February 27, 2009 by Norman McCullough.

I would invite any concerned member of this community to access the community website (SCA-HOA), and then pull up the approved minutes of The Board of Directors Meeting of April 26, 2007, ITEM XL - UNFINISHED BUSINESS. Under item “C” a resolution (R05-042607), was adopted unanimously by the board to approve the agreement of the reserve deficiency settlement of the Villas with the Declarant.

One might ask (and I have), “What’s wrong with that?” Well for starters The agreement on April 26, 2007, was not a legal document. In FACT, it was not even signed by Favil West and Kay Dwyer until the NEXT DAY (on April 27, 2007)!

The reserve deficiency mentioned by Del Webb came from the board adopted 2006 reserve study. That reserve study was commissioned and paid for by Del Webb, but apparently Del Webb did not like the results and baulked at paying up on the projected neighborhood reserves.

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February 26, 2009 by Mark Cook.

Bob Frank was hospitalized at Nellis AFB Hospital with severe abdominal pain on Monday. Tests have determined he has a fast acting infection that is responding to antibiotics and has not spread. He is expected to be released on Thursday or Friday. Bob and Kay thank the community for their concern and appreciate the quick response of the Air Force medical team at Nellis.

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February 22, 2009 by THE VOICE.

Recent postings suggesting that past boards and some standing committees have suffered from groupthink syndrome have stimulated a broader discussion on the behavior, and how it relates to the way the board and finance committee have ganged up on Bob Frank to try to suppress his efforts to clean up some key financial and contracting problems.

We must admit to being a bit surprised that many of our residents seem to be unfamiliar with the concepts and consequences of “groupthink” behavior.  Many of us were trained as managers to be aware of the natural human tendencies to be vulnerable to groupthink, and to be prepared as leaders on how to circumvent it to achieve superior results from our groups.

What is “groupthink”?  “A mode of thinking that people engage in when they are deeply involved in a cohesive in-group, when the members’ strivings for unanimity override their motivation to realistically appraise alternative courses of action.^[3]”

With this in mind, it is easier for some individuals to understand why we must insist on pressing for corrections to certain financial errors and related misconduct.

Even though Bob Frank is called the rogue or maverick board member by some groupthink leaders, it can not be allowed to deter the work.  Such terms are not really negative slurs.  You need to be aware of what is going on to be confident that the majority of our SCA members will eventually recognize the truth and demand appropriate actions be undertaken.

Symptoms of groupthink

Posted in 2009 Campaign, Truth Squad, SCA Board, Community Affairs | Print | 1 Comment »

February 19, 2009 by bobfrank.

During the January 2009 Board Meeting the board members were discussing the motion to renew Mr. Gary Lein as association auditor and there were discussions about my previous calling for independent audits of certain financial matters.  Mr. Lein’s then invited board members to notify him directly if we had any particular concerns he should include in his 2009 audit plans.

With this in mind, I have submitted the following 11 items to Mr. Lein for his 2009 plans.  A letter describing the following items in more detail is here:  Letter to SCA Auditor Gary Lein

1.    2008 Reserve Fund “Look Back Study” needs to be audited to allow members to have high confidence in the revised reserves calculations.  These numbers are used to drive the levels of future assessments. The modified reserve study document is also used to justify the collection of hundreds of thousands of dollars for reserves payments that have remained due from the developer since 2005.  It has to be legally and financially accurate to be used as a collection document from a giant corporation like DW/Pulte.

2.    Unresolved Back Income Tax Questions need to be clearly answered.  For a number of years SCA reported it did not owe any income tax, but the rules for our corporation show that SCA should have paid taxes on surplus revenues.  Retired IRS managers in our community have said that over 3 million dollars of surplus assessments, and another million of other income were taxable.  Taxes could have been avoided on the millions of surplus dues/assessments if  they had been refunded or credited to member accounts.  The other surplus revenues/profits were clearly taxable.  And, since the surplus revenues were retained/rolled over for years without declaring any income tax due, more than a million dollars of back taxes are likely owed.  Since Mr. Lein was our tax preparer, as well as auditor, I have asked him to audit the returns and explain how we can avoid paying back taxes and heavy penalties in the event of an IRS audit in 2009.

