Breaking the law to comply with the law – and PNB Chair Alex Steinberg chooses not to apologise for the sorry tale of the FY2020 audit … the pressure of a threatened CA Attorney General investigation: 30June was never about the CPB

[Here just the headline & some cursory details. Will be finished Su4July – better still, do it once 10 comments are made.]

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At the W30June PNB Coordinating Cttee, PNB Chair Alex Steinberg sheepishly disclosed that earlier in the day the FY2020 auditor’s report had been sent to the California Attorney General.

The audio of the meeting has yet to be posted at https://kpftx.org/archive.php, but for the livestream, dutiful PacificaWatch minions in all signal areas were transfixed by their crystal sets, hanging on every word. The meeting’s job was to agree the draft agenda for the next PNB meet, Th8July, & it was unusually short, lasting ~14mins after roll-call. The electric moment came when Cttee Chair Chris Corey was already in conversation with PNB Chair Alex, & at 2:08 after roll-call he slipped it in, asking if the auditor’s report had got to Sacramento.

[UPDATE: no audiofile available as of Su4July – just like the FY2020 auditor’s report, both may be posted after by-laws referenda voting closes on W7July.] [. . . audiofile posted a few hours before the referenda polls closed, W7July. It was a bonus drop: TechGuy forgot to cut the stream, so the discussion for the Th8July closed session is included. Oh. (Audiofile has been copied, & will be posted before that PNB meeting. Meanwhile it’s still public: https://kpftx.org/archives/pnb/coordinating/210630/coordinating210630a.mp3 (31:57 total).)]

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. . . elaboration, incl.:

Charity corp audit cttee duties: “[t]he audit committee shall confer with the auditor to satisfy its members that the financial affairs of the corporation are in order, shall review and determine whether to accept the audit” (emphases added), § 12586(e)(2): the cttee has to do this: it’s mandatory work, it can’t be delegated to the board of directors, or to a group of directors, or to an individual director – even to the Chair of the board. Given that the PNB Audit Cttee hasn’t met since M26Apr2021, & so failed to “confer with the auditor”, failed to “review […] the audit”, & failed to “determine whether to accept the audit”, will the AG decide that the financial statements have been improperly submitted, rejecting them, & take the appropriate action under the law because Pacifica failed to discharge its legal duties? https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=GOV&sectionNum=12586 . . .

Charity corp duty to the public & to the CA AG: “[t]he audited financial statements shall be available for inspection by the Attorney General and by members of the public no later than nine months after the close of the fiscal year to which the statements relate. A charity shall make its annual audited financial statements available to the public in the same manner that is prescribed for IRS Form 990 by the latest revision of Section 6104(d) of the Internal Revenue Code and associated regulations.” (emphases added), § 12586(e)(1); for the cited section (especially (d)-1(a) and (d)-2), see https://www.law.cornell.edu/cfr/text/26/301.6104(d)-1, & click on ‘next’ for (d)-2. (Contra the PNB talk, the law isn’t all about the AG: it’s also about the plebs, the great unwashed, including the Pacifican cash cows, & the 77% of members who abstained in the Mar2020 proposed new constitution referenda.) The FY2020 auditor’s report hasn’t been published by Pacifica in the place where it’ll end up, linked from https://pacifica.org/finance_reports.php. . . .

It’s because of this stickly law thing that there’s this somewhat worrying 22Dec2020 two-page letter from Xavier Becerra, the California Attorney General, never mentioned in any recorded Pacifica meeting – guess the topic is a clue: “RE: DELINQUENCY NOTICE AND WARNING OF ASSESSMENT OF PENALTIES AND LATE FEES, AND SUSPENSION OR REVOCATION OF REGISTERED STATUS” (original emphases, p. 1). Oh. No: double oh.

CT-451 1st Delinquency Notice, at bottom of ‘Filings & Correspondence’, via https://rct.doj.ca.gov/Verification/Web/Search.aspx?facility=Y (search with ‘Pacifica Foundation’) . . .

