. . . this isn’t a Quinten Massys, 1514 . . .
[updated with 13 interest rate changes, the latest effective Th2Feb2023]
[The following note now superseded: . . . with another – another biggie – to come next month: “[t]he Federal Reserve raised interest rates by 75 basis points – the biggest increase since 1994 – and Chair Jerome Powell said officials could move by that much again next month or make a smaller half-point increase to get inflation under control” (Bloomberg News) – no, the Master of the Universe effectively said something quite different: as things stand, there will be a rise at next month’s meeting, & “most likely” it will be either ½ percentage point or ¾ (0:29) – https://www.bloomberg.com/news/videos/2022-06-15/fed-raises-rates-and-signals-another-hike-is-coming-video. That meeting is Tu26-W27July (usually, announcements come at the end of the second day) – https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm (Federal Open Market Cttee).]
The Pacifica advocates of the loan from the Foundation for the Jewish Community, FJC, have presented it as a good Samaritan, doing it out of the kindness of its heart. In fact, FJC is in a competitive market as a manager of donor-advised funds, a sector of the charity industry. One of its money-making operations is running a fund that lends at prime-plus, the Agency Loan Fund, ALF. Donors to FJC can lodge money with ALF, as can outsiders, all hungry for those extra percentage points of interest earnt.
FJC had been having problems finding borrowers for these prime-plus loans: only 46% of ALF had been converted into loans at 31Mar2018, the very time of the 2Apr Pacifica loan (FJC’s latest auditor’s report, year-end 31Mar2018, page 20; page 22 of the PDF). So, of course, Pacifica, made to use its three buildings as collateral to satisfy the 3:1 assets-to-principal ratio, assets here being “the appraised value of the mortgaged properties under the Deeds of Trust” (Section 1.1(7), p. 2 of the loan agreement – link below), was welcomed with open arms. Sentiment this was not. http://fjc.org/uploads/user-uploads/image/FJC%203-31-18%20FINAL.pdf
The greatest aid to Pacifica transparency, on this or any matter, has not come from the National Board, the PNB. No, this came with the documents leaked W26June2019 on a Facebook group, then co-moderated & -administered by Grace Aaron. She was then, as now, Chair of the Pacifica Foundation. Most of the documents concern the loan from FJC. https://www.facebook.com/groups/PacificaRadiowaves/permalink/1264765520345396/
There are 18 unique documents (one is a copy):
https://www.mediafire.com/folder/e1lo0t30pd4wc/ (the original drop)
https://mega.nz/folder/EdtSkCDZ#oJZi7rkbk2KcI6DtzIudXw (convenient one-click download of the folder; also ‘preview’ allows reading online)
The ‘root’ contract, called the “loan agreement”, 2Apr2018, signed by Pacifica Interim Executive Director Tom Livingston & FJC President Lorin Silverman: https://mega.nz/file/AI0iUYga#QzMtaBd0iRTZJ_YNmh2KZ1xKu7Qh_hQ6IcPMVkGWX94
There’s also an advertising (underwriting) contract as part of the loan, signed 23Mar2018 by IED Livingston; please see below.
The $3.7m loan was reduced to a $3.265m loan when Pacifica was unable to collateralise the KPFK transmitter site lease, at Mount Wilson. This was because it’s federal land administered by the Dept. of Agriculture Forest Service, & they wouldn’t give the necessary permissions. (The documentary evidence is contrary to the story being told in 2018 by Grace Aaron et al. that the attempt was to collateralise the transmitter, not the site lease – please see the loan agreement, Sec. 2.1(d); p. 5.)
What did the PNB commit the members to when it accepted FJC’s offer of the money?
- the signed loan agreement is dated 2Apr2018, & it has a three-year term;
- significantly, Pacifica directors agreed to a contract that details only two ways to pay the principal by 2Apr2021: selling as many broadcasting licences & station buildings as it takes: “a swap or sale of one or more radio licenses or a sale of other Pacifica owned assets” (Recital B; p. 1);
- annual interest at three percentage points above US prime rate (Section 2.2; p. 5). (So, 7.75% when the loan started; 8%, effective 14June; 8.25%, 27Sep; 8.5%, 20Dec2018. [UPDATE: 8.25%, effective Th1Aug2019; 8%, Th19Sep; 7.75%, Th31Oct; 7.25%, W4Mar2020; 6.25%, M16Mar; 6.5%, Th17Mar2022; 7%, Th5May; 7.75%, Th16June; 8.5% (then equal highest), Th28July; 9.25%, Th22Sep; 10%, Th3Nov; 10.5%, Th15Dec; 10.75% (now the highest), Th2Feb2023.] Keeping things in proportion, ¼% change (on $3.265m) is $8 162.50 a year. The three-year interest charge, with the coming recession dragging down the rate, will be less than $800k. https://www.jpmorganchase.com/corporate/About-JPMC/historical-prime-rate.htm);
- the default rate, such as after a late payment – not least the paying of the principal on time (Sec. 8.1; p. 13) – is the lower of either 18% a year or the maximum under law (Sec. 1.1(10); p. 2);
- Pacifica directors, with no public discussion, agreed to carry advertising, & on 23Mar2018 signed a contract with an advertising broker, F. Y. Eye, Inc.; FJC chose to make Pacifica do this “in lieu” of its “origination fee” (Sec. 3.1(2); pp. 6-7), & you may wonder why – details below; &
- FJC never waits for a loan to default: it sells the loan on when it’s only “potentially impaired”, to the Marty & Dorothy Silverman Foundation; details below.