3.    Valley Crest Hardscape Replenishment Contract.  This audit request is to review the apparently deficient contracting procedures used on RMI’s award of a $71,706 contract for 969 tons of landscape rocks to Valley Crest.  There were no written specifications and no written requests for bid.  Also, there are unresolved questions about such issues as whether the contract competition was conducted fairly, if SCA needed to pay more than $28,000 for the hardscape work, and if the contractor has actually delivered all that it was paid for.

4.    Sole-source Contract to Lutron Lighting Co. for $87,962 for minor upgrades to Anthem Center lighting systems.  This contract needs to be audited because there are many unanswered questions about the sole-source rationale, the casual contracting procedures, and the unusually high costs of such a limited project.

5.    Insufficient Details to Back Up RMI Check Requests.  This issue was a concern in the past, and has been reported as corrected.  I have asked for an audit to confirm that corrective actions have been implemented and will be sustained.

6.    Cleo Design Program Contracts.   About $600,000 was spent on Anthem Center and Independence Center facilities upgrade projects this year, and most of the orders for the work were apparently accomplished without using competitive contracting methods.  This huge project needs an audit in 2009 to confirm that the community funds were properly expended.

7.    Restaurant & Kitchen Refurbishment for over $150,000 in 2008 to prepare for the New Year’s Eve party.  An audit is needed to verify the project financials and the contracting procedures.

8.    Iron Fence Painting for about $250,000 in 2008.  Board-developed and approved specifications for this project were apparently disregarded, but the vendor was paid in full.  An audit is needed to review if the contracting and financials were handled properly by RMI.

9.    $16,700 SCA Check Donation to Minuteman Foundation in 2006.  There are unresolved questions on the legality of this large check issued between the two corporations while Favil West served as presidents of both boards.  The transaction needs to be audited to chart the best path to resolve and reconcile the matter.

10. $300,000 payment from DW/Pulte to SCA for construction defects in Rec Ctr 2. This transaction needs to be audited because the payment was claimed to be for health and safety defects, and it is not clear that all items were fully repaired or resolved.

11. Uncollected $1.375 Million funds Owed by DW/Pulte in 2005.  These are the “Co-Generation Plant” funds owed by the developer and uncollected since May of 2005.  The board acted in 2008 to allow DW/Pulte to apply most of those funds to “greening” Rec. Ctr. 3, and it is not clear the board acted properly or legally in doing so. Instead of greening the new center, it appears the board should have had Rec Ctr 3 built as originally proposed by Pulte.  And, the board should have required DW/Pulte to pay the $1.75 million in full, and credited an equivalent amount from available surplus assessment funds to the homeowners.

The community will be advised of the actions taken by Mr. Lein on the above items.

Bob Frank
SCA Director

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February 13, 2009 by bobfrank.

Since the political hit piece on me by the Finance Committee Chairman and Board President was distributed this month in the Spirit mailing without allowing me to respond to my attackers, I have been asked, is it possible that SCA has been defrauded? My answer is that one should trust, but verify, verify and verify again.

That is one of the reasons why I continue to push for a few SCA forensic audits to clear up some unanswered questions involving millions of dollars of uncollected funds owned by Del Webb/Pulte. In the meantime, a director is required by law to keep their eyes open for signals such as the ones described in the below article.

Bob Frank
SCA Director
————–
Written by Sam E. Antar (former Crazy Eddie CFO and convicted felon)

The Art of Spinning: How to Identify Possible White Collar Criminals or at Least Unethical and Deceitful People Who You Should Avoid

“White collar crime is a crime of persuasion and deceit. Since the white collar criminal uses persuasion and deceit to commit their crimes, it follows that such felons are artful liars.People often ask me what characteristics I look for in other people that alert me to possible criminal activity or at least unethical and deceitful people.

Not all questionable conduct is illegal. A person can be unethical or deceitful (however they are defined) without committing any illegal acts as defined under the law.

However, most criminals use tools like spinning (see below) in the conduct of their crimes.

