. . . this isn’t a Quinten Massys, 1514 . . .

[When this webpage was first published, 19July2019, the FJC loan interest rate had changed 3 times; since then another 16 times, the latest effective Th27July2023. All are given below.]

[The following note now superseded: .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.

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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; then 8%, effective 14June; 8.25%, 27Sep; 8.5%, 20Dec2018.)

changes in 2023: 10.75%, Th2Feb … 11%, Th23Mar … 11.25%, Th4May … 11.5%, Th27July.

[Note: Pacifica has had to pay a higher rate, a contracted penalty rate of 18% (details below), when it’s missed its quarterly interest payments. The first arose with the 31Dec2022 payment. ED Wells & the directors were mealy-mouthed, evasive, both in late Dec & later, but the public record shows that, in early Jan, FJC lent Pacifica money, allowing that payment to be made. (But never disclosed has been the sum lent, & on what terms, the period of default, & whether the 18% rate was applied, & at what cost – and no director or other delegate, all of a nominal 122, has publicly asked for this important info, & Finance Chair Sagurton also chose to keep all this out of the ‘Chair’s announcements’ item he instituted. No surprises here.) Carrying on sleepwalking, the directors never publicly discussed what to do – not even the outlines – and proceeded to miss the 31Mar & 30June2023 payments. Here, it’s never been disclosed whether the 18% rate was applied from 1Apr, & at what cost. And the augmentation of the principal has only been disclosed once: now “owing $2.7m to FJC” (ED Wells to Tu11July2023 PNB Finance Cttee, 24:34 of the ‘b’-file – https://kpftx.org/archives/pnb/finance/230711/finance230711b.mp3. So, the calculations, mthly & annualised … mthly: @ 18%, charge is ($2.7m x 0.18) ÷ 12 = $40 500; the excess, @ 6.75% (18 − 11.25) it’s $15 187.50 per mth, & @ 6.5% it’s $14 625 … annualised: at 18%, charge is $486k; the excess, @ 6.75% it’s $182 250, & @ 6.5% it’s $175 500 (employee-wise, annually, that’s forsaking ~2¼ full-time equivalents (2.28 & 2.19, respectively), @ $80k per FTE).

[What has to be paid because of the default? For sake of argument, assume cash is available on 30Sep2023 from the sale of the LA property, so re the default, FJC gets (($2.7m x 0.11 x 3) ÷ 12) + ((2.7m x 0.18 x 6) ÷ 12) = $74250 + 243k = $317 250 – and being security for the loan, FJC also gets ⅓ of the valuation it holds, so assume $1.5m (it’s listed for sale at $5m, & LA commercial prices have stagnated), making a total of ~$1.8m, leaving the principal as $1.2m. So if policy is to retire the loan with the sale (although there’s no PNB minute on this, be it from either an open or closed meet), then FJC gets ~$3.0m of the gross proceeds – which, being known as a fire sale, may be driven down to ~$4.5m.]

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.

https://mega.nz/file/AI0iUYga#QzMtaBd0iRTZJ_YNmh2KZ1xKu7Qh_hQ6IcPMVkGWX94

Pacifica’s immediate future is structured more by this contract than anything else.

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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.

https://mega.nz/file/ZZ8gFSJD#VnNgdE2R4ap3_e0hMI2ma4RVssZSGek7tLWMle10zRM

And F. Y. Eye’s VP Strategy & Operations? Allison Silverman. Lorin’s daughter.

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FJC SELLS “POTENTIALLY IMPAIRED” LOANS TO THE MARTY & DOROTHY SILVERMAN FOUNDATION

[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:

Has FJC sold the $3.265m loan? Is the owner the Marty & Dorothy Silverman Foundation – or have they in turn sold it on?