SSA in Crisis: Can It Heal Itself? [LONG]

Mike Schumann wrote:
If the board felt that an audit was not cost effective, then the bylaws
should have been changed, not just ignored.

Sure, but I don't see how that would have prevented the present
situation. They still didn't do the review that was deemed
cost-effective. If the whole board suffers brain fade at the same time,
the best bylaws won't prevent a disaster.

--
Eric Greenwell - Washington State, USA
Change "netto" to "net" to email me directly

"Transponders in Sailplanes" on the Soaring Safety Foundation website
www.soaringsafety.org/prevention/articles.html

"A Guide to Self-launching Sailplane Operation" at www.motorglider.org

NO I AM NOT VOLUNTEERING TO HELP OUT.

What I am trying to do is to point out that the association is broken and needs fixing. that task in itself has met with a whole lot of resistance on this forum.. so much so that i have grave concerns about the outcome.

This whole problem stems from the allocation of resources (money!!!). we have a nice color glossy monthly magazine in which i find little of interest. it cost about 1/2 million per year. . The board decided to "save" 30 grand by foregoing the required audit. Which pet project ate up that 30 grand??? it was an asset allocation decision that proved to be unwise and is now biting them in the ass.

I think that we should adopt the zero based budgeting concept. start with a fresh piece of paper and on one side project dues. on the other, make a list of projects. First on that project is to HIRE SOMEONE to analyze and define options for the members. Total options.. Outsourcing most of the functions sounds good to me. Perhaps having a small one person PR office at, or close to, a major air museum to provide a presence and to distribute literature would be a cost effective way to eliminate major office overhead. Hiring a lobbyist who specializes in avaition would probably be more cost ewffective than having the ED do that task. There are MANY MANY options available on a blank page. Start over. poll the membership. HIRE A PRO who is expert at starting and running non profit special interest associations. PAY HIM WELL.. I am not competent, nor are the "volunteers" from what i have read to do this major restructuring. If the society is important to the foundation, then the foundation should make a project out of the restructuring. it will cost money. Sacred cows will be sacrificed. As it stands, the entire thing is going down the tubes. \

one more thought re "legality, responsibility etc."

As pilots in command we do NOT have the right to determine which FARS we obey or decide not to obey. It is Illigal to run a cloud street with your canopy in the cloud. It is illigal to stick a wing tip into the vertical face of the rotor cloud . it is illigal to fly after taking a drink or two. it is illigal to fly after sunset unless your plane is equipped properly. It is illigal to bust 18,000 feet without a clearance. Everytime we "choose" decide to ignore one of these "laws" we do so at the risk of legal as well as civil penality. If our actions hurt someone we are civilly liable.

byLAWS are the FARS of a corporation or orginazation. those who chose to violate them did so knowingly and are subject to the consequences. They are taking the society down with their actions and it is a shame.

I stand ready to discuss or to debate any of the points i have made in this and prior posts. Your response to my post is typical of bull**** put out by those who do not have a clue about how things work and are unable to express a coherent thought. So far I have been attacked, but not on matters of substance. Again, i stand ready to debate the issues. I have offered opinion and some choices.. What have you offered???

5bg

"Greg Arnold" wrote in message news:8J0Tg.1011$La2.397@fed1read08...
5-BG wrote:


THIS BOARD IS BROKEN and anything that they do is subject to
challange and controversy.. I certainly hope that their resignation en
masse is the outcome of this weekend.

If they do, who will run the SSA? Is 5-BG volunteering to help out?

Eric Greenwell wrote:
Mike Schumann wrote:
If the board felt that an audit was not cost effective, then the bylaws
should have been changed, not just ignored.

Sure, but I don't see how that would have prevented the present
situation. They still didn't do the review that was deemed
cost-effective. If the whole board suffers brain fade at the same time,
the best bylaws won't prevent a disaster.

A change of this sort to the Bylaws would have been a HUGE RED FLAG to
the rest of the membership (at least SOME of the membership who are
experienced in this area). To operate as they did - behind closed doors
w/o communication to the membership as a whole - permitted the
situation to worsen to the point it presently is: a crisis of major
proportion to the organization.

Audits are a fundamental check and balance that ensures compliance with
all relevent rules, regulations and laws. Just as you would never get
on an airliner whose pilot decided to cancel IFR and fly VFR thru
controlled airspace, you never leave one person in control of an
organizations finances by himself. I am frankly surprised that I have
to state this; this should be basic common sense to all adults with an
8th grade education. The Bylaws are not just some nuisance formality;
they are fundamental guidance to operation of the organization.

I also disagree with the cost estimate Chip gave for doing the audit.
Where did you get that, Chip? The non-profit whose board I am on has
annual audits done for about $15,000, and that is a $10M operation with
400 employees. I would expect SSA's audit to cost half that.