The Art of Spinning:

• Sell people hope. My cousin ‘Crazy Eddie’ Antar taught me that “people live on hope” and their hopes and dreams must be fed through our spin and lies. In any situation, if possible, accentuate the positive.
• Make excuses as long as you can. Try to have your excuses based on at least one truthful fact even if the fact is unrelated to your actions and argument.
• When you cannot dispute the underlying facts, accept them as true but rationalize your actions. You are allowed to make mistakes as long as you have no wrongful intent. Being stupid is not a crime.
• Always say in words you “take responsibility” but try to indirectly shift the blame on other people and factors. You need to portray yourself as a “stand up” guy or gal.
• When you cannot defend your actions or arguments attack the messenger to detract attention from your questionable actions.
• Always show your kindness by doing people favors. You will require the gratitude of such people to come to your aid and defend you.
• Build up your stature, integrity, and credibility by publicizing the good deeds you have done in areas unrelated to the subject of scrutiny.
• Build a strong base of support. Try to have surrogates and the beneficiaries of your largess stand up for you and defend you.
• If you can, appear to take the “high road” and have your surrogates do the “dirty work” for you. After all, you cannot control the actions of your zealots.
• When you can no longer spin, shut up. For example, offer no guidance to investors or resign for “personal reasons.” Your surrogates and so-called friends can still speak on your behalf and defend you.
• If you are under investigation always say you will “cooperate.” However, use all means necessary legal or otherwise to stifle the investigators. Remember that “people live on hope” and their inclination is to believe you.
• When called to testify under oath (if you do not exercise your 5th amendment privilege against self-incrimination) have selective memory about your questionable actions. It is harder to be charged with perjury if you cannot remember what you have done rather than testify and lie about it.
• However, before you testify have other friendly witnesses testify before you to defend you. You need to “lock in” their stories first (before they change their minds) so your testimony does not conflict with their testimony and your story will appear to be more truthful.
• Try not to have your actions at least appear to rise to the level of criminal conduct or a litigable action. Being stupid or being unethical is not always a crime or a tortious action.
• One last rule, to be a most effective spinner always keep your friends close and your enemies closer. The kindness you show your enemies will reduce their propensity to be skeptical of you.

If you see some of the above similarities in people who are in authority such as executives, politicians, and others, you are forewarned to watch out. Before a person can be a white collar criminal, they must be deceitful and be able to follow most of the above rules of spinning.”

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February 11, 2009 by bobfrank.

David Berman, you are wrong to insult the independent-thinking SCA members who disagree with you and Rosalyn and your associates.  Those independent members TRULY care about the future of our community.

Unlike you, they don’t enjoy deceiving and playing dirty political tricks on neighbors. They have TRUE compassion for our wonderful retirement community. They commit their time, energy and resources working to make SCA a much better place for the long-run.

Meanwhile, you and Rosalyn continue to avoid answering the many key questions presented to you. We know you know the answers to the secrets because you were some of the key people in charge at the critical times since 2005.

For example, what will it take to get you (the former attorney and board vice president in 2005-2006) and Rosalyn (the former Finance Committee Member in 2004 to 2006) to explain the following:

1. Why did the board fail to collect the hundreds of thousands of dollars of rent money and catering revenue shares in 2005 and 2006 from the trumpets lessee?  Who was responsible?

2. Why was the $1.375 million Co-Gen money not collected from Del Webb in 2005?

3. Why was the bogus rationale accepted for greening Rec. Ctr. 3 by your board (without following the law concerning contract modifications) instead of demanding the $1.375 million cash be paid in 2005?

4. Why were the $1 Million to $2 Million shortages in community and neighborhood reserve funds not collected from DW/Pulte in 2005/2006?

5. Why were excessive community dues/assessments levied and used to fill our reserve funds shortages since 2005–instead of demanding that Pulte pay up as required by law?

6. Why was Pulte allowed to delay constructing Recreation Center 3 for over 2 years, and hold on to about $10 million during the unexplained delays?

7. Why was action on community property construction defects delayed until 2008 and risk not being able to collect due to 10-year statutes of limitations that started in 1998 with the initiation of SCA?

8. Why were the funds owed by DW/Pulte not considered to be collected until it is almost too late to collect and after the company is at risk of not being financially able to pay?

