2. 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
3. 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
4. February 18, 2010 Resident's Voice 4 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.
9. February 18, 2010 Resident's Voice 9 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.
10. February 18, 2010 Resident's Voice Page 10 Monthly average is $4,411
12. February 18, 2010 Resident's Voice 12 Tannins Wine Bar &Restaurant
13. February 18, 2010 Resident's Voice 13 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.”
14. February 18, 2010 Resident's Voice 14 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.
15. February 18, 2010 Resident's Voice 15 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
16. February 18, 2010 Resident's Voice 16 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.”
20. February 18, 2010 Resident's Voice 20 “Ocean View” From every table “Outstanding Food”
21. February 18, 2010 Resident's Voice 21 “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 $
22. February 18, 2010 Resident's Voice 22 Charges at “Splashes” byGM 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
23. February 18, 2010 Resident's Voice 23 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.
25. February 18, 2010 Resident's Voice 25 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.
26. February 18, 2010 Resident's Voice 26 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:
27. February 18, 2010 Resident's Voice 27 General Ledger $40.05 Chris Trapp Mileage Reimbursement
28. February 18, 2010 Resident's Voice 28 Expense Reimbursement Travel from PCM to Staple Ctr to PCM of 90 miles for Staff Outing. OK’d by M. Johns $40.05 Clippers Game
29. February 18, 2010 Resident's Voice 29 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
31. February 18, 2010 Resident's Voice 31 Work Center 310 – Accounting (13 Employees.) The following slide is a listing of some of the charges associated with Food and Travel for Food.
33. February 18, 2010 Resident's Voice 33 Work Center 370 – Purchasing (6 Employees) The following slide is a listing of some of the charges associated with Food and Travel for Food.
35. February 18, 2010 Resident's Voice 35 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.
37. February 18, 2010 Resident's Voice 37 How Did The Owners Benefit From These Expenses? You’ll have to be the judge of that?
38. February 18, 2010 Resident's Voice 38 Conclusion: We cannot Trust PCM. They have a different view of what is in our best interest.
39. February 18, 2010 Resident's Voice 39 Who Runs Laguna Woods Village?
40. February 18, 2010 Resident's Voice 40 M Johns, says “I don’t do anything except what the Boards tell me to do.”
41. February 18, 2010 Resident's Voice 41 M Johns, asks “What should I do.” The Boards, say “Please tell us what to tell you to do.”
42. February 18, 2010 Resident's Voice 42 M Johns Whom do you believe? “The Boards have always reviewed the Credit Card Charges at the yearly budget meetings and have authorized the expenses!”
43. February 18, 2010 Resident's Voice 43 Whom should you believe? “A former GRF Board Member from 2003-2005, stated that, “He had NEVER seen the Credit Card Billing Statements or knowingly authorized their usage.” The Boards
44. February 18, 2010 Resident's Voice 44 “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.”
45. February 18, 2010 Resident's Voice 45 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.
46. February 18, 2010 Resident's Voice 46 The Consequence!Over the past 35 years! PCM Director
47. February 18, 2010 Resident's Voice 47 How do we solve the problem? Find and Elect new Board Members who will work toward taking back control of our Village!
48. February 18, 2010 Resident's Voice 48 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
49. February 18, 2010 Resident's Voice 49 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.
50. February 18, 2010 Resident's Voice 50 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.