Tom Seim
2G
Richland, WA

I'm getting as frustrated with some of our RAS "experts" as I am by
some of our SSA directors.

Come on, folks, use your brains. The board is no more a monolithic
bunch of indifferent, asleep-at-the-switch incompetents than are the
participants on this forum a bunch of careless, abusive loudmouths. OK,
maybe that's a bad argument to make given some of the simplistic
garbage that's gotten shoveled out recently. Some of you guys have
posted two dozen times and have yet to get it right or add value, even
when you do have the nerve to use your own names when you question
someone's integrity. If I sound a little less temperate than usual,
it's because I'm fed up.

In truth, there are many faces among the board today, with varying
skill sets and levels of competence. Some are scared. Some are
bewildered, wondering what they got themselves into. Some are very
frustrated and angry, not only at the apparent violation of trust by
one staffer over a long period but the way certain directors may have
let the organization down. All of them, I'm convinced, have SSA's
interests at heart although I am concerned about potential conflicts
and the effects those can have even on good people.

I haven't read the minutes of every prior meeting but I suspect it's
true that the board didn't elect to omit doing reviews or to forgo
doing audits. I don't ever recall such a vote when I was a director,
and I raised the audit issue fairly loudly. That decision is something
the Board was fully within their rights to delegate to the Budget &
Finance Committee (FinComm) so long as they had no reason to believe
the finances weren't under control. It's true, as one poster keeps
yammering, that the ByLaws are similar to the FARs, at least in some
ways. But just like a pilot in command who is allowed to ignore the
FARs during an emergency if, at his or her judgment, to comply would
put the pilot(s), passenger(s), or aircraft at risk, so directors are
expected to exercise business judgment as part of their duty of care.
In this case, an argument can be made that the duty of care conflicted
with the duty of obedience (to reference two of a director's duties)
calling for business judgment.

True, the right way would have been to seek a change in the ByLaws. But
nothing is simple in the real world. Let's say the ByLaws only called
for a review. How many treasurers or FinComms do you think would
recommend spending $30,000 (or more) in a given year just because
they're not sure they did a good job of minding the store? We might
never have an audit again. It's called the rule of unintended
consequences. I'm not saying what multiple FinComms did was technically
right. But SSA would have spent more than $500,000 on audits in the
past 15 years if they'd stuck to the ByLaws. As is patently clear now,
that's money SSA didn't have. Best case is if FinComm had continued its
previous policy of annual reviews by a CPA plus close supervision. No
one can say, but we might not be where we are now.

One person apparently caused this problem. Yet one of the loudest
voices on RAS now wants to give the power to completely restructure SSA
to...one guy: a special master. Great. Our record for picking one guy
isn't very good. Nor, for that matter, does it make sense.

There are no easy answers or quick solutions. So quit offering
everything from mass firings to zero-based budgeting as a panacea.

My biggest concerns relate to conflicts of interest, not throwing out
every single officer and director we have. You don't fire everyone
because a few people make mistakes, at least not if there are
alternatives.

I believe the way to deal with conflict of interest is putting a truly
independent party in place to perform their own investigation and
monitor what is being done by ExComm, the board, the staff, etc.,
during this transition. We have, or can get, the experts we need to get
through this and, in a separate step, to make the necessary changes for
a new SSA. We just need to remove the cloud of cynicism and suspicion
and mistrust.

I'm uncomfortable with the current situation, as I have said publicly.
But I'm also amazed to see how easily some posters make snap judgments
based on the information released by ExComm. That information has been
helpful in some ways and I applaud ExComm for releasing it. But, in my
opinion, it is being spun; e.g., to shift blame to the Executive
Director and away from FinComm and ExComm. Speaking of information,
though, a couple of posters have observed that the ExComm meeting
minutes are on the SSA Web site. They've been there, updated from time
to time, at least since the first week this news broke. How many of you
have read them? On the Internet, unlike in 3rd grade, it's apparently
easier to write than to read.

Is the ED guilty of something? I don't know. And none of you do,
either. Several of you keep mouthing off with "if there's a good reason
why the ED didn't report the tax problem to the Board, I'd like to know
what it is." This is what passes for enlightened thinking these days.

OK, here's one explanation. I have no idea if it's true, but it's
plausible. The ED was hired after the CFO and told that the CFO
reported to the Board. That was mistake #1 by SSA but they didn't want
another Larry Sanderson incident. FinComm apparently never engaged the
CPA to prepare the annual financial statements after that point
(Mistake #2). I can hear it now, with the CFO explaining to the CPA
partner how the work was being brought in-house to save money now that
SSA had a fulltime CFO instead of a bookkeeper. Maybe the CPAs drop by
SSA once in a while, maybe they even do a little work, though it
appears there was no formal engagement after 2002. Periodically the CPA
reminds the CFO of the necessity to file annual information returns. He
agrees but offers excuses: certain information isn't yet available; the
computer system is down; files have been corrupted; etc.