9. What consideration has the developer offered/provided, and/or the SCA Board requested, for permitting the developer to be excused from paying millions of dollars during the past 4 years?

10. Why does the Board Majority and Finance Committee refuse to allow me (and a couple of retired IRS senior managers living in SCA) to ask the IRS for clarification on our tax returns for 2004 through 2006?  If the SCA Board, CAM and our auditor had no concerns over the accuracy of SCA’s tax returns, there would be no risks by our asking for clarification and thereby eliminating this explosive issue.

No, David and Rosalyn, this is not a political game. These matters are very serious business issues, and the stakes are high. You have a lot of explaining to do, and I believe most SCA members will be holding your feet to the fire as they learn more of the truth.  This community can be put on a stable financial program and the dues/assessments can be reduced to around $860 per year if we collect the funds Pulte owes, and if we quit wasting so much money from poor contracting and purchasing procedures.

With the economy in the tank and heading towards disaster in the near future, you and your cohorts are going to find it very hard to continue to block members from the truth on all of the above questions–as well as many more. Bullying, dirty tricks, ridiculing and making empty promises will not work again  this year.  Perhaps that is why you are fighting so hard and so viciously to hide the facts from members–while attempting to harass honorable people like Ms. Miller?

Bob Frank
SCA Director

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February 11, 2009 by kayfrank.

I did not receive an email or other contacts from Linda Miller that recommended members not vote for Roz Berman, and I was unaware she had sent one until my husband read David Berman’s attack piece on his blog.  Ms. Miller has the right to her independent opinions and the freedom to state the facts and to make recommendations as she wishes.

Mr. Berman is clearly attempting to harass this homeowner and at the same time send a message to everyone who might dare to speak out to oppose Roz Berman’s behavior.  No doubt Roz will claim she did not know about this nasty behavior and again pretend to be a victim of David’s misconduct.  But, Roz should be required to put a stop to David’s bullying and to apologize to Ms. Miller.

Here are some facts.  David Berman has validated Ms. Miller’s concerns over Roz Berman’s re-election candidacy by his bullying actions, and by Roz’s failure to correct him.  As Board President, she is required to act swiftly against such misconduct—especially when it is her own spouse who is misbehaving on her behalf.

We have seen this kind of attack and intimidation by David Berman before  this flagrant attack.  He is showing typical behavior when someone opposes him or his spouse.  In the past, some of our community women have been physically threatened by David Berman when they did not agree with him. He has a known anger management problem, and Roz protects his misbehavior.

Meanwhile, David’s claim is false that my affidavit filed against Roz Berman and Carl Weinstein is the only one that Ms. Miller could have been talking about. Roz Berman has received numerous SCA and Nevada Real Estate Division complaints while she was on the Board. And, Real Estate Division actions are not final while the individual making the complaint is pursuing other available channels for appropriate actions.

Nevada did recently direct Roz Berman to comply with the law and provide uninterrupted time to community members during member comment times.  David Berman has even admitted that fact and thereby validated my allegations.  In addition, since David has made such a big public issue out of this matter, I have been asked to post a summary and transcript of the violations at this link: 
Affidavit Summary
Transcript of Violations

Meanwhile, my tip to all SCA members, and especially to David A. Berman’s blog readers, always read between his lines.  He and his spouse ignore basic issues while they are viciously attacking those who seriously disagree with them.  And, they arbitrarily dump everyone who disagrees with them into a common opposition group.  That is a classic dirty politics technique.

This community should recognize that Ms. Miller does not deserve to be harassed and intimidated for simply exercising her rights when privately stating her preferences and her reasons for making those choices.  If she had used similar words to urge her friends to not vote for my spouse, we know from past experiences that the Bermans would have defended her rights to do so.

The Board President can not be allowed to stand by quietly while her spouse runs roughshod over others. Roz Berman should apologize to Ms. Miller and openly repudiate her husband’s vindictive campaign activities.   The SCA community should require Roz Berman to be the leader she was elected to be by publically apologizing to Mr. Miller and repudiating David’s willful misconduct.

