This post has been more than a year in coming.  It has been more than six months since an unusual vote by the past presidents and Board chose to ignore the significance of financial scandal, and only now are the members being told.  I’ve waited a long time for this to go public, but now that the president has finally sent out a letter to the membership, the time has come.

In January, 2007, a review of the financials for the Association revealed stunning irregularities.  They centered on the executive director’s expenses via the Association’s American Express account, which had voluminous unexplained charges ranging from match.com to women’s shoes to a wedding dress.  Also discovered were interest charges amounting to around $14,000 for unpaid AmEx bills in 2005. 

An independent auditor was retained and an audit committee formed.   Both arrived at the same conclusion.  The executive director had to be fired.  She had been charging the Association AmEx card for personal expenses for years.  When confronted, she claimed she had paid back all the money, but she was unable to prove this.  The claim was false. 

The interest charges to the card reflected the executive director’s directions to pay off the minimum balance after the annual dinner in 2004 rather than pay off the full amount, even though the Association had the funds to pay the total.  The president at the time started receiving dunning calls from AmEx. His response was to tell the executive director to get them off his back, and otherwise ignore it.

This was a disaster.  But only the first in a series. 

In September, 2007, the Board held a meeting to determine what to do about the executive director.  A massive campaign was waged prior to the meeting to convince past presidents and certain friendly board members that the executive director didn’t mean it, didn’t really do anything, was a good and dear person, and that fault should be laid at the feet of others, even though the executive director, and no one else, was solely responsible for the use of the Association card for personal expenditures. 

The September Board meeting was quite unusual, in that there was a large turnout of past presidents who otherwise never show.  The Association allows past presidents to vote on the Board, a peculiarity in itself.  By a majority of one, based largely on the past presidents, the Board voted to retain the executive director, despite what had happened.  Over objection, she was required to repay the amounts charged, and a committee was formed for that purpose.  The outstanding balance would have been sufficient to make it a felony. 

This is the first leg of the story.  The second was the dues increase levied against the membership this year, while there was silence on the part of the Board as to what had happened.  Factions on the Board argued about what, and how, to tell the membership of this scandal.  There was a group of Board members who thought that disclosure of this scandal with the members’ money would “harm” the Association, and that the members had no need to know of it.  There was another faction who believed that the members had a right to know, and the Board had a duty to tell them.  There was a third faction who just wanted this ugly mess to go away.

Upon pain of some present who demanded that the membership be told, a committee was formed to prepare a letter in October, 2007.  By January, 2008, the letter was completed, circulated, and summarily rejected by the group that did not want the membership to know the truth.  This letter revealed too much, and made the executive director look too “guilty”.  A second letter was hastily drafted, that fudged the details and gave the impression that everything had been well-handled by the Board.  It was meant to calm the potential storm.

It took from January 16th until April 4th for that letter to be sent out to the membership.  The letter, copied below, is dated March 14, 2008.

I have waited until the letter was sent to the members to write about what happened because it was not my place to make the disclosure, though I have pushed for it (as have others) from the beginning.  Now that the letter has been sent, it’s time to discuss what happened and why, and what is so fundamentally wrong about all of this.

As someone who has dedicated a great deal of time to the New York State Association of Criminal Defense Lawyers, having served as Amicus Chair, Board Member, Vice President, I find that the entirety of this situation has been a disgrace.  I am shocked by those Board members who chose to forgive and forget when it was members money, not theirs, at stake.  It was not their place to do so.  I am shocked that the Board thought so little of the membership that they would conceal what happened. 

I personally like the executive director.  I always have.  But as a fiduciary, what she did was wholly unacceptable, no matter how much I liked her.  There is no theory, no rationale, no argument that could possibly make her conduct acceptable.  Neither the letter, nor this post, begin to provide the flavor of how bad this was.  It was quite outrageous.  It was clearly very wrong. 

Similarly, the fact that a majority of the voting Board, meaning past presidents who appeared only for the purpose of voting to retain the executive director, decided that it was within their province to forgive someone who used members’ money for her personal shopping, is inexcusable.  They failed as fiduciaries.  They failed the members.  They had no right to forgive someone using the members’ money to buy her daughter’s wedding dress. 