Anyway, SSA is not the CPA's account anymore so all they can do is
watch. To risk going over the head of the CFO is to risk any chance of
a future re-engagement. The CFO is the only person communicating
financial info to FinComm, and they have no reason to doubt him. The ED
is out of the loop. Until 2005. Now the CFO nominally reports to the
ED. About that same time, or maybe later, the CPA partner mentions to
the ED at a Rotary Club meeting about the information returns. The ED,
startled, asks the CFO, who tells him not to worry, it's just a
paperwork delay, this is done all the time, he's filed for extensions,
he's talking to FinComm about it, no big deal, etc. The ED shuts up; he
knows FinComm still talks to the CFO so he doesn't want to annoy anyone
or, worse, be perceived as trying to make the CFO look bad. And so on.
Finally, this summer, he happens to mention it to FinComm and the
manure hits the rotating propellor blades.

I'm just making this up. The point is, it could be true. Or the ED
could be incompetent (I doubt it; I've met him and seen him work). Or
he and the CFO could have concocted this scheme together and be
planning even now to escape to Bermuda to live happily ever after with
a couple of barmaids...on their $300,000 of ill-gotten gains split two
ways.

It's easy to publish to this forum and say the first thing that comes
into your mind. It's easy to come up with pithy questions to which no
one yet has answers to burnish your image. It's easy to make flat
statements of fact...that are no more than opinions.

I was too diplomatic before so let me try something else. If you don't
have something constructive to say, just shut up. As I said before,
your yammering just makes it tougher to convince our leadership that
it's not just the loudmouths on RAS who are upset, it's the many
rank-and-file SSAers, with cooler heads, the ones who "lurk" but don't
post.

I've got nearly 250 emails in my Outlook folder since 1 Sep. and a huge
number of cellphone calls during the same time all relating to our
attempt to get independent oversight set up for SSA. I imagine several
conscientious directors I worked with have nearly as many. Numerous
other directors, including some on ExComm, have communicated to us to
express their strong support. I've risked my reputation and the respect
of people I know to push for change, even as I've been accused in this
forum of "blind devotion" to the SSA leadership [I'm sure ExComm had a
good laugh about that one; it made me want to cry]. We're trying to do
something about it. If you really want to help and not just see your
name on the Internet, contact your directors before the end of today
and tell them to insist on a truly independent oversight body. Tell
them it's the LONG (of course) legalistic-sounding, detailed charter,
not the shorter, easier-to-read, watered down version.

With apologies for losing my temper,
Chip Bearden

Jim; you wrote"Yet one of the loudest
voices on RAS now wants to give the power to completely restructure SSA
to...one guy: a special master."

The job of a special master would be to first stop the bleeding and second to identify and to present possible ALTERNATIVES to the membership. And to do it in an impartial manner.

you wrote "I believe the way to deal with conflict of interest is putting a truly
independent party in place to perform their own investigation and
monitor what is being done by ExComm, the board, the staff, etc.,"

How is this different than a special master??? I suggested a court appointed master as a means of assuring the membership of impartiality and to give the master legal cover.

You wrote " I don't ever recall such a vote when I was a director,
and I raised the audit issue fairly loudly. That decision is something
the Board was fully within their rights to delegate to the Budget &
Finance Committee (FinComm) so long as they had no reason to believe
the finances weren't under control."
"True, the right way would have been to seek a change in the ByLaws"
"But just like a pilot in command who is allowed to ignore the
FARs during an emergency if, at his or her judgment, to comply would
put the pilot(s), passenger(s), or aircraft at risk, so directors are
expected to exercise business judgment as part of their duty of care."

OK.. when a pilot DECLAIRS AN EMERGENCY he is allowed to make certain decisions. This decision making authority during an emergency does not extend for YEARS and requires a formal emergency call. If the lack of money for an audit was truely an emergency it should have been flagged as such and a serious discussion of what alternatives were available held ( ZERO BASED BUDGETING!!!) in any event, the board did NOT have the right to ignore the bylaws ever.. and certainly not for years.. chosing not to fund an audit which is mandated because other non mandated programs were in need is what happened.
if you, as a director, loudly raised the question, I would be interested in the board response. Someone(you???) posted comments that a read of the minutes of the board reveals no discussion of the question. As a director, you had the opportunity to move for a motion directing the audit. Why didn't you make such a motion? As a director, elected by members in your district, you had the responsibility to raise the issue outside of the boardroom. Making loud noises behind closed doors which are never reflected in the minutes is not good enough.

