The CotoBuzz Journal, Community Journalism

The CotoBuzz Journal

Community Journalism, Newsletters and Blogs Covering South Orange County, CA

The CotoBuzz Journal is a member of Investigative Reporters and Editors (IRE) and NAHJ

July 2007 Issue

We do not make jokes, we simply watch the LA Times, the Orange County Register and the Coto de Caza Board of directors and report the facts!

CZ Master Association Harkins (Attorney) Letter - Zipperman's (CZ President's) First Test?

Joe Morabito, Former member CZ Masters Association Board of Directors.

June 16, 2007

Mr. Harkins: I am in receipt of your letter dated June 12, 2007 in reference to the requests that I made concerning our last CZ Board Election, obtaining the CZ Master’s financial records and the Sports League Roster specific to use of our Sports Park . Let me address each issue in response.

Election Records: The Association’s denial of my request to see results by district count makes it impossible for Members to verify the validity of our election tally. Therefore, on principle alone, I for one do not believe that the results are honest and correct because they are not verifiable. This corrupt system done in secret much the same as occurs in Communist China, Vietnam and Cuba is UNACCEPTIBLE in a country fighting to establish democracy overseas. The only reason I will not pursue this now with state authorities and/or the courts is because it appears that we have a new CZ Board committed to direct popular elections. However, be assured if we don’t have direct popular elections by 2008, I personally will organize the monies necessary to pursue court action to strike down the current corrupt electoral system. Enough is enough.

Sports League Roster: The Association’s refusal to make public the Sport League Roster to properly demonstrate the percentage of CZ children utilizing the facility primarily maintained at CZ Member expense makes it obvious that fewer than 50% of the kids playing at our private park are outsiders. If that is not the case, I invite the CZ Board to prove it!!! This information is not protected by Executive Session privilege, or any other rights of privacy since there is no issue of identify theft involved. And, it is impossible to audit fees paid to the Association by the Leagues without this information. Hence, if it is not provided, I will pursue this matter with state authorities under my right to audit the financials of the Association.

Clearly, CZ Members are providing a substantial subsidy to the Sports Leagues and outsider families at the same time the CZ Board raised our dues twice in two years as a result of blatant fiscal mismanagement. This is again UNACCEPTIBLE. The Association continues to hide material information from our Members because it does not want us to see the facts. However, in hiding that information, the case is made that CZ Members continue to experience dues increases because of all the subsidies going to outsiders. And, the lack of transparency concerning the business of the Association makes it clear that serious financial audit is necessary.

General Ledger: Since CZ Members who may be interested in seeing the General Ledger and inspecting the books also work for a living. I would like to arrange a series of meetings after 6:00 pm in the evenings so that others may participate in this process. Otherwise, one copy of the 2006 General Ledger would also be acceptable. Please advise me if this is workable. If the Association refuses my request, it will be clear that the Association by its actions and deeds continues to stone wall and make it as difficult as possible for Members to gain an understanding of the Association’s business dealings which is again UNACCEPTIBLE. In an era of Sarbanes Oaxley motivated by the Enron and WorldCom debacles, it is time for the CZ Board to recognize that failure to share information reflects on them and perpetuates the perception of a culture of corruption and deceit.

Mr. Zipperman has stated he wants to advance communications and transparency with our Members as one of his goals, yet given the first opportunity under his leadership, pertinent information is denied to our Members. Well Steve, here is your first test and it is Pass/Fail.

Hi Joe:

This response is diametrically opposed to the tone expressed by the board’s president during the first 2007-2008- CZ board meeting.

Unless the board reconsiders your request, the first test will be deemed a total failure.

When you get a chance, I would appreciate it if you post a copy of the latest Harkins letter for our collection -- Buzz

In the spirit of complete transparency, I will post the Harkin’s letter this week. However, you are right. Mr. Zipperman cannot support transparency and then given the first opportunity deny a request for information. This really is a Pass/Fail test for the new CZ Board. And, when the CZ Board refuses to provide information, we have to assume the worst case scenario. What other choice is there when elected officials at any level seek to hide the facts? The CAPO Schools maintained a Culture of Corruption that has resulted in indictments. We don’t need that same culture in Coto. Joe Morabito

Hi Joe:

....the bare-bones least, residents have a right to know how the Zipperman/Yocham board decided on your request. Was it a unanimous decision? If not, what was the breakdown?- Buzz

Since this involved a letter from James Harkins, I assume the discussion with the Board took place in Executive Session. Therefore, if there ever was a vote, it will never see the light of day. And, it really does not matter. Obviously, at least three CZ Board Members concurred that the Association should continue to hide the facts from our Members which continues to be troubling. When the facts are hidden we have to assume a worst case scenario; otherwise why hide the information? Obviously, there are facts the Board does not want us to see because they could show that Board actions were inappropriate. What else can be assumed? The Sports League roster is a real case in point. When I saw those numbers years ago about 50% of the kids playing on our fields were Coto residents. Since Coto has matured, I am willing to bet that today that number is much less. The Board does not want us to see the truth because it will demonstrate even more clearly the huge subsidy going to outsiders. And, if the Sports League is objecting to publication of this data, it is because they know the truth as well. It then becomes a conspiracy to deny our Members this information. It is starting to smell like the corruption in the CAPO Schools and that is not good.

