest that we swap or sell Pacifica stations to pay off Empire State, they claim that filing for bankruptcy is what would allow Pacifica to do this. That is not true. Even if they could persuade Pacifica to do something as stupid as selling FCC licenses in order to hold on to real estate, bankruptcy would not help enable that scenario. That claim is just wishful thinking. This is not my opinion (though I agree with it). It is the opinion of the highly credentialed bankruptcy attorney that Pacifica board members hired to advise them. He said that, even if Pacifica wanted to swap or sell one or more of its stations to pay off Empire State, it would not be able to do this in bankruptcy.
The reason is – it would require too much time, at least 6 months and possibly up to 2 years. Why is that a problem? Because 6 months, let alone 2 years, is longer than Empire State wants to wait for its money. It’s also longer than it needs to wait. That’s because (remember?) Empire State won its lawsuit. It has a signed court judgment in hand. Which means it doesn’t have to wait. It is entitled to be made whole as fast as possible. And that means really fast, because, as Empire State can show, Pacifica is in the unusual position (for a bankruptee) of having more assets than liabilities. Moreover, the Empire State judgment is only $1.8 million (plus interest and legal costs) but Pacifica owns real estate worth $10 million. So this is a no-brainer for any bankruptcy judge, since the whole point of bankruptcy court is to make sure that creditors get paid -- not to make life easier for debtors. Therefore, the judge would very quickly order Pacifica to sell its real estate and pay off Empire State.
You may be interested to know that Crosier and Agarwal have also hired a bankruptcy attorney. And – surprise – he agrees with Crosier and Agarwal. But perhaps that is because their bankruptcy attorney has been linked to Dan Siegel, Margy Wilkinson, and the jolly folks who brought us the secret “KPFA Foundation” that was created to scoop up Pacifica’s assets and FCC licenses in the event that it (conveniently) went bankrupt. Hmmmmmm.
Crosier and Agarwal also claim that filing for bankruptcy will enable them to negotiate down the size of the judgment. This too is wishful thinking. To reduce a judgment in bankruptcy court, one needs two things. (1) A good reason (like, the debtor can’t afford to pay the entire judgment) and (2) meaningful leverage to exert on the creditor. But, as noted above, Pacifica is perfectly able to pay the entire judgment in full, because its assets far exceed its liabilities. And since Pacifica is a radio network, not a real estate company, the judge will not feel the slightest twinge of guilt over ordering Pacifica to make Empire State whole by selling its real estate. As for being able to exert meaningful leverage on Empire State, Pacifica will actually lose leverage after it files for bankruptcy.
Which is why Pacifica will do far better by avoiding bankruptcy and getting a loan to pay off Empire State.
And why you will do far better, after reading Crosier and Agarwal’s deceptive and misleading report, to send an email asking them to stop endangering Pacifica and do the job they were hired to do – which is protecting Pacifica’s welfare. You can email Bill Crosier at pnb [at] pacifica.org and Sam Agarwal at sagarwal [at] pacifica.org . You might also copy the Pacifica National Board at pnb [at] pacifica.org to let them know how you feel.
Stephen M. Brown
WBAI Listener-Former WBAI Board and Pacifica Board