TWO STORIES…..ONE COMMON DENOMINATOR

COVER UP??? OR SPECULATION???

STORY 1. USA FH’S FINANCIAL LOSS IN 2008

• LOSS IN 2008 $ 1.112 MILLION ON $ 6.034 MILLION REVENUE• USA FH LOSS WITHOUT FOUNDATION $ 574K• BIGGEST LOSS IN USA FH HISTORY• PRIOR YEARS RESULTS: 2006 - 180K, 2007 -70K • ANNUAL REPORT 2008 LOSS NOT MENTIONED OTHER THAN IN FINANCIALS• ANNUAL REPORT 2009 REPORTED RESULTS FOR 2009 BUT NO REFERENCE TO

2008• FROM 2008 OF $ 1.112 MILLION TO 2009 216k = $ 1.328 MILLION

TURNAROUND• MAY 2008 BOARD MEETING TREASURER REPORTED:”HAD SOME ERRORS IN

2008 BUDGET. STAFF WILL REDO BUDGET AND PRESENT A BALANCED BUDGET IN THREE WEEKS

• NOVEMBER 2008 BOARD MEETING: CHAIR F&A COMMITTEE: “ 2008 YEAR END PROJECTIONS ARE STILL BEING REVIEWED”

• NOVEMBER BOARD MEETING/EXECUTIVE SESSION: DIRECTORS DECIDED TO FIRE EXEC. DIRECTOR

• SUBSEQUENT MEETING WITH EXEC. DIR.’S ATTORNEY MADE BOARD TO RECONSIDER IMMEDIATE FIRING , DREW UP CONTRACT UNTIL Sep. 2009 ALLOWING EXEC. DIR. STAY WITHOUT ROLE/FUNCTION

• JAN 2009 BOARD MEETING: PAM HIXON ELECTED CHAIR FOR A TWO YEAR TERM. JIM JOHNSON DIRECTOR WILL WORK CLOSELY WITH HER AS HER ASSOCIATE

• FEB. 2009: HEATHER LEWIS, USAFH DIRECTOR TAKES OVER AS COO AND RECEIVES COMPENSATION. BOARD MADE NO ANNOUNCEMENT

• NO REFERENCE AT ANY BOARD MEETING IN 2009 TO HUGE LOSS. NO EXPLANATION EVER GIVEN.

• NOV. 2009 BOARD MEETING: CHAIR F&A REPORT: “IN 2008 THE $ 500,000 LOST BASED ON EXPENSES;NOT INVESTMENT LOSSES

• JUNE 2009 CHAIR F&A REQUESTED FINANCE DEPT. TO PROVIDE EXPLANATIONS FOR SUBSTANTIAL LOSS POSTED IN 2008. ALSO A BANK ACCOUNT WAS NOT RECONCILED WITH A $ 50,000 DIFFERENCE.

6 MONTHS AFTER THE FINANCIAL YEAR 2008 ENDED STILL N CLEAR FINANCIAL PICTURE• IT WAS RUMORED THAT PREVIOUS AUDITORS “BKD” DECLINED TO PERFORM AN

AUDIT AGAIN• JULY 2009: AUDIT FOR 2008 IN PROGRESS• JULY 6, 2009: AUDITORS WERE ASKED WHETHER THE FOUNDATION GRANT COULD BE

USED FOR PURPOSES OTHER THAN APPLIED FOR AND RESPONDED: “DUE TO THE NATURE OF THE QUESTION AND NO MATTER FOR THE REASON FOR THE QUESTION, WE HAVE TO INVESTIGATE FURTHER DUE TO THE REQUIREMENTS OF OUR AUDIT STANDARDS. THE QUESTION COMBINED WITH OTHER FACTORS HAVE RAISED FLAGS REGARDING THE AUDIT OF USAFH. DUE TO THE FLAGS, WE ARE REQUIRED TO PERFORM A THOROUGH INVESTIGATION.”

• END JULY 2009: A USA FH DIRECTOR, 7 MONTHS AFTER THE 2008 FISCAL HAD ENDED, E-MAILED CHAIR F&A COMMITTTEE AND OTHER DIRECTORS: “WITHOUT HAVING THE 2008 FINANCIALS COMPLETED, THE 2009 FINANCIALS ARE INACCURATE. WE HAVE NO IDEA OF WHERE USA FH STANDS IN REGARDS TO FINANCIALS. THEREFORE I RECOMMEND THAT THE F&A COMMITTEE TAKE STRONGER ACTION BY HIRING AN OUTSIDE FIRM TO CLEAN THIS UP, ESCORTING THE Exec. Dir. AND OTHER PERSONNEL OFF THE PREMISES, INSPECT ALL COMPUTERS AND BLACKBERRYS TO DISCOVER ANY FRAUD AND MISSING DOLLARS.”

• END AUGUST 2009: USA FH ANNOUNCED AND APPOINTED HEATHER LEWIS, DIRECTOR OF THE BOARD, OFFICIALLY AS INTERIMS COO, A POSITION SHE ACTUALLY ALREADY HELD SINCE FEB. 2009. SHEILA WALKER LEFT USA FH TO TAKE ON A CONSULTANT ROLE AND WAS ACCORDED ACCOLADES AND HIGHEST PRAISES FOR HER SERVICE WITH USAFH.

• HEATHER LEWIS WAS PAID A TOTAL OF APPROX. $ 46,000. SUCH COMPENSATION ACCORDING TO THE BYLAWS REQUIRES APPROVAL BY THE BOARD BY MAJORITY VOTE. NO SUCH APPROVAL WAS EVER RECORDED

• 6 WEEKS LATER SHEILA WALKER RESIGNED AND LEFT USA FH AND IS NOW A CONTROLLER AT US TAEKWONDO

• SEPT 2009 ANOTHER USAFH DIRECTOR DRAFTED AN ETHICS COMPLAINT AGAINST THE THEN Chair USA FH PAM HIXON ALLEGING, AMONG OTHER THAT SHE DELIBERATELY MISLED THE USAFH MEMBERSHIP WITH REGARDS TO THE ACTUAL FINANCIAL SITUATION.