you wrote"But SSA would have spent more than $500,000 on audits in the
past 15 years if they'd stuck to the ByLaws. "
not so... The year 2002 was the first year from what i have read that the audit was not done. Are you saying that we never had an audit???

you wrote" My biggest concerns relate to conflicts of interest, not throwing out
every single officer and director we have"

I too am concerned about conflict of interest. it has been one of the points i have been "yammering" about.
the situation, as i see it has the ENTIRE BOARD IN CONFLICT, as well as the ED. So what is your suggestion for dealing with a board that is in conflict.? I assume that you do not accept the fact that the entire board is conflicted. They may be well meaning volunteers, BUT i believe that they are all conflicted... refer to my past comments re insurance co seeking deep pockets.

you wrotte, among other abusive comments "Some of you guys have
posted two dozen times and have yet to get it right or add value, even
when you do have the nerve to use your own names when you question
someone's integrity. If I sound a little less temperate than usual,
it's because I'm fed up."

Well I am fed up with the simplistic reasoning and personal attacks that you spew . Your rebuttals to discussion points are internally inconsistant and you resort to personal attacks when frustrated by logic. The mindset that you represent so clearly IS THE PROBLEM. Going along with bad policy and an action outside of the scope of authority vested in the board by the bylaws represents a basic FAILURE, on your part as a director, to understand and to carry out the duties you accepted upon election as a director. So what you are essentially doing is offering up excuses for your own lack of diligence, as a director, and by so doing offering excuses for current directors.
The SSA is clearly FRAGMENTED. A 300k loss is survivable, the fragmentation is not. Beginning with a zero based budget, a new business model needs to be found, discussed and adopted. otherwise the membership will decline dramatically.

My guess is that the board is going to suspend publication of the mag ( or at least radically downsize) AND seek a special dues assessment. My guess is that we will see immediate resignations from board and have a difficult time filling the vacancies.
we will see..

I suggest that you lay off of the personal attacks and devote your energy to crafting rebuttals which are logically consistant and in touch with the real world.


wrote in message oups.com...
I'm getting as frustrated with some of our RAS "experts" as I am by
some of our SSA directors.

Come on, folks, use your brains. The board is no more a monolithic
bunch of indifferent, asleep-at-the-switch incompetents than are the
participants on this forum a bunch of careless, abusive loudmouths. OK,
maybe that's a bad argument to make given some of the simplistic
garbage that's gotten shoveled out recently. Some of you guys have
posted two dozen times and have yet to get it right or add value, even
when you do have the nerve to use your own names when you question
someone's integrity. If I sound a little less temperate than usual,
it's because I'm fed up.

In truth, there are many faces among the board today, with varying
skill sets and levels of competence. Some are scared. Some are
bewildered, wondering what they got themselves into. Some are very
frustrated and angry, not only at the apparent violation of trust by
one staffer over a long period but the way certain directors may have
let the organization down. All of them, I'm convinced, have SSA's
interests at heart although I am concerned about potential conflicts
and the effects those can have even on good people.

I haven't read the minutes of every prior meeting but I suspect it's
true that the board didn't elect to omit doing reviews or to forgo
doing audits. I don't ever recall such a vote when I was a director,
and I raised the audit issue fairly loudly. That decision is something
the Board was fully within their rights to delegate to the Budget &
Finance Committee (FinComm) so long as they had no reason to believe
the finances weren't under control. It's true, as one poster keeps
yammering, that the ByLaws are similar to the FARs, at least in some
ways. But just like a pilot in command who is allowed to ignore the
FARs during an emergency if, at his or her judgment, to comply would
put the pilot(s), passenger(s), or aircraft at risk, so directors are
expected to exercise business judgment as part of their duty of care.
In this case, an argument can be made that the duty of care conflicted
with the duty of obedience (to reference two of a director's duties)
calling for business judgment.

True, the right way would have been to seek a change in the ByLaws. But
nothing is simple in the real world. Let's say the ByLaws only called
for a review. How many treasurers or FinComms do you think would
recommend spending $30,000 (or more) in a given year just because
they're not sure they did a good job of minding the store? We might
never have an audit again. It's called the rule of unintended
consequences. I'm not saying what multiple FinComms did was technically
right. But SSA would have spent more than $500,000 on audits in the
past 15 years if they'd stuck to the ByLaws. As is patently clear now,
that's money SSA didn't have. Best case is if FinComm had continued its
previous policy of annual reviews by a CPA plus close supervision. No
one can say, but we might not be where we are now.