Kay Frank

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February 5, 2009 by bobfrank.

Note: The following revised posting was accomplished after receiving advice from the SCA Election Committee on February 2, 2009.

PDF version of this posting is at this link:
PDF Version of this Posting

Here are the minutes of the annual meeting with the Finance Committee allegations on which the following responses are stated:
Annual Meeting Minutes + Finance Committee Complaints

The SCA Finance Committee (FC) Chairman Joe DeMeo and all other FC members have made five public allegations against me. The FC complaints are summarized here since the full text is available from the Board’s mailing in February 2009, and since most of Mr. De Meo’s words are not directly related to the Review Journal article. My responses have to be detailed because the consequences of further misunderstandings are quite high.

1. FC Complaint: Focused on defending SCA financial management before, during, and since the transition in May 2005, and claimed there was no evidence of misconduct or mismanagement by anyone on the FC, CAMs or the Boards.

My Response to 1: I believe the FC complaint is deceptive and disingenuous. The time frame I focused on was May 2005 until the end of 2006. Because of the many changes in management and CAM companies, there is ambiguity on which individuals were responsible for the association’s accounting and financial management in 2005 and 2006. Del Webb’s financial records prior to March 2006 were not made available for open review until mid 2007.

We have been told that RMI manually transferred the accounting records, developed a new chart of accounts, and changed other key accounting records and procedures when RMI took over in 2006. Those many accounting changes, manual records adjustments, and employee changes provided many opportunities for errors and/or financial misconduct. When millions of dollars are involved and subjected to major changes, prudent managers have to be very inquisitive and very cautious.

Once again, RMI replaced its accounting system during the following year (2007). The SCA accounting system was rebuilt with a new chart of accounts and extensive manual re-keying of records in 2007. That sort of manual conversion process creates errors and provides temptations for corruption. The conversion in 2007 was supposed to be handled electronically between the old RMI systems to the new RMI system. But, Directors were told that the electronic conversion failed and the transfer processes had to be manually completed during the summer months.

Meanwhile, there were many problems caused by the conversion that were reported by FC members while they were trying to develop the annual budget. We were told that at one point the SCA member account data was so corrupted from the RMI conversion that a manual spreadsheet had to be keyed in and used for dealing with SCA’s 7,000+ members. We were told this manual spreadsheet was used to accomplish monthly mailings of SCA’s magazine and official records for some time. We were also told RMI’s Comptroller was fired/replaced because of the many accounting and finance problems in the RMI system, and that it took almost a year for RMI’s accounting and financial reporting to finally come up to SCA’s minimum requirements. Not reported were the amounts of overtime hours and extra SCA costs in 2007 and 2008 due to correcting conversion problems.

In summary, SCA’s multi-million-dollar financial systems suffered two complete overhauls in less than 2 years. I am fully justified in be highly concerned about the errors and possible losses from those experiences. And, since only one member of the current Finance Committee was serving on the committee at transition time, and since none of the FC members have been SCA Directors, the current Finance Committee members have insufficient first-hand knowledge to make such serous, unanimous, group allegations against a director. The FC report is an embarrassment to the chair and it members, and it should be retracted.

2. FC Complaint: Although he was not involved in the issue at that time, Mr. De Meo insisted that nothing adverse happened during and after transition that would justify an investigative/forensic audit. The FC has contended that in spite of the complex financial transition activities, nothing could have been missing while millions of dollars of bank accounts were transferred between Del Webb Community Management Company bank accounts and SCA’s bank accounts with RMI. FC claimed that during such a huge transfer of assets and management company responsibilities, no one should be concerned that only routine audits were performed, and that the auditor (inherited from Del Webb) reported no significant issues in 2005 or 2006.

My Response to 2: A forensic audit was clearly called for in November 2006 to review a few financial issues. Because of the simultaneous transitions of both the Board of Directors and the Community Managers, there should have been a close review to ensure full integrity of all accounts. In this case, the Finance Committee’s claims about the term “outside auditor” should be considered deceptive.

I have been told that SCA’s auditor, Mr. Gary Lein, has performed every audit, and prepared all SCA tax returns since Sun City Anthem was initiated in the late 1990s. Of course, we all know he is not an employee of SCA, DW, Pulte or RMI. He is a consultant/auditor employed by his own company.

