Board of Eastsound Water Users Association in July 2023:
1. Clyde Duke – President
2. Jim Nelson – VP
3. Scott Lancaster - Treasurer
4. Joe Cohen - Secretary
5. Mike Cleveland
6. Ron Claus
Seven-member Board. The Board may appoint someone to fill the vacant seat but is opting not to do that at this time. July 2023.
Changes of note:
Scott Lancaster resigned in November 2022 and was appointed in April 2023 to fill Tenar Hall’s seat after her resignation in March 2023.
There was no Treasurer between March 23 and July 6 of 2023.
Clyde Duke did not run for re-election in November 2022 but was appointed in December 2022 to fill the Scott Lancaster seat since Scott had resigned in November 2022.
Calendar of relevant events:
2020
· January - Joe Cohen is President; Steve Smith is VP; Scott Lancaster is Treasurer.
· November - Dan Burke is hired as General Manager.
2021
· January - Steve Smith elected as President of EWUA, Joe Cohen as Secretary/Treasurer, and Scott Lancaster as VP.
· July – Tenar Hall appointed to fill a vacant seat.
· December – Steve Smith is President; Scott Lancaster is VP; Joe Cohen is Treasurer/Secretary.
2022
· August – In light of the upcoming election where people interested in running for a seat on the Board might want to read the information, Steve Smith informally asks Dan Burke to correct the formatting issue of the bylaws and operating rules on the website.
· September – Steve Smith informally asks Dan Burke to correct the formatting issue of the bylaws and operating rules on the website.
· September 21 – ---------- resigns as an employee working in the office of EWUA.
· October – Steve Smith informally asks Dan Burke to correct the formatting issue of the bylaws and operating rules on the website.
· October 22 – This may seem petty; however, it played a big role in the trajectory of the Association. In light of the election coming up soon, Steve Smith formally asks Dan Burke at the Board meeting to correct the formatting issue of the bylaws and operating rules on the website. Dan Burke took offense at being asked in front of the Board for the site to be updated. In outrage, Dan Burke left the meeting. The meeting was not recorded. Burke demanded of Lancaster that the Board take action to discipline Smith.
· October 23 – Scott Lancaster and Jim Nelson meet with Dan Burke and ask him to “endure” Steve Smith as President until December when Scott Lancaster would be elected as President.
· October 23 - Scott Lancaster and Jim Nelson meet with Steve Smith and ask Smith to do nothing that would antagonize Burke until Lancaster would take over as President.
· October 24 – ---------- writes a letter to the EWUA Board with a complaint about how — was treated unfairly by EWUA. ---------- worked in the office of EWUA, managing the phones and interacting with the customers. — cited wage discrimination based on gender and being mistreated by Board member Joe Cohen.
· October 25 – President Steve Smith appoints Scott Lancaster and Tenar Hall to visit with ---------- to hear the complaints in person. Lancaster and Hall, based on that conversation, opt to talk with two other former employees to hear their concerns.
· November – Steve Smith worked closely with Dan Burke to organize the Board election and annual member meeting. At the request of the Board, Steve Smith was to coordinate and manage the election. This involved Burke providing a list of all members and contact information to Smith. In prior years, the elections were run by the GM. Smith discovered, in the process, that EWUA does not have a list of all members and the number of votes each has. (That list is still not comprehensive.) The election was run with the best information available. There were no conflicts in the interaction between Burke and Smith. Almost all communication was done via email, and the full Board was included in almost all emails.
· November 2 – Smith asked that Burke give Smith (President) and Cohen (Secretary/Treasurer) access to the new accounting system so that the Association’s financial transactions could be reviewed. Included in this email request was a link on how to provide access. This access was not given.
· November 2-9 – Dan Burke prepared a budget, along with Secretary/Treasurer Joe Cohen. Burke was doing almost all of the work in Excel. President Steve Smith asked to see the budget prior to presentation to the Board. In reviewing the budget worksheet, Smith found a large number of major errors (for example, dollars in the bank was off by a million dollars, and there were numerous formula errors). Smith asked to review the budget with Burke and Cohen. Smith invited Jim Nelson to join the review.
o Mon Nov 7 – Several hours spent reviewing the formula changes that needed to be made. Burke, Smith, Nelson, Cohen.
o Tue Nov 8 – A couple more hours on the budget formulas. Burke, Smith, Nelson, Cohen.
o Wed Nov 9 – A couple more hours on the budget formulas. Burke, Smith, Nelson.
· November 8 – Board held a special meeting to read a report on the findings of Scott Lancaster and Tenar Hall’s investigation of ---------- complaints. This was the first the Board had seen or heard their findings. During that meeting, Hall criticized Joe Cohen’s treatment of ---------- and said she wanted actions taken to ensure EWUA employees are not subjected to bullying behavior from a Board member again. Jim dismissed Tenar’s concerns about Joe’s actions.