One person apparently caused this problem. Yet one of the loudest
voices on RAS now wants to give the power to completely restructure SSA
to...one guy: a special master. Great. Our record for picking one guy
isn't very good. Nor, for that matter, does it make sense.

There are no easy answers or quick solutions. So quit offering
everything from mass firings to zero-based budgeting as a panacea.

My biggest concerns relate to conflicts of interest, not throwing out
every single officer and director we have. You don't fire everyone
because a few people make mistakes, at least not if there are
alternatives.

I believe the way to deal with conflict of interest is putting a truly
independent party in place to perform their own investigation and
monitor what is being done by ExComm, the board, the staff, etc.,
during this transition. We have, or can get, the experts we need to get
through this and, in a separate step, to make the necessary changes for
a new SSA. We just need to remove the cloud of cynicism and suspicion
and mistrust.

I'm uncomfortable with the current situation, as I have said publicly.
But I'm also amazed to see how easily some posters make snap judgments
based on the information released by ExComm. That information has been
helpful in some ways and I applaud ExComm for releasing it. But, in my
opinion, it is being spun; e.g., to shift blame to the Executive
Director and away from FinComm and ExComm. Speaking of information,
though, a couple of posters have observed that the ExComm meeting
minutes are on the SSA Web site. They've been there, updated from time
to time, at least since the first week this news broke. How many of you
have read them? On the Internet, unlike in 3rd grade, it's apparently
easier to write than to read.

Is the ED guilty of something? I don't know. And none of you do,
either. Several of you keep mouthing off with "if there's a good reason
why the ED didn't report the tax problem to the Board, I'd like to know
what it is." This is what passes for enlightened thinking these days.

OK, here's one explanation. I have no idea if it's true, but it's
plausible. The ED was hired after the CFO and told that the CFO
reported to the Board. That was mistake #1 by SSA but they didn't want
another Larry Sanderson incident. FinComm apparently never engaged the
CPA to prepare the annual financial statements after that point
(Mistake #2). I can hear it now, with the CFO explaining to the CPA
partner how the work was being brought in-house to save money now that
SSA had a fulltime CFO instead of a bookkeeper. Maybe the CPAs drop by
SSA once in a while, maybe they even do a little work, though it
appears there was no formal engagement after 2002. Periodically the CPA
reminds the CFO of the necessity to file annual information returns. He
agrees but offers excuses: certain information isn't yet available; the
computer system is down; files have been corrupted; etc.

Anyway, SSA is not the CPA's account anymore so all they can do is
watch. To risk going over the head of the CFO is to risk any chance of
a future re-engagement. The CFO is the only person communicating
financial info to FinComm, and they have no reason to doubt him. The ED
is out of the loop. Until 2005. Now the CFO nominally reports to the
ED. About that same time, or maybe later, the CPA partner mentions to
the ED at a Rotary Club meeting about the information returns. The ED,
startled, asks the CFO, who tells him not to worry, it's just a
paperwork delay, this is done all the time, he's filed for extensions,
he's talking to FinComm about it, no big deal, etc. The ED shuts up; he
knows FinComm still talks to the CFO so he doesn't want to annoy anyone
or, worse, be perceived as trying to make the CFO look bad. And so on.
Finally, this summer, he happens to mention it to FinComm and the
manure hits the rotating propellor blades.

I'm just making this up. The point is, it could be true. Or the ED
could be incompetent (I doubt it; I've met him and seen him work). Or
he and the CFO could have concocted this scheme together and be
planning even now to escape to Bermuda to live happily ever after with
a couple of barmaids...on their $300,000 of ill-gotten gains split two
ways.

It's easy to publish to this forum and say the first thing that comes
into your mind. It's easy to come up with pithy questions to which no
one yet has answers to burnish your image. It's easy to make flat
statements of fact...that are no more than opinions.

I was too diplomatic before so let me try something else. If you don't
have something constructive to say, just shut up. As I said before,
your yammering just makes it tougher to convince our leadership that
it's not just the loudmouths on RAS who are upset, it's the many
rank-and-file SSAers, with cooler heads, the ones who "lurk" but don't
post.

I've got nearly 250 emails in my Outlook folder since 1 Sep. and a huge
number of cellphone calls during the same time all relating to our
attempt to get independent oversight set up for SSA. I imagine several
conscientious directors I worked with have nearly as many. Numerous
other directors, including some on ExComm, have communicated to us to
express their strong support. I've risked my reputation and the respect
of people I know to push for change, even as I've been accused in this
forum of "blind devotion" to the SSA leadership [I'm sure ExComm had a
good laugh about that one; it made me want to cry]. We're trying to do
something about it. If you really want to help and not just see your
name on the Internet, contact your directors before the end of today
and tell them to insist on a truly independent oversight body. Tell
them it's the LONG (of course) legalistic-sounding, detailed charter,
not the shorter, easier-to-read, watered down version.

