the gong show continues - laguna woods not so hidden executive incentives
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8/8/2019 The Gong Show Continues - Laguna Woods Not So Hidden Executive Incentives
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A Publication of Residents Voice Sep 2010 Volume 3 Issue 5
Page 1 of 4
Four of eight Bell City Officials and Council
members arraigned before a judge after the
“Bell City Fiasco.” Bell City officials awardedthemselves high salaries and benefits which were
kept hidden from the public until two unrelenting
LA reporters brought them to light .
District Attorney, Cooley, stated that, “Being paid
excessive salaries is not a crime, but, Illegally ob-
taining those salaries is a crime.”
How did the city officials obtain their excessive
salaries? Prosecutors allege the subjects misap-propriated more than $5.5 million. Most of the
funds were kept hidden from the general public
and the only oversight was provided by the Coun-
cil itself.
On an equivalent scale we have been told that
PCM has awarded their staff $5.2 million dollars in
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Incentive Bonus monies and the only oversight that
was provided was by PCM. There never was a vote by
the Mutual Boards to specifically allocate monies for
this purpose.
LWV Resident/owners concur that, “Being paid exces-
sive salaries may not be a crime, but, Illegally obtain-
ing those salaries is a crime.”
Spending those monies without Board approval or
knowledge, can certainly be construed as misappro-
priation of funds.
Should the Bell City Residents have accepted the ac-
tion of the council who willingly reduced their salaries
from $100,000 to $8,000 a year after the exorbitant
salaries became public knowledge? The council was
willing to forget the past and live with a reasonable
(Continued on page 2)
It’s LEGAL!! 1
BONUS PLANS 2
Landscaping 3
Opinion 4
“But, It Was Legal, Your Honor!”
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A Publication of Residents Voice Sep 2010 Volume 3 Issue 5
Page 2 of 4
salary, but, apparently this was not acceptable to
the city residents.
If hiding these excessive salaries and reverting to a
reasonable pay scale would justif y Bell City resi-
dents to overlook these excessive expenses
(according to the city council) shouldn’t LWV Own-
ers ignore the $5.2 million in Incentive Bonuses
and overlook restitution (according to PCM and the
candidates; Muennichow, Welch, Wellikson, Tso)?
While many LWV residents feel that way, and, un-
fortunately, so do a number of candidates for the
Third Mutual Board who publically state that their
primary ob jective is to “Sto p the Law Suit .” Rather
than getting elected with the intent on providing
OVERSIGHT, they want to get elected with the in-tent on IGNORING THE PAST. PCM says that it has
terminated the Incentive Bonus Plan. Should we ac-
cept that as full payment for the $5.2 million that
was spent by PCM f or unallocated bonuses?
“ Sto p the Law Suit !” Could 3 of the 4 candidates
who state that this is their primary objective, be in-
fluenced because they were on the Third Mutual
Board at the time the Incentive Bonus was being
implemented and, as Board Members, were respon-
sible for oversight, yet didn’t know of the plan? If
we were in that position, it is probable that we too
would like to “St op the Law Suit .”
started. A PCM paid Leisure World News ad was
describing this back in 1990 when residents
were upset that their assessments were going
up even more. (NOTE: Neither the word
“incentive” or phrase “incentive plan” are even
used in this PCM ad.)
Bonus Program – Started in the early 1990’s, itpaid department managers and employees
within the departments bonuses from a bonus
pool for outstanding ideas and savings. Boards
knew about this each year, and were informed
each year how big the “bonus pool” was. This is
the program they based their $32-Million in
community savings on (again, with assessments
going up each year). This program continues to-
day (2009). It is a successful program and com-
mon within industry.
Incentive Plan – Secretly started in 1996 and
never revealed to the boards until late 2006 af-
ter being accidentally discovered. PCM claims
they took 30% of certain savings each year and
awarded it to employees. There is no proof re-
garding the percentage skimmed or that monies
were distributed to any significant number of
employees. PCM established project budgets
each year, got the boards to approve the budg-
ets, managed the projects and “always” came in
under-budget, paid out supposedly 30% of the
savings for themselves, and returned the bal-
ance of the savings (70%?) to the boards. There
has never been any open accounting or audits of
these accounting transactions and details –
NEVER. PCM has admitted in written e-mails
their unapproved payouts averaged $450,000
per year and ranged from $200,000 to over$1Million over the years.
PCM and the Mutual Directors keep trying to con-
fuse the issue by saying Boards knew all along about
(Continued on page 3)
BONUS PLANS ?
There are three programs they are trying toconfuse members with these days…….
Employee Suggestion Program – Started in
1987, it paid employees spot awards and a per-
centage of savings. Boards knew about this
every year. It ended when the Bonus Program
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A Publication of Residents Voice Sep 2010 Volume 3 Issue 5
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What requires more water with a potential for
exceeding our water allocation during our cur-
rent drought?