But, we know it is possible for consultants involving financial matters to possess even more serous conflicts of interest than other types of corporate employees. It is wrong for the FC to try to claim that because Mr. Lein is an independent auditor that he could have never had any conflicts of interest between Del Webb and SCA community interests. And, even if one has such a potential conflict of interest that does not suggest anything improper was acted upon.

In my opinion/business judgment, regardless of how good Mr. Lein may have been in the past, the auditing company should have been changed at transition time in May of 2005 from the developer’s selection to another company not affiliated in any way with the developer. I also believe our auditing company should be routinely changed every three to five years to encourage fresh and innovative reviews of our association’s business practices. I have found during my career it is an advantage to have new auditors looking at a company’s accounts because they detect things that can be missed by those who might be too close to the ways things have always been done.

Since we know of at least some poor financial management decisions were made during 2005, 2006 and 2007 that resulted in the association losing hundreds of thousands of dollars, we must be alert to possible financial misconduct and/or fraud during that same time frame.

And, since there were (a) two accounting system conversions involving many manual actions, (b) two transitions in community managers involving major corporate changes in people and policies, and (c) major changes in the SCA board members between 2004 and 2007, our association has been exposed to many opportunities for misconduct and fraud. We need to always be alert to such possibilities. We can not afford to be caught by the kinds of fraud and power abuses our Nation and State are involved in at this time.

No person has been accused of any specific misconduct, and it is more than appropriate for a Director to be highly concerned when answers to his valid questions about finances and contracting are ignored or suppressed. If the records and accounting procedures were as clean and complete as claimed by the Finance Committee, it would not take long and not cost much for a qualified forensic auditor to verify the results. Everyone in our community would benefit from investing in such independent validations of the associations funds and financial records.

3. FC Complaint: Because the Del Webb-appointed auditor worked for his own company, members of the FC believe it could be unfair to claim Mr. Lein might have had conflicts of interest with the SCA community’s interests at transition and since. And, because Mr. Lein is a very nice person and has earned high credentials within the auditing community, and because he was endorsed by previous developer-controlled and other SCA Boards, he should be above being questioned about possible conflicts of interest.

My Response to 3: It is deceptive for the committee to try to claim that because Mr. Lein is a named partner in his own firm that he was not retained/did not “work for” the Del Webb Community Management Company—a Pulte Corp. company. Mr. Lein has admitted he has been the auditor for the SCA since he was originally retained by Del Webb in the late 1990s. Mr. Lein’s firm services hundreds of other homeowner associations. And, Mr. Lein can receive new business accounts when developers open up new communities and/or when Community Management Companies are changed by HOAs. Conflicts of interest are clearly possible.

There is nothing factually wrong with what I said in the paper, or above. As a Director with relevant business experience in this auditing area, I have the obligation to question Mr. Lein about potential conflicts of interests related to his Del Webb/Pulte business, and he should not feel uncomfortable with such questions. Nothing untoward or improper was suggested or inferred. This is an example due diligence by a board member.

4. FC Complaint: Because Mr. Lein has always followed normal auditing practices, and because there are 4 CPAs on the FC, no one should question the results of the past audits. Also, because a forensic audit would cost more to validate some of Mr. Lein’s work, such additional audits would be a waste of time and money.

My Response to 4: My statement is factual, and the FC’s recommendations have been noted. As an elected Director I have legal fiduciary duties and responsibilities that appointed FC members do not have. The FC advises and the Board makes the decisions. In the case of potential misconduct or fraud, a Director is required to consider and advocate the matter of an investigative audit until being satisfied–even if the majority of the board does not wish to do so.

We have many examples in this State and Nation where large numbers of highly experienced CPAs have hundreds of years of cumulative experience, but they failed to identify and act on findings pointing to significant fraud in companies and government agencies. But, under Nevada law, the boards of directors can be held accountable for failing to use their business judgment to detect and initiate actions to correct financial problems. My objections and inquiries are clearly within my authority and duty.