November 9 - Hall is tasked to hand-deliver a hard copy of the report to Dan Burke, to give him an opportunity to read the report, and then collect the report after his reading it.
November 10 - Board held a special meeting with Dan Burke to discuss the report and determine its response to ----------.
· November 11 – EWUA asked the employment attorney to draft a settlement agreement letter for consideration. The letter offered to pay ---------- what is asked for and to agree to ---------- other demands for changes in how things are done in the office.
· November 11 – The Board encouraged Dan Burke to issue an apology to —------, and Burke did so.
· November 15 – Annual member meeting and Board election results. Three seats were up for election. Five candidates. Joe Cohen was re-elected. Ron Claus was elected. Mike Cleveland was elected.
· November 15 – Scott Lancaster resigned from the Board. He had been scheduled to become President. Cited health and time with family.
· November 16 - Hall hand-delivered the Board’s settlement agreement to ------------- who accepted the agreement.
· December 13 – Board meeting. Clyde Duke appointed to fill the open seat vacated by Scott Lancaster. Officer election held. Clyde Duke elected President; Jim Nelson VP, Tenar Hall Secretary/Treasurer. Budget accepted as presented by Burke without modification.
· December 29 – Tenar Hall sends letter to Clyde Duke, the incoming President and the Board, asking that the Board follow through on the things that it agreed to do in its settlement agreement with ----------.
2023
· January 1 – New officers assume office.
· January – Tenar Hall, as the new Secretary-Treasurer, requests access to the books so that she can prepare the monthly financial report. Dan Burke indicates that he is willing to give Hall a printed copy of the balance sheet and P&L. Hall requests log-in access. Dan Burke declines.
· January 19 - Hall is set up with a single Caselle Module designed solely to approve checks exceeding $5k. There is no access to invoices, receipts, or financial reports. Hall requests Burke update her Caselle access to include reports and give her access to online banking.
· January 26 - Hall is set up with online banking for one account only. Burke claims the Caselle portal doesn’t have the ability to display the P&L and Balance Sheet.
· February 1 – Officers Duke, Nelson, and Hall meet with Burke to discuss access to the books, Duke and Nelson as observers. Hall requests the ability to log-in to the accounting system to view all transactions. Burke describes that request as “an assault” on his position and declines. Duke and Nelson ask Hall to explain why she needs access and what she will do with it.
· February 1 – Via email, Hall reiterates her request to the Board for it to agree to implement the terms of the settlement agreement with ----------.
· February 8 - Hall sends the following email to Joe Cohen:
“Joe,
“It has been over three months since the board first became aware of your repeated abusive behavior towards an EWUA employee. You admitted to this behavior but have failed to take accountability for your actions.
“The display of anger you presented during a board meeting this past summer was shocking enough on its own. After observing that tantrum, the image of you directing an even stronger display of anger towards an EWUA employee is horrifying. The knowledge that this has happened at least twice (as you admitted) is sickening. As I said to you over three months ago, people in positions of power should not treat employees in such a disgraceful manner and there needs to be reassurances that this sort of damaging behavior will not happen again. Our employees deserve a safe and healthy working environment.
“A three-month grace period to allow you to reflect on your actions has been more than generous. Within this time period, I have witnessed you attacking the victim's credibility. Moreover, during the November meeting you refused, as treasurer, to sign the check for her settlement. These actions suggest that you have no intention of taking accountability for your repeated verbal assaults against an EWUA employee.
“Therefore, to protect The Association and its Employees from your volatility and violence, I will be calling for your removal from the board.
“Out of consideration for our community I have decided to give you the opportunity to step down before I take action. This notice is a courtesy and nothing more.
“Sincerely,
“Tenar Hall”
· February 13 - Hall sends a report to the Board showing the following $144k deficit:
“During the December 6th meeting, prior to my being elected as Secretary-Treasurer, the EWUA Board approved a 24th-Month Budget and then set the 2023 rates based on that budget. The following table provides the Budget vs Actual for the total cash on hand at the end of 2022 and shows that we began the cycle off-budget with a deficit of $114,026.37.
“I believe a $114, 026.37 discrepancy warrants further investigation, especially considering the board set rates using these numbers, however, I am unable to investigate the matter with my current level of access. Bank statements do not provide sufficient details of the organization’s cash flow. The December 2022 bank statement is attached to provide an example of the limited information bank statements provide and to allow the board to verify our 2022 end-of-year status.”