When you also include a 10% plant loss ratio for
new plants with limited water during our drought,
you must ask yourself if this is really justified. An
open area like this will take less than 5 minutes to
mow each week and as an already established area
it will look green and fresh 100% of the time, as op-
posed to many man hours trimming, replanting, and
watering after it has been re-landscaped.
If you drive around United and Third Mutual and
inspect the slopes, you will see many areas that
need immediate attention to either, resolve slopes
that have not been maintained, or, to repair slopes
that have been maintained.
This does not bode well for the effort of the Land-
scape Division when viewed by a potential buyer. It
is always better to have nice green grass and well
maintained slopes as opposed to winding walkways
with bushes and shrubs and slopes that look like
they are on their last drop of water.
A moratorium on new plants during this period of
water restriction would have saved costs for both
water and the loss of plants trying to grow with lim-
ited water at the very time they need excess water.
the Incentive Plan payouts, but, even PCM has
written that boards were not aware of them. Each
year, PCM should have gone to the board and re-
quested approval for a payout from savings. They
never did, and the boards had no knowledge. (The
prior comment was written by Mike Curtis, August
2, 2009. )
When discussing Incentive, Employee, Safety, Bo-
nus, etc, PLANS, it is critical to ensure that you are
talking about the same PLAN. There have been a
number of PLANS over the course of the past 20
years. All but one had been authorized by the Mu-
tual Boards. It is not uncommon for past Directors
to state that, “They were aware of the bonus
plan.” In most all cases, they would be alluding to
the Incentive Plan, but, in reality they were un-
wittingly speaking about one of the other plans.
Few Directors, in the early 2000’s, knew about the
various plans and only recently (2006) had they
become aware that the infamous INCENTIVE
PLAN even existed.
Anyone browsing PCM’s ledgers would not find an
account number called, “INCENTIVE BONUS, or
INCENTIVE PLAN,” however, there is an account
titled F.I.C.A.—INCENTIVE ACCRUAL..
LANDSCAPING?
L andscaping, or, Make Work? What is the justi-
fication for some of the re-landscaping effort
that is going on in United Mutual?
Does it cost less to water , trim and maintain
plants in a newly re-landscaped area, or, to wa-
ter and mow an already established grass area?
What is our cost justification for beautification?
What is more beautiful; a green area of grass
within our manors and common areas, or, wind-
ing paths with plant and bushes that mimic our
manor common areas?
Shrubs or Grass $$$$
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A Publication of Residents Voice Sep 2010 Volume 3 Issue 5
Page 4 of 4
Standing’ with the Mutual (no outstanding debts to
the mutual).”
The Nominating Committee has the responsibility to
communicate with the candidates and it is up to
them to inform a candidate of his/her status.
If there is any reason for not endorsing a candidate,
the Nominating Committee should make that
known to the candidate.
By definition, the Nominating Committee is neutral
and is responsible to look only at qualifications and
must ignore political differences between the Nomi-
nating Committee and the candidates. Not endors-
ing a candidate would imply that the Nominating
Committee does not feel the candidate is qualified
and it is imperative that the candidate is informed
of the reason(s).
By having the PCM Towers Administrator notify the
candidate of the failure to endorse the candidate, itcould imply that PCM is in control of this Mutual
Committee function and that PCM is involved in
our elections when they should be completely neu-
tral and divorced from any influence on LWV Com-
mittees and Boards.
Is the Towers Mutual Board being dictated to by
PCM like some of our other Boards? An immediate
call was made to PCM on becoming aware of this
situation. The Towers Administrator responded by
saying, “I did nothing wrong.”
The Towers have been quietly going their own
direction with little or no visible outward
signs of contention or problems. The times are-a-
changing! The Towers Administrator, Ms Judie Zo-
erhof, rules the Towers with an “iron fist” and little
word gets out to the public on the inner happen-
ings.
After over 30 years as our Managing Agent, it is not
surprising that PCM would feel that they should
have a part interest in our elections. Close ties with
select Directors would certainly influence who PCMwould like to see elected to a Mutual Board.
As their control over our boards continues to in-
crease it is not surprising that the following scenario
could ensue.
A Towers Board candidate spoke before the Towers
Nominating Committee interview in July at which
time there was no reference to any objections that
would not allow their endorsement of the candi-
date. On September 24, the candidate received a
letter from the PCM Administrator, that his en-
dorsement was being dropped by the Nominating
Committee. No reason was given.
In contacting a Nominating Committee Member to
get clarification on this decision, the candidate was
told that the information was confidential and could
not be discussed.
This brings up several questions; What is PCM’s re-
sponsibility? Who should notify the candidate?
What justification for non-endorsement should be
made available to the candidate?
PCM has only one responsibility during an election
and that is, “To verify that the candidate is ‘In Good
Opinion
Residents Voice(949) [email protected]
What is PCM’s Role in LWV Elections?