With apologies for losing my temper,
Chip Bearden

I wasn't suggesting that changing the bylaws was a good idea. Just a
bettter idea than ignoring them.

Mike Schumann

wrote in message
ups.com...

Eric Greenwell wrote:
Mike Schumann wrote:
If the board felt that an audit was not cost effective, then the bylaws
should have been changed, not just ignored.

Sure, but I don't see how that would have prevented the present
situation. They still didn't do the review that was deemed
cost-effective. If the whole board suffers brain fade at the same time,
the best bylaws won't prevent a disaster.

A change of this sort to the Bylaws would have been a HUGE RED FLAG to
the rest of the membership (at least SOME of the membership who are
experienced in this area). To operate as they did - behind closed doors
w/o communication to the membership as a whole - permitted the
situation to worsen to the point it presently is: a crisis of major
proportion to the organization.

Audits are a fundamental check and balance that ensures compliance with
all relevent rules, regulations and laws. Just as you would never get
on an airliner whose pilot decided to cancel IFR and fly VFR thru
controlled airspace, you never leave one person in control of an
organizations finances by himself. I am frankly surprised that I have
to state this; this should be basic common sense to all adults with an
8th grade education. The Bylaws are not just some nuisance formality;
they are fundamental guidance to operation of the organization.

I also disagree with the cost estimate Chip gave for doing the audit.
Where did you get that, Chip? The non-profit whose board I am on has
annual audits done for about $15,000, and that is a $10M operation with
400 employees. I would expect SSA's audit to cost half that.

Tom Seim
2G
Richland, WA

Mike Schumann wrote:
I wasn't suggesting that changing the bylaws was a good idea. Just a
bettter idea than ignoring them.

I really don't give a dang what the bylaws say or whether they were
ignored or not. To me, it boils down to this: No tax returns were filed
since 2002. We got a new "professional" Executive Director in 2003 who,
supposedly, arrived with a "clean slate". How hard is it to figure out
that no taxes had been paid - when he first walked in the door, or
since? If he didn't figure it out, that's bad. If he figured it out and
ignored it, that's really bad. The former may be incompetence, the
latter may be criminal - I don't know.

Tony V.

Tony V..

Post ENRON, laws were enacted in the corporate world which REQUIRE the CEO to PERSONALLY sign and to attest to the validity of tax returns. I believe that the Chairman of the board must also personally attest to the validity of the returns. This has caused much concern in corporate world and many returns from BIG companies have been delayed because executives were making sure that what the accountants presented was defensible. As for the unpaid employee taxes, the CEO (ED) and the chairman have personal liability for unpaid taxes that were withheld from paychecks.. as well as for matching funds ( social security). This is an area in which the IRS does NOT screw around. It is beyond reason that the IRS did NOT formally contact the association re unpaid employee taxes for 3 to 4 years.. Normally they would be well into the lien process and making substantial personal financial threats to the responsible persons ( chair and ED.) within this time period.
People do go to jail for willfully not filing tax returns.

Anyone competent enough to hold the position of ED should have been aware. ITS REALLY BAD!!!..

I believe that you should " give a dang" about the bylaws. Saving the ssa will require a thorough review and perhaps some changes in the bylaws. they are important.

by the way, the ED has a dedicated seat, as does the chair of the SSA on the board of the foundation ( where the money is stashed). Our current board comprise the membership of the foundation. this is per the bylaws of the foundation. The loan of about 300k to bail the ssa out was authorized by the board of the foundation, which is heavily influenced by the board and ED of the ssa, which is in a major conflict of interest and faced with personal liability. The purpose of the foundation is to promote soaring, not to bail directors out of a jam. but they ARE the foundation, so what can we say???
this will get worse before it gets better.
5bg

"Tony Verhulst" wrote in message . ..
Mike Schumann wrote:
I wasn't suggesting that changing the bylaws was a good idea. Just a
bettter idea than ignoring them.

I really don't give a dang what the bylaws say or whether they were
ignored or not. To me, it boils down to this: No tax returns were filed
since 2002. We got a new "professional" Executive Director in 2003 who,
supposedly, arrived with a "clean slate". How hard is it to figure out
that no taxes had been paid - when he first walked in the door, or
since? If he didn't figure it out, that's bad. If he figured it out and
ignored it, that's really bad. The former may be incompetence, the
latter may be criminal - I don't know.

Tony V.

