Even though KPFA was not a party in the matter, US Marshals seized $305,000 of KPFA’s cash reserves to pay for a monetary judgment against the Pacifica Foundation, its parent organization. The asset seizure resulted from a defamation lawsuit filed by Pacifica former interim executive director John Vernile in 2019 against programmers of WBAI in New York. Pacifica lawyers filed an appeal on December 8 to block the judgment, and said they will sell foundation assets to recoup KPFA's loss, but KPFA is now facing layoffs and a massive budget shortfall.

According to court filings, the defamation claim arose from Vernile’s decision to lock out WBAI staff and replace locally produced programming in October 2019, three months into his term as interim executive director. WBAI successfully sued to block the move. The Pacifica National Board sided with the station and fired Vernile, saying he acted improperly without the Board’s authorization. He then filed an arbitration demand for wrongful termination. WBAI programmers discussed his actions on air, claiming Vernile had been hired to sell WBAI and was part of a group staging a coup. Other programmers called him a "rat" and a "crook." The arbiter ruled Vernile had exceeded his authority and was not wrongfully terminated, but agreed there was no evidence he was hired to take down WBAI and that he was defamed.

Pacifica's appeal of the judgment asserts that a defamation case has no place in a wrongful termination arbitration process. In the court filing, Pacifica says the WBAI employees made comments on air six weeks after Vernile’s firing, and they should be covered by the First Amendment.

Federal Marshals Seize KPFA Assets to Pay Defamation Judgment Against New York Sister Station | Pacifica Foundation can’t dodge $300,000 defamation award for fired executive