On the other hand, the Finance Committee members serve at the pleasure of the Board. The FC charter does not provide it the authority to politically attack a Director. If a Director want to challenge the actions of another Director, he/she must make the challenge directly. A committee must not be exploited and misused to speak for other directors.

5. FC Complaint: The FC continues to deny there have been any past problems with SCA’s income tax filings. The FC insists that it was proper for SCA to pay no income taxes in 2004 to 2006 while we were accumulating over $3.7 million in “profits” from charging more dues/assessments than needed for operating expenses, reserve funds and facilities improvements.

The FC and Mr. Lein also claim that the SCA Boards used good business judgment to over-ride IRS policies and not refund or credit the surplus dues to members. The FC also claims it and the Board of Directors used good business judgment to fail to report the surplus dues as corporate profits—as believed to be required by IRS Revenue Ruling 70-604.

My response to 5: I consider the FC comments to be untrue, and I believe they are intended to politically influence members against me during the current board campaign. The facts do not support the FC claims.

Retired IRS agent advisers living in SCA have frequently made themselves available to meet with the FC members, SCA Treasurer and Board members. But, the Board officers and FC members have refused to meet to discuss the well-documented and precisely explained concerns. This failure by the Board of Directors is a well-documented fact.

Past rationale used by our auditor and FC and other board members to circumvent Revenue Ruling 70-604 has not been proven valid by the IRS. Until the IRS has provided written confirmation that our tax returns for 2004-2007 were correctly done, I must remain unconvinced of the legality of way our returns were prepared and submitted.

And, I must remain concerned over SCA’s potential liabilities for paying back income taxes, penalties and interest that could exceed $1.5 million. As a Director, I have the personal fiduciary duty to pursue the matter until it is clearly settled. The FC can advise, but it can not decide the matter. And, the FC must not be used as a political tool of other board members to try to bully me into agreement by using SCA funds to mail out politically-charged materials to influence the SCA membership. That action is highly unethical.

In addition, the FC and auditor Gary Lein refused to state categorically that there is no risk to SCA for owing back taxes. They know that I am right in claiming there is a good chance they made mistakes on past income tax returns for this community. They know there is a chance that our returns that reported no tax due for 3 consecutive years are wrong. And, they have refused to join me and our retired IRS tax advisers to consult with the appropriate national IRS staff member to settle this dispute. Instead, they insist waiting until an IRS audit is conducted on SCA in the future.

In summary: my tax concerns have been clearly stated. After receiving advice of highly competent professionals, I am convinced that SCA’s income taxes have been incorrectly submitted in the past few years; and, I am quite worried that significant tax filing errors have been made on our $3+ million of accumulated surplus assessments (profits) have been made in the past. There appears to have been a cover-up of those errors in hopes that the IRS will not notice.

As a Director, I can not condone such apparent misbehavior. If our tax preparers (Mr. Lein and Jack Troia) and past SCA Treasurers (West, Dwyer, Roz Berman and Cheri) have made some mistakes, or made errors in judgment in filing our tax returns, then they need to admit such mistakes, and we can ask the IRS for permission to make the necessary corrections and pay a negotiated fine.

In the meantime, I must insist that SCA asks the IRS to confirm that we previously filed our returns correctly in 2004 through 2006. We can not afford to take the risk of waiting until we are audited to learn we have done our returns wrong. Such a mistake could cost us hundreds of thousands of unnecessary dollars in fines and penalties.

Bob Frank, SCA Director
Send questions or comments to: bobfrank@cox.net

Posted in 2009 Campaign, Truth Squad, SCA Board, Community Affairs, News! | Print | No Comments »

February 3, 2009 by Mark Cook.

 The photo above shows the trail being constructed above the East end of Crescent Heights Avenue.  The lower photo shows the trail being constructed above the water tanks, going back up to the power line road.   It’s barely visible, you’ll have to look closely directly above the water tanks to see it. 

 Now, for the  first time in history, the power line roads that ended on each side of the valley above the water tanks have been connected for the benefit of hikers, and mountain bikers, and Henderson police officers on horseback. 

Posted in Truth Squad, Community Affairs, Lifestyle, News!, Other | Print | 1 Comment »