Tony Verhulst wrote:

I really don't give a dang what the bylaws say or whether they were
ignored or not. To me, it boils down to this: No tax returns were filed
since 2002. We got a new "professional" Executive Director in 2003 who,
supposedly, arrived with a "clean slate". How hard is it to figure out
that no taxes had been paid - when he first walked in the door, or
since? If he didn't figure it out, that's bad. If he figured it out and
ignored it, that's really bad. The former may be incompetence, the
latter may be criminal - I don't know.

Responses to Tony and others:

1. As I understand it, it might have been rather difficult to figure
out the taxes weren't paid unless you suspected something was wrong.
Electronic transfers may have been made but to the wrong accounts. I'm
told this was no simple hand-in-the-cookie-jar snatch of a few bucks;
it was a very carefully orchestrated, rather well concealed effort to
siphon out money over some years. The IRS did notify SSA on numerous
occasions of the withholding tax non-payments...but the person who
received said notifications was the CFO.

2. As for Sarbanes-Oxley (i.e., the post-Enron changes requiring, for
example, CEOs to sign tax returns), that doesn't apply to non-profits
although many CPAs are advising their clients to implement some of the
provisions voluntarily. This must absolutely be one of the
recommendations coming out of this debacle.

3. Yes, the IRS can go after individuals for non-payment of withholding
taxes ("trust fund" taxes), and not just the taxes owed but stiff
penalties, as well, but only from "responsible persons" who "wilfully
failed" to cause the organization to pay them. The burden of proof is
on the individual to prove he or she did not meet these conditions, but
it's easier for unpaid volunteers (e.g., directors) of non-profits to
avoid this liability than in the corporate world. I assume it's easier
still in situations involving fraud (implied from the ExComm's
announcement that law enforcement was now involved). Based on the
ExComm meeting minutes, I also understand that the IRS could probably
have grabbed the Foundation assets anyway if they wanted. At least this
way there's formal loan documentation and the interest is being paid
internally, not to an outside party. Were there potential conflicts?
Sure, in abundance. Would an impartial observer have agreed this was a
reasonable thing for SSA and the Foundation to have done? We'll only
know if such an impartial body is chartered and staffed.

4. Again it's important to distinguish between (a) the lack of filing
information returns each year (a paperwork problem, albeit not trivial)
which could have been caught by the ED if he were looking for it and if
he were in the financial chain of command (neither of which were
apparently true, at least until the CFO began reporting partially to
him in mid 2005) from (b) non-payment of payroll taxes, which is a much
more serious problem but one that, apparently, was well concealed. It's
also worth noting that the tax non-payment problem wasn't discovered
until after the ED notified the Board of the non-filing problem. It's
incomprehensible to me that the IRS wasn't swarming over SSA years ago
but apparently not.

5. To the best of my recollection, SSA's financials were audited only
once while I was on the board (and that one time partly, I believe, due
to the noise I made about it, and with absolutely no problems found, by
the way; all other years involved reviews). I'm told they were audited
at least once again, after the Larry Sanderson affair. When I performed
an extensive financial analysis of SSA a year or so before I landed on
the board, I recall learning that all the financial statements from the
mid 1980s to the early 1990s were reviewed, not audited, and that this
had been the practice for some time. These financial reports were
published in Soaring magazine each year in those days so it wasn't
exactly a secret.

6. Tom Seim's comment about the cost of an audit is of great interest.
My numbers are based on what I believe I was told by FinComm in the
early 1990s when, after I joined the board, I started "yammering"
for an audit. I could be mistaken, though I know the difference in cost
between a review and an audit was quite high. Although SSA financials
involve some complexities--e.g., accounting for deferred subscription
income and merchandise sales (i.e., inventory costing)--the annual
reveues are only about $1 million, a very small organization. This is
clearly an area that should be explored by the new financial team.

I hope this information will help all to understand that this situation
is a lot more complex than it has been described by some. Although I
believe some fundamental mistakes were made (that's an understatement),
there's no quick solution now, although the approach to a better,
stronger SSA is straightforward given the right people. That's why I
continue to plead, nag, encourage, and promote the idea of a small
group of independent, skilled overseers/monitors to work in parallel
with the directors still in place, especially ExComm--whomever remains
on that body after the SSA Board meeting tomorrow--to restore
confidence among SSA members and insure that good decisions are made. I
don't want to see the organization I have belonged to since 1965
implode. But I do want to see some significant changes made, and very
soon.

And for those who are wondering: yes, I can occasionally write very
brief, to-the-point postings. This subject doesn't lend itself to that,
however.

Chip Bearden

to chip;
you seem to be in possession of more information than the rest of us... here is a straight question for you.. one of import.

Does the SSA have in force an insurance policy that covers the type of fraud you allude to?

were the premiums paid up?

HAS THE BOARD SOUGHT PAYMENT FROM THE INSURANCE COMPANY??

