Federal marshals seize KPFA assets to pay defamation judgment against its New York sister station

This week US Marshals seized more than $300,000 of KPFA’s cash reserves to pay for a monetary judgment for its parent organization the Pacifica Foundation. The asset seizure resulted from a defamation lawsuit by a former interim executive director of Pacifica, John Vernile in 2019 against programmers of its New York station, WBAI. Pacifica lawyers filed an appeal today to block the judgment. But KPFA is now facing layoffs and a massive budget shortfall. KPFA’s Corinne Smith has more. 

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In September a federal judge confirmed an arbiter’s decision that former Pacifica executive director John Vernile was defamed by New York programmers with WBAI in 2019, who accused him of being hired to sell the station and its signal. The arbiter awarded Vernile $305,000 in damages for defamation. Vernile also claimed wrongful termination after he was fired by the Pacifica Board of Directors over the financial handling of the WBAI station, but the arbiter agreed with Pacifica that that was not the case.

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This week U.S. Marshals seized $305,000 of KPFA’s assets to pay for the arbitration award, leaving the Berkeley station in a major budget shortfall and beginning the process of layoffs. 

The Pacifica Foundation executive director Stephanie Wells declined to comment on the legal case saying it was still ongoing, but says the impacts are painful for the network. 

“Any time that funds are garnished or levied, or there’s a lien placed on any of our properties or our accounts its extremely nerve wracking,” Wells said. “And when it’s detrimental to our employees, it’s very painful.”

Wells says KPFA assets were seized because they were what’s available in Pacifica’s bank accounts, even though KPFA was not involved in the court case or dispute.

“There’s no rhyme or reason to my knowledge as to when an agency is levying funds,” she said. “They don’t pick and choose where they’re going to take it. They have access to all of the checking accounts or all of the accounts that are available, and then pull from those. For example, earlier in the year the IRS levied some funds for some past due tax penalties that Pacifica had from I believe 2016 or 2017. So they pulled assets from the national office, WPFW and KPFT.”

Wells says no other funds were seized from any other of the four Pacifica stations for this judgment, and she declined to comment on the WBAI programmers involved in the defamation case. Wells says Pacifica is struggling to pay its bills, and says the Board is taking stock of the network’s assets, including the signals for WBAI and KPFK, and potentially selling the Los Angeles station property.

“So we have had valuation reports on the WBAI signal and the KPFK signal, just in case there’s any discussion or need for a signal swap. That’s the last thing that anyone wants to do, but the board wanted me to get valuation reports on that. And then a motion was passed also to get values on the KPFK building for a potential sale,” she said.

Wells says if the KPFK station is sold, the $300,000 would be returned to KPFA.

“It would be replaced. Yes, funds would definitely be replaced,” she said. “Whether that’s from a sale of an asset that we have. Right now we’re looking at selling the KPFK building. I met with two commercial brokers, and have their valuation reports on that, and I’ll be presenting to the board this evening, and then the board will make a determination as to whether we are definitely going through with that process or not. But the number one priority is that those funds will be replaced.”

According to court filings, the defamation came from Vernile’s decision to replace locally produced WBAI programming in October 2019, three months into his term as interim executive director. He cited major financial and compliance issues with WBAI, including loan payments coming due, a non-compliant payroll and gifts system, and FCC violations. 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 filed an arbitration demand for wrongful termination. WBAI programmers, including the Program Director, 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,” according to court documents. 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 he was defamed by the false statements. Pacifica filed a motion to vacate the arbitration award filed a motion to vacate the arbitration award, but a judge denied it. 

Pacifica’s attorney Arthur Schwartz filed an appeal on Thursday with the Ninth Circuit Court of Appeals challenging the monetary judgment. The appeal argues the arbiter found good cause for Vernile’s firing, and 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.

In the meantime, KPFA staff are feeling the pain of Pacifica’s financial crisis and the asset seizure. On Monday,  KPFA management announced 10 positions would be laid off totalling 150 hours effective December 30, including producers and engineers. However those cuts must be negotiated with its union, CWA Local 9415.


Corinne Smith is a reporter and producer with KPFA News. You can reach her at [email protected]