• PAM HIXON AT THE May 31st, 2009 BOARD MEETING IN COLORADO SPRINGS ASKED THE CHAIR OF THE Finance & Audit COMMITTEE TO POSTPONE HIS REPORT TO OUR EXEC. SESSION-THEREBY NOT HAVING HIS REPORT RECORDED IN THE MINUTES AVAILABLE TO THE PUBLIC. THE REPORT INDICATED POOR FINANCIAL INTERNAL CONTROLS

• PAM HIXON FAILED TO DISTRIBUTE MINUTES OF THE EXECUTIVE SESSION TO BOARD MEMBERS AND TOLD ONE DIRECTOR THAT SHE DID NOT KEEP THE COPIES AS THEY WERE DESTROYED

• OCT. 2009: A CONFLICT OF INTEREST COMPLAINT INCLUDING FINANCIAL ISSUES WAS FILED AGAINST USA FH’S CHAIR PAM HIXON BUT WITHDRAWN IN RETURN FOR PAM HIXON TO RESIGN. MAIN COMPLAINT WAS BUSINESS RELATIONSHIP WITH HEATHER LEWIS BEING HER BUSINESS ASSOCIATE AND CAMP DIRECTOR AT WHITE MOUNTAIN SPORTS AND FINANCIAL IMPROPRIETIES

• AFTER RESIGNATION FROM HER CHAIR POSITION, PAM HIXON STAYED ON AS A DIRECTOR BUT WAS FORCED TO RESIGN AGAIN

• OCT. 2009: JIM JOHNSON ELECTED AS CHAIR• NOV. 2009: JIM JOHNSON, CHAIR, WAS ASKED TO POSE VARIOUS QUESTIONS AT

THE AGM ABOUT THE EVENTS IN 2008 , AGREED BUT FAILED TO POSE THESE QUESTIONS. HE LIED WHEN STATING THAT THESE QUESTIONS “WERE DISCUSSED IN THE AGM AND BOARD MEETINGS AND AMONG THE MEMBERS OUTSIDE THE MEETING.”

• VARIOUS BOARD MEMBERS CONFIRMED INDEPENDENTLY THAT THEY DO NOT REMEMBER ANYTHING BEING DISCUSSED

• MAY 2010: A YEAR AND 5 MONTHS AFTER THE FINANCIAL YEAR 2008 HAD ENDED THERE WERE SOME LINGERING DOUBTS AMONG SOME USA FH DIRECTORS ABOUT ANY IMPROPRIETIES HAVING OCCURRED IN 2008 HAVING CAUSED THE HUGE LOSS OF $ 1.112 MILLION AND DECIDED TO COMMISSION AN INTERNAL AUDIT WITH SOME INSISTING ON A FORENSIC AUDIT.

• MAY 2010: THE DAVIS GROUP PERFORMED A COMPLIANCE AND CONTROLS REVIEW• JUNE 2010: BOARD MEETING: THE “INTERNAL AUDIT REPORT” WAS PRESENTED IN AN

EXECUTIVE SESSION. • CHAIR JIM JOHNSON, AS ENTERED IN THE MINUTES, STATED TO PROVIDE A SUMMARY

REPORT TO THE MEMBERSHIP BUT NEVER FOLLOWED THROUGH• SUBSEQUENT REQUESTS TO SHARE AUDIT REPORT WERE UNSUCCESSFUL AND

REJECTED• OCT. 2010: A DETAILED ACCOUNTING OF HUGE VARIANCES BETWEEN THE 2009 AND

2008 FINANCIALS AS PER FORM 1040 WERE SUBMITTED TO THE EXEC. DIR. AND DIRECTOR OF FINANCE BUT A DETAILED EXPLANATION WAS NEVER PROVIDED DESPITE NUMEROUS FOLLOW UPS.

• NOV. 2010 AGM: THE EXEC. DIRECTOR WAS ASKED AND AGREED TO POSE VARIOUS QUESTIONS AMONG THEM A RENEWED REQUEST FOR THE BOARD TO MAKE THE AUDIT REPORT AVAILABLE AS PROMISED TO THE MEMBERSHIP BUT QUESTIONS WERE NEVER POSED.

• NOV. 2010 AGM: ELECTION OF DIRECTORS: VARIOUS SEATS ON THE BOARD BECAME OPEN AS THE TERM FOR DIRECTORS JIM JOHNSON, BILLIE AHLUWALIA AND HEATHER LEWIS WERE UP AT THE END OF 2010. AFTER A YEARLONG SEARCH THE NOM. COMMITTEE SUBMITTED ITS RECOMMENDATIONS/APPOINTMENTS TO THE BOARD PRIOR TO THE AGM. ONE OF THE APPOINTED INDEPENDENT DIRECTORS WAS FOUND NOT TO BE INDEPENDENT AND THUS THE BOARD AFTER AN EXECUTIVE SESSION OPENED UP THE FLOOR, AMONG THEMSELVES, AND NOMINATED JIM JOHNSON AS INDEPENDENT DIR. IN VIOLATION OF THE BY-LAWS AND BILLIE AHLUWALIA AND HEATHER LEWIS AS AT LARGE DIRECTORS.

• ALL THREE WERE ELECTED AND WERE KEY PERSONS IN THE 2008/2009 FINANCIAL PROBLEMS: Billie AHLUWALIA, AS DIR. AND CHAIR F&A, HEATHER LEWIS, AS DIR. AND COO FEB. –DEC. 2009 AND JIM JOHNSON, AS DIR. AND CLOSE ASSOCIATE OF CHAIR PAM HIXON

• DEC. 2010: STRONG PROTESTS INVOLVING THE USOC PROMPTED USA FH TO SCHEDULE A “DO-OVER ELECTION” TO BE HELD FEB. 13, 2011

• FEB. 13, 2011: IN THE “DO-OVER ELECTION” JIM JOHNSON AND BILLIE AHLUWALIA WERE ON THE SLATE FOR AN AT-LARGE POSITION AND SINCE HEATHER LEWIS DID NOT MAKE THE SLATE, THE BOARD AGAIN SOLICITED NOMINATIONS FROM THE FLOOR, I.E. AMONG THEMSELVES AND HEATHER LEWIS WAS ADDED TO THE SLATE OF 5 MAKING IT 6 WHICH IS IN VIOLATION OF THE BY-LAWS.