· February 13 - The Board holds an “executive session,” presumably to keep members from knowing about the financial discrepancies under discussion. Hall presents copies of checks the GM had written to himself and multiple checks that were signed by the GM that were in excess of the $5,000 limit allowed. Hall also presents the -$114k discrepancy between the budgeted 2022 end-of-year cash-on-hand and the actual 2022 end-of-year cash-on-hand. With limited access, it was not possible for Hall to do more than raise questions.
· February 13 – After the “executive session,” the Board holds a special meeting to discuss allowing Hall access to the accounting system. It passes the following motion:
“As per the responsibilities assigned by the bylaws in Article VI H to the officers of the EWUA, namely, “Supervise the General Manager’s maintenance and safe custody of all funds, records, properties, and membership records of the Association.” -
“The board directs the GM to provide the President and Secretary/Treasurer of the board, no later than February 15, 2023:
“View access to the Caselle enterprise system”
· February 14 – Without directions from the full Board, Jim Nelson met with Burke to discuss checks signed by Burke that appeared to be out of compliance with policy. Nelson claimed he was “satisfied” that there were no problems.
· February 15 – Hall sent the following email to the Board:
“In order to perform duties as outlined by Article VI Section H c and Article VII B of EWUA's Bylaws (pasted below and Ref: EWUA Bylaws), I, the elected Secretary-Treasurer in accordance to RCW 24.03A.235 (Ref: RCW 24.03A.235), am invoking my right to inspect the following Corporate Records required to be kept by EWUA as a nonprofit corporation (Ref: RCW 24.03A.210):
“RCW 24.03A.210 (1)(a) Minutes of all meetings of its members and of its board of directors.
“Relation to the performance of the following Secretary-Treasurer's duties assigned by EWUA Bylaws: Ensure proper maintenance and safe custody.”
“RCW 24.03A.210 (1)(b) A record of all actions taken by the members and board of directors by unanimous written consent.
“Relation to the performance of the following Secretary-Treasurer's duties assigned by EWUA Bylaws:”
“Ensure proper maintenance and safe custody.”
“RCW 24.03A.210 (1)(c) a record of all actions taken on behalf of the corporation by a committee of the board.
“Relation to the performance of the following Secretary-Treasurer's duties assigned by EWUA Bylaws:”
“Ensure proper maintenance and safe custody.”
“RCW 24.03A.210 (2)(c) All communications in the form of a record to members generally within the past six years, including the financial statements furnished for the past six years under RCW 24.03A.225 (pasted below and Ref: RCW 24.03A.225 )* -
“Relation to the performance of the following Secretary-Treasurer's duties assigned by EWUA Bylaws:”
“Ensure proper maintenance and safe custody.”
“Budget development.”
“RCW 24.03A.210 (3) A nonprofit corporation shall maintain appropriate accounting records.
“Relation to the performance of the following Secretary-Treasurer's duties assigned by EWUA Bylaws:”
“Ensure proper maintenance and safe custody.”
“Budget development.”
“Keep an accurate accounting of the funds of the Association and make an annual financial report to the membership.”
“Facilitate financial statements of the Association to be reviewed by an independent accountant.”
“RCW 24.03A.210 (4) A membership corporation of its agent shall maintain a record of its members, in a form that permits preparation of a list of the names and addresses of all members, in alphabetical order by class, showing the number of votes each member is entitled to cast.
“Relation to the performance of the following Secretary-Treasurer's duties assigned by EWUA Bylaws:”
“Ensure proper maintenance and safe custody.”
“Send out notice of meetings and special meetings as directed by the board.”
· February 16 - Jim Nelson and Clyde Duke send a report to the Board, purporting to justify the checks Hall had presented during “executive session.” The report contained Burke’s pay stubs that showed Burke had been paid $13k more than the Board authorized for the year 2022.
· February 21 – Regular Board meeting. Tenar Hall and Ron Claus are both traveling. Hall and Claus had both requested a change in date. Denied by Duke. Board voted to:
o Hire an attorney to provide guidance on bylaws and policies.
o Ask an attorney to review Hall’s request for access to the financial records as per RCW 24.03A.210 and to determine if the Secretary/Treasurer should have full access to the records of the Association.
o Authorize the Secretary/Treasurer to get quotes from potential forensic accountants.
o The Board voted against asking the GM to provide the officers with the log-in information associated with the different systems used to manage the organization.
o Steve Smith made a motion to have the President appoint two people to review and make recommendations regarding the implementation of the settlement with ----------. The motion failed for the lack of a second.
· February 27 – Joe Cohen retains Attorney Tom Fiscus and sends the Board an email demanding that Tenar Hall stop threatening and harassing Joe Cohen.
· March 4 – Hall requests all payroll information and compensation for all employees.
· March 13 – Hall reports to the Board and GM that the View-Only Caselle Access that had been approved on February 13 had not been carried out in-full. Several modules were blocked, including Payroll and Timekeeping.