Are board actions covered by a simlar policy and have claims been made?

thank you in advance for any answers you might have.
5bg
wrote in message ups.com...
Tony Verhulst wrote:

I really don't give a dang what the bylaws say or whether they were
ignored or not. To me, it boils down to this: No tax returns were filed
since 2002. We got a new "professional" Executive Director in 2003 who,
supposedly, arrived with a "clean slate". How hard is it to figure out
that no taxes had been paid - when he first walked in the door, or
since? If he didn't figure it out, that's bad. If he figured it out and
ignored it, that's really bad. The former may be incompetence, the
latter may be criminal - I don't know.

Responses to Tony and others:

1. As I understand it, it might have been rather difficult to figure
out the taxes weren't paid unless you suspected something was wrong.
Electronic transfers may have been made but to the wrong accounts. I'm
told this was no simple hand-in-the-cookie-jar snatch of a few bucks;
it was a very carefully orchestrated, rather well concealed effort to
siphon out money over some years. The IRS did notify SSA on numerous
occasions of the withholding tax non-payments...but the person who
received said notifications was the CFO.

2. As for Sarbanes-Oxley (i.e., the post-Enron changes requiring, for
example, CEOs to sign tax returns), that doesn't apply to non-profits
although many CPAs are advising their clients to implement some of the
provisions voluntarily. This must absolutely be one of the
recommendations coming out of this debacle.

3. Yes, the IRS can go after individuals for non-payment of withholding
taxes ("trust fund" taxes), and not just the taxes owed but stiff
penalties, as well, but only from "responsible persons" who "wilfully
failed" to cause the organization to pay them. The burden of proof is
on the individual to prove he or she did not meet these conditions, but
it's easier for unpaid volunteers (e.g., directors) of non-profits to
avoid this liability than in the corporate world. I assume it's easier
still in situations involving fraud (implied from the ExComm's
announcement that law enforcement was now involved). Based on the
ExComm meeting minutes, I also understand that the IRS could probably
have grabbed the Foundation assets anyway if they wanted. At least this
way there's formal loan documentation and the interest is being paid
internally, not to an outside party. Were there potential conflicts?
Sure, in abundance. Would an impartial observer have agreed this was a
reasonable thing for SSA and the Foundation to have done? We'll only
know if such an impartial body is chartered and staffed.

4. Again it's important to distinguish between (a) the lack of filing
information returns each year (a paperwork problem, albeit not trivial)
which could have been caught by the ED if he were looking for it and if
he were in the financial chain of command (neither of which were
apparently true, at least until the CFO began reporting partially to
him in mid 2005) from (b) non-payment of payroll taxes, which is a much
more serious problem but one that, apparently, was well concealed. It's
also worth noting that the tax non-payment problem wasn't discovered
until after the ED notified the Board of the non-filing problem. It's
incomprehensible to me that the IRS wasn't swarming over SSA years ago
but apparently not.

5. To the best of my recollection, SSA's financials were audited only
once while I was on the board (and that one time partly, I believe, due
to the noise I made about it, and with absolutely no problems found, by
the way; all other years involved reviews). I'm told they were audited
at least once again, after the Larry Sanderson affair. When I performed
an extensive financial analysis of SSA a year or so before I landed on
the board, I recall learning that all the financial statements from the
mid 1980s to the early 1990s were reviewed, not audited, and that this
had been the practice for some time. These financial reports were
published in Soaring magazine each year in those days so it wasn't
exactly a secret.

6. Tom Seim's comment about the cost of an audit is of great interest.
My numbers are based on what I believe I was told by FinComm in the
early 1990s when, after I joined the board, I started "yammering"
for an audit. I could be mistaken, though I know the difference in cost
between a review and an audit was quite high. Although SSA financials
involve some complexities--e.g., accounting for deferred subscription
income and merchandise sales (i.e., inventory costing)--the annual
reveues are only about $1 million, a very small organization. This is
clearly an area that should be explored by the new financial team.

I hope this information will help all to understand that this situation
is a lot more complex than it has been described by some. Although I
believe some fundamental mistakes were made (that's an understatement),
there's no quick solution now, although the approach to a better,
stronger SSA is straightforward given the right people. That's why I
continue to plead, nag, encourage, and promote the idea of a small
group of independent, skilled overseers/monitors to work in parallel
with the directors still in place, especially ExComm--whomever remains
on that body after the SSA Board meeting tomorrow--to restore
confidence among SSA members and insure that good decisions are made. I
don't want to see the organization I have belonged to since 1965
implode. But I do want to see some significant changes made, and very
soon.

And for those who are wondering: yes, I can occasionally write very
brief, to-the-point postings. This subject doesn't lend itself to that,
however.

Chip Bearden