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Used for 2/18/10 Residents Voice Meeting
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LWVFebruary 18, 2010
Residents Voice
Conrad Grundke
February 18, 2010 1Resident's Voice
Topics for Tonight
• Removal of General Manager– It need not be done “WITHOUT CAUSE”– It would be done “WITH CAUSE” resulting from
“LOSS OF TRUST” in such areas as:• Credit Cards• Expense Reimbursements• Incentive Plan
February 18, 2010 Resident's Voice 2
Credit Cards
• After Residents Voice published the Credit Card Data, a number of GRF Directors reviewed the charges and said that they were appropriate and they found no problem with the use of the Credit Cards.
• Thereby, exonerating PCM. However, this action could make them complicit in actions that are, at the least, unethical.
February 18, 2010 Resident's Voice 3
Resident's Voice 4February 18, 2010
Credit Cards (Cont.)
• It took 4 years before credit card billing records were provided by PCM to Directors and Owners.
• During that time the General Manager stated “numerous” times that the credit cards were for “Emergency Use” only, including at an interview by Rob Merritt on TV 6.
Resident's Voice 5
Credit Cards (Cont.)
February 18, 2010
• In addition to Non-emergency use of Credit Card Charges,
• There were instances of “co-mingling” of funds. PCM Employees monies co-mingled with LWV monies.
Resident's Voice 6
Emergency & Comingling of Funds
February 18, 2010
Amt Desc Date USER
$1,316.00 Sees Candies 12/01/06 Price
$1,299.00 American Table Tennis 11/07/06 David
$981.87 Claim Jumper 12/18/06 Storage
$974.92 Carriage Trade 12/05/06 David
$834.31 Lawry's Five Crowns 12/22/04 Lee
$811.12 Dave & Busters 12/17/05 Storage
$713.77 Las Brisas 12/18/06 Johns
$700.00 Disney Club 11/17/06 Storage
$646.02 Things Remembered 07/18/05 Johns
Resident's Voice 7February 18, 2010
Date Desc Day Total
12/10/04 Sushi Wok Express Fri $68.70
12/14/04 Gullivers Tue $543.72
12/15/04 Cedar Creek Inn Wed $280.70
The Lobby Lounge Wed $74.65
The Loft Wed $507.16
12/16/04 BJS Rest & Brew Thu $31.10
12/17/04 Dana Warf Sportfishin Fri $375.00
The Lobby Lounge Fri $111.51
The Loft Fri $356.01
12/20/04 BJS Rest & Brew Mon $29.00
12/21/04 Beach House Tue $171.00
12/22/04 Lawry's Five Crowns Wed $834.31
Macaroni Grill Wed $29.28
Resident's Voice 8February 18, 2010
Date Desc Day Total
12/30/04 On The Border Thu $27.31
01/04/05 Sushi Wok Express Tue $112.93
01/05/05 Baja Fresh Wed $26.78
01/06/05 CACM Thu $315.00
Claim Jumper Thu $141.88
On The Border Thu $29.31
01/10/05 Players Sport Grill Mon $37.78
01/11/05 Sushi Wok Express Tue $87.89
01/12/05 On The Border Wed $27.31
01/13/05 Casa De Pico Thu $30.00
01/17/05 Sushi Wok Express Mon $19.73
01/18/05 Sushi Wok Express Tue $88.16
01/19/05 On The Border Wed $28.31
Resident's Voice 9February 18, 2010
Conclusion:
• We cannot Trust PCM.• Just like a parent will not trust a
child after they tell a lie, we cannot distinguish the validity of anything the General Manager tells us.
Resident's VoiceFebruary 18, 2010 Page 10
Total Monthly Billing for the 9 Cards
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
Jan-
05
Feb
-05
Mar
-05
Apr
-05
May
-05
Jun-
05
Jul-0
5
Aug
-05
Sep
-05
Oct
-05
Nov
-05
Dec
-05
Jan-
06
Feb
-06
Mar
-06
Apr
-06
May
-06
Jun-
06
Jul-0
6
Aug
-06
Sep
-06
Oct
-06
Nov
-06
Dec
-06
Jan-
07
Feb
-07
Drop Page Fields Here
Sum of Amt
Billing
Drop Series Fields Here
Monthly average is $4,411
Resident's VoiceFebruary 18, 2010 Page 11
Who Spent The Money?