· March 13 – Hall reports to the Board that Burke appears to be taking more compensation than the Board has authorized in the year 2022, based on Burke’s pay stubs presented in Nelson and Duke’s report, the EWUA Employee Handbook, and all available Board-approved documentation regarding Burke’s compensation.
· March 14 – Hall reports to the Board that Burke appeared to have taken $11k more compensation than the Board had authorized in the year 2021, based on a "Wages QB vs Gusto Analysis" spreadsheet Burke sent to Hall, Smith, Cohen, and Nelson during the 2022 budget process.
· March 14 – Duke informs the Board that Burke had retained an attorney and calls a special meeting between the Board and the Board’s attorney.
· March 20 – Hall resigns from the EWUA Board. Hall never did gain access to the accounting system. Hall never received any of the documents to which she had requested access.
· April 6 – Special EWUA Board meeting – Rochelle Doyea discussed with the Board the potential settlement terms that Burke was demanding to resolve his complaint. The Board voted to hire a forensic accountant to review the financial transactions. There are no minutes of the meeting or record of the motions. Neither at this meeting nor at a later meeting was the scope of work for the forensic investigator set by the Board or a committee formed to do so.
· April 18 – Scott Lancaster is appointed to fill the seat vacated by Tenar Hall.
· May 16 - Regular Board meeting, then a so-called Executive Session to meet with Tiffany Couch, of Acuity Forensics.
Regular session. Duke reports that the attorney looking at governance and the attorney crafting the settlement agreement with Burke have had their work put on hold, subject to the determination by the forensic accountant on the status of the questions raised by Hall and Smith.
· May 17 – Smith sends a packet of information (previously compiled by Hall and shared with the Board) to Acuity to review, including Hall’s questions at the time of her serving as Secretary-Treasurer.
· May 21 – Acuity reports to all Board members, via email, that there is evidence of Nelson and Duke withholding relevant information from her, evidence of possible wage theft by Burke, and the possibility of Burke making purchases for personal benefit.
· May 22-23 – As per Acuity’s request, Nelson works with the EWUA bookkeeper to collect invoices and receipts for questionable expenditures.
· June 19 – Special Board meeting held to review the final forensic report by Acuity Forensic shared with the Board. The report shows the GM took compensation that was not authorized by the Board and that was in violation of EWUA policy. It also found numerous failures of the Board in its duties to oversee the GM and his spending. See the final forensic report.
· June 20 – The Board continues the Board meeting from the previous day to discuss the forensic report. The Board opts to only make available to the members the recommendations from the forensic report.
The Board, in regular session, adopts recommendations from the forensic investigation on modifications on how finances would be monitored.
· June 21 – Special meeting. Without notice to Smith or members and without it being on the agenda, Board holds a vote to remove Smith from the Board. Vote is 5-1-1. Claus voted “no”; Smith abstained. Smith was on the Board as a member representative, designated as such by Jim Nelson. Nelson withdraws his designation, and the Board votes to remove the designation status by a vote of 5-1-1. Hence, it was argued that since Smith is “not representing any member,” and a majority of the Board does not want Smith on the Board, Smith is not eligible to be on the Board. Theory approved by the Association’s attorney, Rochelle Doyea.
The EWUA bylaws state that the Board’s removal of one of its own Board members takes a unanimous vote of the Board, excepting the Board member in question. State law says that only the members voting in a Board can remove a Board member. RCW 24.03A.530. The removal of Smith was not a part of any settlement agreement, as no agreement between Burke and the Board had yet been reached.
· July 6 – Special meeting. The Board meets to discuss Burke’s new terms for settlement. The Board passes a motion to revise the bylaws by November. The desired modifications are not revealed. Against the Association’s bylaws, the Board separated a position to be filled by two people by electing Lancaster as Treasurer and Cohen as Secretary. The Board votes to hire the Association’s attorney, Rochelle Doyea, to revise the Employee Handbook.
· July 7 – Association attorney Doyea sends an email to Smith requesting that all data held by Smith that is associated with EWUA be returned, despite the fact that such a demand has never been made of any prior officer or director, that there is nothing in the bylaws or state law requiring the destruction or return of such data, and that there are no confidentiality agreements or non-disclosure agreements that prevent Smith from sharing relevant information with the members.
· July 18 – Association attorney Doyea sends an email to Smith requesting that all data held by Smith that is associated with EWUA be returned.
· July 27 – Association attorney Doyea sends an email to Smith demanding that all data held by Smith that is associated with EWUA be returned and all copies destroyed and that if Smith does not comply, Smith will be sued.
To the best of our knowledge, as of August 20, 2023 the Board has not taken action to require Dan Burke to repay the Association for the money he overpaid himself, and he remains the General Manager.