At a minimum, the Board should publish the percentage of CZ Members playing on our fields. If they don’t know the number, they are in violation of their fiduciary responsibility to properly manage that major facility. If they do know the number and won’t reveal it, then they are hiding the facts from us on purpose in order to hide the subsidy from us. Either scenario is unacceptable. JM

…and of course that is the circular reasoning that has created in part, this lack of transparency in the first place: “ I am committed to establishing a dialogue with residents, but I cannot discuss anything, because what you asked was discussed in executive sessions” – or worse yet, use stupid lawyer letters to “interpret pertinent laws an regulations”.

Transparency should be clear as Evian bottled water- executive sessions and “attorney-client privilege” not withstanding, as these are mere excuses, not clear as mud, as is the case with your request.--Buzz

The CZ Board needs to stop hiding behind legal advice designed to keep information from our Members and open up the books for all to see. If there is nothing to hide, then there will be no consequence to more transparency. If there is something to hide, then shame on all of them. Fleming and those long time Board Members in Capo Schools are a bunch of crooks who maintained sweet heart deals for their family members and an “enemies list” to pursue critics by punishing their children. In doing so, they are guilty of misappropriation of funds. What is worse, I think the district may be paying for Fleming’s legal fees, which means tax payer money which should be going to support Capo Schools is going to keep Fleming out of jail. Some of those characters have been indicted and my guess is that more will follow. All of them should GO TO JAIL for maintaining the culture of corruption that existed in the Capo Schools. CZ Board Members need to get the message. We don’t need or want a culture of corruption in CZ. CZ Members have a right to complete transparency concerning the business dealings of CZ. If there is nothing to hide, what is the problem anyway? JM

Hi Joe:

You know how ridiculous it sounds for a board member to point to “audited financials”, prepared by an independent auditor – then you ask the auditor a simple question and you are referred back to the board – is that transparency?

It is no secret that the IRS has had growing concerns regarding conflicts of interest, relationships among directors, directors, or friends of directors serving the organization as vendors, and the resulting effect.

On April 26, the Internal Revenue Service (IRS), in a significant tax planning and governance development for exempt organizations, released new "FAQs" supplementing the instructions for the 2006 Form 990 (that is, the Form 990 used as the tax return for the fiscal year beginning in 2006).

This development is relevant to all Section 501(c) organizations, including those recognized as exempt under Sections 501(c)(3), (c)(4) and (c)(6).

By law, nonprofits must make their last three years' 990s available to anyone who asks

The IRS hopes the new form will make nonprofits more transparent, instead of just providing financial information, the new front page includes details about the nonprofit's mission, governance, employment and the top salaries it pays.

The IRS encourages the (nonprofit) sector, the press and the public to comment

The FAQs are available on the IRS website: http://www.irs. gov/pub/irs- tege/2006_ form_990_ qas_final. pdf ...Buzz

It is very troubling that CZ Board Members continue to hide requested information from our Members on just about any premise they can hang their hat on. You will see when I provide the letter from Harkins that he is citing privacy issues specific to showing me the Sports League roster so we can determine how many CZ children are actually playing on our fields. Obviously, this is not about social security numbers or any other information that has anything to do with privacy issues. The list can even be provided with a simple CZ Member Name and Non-CZ Member Name listing. We don’t need addresses at all. After two dues increases in two years, this is really about our CZ Board intentionally hiding the number of outsiders playing on our fields because they do not want us to see the amount of subsidy that is being provided to non-CZ Members. And, as a result, we must now assume that it is really a very small number of CZ children playing on those fields because otherwise why would they withhold this information particularly if it actually made the case for the subsidies. At a minimum, we should be able to see the information by percentage assuming the CZ Board even knows who is playing on our fields which is their responsibility. In addition, if the CZ Board is going to attempt to get any funding from the county to maintain our Sports Park which absolutely should be happening, this information must be made public anyway.

Most important, it is impossible to examine the “financial records” of the Association as is required by law when requested by any Member without that information. So, if I don’t get the information to properly substantiate the fees paid by the Sports Leagues, I will file a complaint with state authorities. This is the very reason the state keeps passing laws to “micro manage” homeowner associations. HOA Boards and their minions all over the state continue to lie, hide information from their Members and play games with elections. These laws are the result of continuous complaints against HOA Boards and their minions that are guilty of shenanigans. Why is there a lack of transparency in CZ? The only answer must be because the current CZ Board has something to hide. There is no other logical explanation. Joe Morabito

As a result of the barrage of nasty lawyer letters sent out, the board has now realized that filing complaints with state authorities is like blowing in the wind. Consider that we have filed complaints with the bar against seven – count them – seven attorneys! – all involved in the same issue, including the fabrication of evidence. What did the bar do? Zilch, nada – they are waiting for results of a pending law suit, then the Domino Effect will take over.

Your premise is right about legislation. It is time to bring in the feds. Buzz

In reality complaint letters coming from many HOA Members serve to stimulate more laws micro managing HOA’s. Politicians only move when they feel the heat of screaming constituents. For better or worse that is our system. And, in really egregious situations like CZ’s corrupt, Communist electoral process, if it is not changed soon, court action will be the only recourse available to strike it down. Hopefully, that last resort costly action will not be necessary since it appears that the Zipperman Board is committed to bringing free and fair direct popular elections to Coto. At least, I sincerely hope that will be the case. JM

P.S. Zipperman who speaks of more transparency as a goal, when given the first opportunity to put words into action has thus far failed the test. It is very disappointing indeed. Actions speak much louder than words and so far anyway, the Zipperman Board is stone walling our legitimate request for information. What has changed?