0
5000
10000
15000
20000
25000
30000
M.
Joh
ns
J. P
rice
J.S
tora
ge
K.
Rah
n
D.
Lam
b
J. Z
oer
ho
f
R.
Rid
gew
ay
R.
Lee
J. D
avid
User
Do
llar
s Travel
Other
Food
18563
28234
6408
12421
7645 6489
13357
15797
5780
Resident's Voice 12February 18, 2010
Tannins Wine Bar &
Restaurant
Resident's Voice 13February 18, 2010
Background
• Questions were brought up by Residents Voice concerning the $1,036.37 Credit Card Charges that were paid to Tannins by Mr. Johns.
• At the May 1, GRF Board Meeting Mr. Johns explained that, “These charges were for catered meals for the Boards at their monthly Board Meetings.”
Resident's Voice 14February 18, 2010
Analysis Background
• Tannins is located in San Juan Capistrano, which is 30 miles round trip from the Laguna Woods Admin Bldg.
• Luncheons normally are planned for 11 Board Members and 3-5 Staff people.
• Board Meetings are held on the 1st, 2nd & 3rd Tuesday of each month.
Resident's Voice 15February 18, 2010
Tannins Wine Bar & RestCredit Card Charges
• 09/12/06 Tannins Wine Bar & Rest $154.36• 09/19/06 Tannins Wine Bar & Rest $151.50• 10/03/06 Tannins Wine Bar & Rest $188.83• 10/04/06 Tannins Wine Bar & Rest $157.21• 09/28/06 Tannins Wine Bar & Rest $198.53• 10/17/06 Tannins Wine Bar & Rest $185.94
Total $1,036.37
Non-Tuesdays $ 355.74
Resident's Voice 16February 18, 2010
Conclusion
• YES! Mr. Johns could have paid for catered lunches for the Boards.
• YES! Mr. Johns could have paid for other catered luncheons that did NOT include the Boards.
• No one said that, “Mr. Johns ONLY used his GRF Credit Card for his personal use.”
Resident's Voice 17February 18, 2010
S at the S&S
Resident's Voice 18February 18, 2010
“Splashes” at the
Surf & Sand
Resident's Voice Page 19 February 18, 2010
Resident's Voice Page 20 February 18, 2010
“Ocean View”
From every table
“Outstanding Food”
Resident's Voice 21February 18, 2010
“Splashes” on their Website
• Prompt Seating: Yes• Good for kids: No• Make Reservations: Yes• Good for Groups: No• Romantic: Yes• Expensive: Yes
• Ambience: $ Y $ E $ S $
Resident's Voice 22February 18, 2010
Charges at “Splashes” by
GM Milt Johns• 03/24/05 Thursday $40.10
• 03/24/05 Thursday $326.86
• 08/17/05 Wednesday $371.08
• 10/22/05 Saturday $179.32• _______• Total $917.36
Resident's Voice 23February 18, 2010
Some Observations
• None of the days fell on a Board Meeting Tuesday.
• Splashes does not cater meals, except as Room Service.
• Surf & Sand has 14 Meeting Rooms the smallest of which have a 30 person capacity for Banquets.
“Expense Reimbursements!”
February 18, 2010 Resident's Voice 24
Resident's Voice 25February 18, 2010
Expense Reimbursements
• With the legislative changes to the Davis Stirling Act, the Home Owners Associations are limited in what information they are NOT obligated to provide to the owners.
• Residents received 2 years of Expense Reimbursement records and review of these records questions the legal and ethical use of these charges by PCM.
Resident's Voice 26February 18, 2010
• Expenses are used as deductions in the IRS tax computations.
• IRS defines legitimate expenses as those costs that have a direct benefit to the corporate owners.
• They also compare expenses with those of like industries, in our case (Home Owner Associations).
• With that in mind, do the following sound to you as legitimate expenses:
Resident's Voice 27February 18, 2010
General Ledger
$40.05Chris Trapp Mileage Reimbursement
Resident's Voice Page 28 February 18, 2010
Expense Reimbursement
$40.05Clippers Game
Travel from PCM to Staple Ctr to PCM of 90 miles for Staff Outing. OK’d by M. Johns
Resident's Voice 29February 18, 2010
• The following are samples of one of nine divisions in PCM (the Finance Div).