Link to the loan agreement again:
Pacifica’s immediate future is structured more by this contract than anything else.
PACIFICA’S $37 000 ADVERTISING CONTRACT with A FJC ‘DAUGHTER’ CORPORATION
As part of the FJC contract, on 23Mar2018 IED Tom Livingston signed an underwriting contract on behalf of Pacifica, for it to carry advertising. This hasn’t been acknowledged publicly by any Pacifica body, not least the PNB. The details now follow.
Appended to the loan agreement, signed by Pacifica & FJC, is an unsigned underwriting contract (pp. 25-7). It is “substantially in the form” that Pacifica has agreed to sign with the NYC advertising broker, F.Y. Eye, Inc. (Sec. 3.1(2); pp. 6-7 & 25-7) – a corporation founded by its president, Lorin Silverman . . . yes, the President & Treasurer of FJC, and President & Treasurer of the Marty & Dorothy Silverman Foundation (of which, more anon). And, yes, it was Lorin’s signature that lent the money to Pacifica.
The language here is odd because IED Tom Livingston actually signed an advertising contract a week earlier, on 23Mar2018. The contract is with F. Y. Eye, Inc., & it’s dated 2Apr2018 (linked below). Signing for the latter was its President, Lorin Silverman (yes, a busy guy). Pacifica has publicly issued no document demonstrating that Livingston had been authorised by the PNB to do this. Likewise, there is no public Pacifica document showing that the PNB had agreed to advertising via the FJC loan. Such is the life of a secret society – moreover, one funded directly by the members, members who were never consulted on this matter. Moreover, members who have never shown any evidence, at any time in Pacifica’s 73-year history, of being enamoured to advertising on the Pacifica airwaves. Such is the anti-democratic disposition of the PNB majority. Shameless authoritarians. Eat yer heart out, Lew.
And F. Y. Eye’s VP Strategy & Operations? Allison Silverman. Lorin’s daughter.
FJC SELLS “POTENTIALLY IMPAIRED” LOANS TO THE MARTY & DOROTHY SILVERMAN FOUNDATION
FJC doesn’t let a borrower default: they sell the loan, without suffering a discount, to the Marty & Dorothy Silverman Foundation. FJC’s auditor refers to these loans as “potentially impaired” (emphasis added). This FJC policy is disclosed in any of their auditor’s reports & IRS Form 990’s – the latest: in the auditor’s report, sections ‘Loans Receivable’, ‘Delinquent and Impaired Loans’, & ‘Non-accrual Loans’, pp. 10-11, being pp. 12-13 of the PDF, http://fjc.org/uploads/user-uploads/image/FJC%203-31-18%20FINAL.pdf; & Schedule O of the Form 990, p. 90 of the PDF, http://fjc.org/uploads/user-uploads/image/file/990%20FY17%20-%20For%20Distribution.pdf).
[UPDATE: those two links are dead, but the docs are at MEGA LINK. At 30Sep2022, the FJC site carries the info in their FY2021 auditor’s report (the same three sections, pp. 12-13), https://fjc.org/wp-content/uploads/2021/12/Audited-Financial-statements-FY-2021.pdf; & 2020 IRS Form 990 (here please see Schedule L, p. 2, being p. 105 of the PDF), https://fjc.org/wp-content/uploads/2022/05/2020-990-FYE-3.31.2021-External.pdf.
[The passage, in full, in the 990: “Lorin Silverman is a director, president and treasurer of the Marty and Dorothy Silverman Foundation which has pledged to FJC a security interest in securities to be used as collateral for the repayment of principal amounts in the event of default of any of FJC’s Agency Loan Fund receivables. This agreement remains in effect until October 1, 2022 and is renewable by mutual consent. As of March 31, 2021, the fair value of the collateral held as security under the pledge agreement was $20,003,840″ (originally in all-caps, emphases added).
[Note, there are two inconsistencies here. The first is between the 990 & the auditor’s report: the 990 speaks of “in the event of default”, whereas the stated policy in the much more used auditor’s report is much more conservative, encompassing the “potentially impaired”. This policy is found in four places: “[s]ince its inception, any loans that were determined by FJC to be potentially impaired were purchased in full by a private foundation” (‘Loans Receivable’, p. 12); “securities in a pledged collateral account […] hypothecated to FJC in the event of default of any loan receivable” (passim – posh for same passage); “[i]n the event that FJC determines a loan to be potentially impaired, FJC will notify the private foundation that pledged securities to satisfy the loan that FJC intends to exercise its rights under the hypothecation agreement” (‘Delinquent and Impaired Loans’, same page); & “FJC considers a non-accrual loan as a nonperforming loan that is not generating its stated interest rate due to nonpayment from the borrower. Since FJC retains the ability to call the collateral on the loan or exercise its right under the hypothecation agreement with the private foundation, FJC expects [x, y, z]” (‘Non-Accrual Loans’, p. 13). So the second inconsistency is within the auditor’s report: rather than always selling the loan to “the private foundation” we now get the option of ‘calling the collateral’, an action that’s only mentioned once. Praps the prob is only apparent in that one can take the talk of “FJC retains the ability to call the collateral on the loan” as being an expression of their legal right, something beyond their current policy, which by focusing on the early stage of difficulty, merely being judged potentially impaired, nips everything in the bud before things may slip thru, into default & the disaster of a bad press arising from court action against a sanctuary for sick animals, or worse. (Although, obviously, such a loan would instead be sold to the Marty and Dorothy Silverman Foundation, for them to sort out.)]
Full details of this FJC arrangement are here: