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Board Wastes More Money
Posted By admin On October 6, 2008 @ 19:11 In Truth Squad, SCA Board, Community Affairs | 5 Comments
Thanks to the perseverance and tenacity by some of our fellow homeowners (and lately, one particularly persistent individual) the facts of more board shenanigans has come to light for all to see.
In 2006 there was a desire to install industrial quality steel shelving in one of our buildings for storage purposes. The price was estimated at something over $10,000. A quote was obtained from a local vendor:
Total price of shelving $10,552.32
Sales Tax 817.80
Installation Labor 960.00
Total Price $12,330.12
An idea emerged. Over $800 could be saved by not paying the sales tax. Having the Minuteman Foundation (MMF) buy the shelving could do this since they are not taxable. They could in turn sell the shelving back to us tax-free because they are a charitable organization. For their cooperation in this scheme the Minuteman Foundation would be allowed to use some of the shelving space at no charge. Such a deal, everybody wins
The Minuteman Foundation purchased the shelving and had it installed as follows:
Total price of shelving $10,552.32
Sales Tax 0.00
Installation Labor 960.00
Total Price $11,512.32
Apparently the Minuteman Foundation Officers felt they deserved more consideration for their participation in this scheme than simply free use of SCA property. The same people (West and Berman while wearing two different hats for the two different corporations) would charge SCA more than the shelving actually cost to realize a profit for the Minuteman Foundation.
How much did they charge you might ask? On behalf of MMF, Favil West and Bob Berman charged SCA $16,700. That is a huge 45% markup for acting as a middleman - plus those same officers still insist on the free use of the shelves now belonging to SCA.
So, the SCA officers, two of whom were also Officers and Trustees of the Minutemen Foundation, thought this was just fine, and “donated” $16,700 to the Minuteman Foundation! But, imagine this, the SCA Officers (West, Berman, Dwyer and Berg) did not even bother to get the transaction on the agenda and approved by a board vote–as required by the law! Why were they hiding such a large amount? Perhaps they knew that the amount and purpose (donation) and the self-dealing was not legal?
Let us review this action by the board:
1. We could have purchased the shelves for $12,330.12.
2. Instead, the 2006 SCA Officers (with the same individuals serving as President and Vice President of both corporations) decided to pay Minuteman Foundation $16,700 for the shelves.
The 2006 board officers paid almost $4,400 more for the shelves than was necessary and almost $4,400 more than they are worth. That was our dues money they wasted. All the while claiming to be saving the sales tax of over $800. Can you believe that kind of judgment?
Now, consider this case while you evaluate the competence, honesty and integrity of most of our past and present SCA directors. Mull this over when you think about the honesty and integrity of the Minuteman Foundation officers. We each have to act as we see fit, but many will remember this case the next time the Minuteman Foundation leadership comes with its hand out.
It is very difficult to uncover facts in matters like this. There has been an uncooperative attitude by the Board and the Community Manager that has taken our fellow homeowners over a year to finally get to the facts.
But, we also have to wonder how much more money has been wasted or is missing? Some say millions appear to have been lost or wasted. How could those of us who pay the bills find out the truth?
In the meantime, the board majority is refusing to allow all the financial facts of past years to come out. Last year the board raised the dues by $160, and a few months later cut it by $100. Do they really know what they are doing? Imagine the wasted thousands of dollars of just changing the collection procedures and by having to reconcile the 7,000+ accounts!
Months before that, we found out the board had improperly retained over $3.7 million in surplus dues for the past few years–in spite of fact that all bills had been paid, and all reserves had been funded to over 90%. We are talking about truly excessive dues collections! And, then they even raised the 2007 dues above the previously excessive levels. How could that be justified?
The excuses given? They said it is not easy to know exactly how much is needed each year, so it is better to ask for too much than to run short. While it can make sense to have an operating fund of a hundred thousand or two to support the year end carry over supporting an annual budget of $8 Million, but accumulating $3.7 million in surplus to all known needs–outrageous!
Such surpluses are required by law to be credited to the homeowners against future assessments or to pay federal income tax on the retained surplus. But, they refuse to do either one. Instead, they are hoping to not be audited by the IRS while they are struggling to find ways to spend all of that surplus and ignoring the requirement to spend the money wisely. Amazing attitudes. Whose money do they think they are handling? Do they remind you of the members of Congress?
It should be clear that SCA members must demand there be a forensic audit by a truly independent source to find out the whole truth, and to make our membership comfortable with our financial foundation for the future. We want to pay the dues needed to maintain our community property at a high level of excellence, but no more. We want to avoid nasty surprises like we are seeing on the national levels.
5 Comments To "Board Wastes More Money"
#1 Comment By Charles W Davis On October 7, 2008 @ October 7, 2008
Bob,
I have a few comments. In the 3rd paragraph, you state: “…An idea emerged….” The Idea did not just emerge. It was a part of the plans from the day (3/11/2003) that the Minuteman Foundation proposed that Del Webb gift the building to the Association.
Later you write: “…On behalf of MMF, Favil West and Bob Berman charged SCA $16,700. That is a huge 45% markup for acting as a middleman - plus those same officers still insist on the free use of the shelves now belonging to SCA…”
No markup! The Minuteman Foundation never “charged” anything. The total of that check included two amounts; 1). $6,993.36 and 2). $10,000 that were inadvertently written to the Association instead of the intended recipient, the Minuteman Foundation. Amount #1, from Shout. Amount #2 from Pulte/Del Webb. Both amounts were combined and the $16,700 check was issued by the Association to forward the funds to the appropriate recipient. Think about it a moment and you will realize that the Foundation might be due an additional $296.36.