• To minimize the amount of data, only expenses associated with food/meals are included in this information.
• The Finance Division is divided into 6 Work Centers– 300, 310, 311, 330, 360, 370
Resident's Voice 30February 18, 2010
# Emp
Wk Ctr Wk Ctr Desc Total
4 300Financial Services
Admin $241.51
13 310 Accounting $3,033.48
3 311 Warehouse $2,104.59
4 330Budget & Financial
Planning $2,554.82
14 360 MIS $840.13
5 370 Purchasing $2,718.16
43 Food Total$11,492.6
9
Resident's Voice 31February 18, 2010
Work Center 310 – Accounting (13 Employees.)
• The following slide is a listing of some of the charges associated with Food and Travel for Food.
Resident's Voice 32February 18, 2010
Wk Ctr Date Wk Ctr Desc Description Total
31002/09/
05 Accounting Janet Retirement $42.36
04/07/
05 Accounting Audit debriefing with accountants $47.04
04/21/
05 Accounting End of Audit Celebration $139.77
05/04/
05 Accounting 1st Qtr BD Lunch $103.34
06/22/
05 Accounting 2nd Qtr Staff Luncheon $191.46
Travel - 2nd Qtr Staff Luncheon $42.99
08/24/
05 Accounting 3rd Qtr Staff Luncheon $185.25
12/02/
05 Accounting 4th Qtr Staff Luncheon $188.44
12/09/
05 Accounting Holiday Luncheon $559.57
Travel - Holiday Lunch $5.92
04/07/
06 Accounting End of Audit Staff Celebration $216.66
Travel - End of Audit Staff Celebration $5.54
06/27/
06 Accounting 1st Qtr Staff Luncheon $246.72
Travel - 1st Qtr Staff Luncheon $3.45
09/21/
06 Accounting 2nd Qtr Staff Luncheon $232.17
Travel-2nd Qtr Staff Luncheon $14.08
10/21/
06 Accounting 3rd Qtr Staff Luncheon $194.22
11/14/
06 Accounting Holiday Luncheon - Accounting Staff $358.23
Travel-Holiday Luncheon - Accounting Staff $13.11
12/21/
06 Accounting 4th Qtr Staf Luncheon $243.16
Resident's Voice 33February 18, 2010
Work Center 370 – Purchasing (6 Employees)
• The following slide is a listing of some of the charges associated with Food and Travel for Food.
Resident's Voice 34February 18, 2010
Date Wk Ctr Desc Description Total
01/06/05 Purchasing Nicole Review Lunch $46.00
02/03/05 Purchasing Nicole BD lunch w June,Delorie,Debbie,James $152.00
02/16/05 Purchasing Farr's review lunch $48.00
05/17/05 Purchasing Raul,Jim,Leo,Delorie,Nicole,James $228.86
06/02/05 Purchasing Debbies BD lunch w Gina,Nicole,James,Delorie $128.00
07/29/05 Purchasing Debbie's review lunch $62.00
08/03/05 Purchasing Gina's review lunch $58.00
08/22/05 Purchasing Mtg lunch with Debbie $22.00
09/15/05 Purchasing Delories BD Lunch w James, Debbie, Nicole $108.00
10/20/05 Purchasing Zoehof Lunch $29.00
11/03/05 Purchasing Gina BD Lunch w James,Debbie,Delorie,Nicole $130.00
11/08/05 Purchasing Parking for Marriott Luncheon $4.00
12/14/05 Purchasing Xmas Lunch w James,Nicole,Gina,Delorie $513.00
01/05/06 Purchasing Nicole's Review Lunch $32.00
02/02/06 Purchasing Nicole's BD Lunch w James,Delorie,Debbie,Gina $137.00
02/21/06 Purchasing Delorie's Review Lunch $63.00
04/18/06 Purchasing Gina's review lunch $53.00
06/13/06 Purchasing Dinner w consultant - Towers Hair Salon $45.00
07/25/06 Purchasing Debbie BD lunch w James,Gina,Nicole,Delorie $123.00
08/09/06 Purchasing Debbie's review lunch $40.00
08/22/06 Purchasing Janet's BD Valet Parking $6.00
09/07/06 Purchasing Delorie BD Lunch w Debbie,James,Gina,Nicole $130.00
11/07/06 Purchasing Gina BD Lunch w Delorie,Debie,Nicole,James $108.00
11/30/06 Purchasing Xmas Lunch w debbie,Scott,Gina,Maggie,Delorie,Nicole,Raul,James $441.30
$2,718.16
Resident's Voice 35February 18, 2010
• The following is a subset of the charges on the prior page for Work Center 370.