• ALL THREE WERE ELECTED• SUBSEQUENTLY, IN MAY 2011, A COMPLAINT WAS FILED WITH THE USA FH

JUDICIAL COMMITTEE TO OVERTURN THE RESULTS OF THE “DO-OVER ELECTION” ON ACCOUNT OF BY-LAW VIOLATIONS

• MAY 2011 THE JUDICIAL COMMITTEE DECIDED TO ORDER YET ANOTHER ELECTION • MAY 2011 BOARD MEETING: ELECTION WAS HELD AND BILLIE AHLUWALIA AND JIM

JOHNSON WERE ELECTED, WITH HEATHER HAVING RESIGNED EARLIER FROM THE BOARD

• FEB. 13, 2011: AFTER 11 MONTHS THE ETHICS COMMITTEE PRESENTED ITS EVALUATION, CONCLUSION AND RECOMMENDATION TO THE BOARD ABOUT A COMPLAINT CITING VARIOUS IMPROPRIETIES HAVING OCCURRED IN 2008

• CHAIR ETHICS COMMITTEE STATED: “ THE INVESTIGATION HAS BEEN SEVERELY HAMPERED BY A LACK OF RECORDS AND/OR GOOD RECORD KEEPING, PARTICULARLY USA FH’S ACCOUNTING AND AUDIT RECORDS. THE COMPLAINANT PROVIDED DETAILED RECORDS AS PART OF HIS CLAIM, BUT DUE TO AN ABSENCE OF RECORDS FROM OTHER PARTIES AND SOURCES, IT HAS BEEN VERY DIFFICULT TO PROVIDE AN INDEPENDENT SUBSTANTIATION OF FACTS. SUBSTANTIATIONS HAVE TO BE STRONG AND EXTENSIVE ENOUGH TO REACH THE BURDEN OF PROOF NECESSARY TO CONFIRM AN ETHICS VIOLATION. WHEN CONSIDERING EVIDENCE PROVIDED FROM JUST ONE SOURCE THERE IS ALWAYS DOUBT THAT ONLY PART OF THE PICTURE IS BEING PRESENTED EVEN IF THIS IS INADVERTENT. IT IS NOT POSSIBLE TO CONFIRM A VIOLATION OF HEARSAY ALONE.”

• THE REPORT WAS VENTED BY A USA FH DIRECTOR, AN ATTORNEY BY PROFESSION, AND THIS DIRECTOR RESIGNED UNEXPECTEDLY FROM THE BOARD BEFORE HER TERM WAS UP AT THE END OF 2012.

• FEB. 2012 BOARD MEETING: 1.1/2 YEARS AFTER THE AUDIT WAS PERFORMED , THE BOARD INTRODUCES A MOTION, SECONDED BY JIM JOHNSON:

• “TO NOT ACCEPT THE AUDIT REPORT OF 2010 BECAUSE IT WAS NOT AN INDEPENDENT REPORT.”

• THE PRINCIPAL OF THE DAVIS GROUP WHO PERFORMED THE AUDIT IS ALSO AN USA FH UMPIRE.

• FEB. 15, 2011: CHAIR OF ETHICS COMMITTEE STATED: ‘ “HAVE BEEN THROUGH AND INVESTIGATED YOUR COMPLAINT IN MORE DETAIL

THAN ANYONE ELSE AND HAVING LEARNED A LOT ABOUT THE OPERATING & ACCOUNTING PROCEDURES AT USA FH FROM 2007 – 2009, I FULLY UNDERSTAND YOUR VIEW POINT. IT WOULD NO DOUBT HAVE HELPED IF THE ETHICS COMMITTEE HAD JUST STARTED AN NINVESTIGATION WITH YOUR ORIGINAL SUBMISSION IN SEPT. 2009 – BUT HINDSIGHT IS ALWAYS 20:20

FINANCIAL COMPARISON

2006 2007 2008 2009 2010 2011REVENUE 5.061 6.125 6.034 7.609 6.866 7.043EXPENSES 5.070 6.020 7.146 7.393 6.589 6.959INCOME* -9 105 -1.112 216 277 84

USAFH INCOME -180 -70 -574 -88 99 120

* INCLUDES US FH FOUNDATION• LOSS OVER 6 YEAR PERIOD FOR USA FH -693K

FINANCIAL COMPARISON

2006 2007 2008 2009 2010 2011EXPENSESGEN. ADMIN. 615 887 924 853 882 908MARKETING 241 417 495 308 332 368VOLUNTEER ADM. 109 59 364 169 38 29OLYMPIC&SPORTDEVELOPMENT 1.469 1.771 2.275 2.644 2.588 2.704INTERNTL.TEAMS 1.835 2.125 2.163 3.090 2.470 2.608MEMBER SERVICES 750 701 836 317 273 267COACHES COMP.* 307 449 465 558 562 N/A*TW, LB, NC

FINANCIAL COMPARISON 2006 2007 2008 2009 2010 2011REVENUESREGISTRATIONFEES 2.672 3.187 3.444 3.224 3.263 3.586UMPIRE FEES 119 152 178 212 235 292OTHER FEES 199 239 283 1.104 371

461MEMBERSHIP DUES 588 608 774 682 802 969

FINANCIAL COMPARISON 2008 2009 2010 2011

HP EXPENSES 2.558 3.089 2.411 N/AHP REVENUE 4.032 982 995PROFIT /LOSS 1.474 2.107 1.416

FUTURES EXPENSES 1.484 1.608 1.560FUTURES REVENUE 285 2.345 2.421PROFIT /LOSS 1.199 737 861

NTL. HOCKEY FEST. EXP. N/A 262 526NTL. HOCKEY FEST. REV. N/A 452 211PROFIT/LOSS N/A 190 315

OTHER EXPENSES 675 773 874OTHER REVENUE - 1.070 343PROFIT LOSS 675 297 531

COMMENTARY ON FINANCIALS• 2008 LOSS OF $ 1.112 MILLION OVERALL AND $ 574K LOSS FOR

USA FH WITHOUT ITS FOUNDATION IS JUMPING OUT OF COMPARISON

• REVENUES ARE IN LINE WITH OTHER YEARS EXCEPT FOR “OTHER FEES” SHOWN AS $ 283K IN 2008 COMPARED WITH

$ 1.104 MILLION IN 2009????• EXPENSES FOR GENERAL ADMINISTRATION AND MARKETING ARE

AT THE HIGHEST LEVEL IN 2008 WHEN COMPARED WITH ALL OTHER YEARS????