Xavier’s moved on to higher things, replacing Alex ‘I’ll do whatever it takes to keep my job, even stamp on Nancy Messonnier’ Azar as US Secretary of Health and Human Services. Nancy’s ignored warning, 25Feb2020, when Trump was visiting Modi in Delhi, downplaying it all: “disruption to everyday life may be severe […] I had a conversation with my family over breakfast this morning and I told my children that while I didn’t think that they were at risk right now, we as a family need to be preparing for significant disruption of our lives” (7:56), said with noticeable urgency – not panic – at her CDC media teleconference, at a time when the CDC were reporting that there were a mere 14 confirmed COVID-19 cases in the US (12 had recently arrived in the US, & 2 had known contact with an infected person). What fuelled Messonnier’s arousal was presumably what was made public the next day by the CDC: the first apparent case of asymptomatic transmission within the US, in California – https://www.cdc.gov/media/releases/2020/s0226-Covid-19-spread.html). The 25Feb2020 transcript (with embedded audiofile), https://www.cdc.gov/media/releases/2020/t0225-cdc-telebriefing-covid-19.html; & audio, https://www.cdc.gov/media/releases/2020/t0225-cdc-telebriefing-covid-19-update.mp3 (it’s also embedded (as a courtesy – or to increase exposure?) in the webpage announcing the upcoming teleconference, https://www.cdc.gov/media/releases/2020/a0225-cdc-telebriefing-covid-19.html). At the time, Nancy was the CDC’s Director of the National Center for Immunization and Respiratory Diseases. (Her bro is Rod Rosenstein – yes, who appointed Mueller as Trump-Russia investigator.)

And with Xavier’s letter we have the point. The ‘Pacifica 30June hullabaloo’ doesn’t revolve around some CPB deadline: it must have been this CA AG letter, following up on his 22June & 18Aug letters, & no doubt others, that made it plain to the PNB that the Office of the AG would no longer play softball: it had become apparent to all that if Pacifica remained delinquent, or lapsed again, then the AG would open an investigation into Pacifica. This reality has been consistently concealed from the members, the staff, the listeners, the creditors.

Xavier put the effect of losing charitable status this way: “[a] delinquent organization may not engage in any activity for which registration is required, including solicitation or disbursing of charitable assets.” (original emphases, p. 2). “[D]isbursing of charitable assets” means, for example, passing on cash held by Pacifica Foundation, Inc. to an outsider, so to a creditor, be it an employee or NETA or FJC. All assets acquired when the organisation was a charity are frozen: their ownership can’t be changed. Triple oh.

Also, the AG will have to give the California Franchise Tax Board a call, threatening Pacifica’s tax-exempt status (p. 1).

Lastly, Xavier, as his personal Xmas prezzy, reminded the directors that the state will come after their nest eggs: “[c]haritable assets cannot be used to pay these avoidable costs. Accordingly, directors, trustees, officers and return preparers responsible for failure to timely file the above-described report(s) are personally liable for payment of all penalties, interest and other costs incurred to restore exempt status” (original emphases, p. 2). Quadruple oh. (To this one can add the personal liability arising if Pacifica was broken up with its restricted endowment funds still being in deficit: at 30Sep2019, the unaudited deficit per the FY2019 auditor’s report was $579 207 (p. 19; p. 21 of the PDF – https://pacifica.org/finance/audit_2019.pdf). Even shared by 30 directors, that’s ~$20k each. Worryingly, Pacifica has never published a time-scheduled plan as to how this not insignificant deficit is to be eliminated – this increases the probability that elimination will be occurring elsewhere.) . . .