Then, the decision to increase dues while concealing the financial scandal bordered on fraud.  Bear in mind, the nature and scope of this impropriety was known throughout this period, and deliberately withheld from the membership while the members were told of the dues increase. 

But the final nail in the coffin was that it took more than six months since the decision of September, 2007 to forgive this scandal before anything was disclosed to the members.  Those who thought forgiveness was the right thing to do were afraid of how the membership would react if the truth came out.  They had reason to be afraid. 

Those who voted to discharge the executive director held different fears; They were afraid that disclosure of this scandal would cause the Association to implode, and they didn’t want to “harm” the Association.  This paternalistic fear, that the members couldn’t handle the truth so they would handle it for them, treated the members like children.  Good enough to pay the dues, and not good enough to know the truth. 

I have resigned from the Board, in protest of this and other issues that have been percolating for years.  I cannot condone the actions and inactions of the Board, and I have long questioned whether the Association has lost its focus and any true purpose for its existence.  The duty of the Board in this scandal seemed clear to me from the outset, and that portion of the Board had no right to substitute its personal feelings for its responsibility to the members. 

Now that the letter has gone out, after almost daily prodding by those who believed that disclosure to the members was the absolute minimum required of the Association, it’s up to the members to decide whether the Board fulfilled its fiduciary responsibility.  Some may decide that they no longer want to be a member of the Association.  Others may agree with the Board’s action.  Others still may not care.

But the Association exists for the members, not the elite or the Board or to give the executive director a place to go
every weekday.  To deny the members the truth is wholly unacceptable.  It is now up to the members to make what they will of this situation.  I have chosen to end my involvement with the NYSACDL, and I am deeply saddened that I feel there is no other choice under the circumstances.



Text of the Letter:

Many of you may have heard about an important matter that was addressed by the Board this fall regarding the Executive Director, Pat Marcus. This brief description of what took place is intended to advise the membership generally of the events that took place. Please feel free to contact me directly if you would like further information.

In January, 2007 the NYSACDL Board authorized an audit of the books and records of the Association for the years 2005/2006. An Audit Committee of the Board was formed at that time and it was requested to interview, select and, with the Board’s approval, retain auditors for this purpose. Following a search, the Audit Committee reported to the Board, which authorized hiring the firm of Salerno, Gannon and Angelo, PC (SGA).

In May, 2007 SGA gave its report to the Audit Committee. The auditor’s report disclosed the use of the Association’s credit card by the Executive Director for personal expenses, a matter which was of grave concern to the Audit Committee.

As a result of this preliminary report, the Audit Committee recommended the termination of the Executive Director and referred the matter to the Executive Committee. After considering the issues, the Executive Committee called for a special meeting of the full Board of Directors which was held on September 8, 2007 to address the issues in the Auditor’s report. The Board reviewed voluminous records of the Association’s finances for the two preceding years as well as the explanation by the Executive Director. Ms. Marcus explained that she had used the NYSACDL card on numerous occasions and had paid the bill from her own funds. This had occurred for the entire time she had been employed by the NYSACDL.

Having duly heard Ms. Marcus and reviewing the documents and recommendations of the accountants, the Board voted (although notably not unanimously) that Ms. Marcus would remain in her position.

Following the September 8 meeting, a thorough investigation of all the relevant documents was reviewed by a sub-committee of the Board. It was determined that, although thousands of dollars of personal expenses were paid by Ms. Marcus at or near the time of the purchase, approximately $3,100 of personal charges had not, in fact, been paid by Ms. Marcus over the course of years, Ms. Marcus has subsequently reimbursed the Association for such personal expenses.

While the Board agrees that Ms. Marcus’ behavior was imprudent, it took into consideration her many years of faithful service to the Association and what appears to have been a mistake in miscalculating what was owed. She has not been allowed to use the Association’s credit card during the investigation and will not be permitted to use it for personal expenses at any time in the future.

Please be assured that no member money was diverted for non-Association expenses during this period.

More importantly, the Association has undergone a complete revamping of its financial controls and procedures in accordance with the recommendations of the auditors.

In the event there are questions or concerns regarding any issue mentioned here, please feel free to contact me.

Sincerely,

/S/
Lisa Schreibersdorf