• EXPENSES FOR OLYMPIC & SPORT DEVELOPMENT AND INTERNATIONA TEAMS SEEM TO BE IN LINE EXCEPT FOR 2009 OF $ 3.090 MILLION VERSUS 2008 OF $ 2.163

COMMENTARY ON FINANCIALS• HIGH PERFORMANCE REVENUE IN 2008 IS SHOWN AS $ 4.032 IS

HIGHLY QUESTIONNABLE AS HISTORICALLY EXPENSES WERE ALWAYS SIGNIFICANTLY HIGHER THAN REVENUE. 2008 IS THE ONLY YEAR WHERE A PROFIT IS SHOWN MADE FROM HIGH PERFORMANCE.????

• FUTURES REVENUE IN 2008 OF $ 285K IS UNREALISTICALLY LOW AS REVENUE IS ALWAYS HIGHER THAN EXPENSES AS SHOWN IN 2009 AND 2010. FUTURES IS THE SINGLE MOST PROFITABLE ITEM FOR USA FH.

• THERE ARE NUMEROUS OTHER VARIANCES WHEN COMPARING 2008 TO THE PREVIOUS AND ENSUING YEARS

• USA FH HAS NEVER EVER REPORTED ANY OF THIS AND THE VARIANCES ARE A CONFIRMATION THAT SOMETHING WAS NOT CORRECT!!!

STORY 2. USFH FOUNDATION GRANT MISAPPROPRIATION

• NOV.11, 2007 : EXEC. DIR. SHEILA WALKER SUBMITTED A REQUEST FOR A CONTINGENCY GRANT FOR $ 150,000 TO COVER EXPENSES AT THE 2008 BEIJING OLYMPICS PROVIDED USA FH QUALIFIES IN APRIL 2008 IN RUSSIA

• REQUEST WAS SUPPORTED BY A LIST OF EXPENSES FROM QUALIFICATION THROUGH THE OLYMPIC GAMES SPECIFICALLY LISTING AMONG OTHER HOLLAND SERIES, SPORTSPSYCHOLOGIST, VIDEOGRAPHER PREPARED FROM THE 2008 BUDGET

• COVER LETTER STATED THAT THE REQUEST “ HAD RECEIVED THE APPROVAL OF THE BOARD OF DIRECTORS OF THE USA FH BOARD. USAFH BOARD MEMBERS OF THE FOUNDATION RECUSED THEMSELVES FROM VOTING SO THAT THERE MAY BE NO PERCEPTION OF CONFLICT OF INTEREST

• THE REQUEST WAS DATED 11/6/2007 ALMOST TWO WEEKS PRIOR TO THE NOV. 17/18, 2007 BOARD MEETING.

• THERE IS NO ENTRY IN THE MINUTES OF THE NOV. 17/18 BOD MEETING NOR IN THE MINUTES OF THE Aug. 1, 2007 BOD MEETING

• US FH FOUNDATION BOARD APPROVED THE GRANT AND PAID $ 150,000 UPON SUCCESSFUL QUALIFICATION

• MAY 2008 USA FH RAN A FUNDRAISING CAMPAIGN “BEIJING & BEYOND” LISTING AMONG THE ITEMS DONATIONS WERE SOLICITED FOR EXACTLY THE SAME ITEMS LISTED IN THE GRANT REQUEST: HOLLAND SERIES, SPORTSPSYCHOLOGIST, VIDEOGRAPHER

• PRIOR TO THE AUDIT TIME FOR THE 2008 FINANCIAL YEAR IN MID 2009, THE TREASURER OF THE FOUNDATION RECEIVED A LISTING FROM ANOTHER TRUSTEE AND USAFH DIRECTOR CONFIRMING THAT THE HOLLAND SERIES, SPORTSPSYCHOLOGIST AND VIDEOGRAPHER WERE PAID FOR FROM THE DONATIONS

• EARLY JULY 2009 APPROACHED FOUNDATION AUDITORS –USA FH HIRED THE SAME AUDITORS – WHETHER A GRANT FOR SPECIFIC ITEMS COULD BE USED FOR OTHER PURPOSES

• JULY 6, 2009: THE AUDITORS, STOCKMAN,KAST RYAN & CO RESPONDED: “DUE TO THE NATURE OF THE QUESTION AND NO MATTER FOR THE REASON FOR THE QUESTION, WE HAVE TO INVESTIGATE FURTHER DUE TO THE REQUIREMENTS OF OUR AUDIT STANDARDS, THE QUESTION COMBINED WITH OTHER FACTORS HAVE RAISED FLAGS REGARDING THE AUDIT OF USA FH. DUE TO THE FLAGS, WE ARE REQUIRED TO PERFORM A THOROUGH INVESTIGATION”

• THE AUDITORS NEVER INFORMED ABOUT THEIR THOROUGH INVESTIGATION EXCEPT TOLD THE TREASURER TO SEEK LEGAL ADVICE FROM AN ATTORNEY

• JULY 2, 2009: THE EXEC. DIR. IN AN E-MAIL TO THE USAFH CHAIR AND ALSO THE CHAIR OF THE USFH FOUNDATION REPORTED ABOUT THE CONTACT TO THE AUDITORS BY THE TREASURER AND STATED: “ HIS INTRUSION INTO THE CONFIDENTIAL RELATIONSHIP BETWEEN USA FH AND ITS AUDITORS IS UNACCEPTABLE. NEEDLESS TO SAY OUR AUDITOR WOULD NOT AND WAS NOT SO UNPROFESSIONAL AS TO DISCLOSE ANY INFORMATION TO A THIRD PARTY.”