Chair Alex used odd language in his reply to Chair Chris, referring not to the auditor’s report but to “they’ve” – so presumably these three docs:

(a) FY2020 auditor’s report (as they include financial statements; due no later than 9mths after year-end, so 30June – the above § 12586(e)(1) … the law gives no discretion to the AG, or anyone else, to grant an extension: “Nonprofit Integrity Act of 2004 FAQ[.] 8. Does the extension for filing IRS Form 990 also apply to the completion date for the audit? No. The statute does not provide for an extension of time.” – https://oag.ca.gov/charities/laws#integrityact. After all, this is the age of consumer protection, where peeps can expect their charity spending to bring smiles to faces – even to others. Protecting the public not just from those who use a charity to perpetrate fraud, but also from the well-intentioned who happen to be so hapless that they can’t even keep their accounts in order, letting the public know where their money’s going, whether the charity is on its last legs, a transparency that may help to hold decision-makers to account, perhaps the most important one. The state, eh?, always interfering, sticking its nose everywhere);

(b) the 2019 IRS annual informational return (IRS Form 990; using the FY2020 data; “[f]ile Form 990 by the 15th day of the 5th month after the organization’s accounting period ends” (p. 6), so 15Feb – https://www.irs.gov/pub/irs-pdf/i990.pdf); &

(c) the annual renewal of Pacifica’s charity registration (RRF-1, that’s Registration Renewal Fee; using the FY2020 data; due “no later than four months and fifteen days after the end of the organization’s accounting period” (the form itself, p. 1), so 15Feb; “[t]he purpose of the Annual Registration Renewal Fee Report (Form RRF-1) is to assist the Attorney General’s Office with early detection of charity fiscal mismanagement and unlawful diversion of charitable assets” (p. 3) – https://oag.ca.gov/sites/all/files/agweb/pdfs/charities/charitable/rrf1_form.pdf. Speaking of which, effective 1Feb2020, the form has a new topic (as question #9), highlighting duties required by California Government Code Section 12599.8, effective way back on 1Jan2013, falling upon financially distressed charities, those like Pacifica with year-end negative net assets without donor restrictions (Politese for net liabilities of that kind) but custodians of restricted net assets (these are disclosed, starting with the 2019 Form 990, on lines 27 & 28 of the balance sheet section, Part X – previously, there were separate lines for temporarily & permanently restricted net assets). Pacifica first had to answer this question in its 17Aug2020 filing, using FY2019 data, rejected because the audit hadn’t been done. Oddly, not in the Registry’s depository are two docs: a re-submitted complete RRF-1, & a re-submitted complete 2018 Form 990 (using FY2019 data; “[o]ur office received the DRAFT copy of the IRS 990. We can not accept DRAFT copies of the form” (original emphases & capitalisations) – the 22Dec2020 missive from Xavier, repeating what he had said in his 18Aug2020 rejection letter (also in the depository). Unfortunately, Pacifica is still only posting the rejected form, signed 11Aug2020 – https://pacifica.org/finance_reports.php).

§ 12599.8: “For any year that the balance sheet of a charitable organization shows that it holds restricted net assets, while reporting negative unrestricted net assets, the organization shall provide an explanation of its compliance with its charitable trust responsibilities and proof of directors’ and officers’ liability insurance coverage to the Attorney General’s Registry of Charitable Trusts.” – https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=GOV&sectionNum=12599.8

. . . speaking of which: “Report Out from PNB Closed Session of April 15, 2021. The PNB met in closed session to approve the D&O insurance for Pacifica” – https://pacifica.org/documents/pnb_exec_210415.pdf (dated 22June2021 – not within 10 days of the meeting, so a violation of CPB’s interpretation of federal law, of the Comms Act of 1934: “[t]he Act requires stations to document and make available to the public the specific reason(s) for closing a meeting within a reasonable time after the meeting. CPB also requires that the written statement be made available for inspection, either at the CSG recipient’s central office or posted on its station website, within 10 days after each closed meeting” – https://www.cpb.org/stations/certification/closed-meetings)

(Chair Chris didn’t seem to notice Chair Alex’s use of the plural.) . . .

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PacificaWorld is governed not by the rule of law but by the rule of decision: PacificaWorld is a Reich of Carl Schmitt. The ruling PNB clique makes the decisions, unbounded by the by-laws, & in practice even unrestrained by either state or federal law – until now, that is.

That’s why the breakers will start a write-in campaign to Sacramento, to the California Attorney General.

The rebellion – not the civil war – continues, on a new front.

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