Later you write: “…Perhaps they knew that the amount and purpose (donation) and the self-dealing was not legal?…”
You apparently don’t understand the words that you use: Self-dealing involves a situation where one takes an action in an official capacity which involves dealing with oneself in a private capacity and which confers a benefit on oneself. No benefit accrued to any of the Board Members.
Still later, you write: “…We each have to act as we see fit, but many will remember this case the next time the Minuteman Foundation leadership comes with its hand out….”
The Minuteman Foundation has never come to the Association with its hand out. Just the opposite is true. The Minuteman Foundation raised money to buy Video Cameras, Television Monitors, Computers, and other items for the Association’s Channel 99 TV production facilities.
This year to date, the Minuteman Foundation has contributed $6,589 to the Association’s Community Service Group.
During 2007, the Minuteman Foundation contributed $9,330 to the Association’s Community Service Group.
Likewise in 2006, the amount was $5,810. In 2006, the total Leasehold Improvements to the Community Service Building was $24,533!
In 2005, the Minuteman Foundation contributed $2,640 to the Association’s Community Service Group and an additional $11,367 to support the Association’s Channel 99. There was also $576 contributed to Leasehold Improvements.
In 2004, the Minuteman Foundation contributed $5,612 for the Association’s Community Service Group, and an additional $1,711 for the Association’s Channel 99.
My Excel spreadsheet calculates that the total of the contributions from the Minuteman Foundation to the Association’s buildings and organizations amounts to: $68,168!!!
#2 Comment By bobfrank On October 8, 2008 @ October 8, 2008
Chuck, once again, you made a mistake. I did not write the article.
We have many contributors to AV blog, and they have the option to post under admin or The Voice if they prefer to have readers focus on the content–instead of the person.
If one of those authors of that article elects to write to you directly they can. Otherwise, please concentrate on the issue instead of trying to harass the author.
Meanwhile, we can note that you, once again, missed the point of the posting. The authors were complaining about the SCA Board and CAM–not the Minuteman Foundation.
If readers will look closely, every complaint in the posting was directed at willful misconduct by the involved Directors and CAM members (which could include Favil West, Bob Berman, Kay Dwyer, Lanie Berg, Arnie Snow, Terry DaSilva, Roz Berman and Shirley Cheri). That is the chain of authority and trust involved in the misconduct and the subsequent cover ups.
While your report on the activities of the Minuteman Foundation is welcomed, there is no need to defend MMF. The fault in the history of this bogus transaction is due entirely to SCA Director and CAM misconduct.
Bob Frank
SCA Director
#3 Comment By Charles W Davis On October 8, 2008 @ October 8, 2008
Bob,
Sorry, but I can’t determine the writer when there is no indication on the posting. In this case, the original poster, could learn from my response.
You have never been able to prove “willful misconduct” by any of the current or present board members. Only opinions based on your interpretation of events.
#4 Comment By bobfrank On October 9, 2008 @ October 9, 2008
Chuck Davis, since you always serve as the designated hitter for all of the past board members, particularly Favil West, you really have no room to complain about who is posting for whom.
Concerning “willful misconduct”: In my opinion, the abject failure of Favil West, Bob Berman, Kay Dwyer, Lanie Berg, Arnie Snow and Terry DaSilva to make sure that the $16,700 funds transfer to MMF followed the statutes and SCA governing documents is clear evidence of “willful misconduct”. All of them knew it was a bogus transaction. All of them knew they had to have a public board vote to authorized the funds transfer. And, none of them did anything to prevent the violation (as far as we can find out).
None of them have since provided any information to the contrary to any SCA members or the current Treasurer who have worked on this issue. And, none of them have done anything to claim it was a “simple error”. That is what I call willful misconduct. What do you call it–smart business?
Since you are the Treasurer of MMF you are personally involved by accepting this bogus transaction. Since you now know that the transaction has been proven to have been invalid, will you agree with Sonny Sonnenfeld and other members that you made a mistake in accepting the money and that it should be immediately refunded to SCA? Surely you would not want to retain funds that were improperly “donated”? And, please do not be offended by my asking. I am just doing my job as a director for a different corporation with different goals and objectives.
Bob Frank
SCA Director
#5 Comment By tim_stebbins On October 9, 2008 @ October 9, 2008
To Chuck Davis
The record clearly shows the surplus and unused donations to the SHOUT program were intended for, given to and accepted by the SCA Association. There was no intent to have them go to the Minuteman Foundation.
The proper action is for the Minuteman Foundation to immediately return $6,700 plus interest to the SCA Association.
As to the claim that Pulte/Del Webb owed the Minuteman foundation $10,000 for some unspecified reason but sent the check to the Association by mistake, that is a matter between the Minuteman Foundation and Pute/Del Webb.
The proper action is for the Minuteman Foundation to immediately return $10,000 plus interest to the SCA Association. Our board can then investigate the matter with the aid of RMI. If it is determined SCA received a payment of $10,000 from Pulte/Del Webb prior to October of 2006 that was not due to SCA the board could pass a proper motion to return the $10,000 to Pulte/Del Webb.
The Minuteman Foundation can then pursue any claim for $10,000 directly with Pulte/Del Webb
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