• THE SAME AUDIT FIRMS WAS HIRED BY USA FH AND USFH F SINCE THE AUDITORS DECLARED THAT “BOTH ORGANIZATIONS ARE FINANCIALLY INTERRELATED.”

• AUGUST 16, 2009 USFH F BOAR MEETING: A MOTION BY THE TREASURER WAS INTRODUCED: “USA FH SHOULD BE DIRECTED TO RETURN IMMEDIATELY TO USFH F THOSE FUNDS FROM THE $ 150,000 GRANT WHICH WERE NOT USED FOR THEIR SPECIFIED AND INTENDED PURPOSE AS PER THE USA FH GRANT REQUEST OF 11/6/2007

• THE MINUTES STATE: “AFTER DISCUSSION THE MOTION WAS TABLED UNTIL MORE INFORMATION CAN BE SECURED BY THE USA FH BOARD, AND A LEGAL OPINION SOLICITED

• THE USA FH DIRECTORS ON THE BOARD OF THE FOUNDATION BILLIE AHLUWALIA, DIR. & CHAIR FINANCE & AUDIT COM. PAM HIXON, CHAIR USA FH LISA WILKINS, DIR. JIM JOHNSON, DIR.• OCT. 2009 PAM HIXON WAS REPLACED BY JIM JOHNSON UPON HER RESIGNATION AS USA

FH CHAIR DUE TO THE THREAT OF AN INVESTIGATION SURROUNDING CONFLICT OF INTEREST AND OTHER FINANCIAL ISSUES AMONG THEM THE CONTINGENCY GRANT

• NOV. 2009 AGM: MINUTES DO NOT CONTAIN ANY REFERENCE TO THE BOARD HAVING SECURED MORE INFORMATION OR SOLICITED A LEGAL OPINION ABOUT THE GRANT ISSUE

• NOV. 2009 AGM: JIM JOHNSON, CHAIR HAD AGREED TO POSE QUESTIONS ON BEHALF OF THE FOUNDATION TREASURER AMONG THEM THE GRANT ISSUE

• DEC. 2009 FOUNDATION BOARD MEETING: THE MOTION TABLED AT THE PREVIOUS BOARD MEETING WAS NOT REVISITED BUT THE MINUTES WITH THE MOTION AND THE OUTCOME WERE APPROVED.

• DEC. 27, 2009 CHAIR USA FH STATED AFTER NUMEROUS REQUESTS: “ THE QUESTIONS THAT YOU POSED WERE DISCUSSED IN THE AGM AND BOARDMEETINGS AND AMONG THE MEMBERS OUTSIDE THE MEETING. WE NORMALLY INCLUDE ONLY TRANSACTIONS AND NOT DISCUSSIONS IN THE MINUTES OF THE AGM AND BOARD MEETINGS.”

• MINUTES OF SAID MEETING CONTRADICT THE CHAIR’S STATEMENT AS PER ITEM 4: “ OPEN TO GUEST COMMENTS AND QUESTIONS NOTED WITH THE QUESTIONS LISTED BUT NOT THE ONES TO BE POSED BY THE CHAIR.

• MINUTES OF SAID MEETING ON NOV. 21, 2009 WERE POSTED IN MARCH 2011, SOME 14 MONTHS LATE WHILE BY-LAWS REQUIRE MINUTES TO BE POSTED LATEST 30 DAYS AFTER A MEETING

• JAN. 3, 2010 DIR. BILLIE AHLUWALIA CONFIRMING IN WRITING: “SORRY I DO NOT RECALL ANY Q&A AT THE AGM AND DIR. LISA WILKINS STATED” HAVE NO MEMORY ABOUT THE QUESTIONS AT THE AGM.

• JAN. 2010 – MARCH 2010 JIM JOHNSON, CHAIR WAS MADE AWARE OF HIS FALSE STATEMENTS AND REQUESTED TO TELL THE TRUTH BUT STALLED UNTIL HE SUGGESTED TO FILE A COMPLAINT WITH THE ETHICS COMMITTEE AND ITS CHAIR SIMON GRAY

• MARCH 31, 2010 ETHICS COMPLAINT FILED AND ACCEPTED CONTAINING VARIOUS FINANCIAL ISSUES AMONG THEM THE CONTINGENCY GRANT.

• OCTOBER 2010: 7 MONTHS PASSED WITHOUT ANY PROGRESS REPORTED BY THE CHAIR OF THE ETHICS COMMITTEE ABOUT ITS INVESTIGATION DESPITE NUMEROUS REQUESTS

• A MEMBER OF THE ETHICS COMMITTEE CONFIRMED ON OCT. 7, 2010 NOT HAVING BEEN INFORMED THAT AN INVESTIGATION WAS UNDER WAY. “ I AM UNAWARE OF THE COMPLAINT. CAN YOU ENLIGHTEN ME?”

• END OF OCTOBER 2010 CHAIR ETHICS COMMITTEE STATED THAT THE INVESTIGATION WOULD BE FINALIZED BY THE END OF 2010 SOME 9 MONTHS AFTER THE INVESTIGATION WAS STARTED

• JAN. 10,2011 : SINCE THE INVESTIGATION WAS STILL NOT FINALIZED, A COMPLAINT WAS FILED WITH THE CHARITIES COMPLIANCE INVESTIGATOR OF THE STATE OF COLORADO ABOUT A POTENTIAL VIOLATION OF THE COLORADO CHARITABLE SOLICITATION ACT (CCSA)

• FEB. 2011 USA FH ATTORNEY PROVIDED EVIDENCE WHICH WAS NOT SHARED TO REFUTE• EARLY FEB. 2011 THE ETHICS COMMITTEE SUBMITTED ITS REPORT. WITH REFERENCE TO

THE CONTINGENCY GRANT AND AS GENERAL COMMENTS THE REPORT STATED: “THE INVESTIGATION HAS BEEN SEVERELY HAMPERED BY A LACK OF RECORDS AND/OR GOOD RECORD KEEPING, PARTICULARLY USA FH’S ACCOUNTING AND AUDIT RECORDS. THE COMPLAINANT HAS PROVIDE DETAILED RECORDS AS PART OF HIS CLAIM, BUT DUE TO AN ABSENCE OF RECORDS FROM OTHER PARTIES AND SOURCES, IT HAS BEEN VERY DIFFICULT TO PROVIDE AN INDEPENDENT SUBSTANTIATION OF FACTS. SUBSTANTIATIONS HAVE TO BE STRONG AND EXTENSIVE ENOUGH TO REACH THE BURDEN OF PROOF NECESSARY TO CONFIRM AN ETHICS VIOLATION. WHEN CONSIDERING EVIDENCE PROVIDED FROM JUST ONE SOURCE THERE IS ALWAYS DOUBT THAT ONLY PART OF THE PICTURE IS BEING PRESENTED EVEN IF THIS IS INADVERTENT. IT IS NOT POSSIBLE TO CONFIRM A VIOLATION ON HEARSAY ALONE.”

