Thursday, December 02, 2004

Joe explains ( again) why they are called "the sunshine Boys"

John: First, I often use humor in my writings. The reason I refer to our current CZ Board as The Sunshine Boys or the Keystone Cops is because they are the Feel Good Board that is giving away revenues and subsidizing outside groups to our detriment which the numbers prove. This is the Board that just can't say NO to any interest group that comes along, except maybe to our suppliers which is the reason that expenses are out of control. And, they have made many factual errors (the reason I refer to them as the Keystone Cops) that make them look pretty incompetent. i.e. the Special Assessment without a deal, the legal announcements that were incorrect, the misinformation concerning Sheriff's coverage, the amendment specific to voting rights, the Delegate Packing Scheme that they supported and then advised Delegates to vote against (that one was very John Kerry), the incorrect information on the CHP, the lack of knowledge about the Oakview/Oakknoll issue, the Architectural Review Committee that they would not even meet with after appointing them, etc. etc. These current CZ Board Members just do not do their homework.

It is inconceivable to me that these things would have occurred with proper legal counsel. They never have to my knowledge with past Boards that did their homework. I am giving Harkins the benefit of the doubt. I just don't think the current CZ Board has consulted with legal counsel on many of these issues because no good attorney would have allowed these things to happen. I understand they told Kannen to mind her own business which is probably the reason Kannen/Harle walked away from our account. Specific to the tax "fraud" issue, I am only reacting to Mezger and Varo's comments made in public that one goal in shifting income to CotoCAN is to avoid federal and state income taxes that would otherwise be due if the income was booked by CZ.

It could be "creative" accounting or maybe deemed to be something worse. If an inquiry is required to get full disclosure, I guess we will have to see how the State Franchise Board and or IRS view the practice. My understanding is that when some one knowingly takes action to prevent the payment of taxes that would otherwise be due, that it could be construed as fraud. At a minimum in an audit, the taxes would be due. Based on all the dealings that I have with attorneys and accountants which happen almost daily in my business, I believe a smart trial attorney would claim that the corporate veil has been pierced specific to CotoCAN in the event of a liability case to get at the deeper pockets of CZ if there is a tragic accident at one of CotoCAN's events. The only way we can know for sure if that is true is if a jury ultimately says so. But, why would any Board knowingly take the chance when their fiduciary responsibility is to protect the interests of our Members. I know that in California especially, I would not take a bet in favor of CZ on this issue and I don't care what Harkins says. There are often huge monetary awards that are not logical. Plus, we now have $500,000 deductible so we would be on the hook for money that is not in our budget and for all of it after $5,000,000 paid out by the insurance company. What then, a Special Assessment to cover a judgment.

Finally, I suggest you read the last paragraph of the letter I got from Harkins. There is no doubt in my mind that this letter is designed to frighten a CZ Member, critical of the current Board, into silence. Of course, it will not work specific to me; but it could have a chilling effect for some people. To my knowledge, a letter like this has never been sent to a Coto resident in the history of CZ. And by the way, if you want to talk about name calling, I can assure you, I heard them all when I served on the Board directed at me; but would never have suggested paying CZ attorneys to send a letter like this to some of the very same people that are serving on the CZ Board today.

The bottom line is that I believe there has been fiscal mismanagement based on what I see in the CZ numbers so far. I know that our Members have been exposed to increased and unnecessary liability as a result of direct CotoCAN connectivity. I know that the current CZ Board has disregarded a legal agreement related to the Oakview/Oakknoll gate issue. I am not happy about the loss of pro-active law enforcement on our streets because based on what I know about the issue, I believe my family is exposed to increased danger from speeders on our streets.

Ultimately, if Varo, Mezger and Hill run for reelection next May, which I hope will not be the case, Delegates will have to decide if they want to pay higher dues as a result of fiscal mismanagement, to be exposed to unnecessary liability, to face more speeding on our streets, to continue subsidizing outside groups with our dues money and to keep giving away revenues that legitimately belong to CZ Members. Assuming three responsible candidates step forward which is my hope, the choice should be clear. Varo, Mezger and Hill equal more of the same which is not my preference. Regards, Joe Morabito


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