• Reading these charges is indicative of the extravagant use of the Mutuals money for meals.
Resident's Voice 36February 18, 2010
Date Description Total02/03/05 Nicole BD Lunch w June,Delorie,Debbie,James $152.00
05/17/05 Raul,Jim,Leo,Delorie,Nicole,James $228.86
06/02/05 Debbies BD Lunch w Gina,Nicole,James,Delorie $128.00
09/15/05 Delories BD Lunch w James, Debbie, Nicole $108.00
11/03/05 Gina BD Lunch w James,Debbie,Delorie,Nicole $130.00
12/14/05 Xmas Lunch w James,Nicole,Gina,Delorie $513.00
02/02/06 Nicole's BD Lunch James,Delorie,Debbie,Gina $137.00
07/25/06 Debbie BD Lunch w James,Gina,Nicole,Delorie $123.00
08/22/06 Janet's BD Lunch Valet Parking $6.00
09/07/06 Delorie BD Lunch w Debbie,James,Gina,Nicole $130.00
Parking-Delorie BD Lunch w Debbie,James,Gina,Nicole $5.00
11/07/06 Gina BD Lunch w Delorie,Debie,Nicole,James $108.00
11/30/06Xmas Lunch w debbie,Scott,Gina,Maggie,Delorie,Nicole,Raul,James $441.30
Grand Total $2,210.16
(BD = Birth Day)
Resident's Voice 37February 18, 2010
How Did The Owners Benefit From These
Expenses?
You’ll have to be the judge of that?
Resident's Voice 38February 18, 2010
Conclusion:
• We cannot Trust PCM. They have a different view of what is in our best interest.
Resident's Voice Page 43 February 18, 2010
The Boards“A former GRFBoard Member from 2003-2005, stated that, “He had NEVER seen the Credit Card Billing Statements or knowingly authorized their usage.”
Whom should you believe?
Resident's Voice Page 44 February 18, 2010
“In addition to the GRF Director, former United & Third Directors:
Ray Barrett, Art Welch, Presidents, Connie Grundke, Treasurer, and Charlene Sydow, Kay Margason, Larry Dersh, June Todd, Barbara Parker, Don Kornreich, and Dominic Burrasca, Directors have also never seen or been involved with the charges and knowingly authorized the use of these Credit Cards.”
Resident's Voice 45February 18, 2010
Why is that?
Most Board members do NOT have the knowledge or skill to review all of the
information that is potentially available during a budget cycle.
As a result, they rely entirely on PCM to provide the necessary information to
justify their budget.
Resident's Voice 46February 18, 2010
The Consequence!Over the past 35 years!
PCM
Director
Resident's Voice 47February 18, 2010
How do we solve the problem?
Find and Elect new Board Members who will work toward taking back control of our Village!
Resident's Voice 48February 18, 2010
Do YOU Believe That We Have A Problem ?
• We can ignore the Legal vs. Illegal discussions, since that is a lower priority at this time. However,
• Are the expenses justifiable and ethical?
–NO!• Could these costs reflect how PCM approaches all of
our business costs?
–YES
Resident's Voice 49February 18, 2010
How did we get into this mess?• Lack of oversight by the Boards of Directors!
– Most Directors only know what PCM tells them.
• Unwarranted Trust in PCM to do the “right” thing!– Lack of knowledge forces Directors to rely too heavily on PCM.
• A Corporate Attorney whose interests are too closely related to PCM.
– Attorney does not have a cohesive relationship with the Boards and will look toward PCM’s needs rather than the needs of our Mutuals.
Resident's Voice 50February 18, 2010
The Crash !• We had an opportunity to remedy this with
the 2007 Management Agreement.• Our Boards took it upon themselves to write
the agreement ignoring the advice of an independent attorney.
• We are now faced with potential consequences of PCM’s actions that will impact our assessments.
The End
February 18, 2010 51Resident's Voice