• Feb. 13, 2011: THE ETHICS COMMITTEE REPORT WAS PRESENTED TO THE BOARD AT ITS MEETING IN AN EXECUTIVE SESSION WITH NO RECORDINGS AND FOLOWING THE BOARD MADE VARIOUS MOTIONS AMONG THEM: “WITH RESPECT TO THE SPECIFIC RECOMMENDATIONS MADE, THE ETHICS COMMITTEE FOUND NO EVIDENCE OF FRAUD, MALFEASANCE, AND MISAPPROPRIATION OF FUNDS.” ALL IN FAVOR INCLUDING DIR. HEATHER LEWIS WHO HAD KNOWLEDGE AS LATER EXPLAINED THAT THE GRANT WAS ALWAYS POSTIONED AS EXTRA MONEY – INSTEAD OF THE ORIGINAL GRANT BUT STILL VOTED IN THE AFFIRMATIVE.

• MARCH 17, 2011: THE CHARITIES COMPLIANCE INVESTIGATOR PROVIDED HIS RULING/DECISION ON THE COMPLAINT: HE INVESTIGATED FOR ANY POSSIBLE VIOLATION OF TITLE 6, ARTICLE 16, C.R.S., THE COLORADO CHARITABLE SOLICITATION ACT AND FOUND NO VIOLATION, HOWEVER , DID NOT HAVE A MAJOR PIECE OF EVIDENCE WHICH ONLY SURFACED IN MAY 2011

• MAY 2011: AN E-MAIL SURFACED WRITTEN BY THE EXEC. DIR. SHEILA WALKER ON JULY 16, 2009 TO THE INTERIMS COO HEATHER LEWIS WITH COPY TO THE PREVIOUS USA FH CHAIR PAM HIXON STATING:

• “THE OLYMPIC CONTINGENCY GRANT WAS ALWAYS POSITIONED AS EXTRA MONEY – NOT INSTEAD OF THE ORIGINAL GRANT – JUST AND FYI.”

• HAVING MADE THE DECISION TO USE THE GRANT “ AS EXTRA MONEY”, THE EXEC. DIR.’S STATEMENT IN THE APPLICATION IS A CONFIRMATION AS TO HOW FRAUDULENT THE REQUEST WAS: “ THE FOUNDATION AWARDING THIS GRANT TO HELP OUR WOMEN PLAYERS TO PERFORM TO THEIR MAX. POTENTIAL IN THE 2008 GAMES AND REALIZE THE OLYMPIC DREAMS OF ALL OF US”

• MAY 2011: BASED ON THIS EXTRAORDINARY PIECE OF EVIDENCE AND ADMISSION THAT THE GRANT WAS USED AS EXTRA MONEY AND NOT AS INTENDED BY THE ORIGINAL GRANT, SUCH EVIDENCE WAS SUBMITTED TO THE CHAIR OF THE ETHICS COMMITTEE AND USA FH EXEC. DIR. STEVE LOCKE WITH THE REQUEST TO REVIEW ITS EARLIER FINDING.

• THE REQUEST WAS DECLINED BY BOTH, THE CHAIR OF THE ETHICS COMMITTEE AND THE EXEC. DIRECTOR

• OCT. 2011 A COMPLAINT WAS FILED WITH THE JUDICIAL COMMITTEE OF USA FH IN THIS MATTER

• OCT. 2011 EXEC. DIR. STEVE LOCKE FILED A COMPLAINT TO REVOKE THE MEMBERSHIP OF RALF HEUSER FOR NOT PAYING THE LEGAL FEES INCUURRED BY USA FH IN SUBMITTING EVIDENCE TO THE CHARITIES COMPLIANCE INVESTIGATOR

• OCT. 2011 RALF HEUSER SUBMITTED EVIDENCE ABOUT ALL ISSUES TO THE USA FH CHAIR COMPLETE WITH SUBSTANTIATION OF EVIDENCE AND EACH AND EVERY MEMBER OF THE BOARD WITH THE REQUEST TO ENTER SUCH EVIDENCE INTO THE MINUTES AT THE NOVEMBER AGM WHEN THE COMPLAINT WAS TO BE HEARD

• NOV. 2011 PRIOR TO THE AGM, A SPECIAL “HEUSER COMMITTEE” ISSUED RECOMMENDATION NOT TO PURSUE MATTER AND WITHDRAW COMPLAINT THUS AVOIDING ISSUES RAISED BY RALF HEUSER NOT TO BECOME PART OF THE PUBLIC RECORD

• NOV. 25, 2011 USA FH’S JUDICIAL COMMITTEE RENDERS DECISION: “UPON CAREFUL REVIEW OF THE COMPLAINT AGAINST USA FH AND ITS BOARD OF DIRECTORS, IT IS OUR VIEW THAT THE SUBSTANCE OF THE COMPLAINT – ALLEGATIONS OF FRAUD, BREACH OF FIDUCIARY DUTIES, AND CONSPIRACY TO MISAPROPRIATE FUNDS – IS OUTSIDE THE SCOPE OF THE JUDICIAL COMMITTEE’S MANDATE BECAUSE IT DOES NOT PERTAIN TO AN (1) ADMINISTRATIVE GRIEVANCE OR A (2) RIGHT –TO-COMPETE ISSUE. THE ALLEGATIONS CONTAINED IN THE COMPLAINT HAVE TO DO WITH THE USA FH’S INTERNAL FINANCIAL MANAGEMENT AND ARE MORE PROPERLY DIRECTED TO THE USA FH BOARD ITSELF, AND FAILING A SATISFACTORY RESPONSE THERE, TO THE ORDINARY LEGAL PROCESS.”

• Dec.2011 USA FH’S CHAIR AND ALSO EXEC. DIR. WERE ASKED IN WRITING TO TAKE THE MATTER TO THE USA FH BOARD

• JUNE 2012 SINCE BOTH USA FH IGNORED THE REQUEST AND DID NOT EVEN RESPOND, THE REQUEST AGAIN WAS RENEWED IN WRITING WITH THE ADVICE THAT THE NEXT STEP WOULD B TO GET THE ORDINARY LEGAL PROCESS INVOLVED

SUMMARY OF INFRACTIONS STORY 2.

• ALL EVENTS CHRONOLOGICALLY REPORTED ARE BASED ON ACTUAL DOCUMENTS AND NOT HEARSAY

• EXEC. DIR. MISREPRESENTED THAT VOTE BY USA FH BOARD HAD TAKEN PLACE AS THERE ARE NOT ENTRIES IN THE MINUTES PRIOR OR AFTER THE DATE OF THE REQUEST.

• THE FOUR USA FH DIRECTORS SERVING ON THE BOARD OF THE FOUNDATION NEVER OBJECTED THAT THIS VOTE WAS A FABRICATION

• USA FH DOMINATES AND EFFECTIVELY CONTROLS ANY DECISION BY THE FOUNDATION BOARD• IN 2009 BOARD MEMBERS WERE: LORI IRELAND, INDEPENDENT RALF HEUSER, INDEPENDENT CHRISTINE HUNSICKER, FORMER USA FH DIRECTOR JEN SHILLINGFORD, SECRETARY FOUNDATION & FORMER PRESIDENT USFHA PAM HIXON, COB USA FH BETTI TINER, DIRECTOR USA FH LISA WILKINS, DIRECTOR USA FH BILLIE AHLUWALIA, DIRECTOR USA FH & CHAIR FINANCE & AUDIT COMMITTEE MANZAR IQBAL, INDEPENDENT & FORMER US NATIONAL TEAM PLAYER/OLYMPIAN/MANAGER

• THE USA FH DIRECTORS DID NOT NOTICE AND /OR OBJECT THAT GRANT REQUEST AND FUNDRAISING CAMPAIGN CONTAINED THE SAME ITEMS, A POTENTIAL MISREPRESENTATION AND EXPOSURE

• USA FH CHAIR , IN A COVER LETTER ENCLOSING THE BROCHURE “ BEIJING & BEYOND” TO ANNOUNCE THE FUNDRAISING CAMPAIGN OMITTED TO INFORM THE POTENTIAL DONORS THAT USA FH ALREADY RECEIVED FUNDS FOR ONE AND THE SAME ITEMS FROM ITS FOUNDATION, A CLEAR MISREPRESENTATION

• THE ETHICS COMPLAINT FILED IN Sep. 2009 AGAINST PAM HIXON, CHAIR USA FH DEMANDING HER RESIGNATION IN VIEW OF CONFLICT OF INTEREST ON ACCOUNT OF A BUSINESS RELATIONSHIP WITH ANOTHER DIRECTOR AND VARIOUS FINANCIAL IMPROPRIETIES INCL. THE GRANT, CAUSED HER TO RESIGN AS CHAIR, DE FACTO ADMITTING THE ALLEGATIONS

• THE USA FH DIRECTORS DID NOT FURTHER INVESTIGATE, THUS VIOLATING THEIR FIDUCIARY DUTIES

• USA FH DIR. LEWIS , A BUSINESS ASSOCIATE TO THE CHAIR DID NOT RESIGN AS WELL DUE TO THE SAME CONFLICT OF INTEREST.

• USA FH DIRECTOR HEATHER LEWIS WAS APPOINTED WITH PAY BY THE BOARD TO TAKE OVER THE USA FH AFFAIRS AS COO INOFFICIALLY IN FEB. 2009, OFFICIALLY IN SEP. 2009. BOARD FAILED TO INFORM THE MEMBERSHIP TO AVOID ANY SUSPICION THAT THE FINANCIAL HOUSE WAS NOT IN ORDER

• HEATHER LEWIS AND PAM HIXON WERE IN A OWNER/EMPLOYEE RELATIONSHIP CAUSING INDEPENDENCY BEING COMPROMISED

• SUCH BUSINESS RELATIONSHIP IS REQUIRED TO BE DECLARED WHEN FILING THE TAX RETURN ON FORM 990 WITH THE IRS BUT WAS FALSELY STATED AND NEVER CORRECTED DESPITE NUMEROUS REQUEST AS BOD DID NOT WANT TO CONFIRM ANY WRONGDOING WHICH WOULD HAVE BEEN A VIOLATION OF THE BY-LAWS.

• BOARD OF DIRECTORS TOLERATED VIOLATION OF BY-LAWS BY NOT INSISTING ON MINUTES BEING POSTED MAX. 30 DAYS AFTER EACH MEETING. VIOLATIONS CONTINUE STILL TODAY.

• USA FH CHAIR JIM JOHNSON MISREPRESENTED AND IN THE PROCESS LIED ABOUT HAVING POSED QUESTIONS AT THE AGM BY STATING THAT WHILE THE QUESTIONS WERE ASKED, USA FH DOES NOT INCLUDE DISCUSSIONS BUT ONLY TRANSACTIONS IN THE MINUTES, HOWEVER, THE MINUTES RECORDED QUESTIONS FROM OTHER MEMBERS

• USA FH CHAIR JIM JOHNSON DID NOT ACT IN GOOD FAITH AND OBSTRUCTED DISCOVERY WHEN NOT POSING/ANSWERING THE QUESTIONS AT THE AGM AND THEREAFTER FOR A PERIODE OF THREE MONTHS.

• AUDITORS FOR USAFH AND USFH F CONFIRMED TO UNDERTAKE A THOROUGH INVESTIGATION BUT NEVER FOLLOWED THROUGH IN VIOLATION OF THE REQUIREMENTS OF THEIR AUDIT STANDARDS

• USA FH’S EXEC. DIR. INTERFERED WITH THE FOUNDATION AUDIT AND OBSTRUCTED THE TREASURER OF THE FOUNDATION TO CARRY OUT HIS FIDUCIARY DUTIES BY HAVING THE AUDITORS NOT ADDRESS THE GRANT ISSUE QUESTION

• USA FH’S EXEC. DIR. MISUSED THE POWER OF HER POSITION/OFFICE TO MAKE THE AUDITORS NOT DISCLOSE/RESPOND TO THE FOUNDATION’S REQUEST FOR CLARIFICATION ON THE GRANT

• USA FH’S EXEC. DIR., WHEN COMPLAINING TO BOTH CHAIRS USA FH AND USFH F ABOUT THE TREAURER, DEFAMED HIS CHARACTER BY DECLARING FALSELY THAT HE INTRUDED INTO THE CONFIDENTIAL RELATIONSHIP OF USA FH /AUDITORS AND LABELED HIM UNPROFESSIONAL

• THE FOUR USA FH DIRECTORS ON THE FOUNDATION BOARD DID NOT MEET THEIR FIDUCIARY DUTIES TOWARDS THE FOUNDATION AS WELL AS THEIR OWN ORGANIZATION BY NOT EXECUTING THE DEMAND TO UNDERTAKE FURTHER RESEARCH AND SOLICIT A LEGAL OPINION INTO THE ALLEGED FRAUD, ESPECIALLY BY BILLIE AHLUWALIA AS CHAIR OF THE F&A COMMITTEE OF USA FH

• THE CHAIR OF THE ETHICS COMMITTEE AND THE CHAIR OF USA FH DID NOT ACT IN GOOD FAITH WHEN ONLY CONCLUDING THE INVESTIGATION IN 10.1/2 MONTHS AND BEING EVASIVE WHEN A STATUS REPORT WAS REQUESTED.

• THE ATTORNEY REPRESENTING USA FH AND USA FH ITSELF DID NOT ACT IN GOOD FAITH WHEN NOT MAKING THEIR RESPONSE TO THE COMPLAINT AVAILABLE TO CLAIMANT AFTER THE COMPLAINT WAS FORWARDED TO BOTH.

• THE ETHICS COMMITTEE DID NOT ACT ETHICAL WHEN USING USA FH’S LACK OF DOCUMENTATION TO CONCLUDE THAT THE DETAILED EVIDENCE FROM ONE PARTY IS HEARSAY.

• USA FH DIRECTORS ADOPTED THE RECOMMENDATIONS BY THE ETHICS COMMITTEE BUT FAILED TO ACT ,AND THUS VIOLATING THEIR FIDUCIARY DUTIES , TO RESTRUCTURE THE COMPOSITION OF THE FOUNDATION BOARD SO THAT USA FH DOES NOT DOMINATE THE DECISION MAKING PROCESS AND HAS A CONSTANT CONFLICT OF INTEREST.

• 1.1/2 YEAR LATER USA FH’S DOMINANCE ON THE FOUNDATION BOARD IS EVEN LARGER AS 7 OUT OF NINE DIRECTORS ARE EITHER CURRENT DIRECTORS OR PAST DIRECTORS/OFFICERS.

• THE EXEC. DIR. USA FH FAILED TO ACT ON A RECOMMENDATION MADE IN ITS REPORT TO THE BOARD AND A SUBSEQUENT MOTION TO OBTAIN LEGAL TAX ADVICE AND REVIEW PRIOR FILINGS WITH THE IRS CENTERING AROUND BUSINESS RELATIONS AMONG DIRECTORS.

• THE DIRECTORS VIOLATED THEIR FIDUCIARY DUTIES BY NOT MAKING SURE THAT THE EXEC. DIR. DID FINALIZE THE TASK BESTOWED ON HIM BY THE RESPECTIVE MOTION 15 MONTHS AGO

• LIKEWISE THE ETHICS COMMITTEE FAILED TO ACT TO SEE THAT ITS RECOMMENDATIONS , MADE 15 MONTHS AGO,WERE ENACTED

• USA FH DIRECTOR HEATHER LEWIS VOTED IN THE AFFIRMATIVE AT THE FEB. 13, 2011 BOARD MEETING THAT NO MISAPPROPRIATION OF FUNDS TOOK PLACE AND THUS COMMITTED AN ACT OF PERJURY AS SHE WAS MADE AWARE ON July 16, 2009 AS INTERIMS COO BY THE EXEC. DIR. THAT “THE OLYMPIC CONTINGENCY GRANT WAS ALWAYS POSITIONED AS EXTRA MONEY – INSTEAD OF THE ORIGINAL GRANT”

• THE CHAIR OF THE ETHICS COMMITTEE AND THE USA FH EXEC. DIR. REJECTED TO REVIEW THE GRANT ISSUE AFTER SAID E-MAIL SURFACED IN MAY 2011 AND THUS OBSTRUCTING DISCOVERY OF THE ALLEGED FRAUD

• THE EXEC. DIR. FAILED TO PRESENT, DISCLOSE AND CONSULT WITH THE BOARD OF DIRECTORS THIS VITAL PIECE OF EVIDENCE CONFIRMING THAT THE GRANT FUNDS WERE MISAPPROPRIATED

• BOTH THE USA FH CHAIR AND EXEC. DIR. IGNORED THE REQUEST TO REVIEW THE ALLEGATIONS AFTER THE USA FH JUDICIAL COMMITTEE SUGGESTED THAT THESE ALLLEGATIONS SHOULD BE MORE PROPERLY DIRECTED TO THE USA FH BOARD AND THUS SUPPRESSING DISCOVERY OF THE TRUTH WHICH WOULD BE DAMAGING TO USA FH WHOSE DIRECTORS AND OFFICERS WERE NOT ACTING IN GOOD FAITH BY NEVER WILLING TO FULLY INVESTIGATE THIS MISAPPROPRIATION