united board recall & the elephant in the room

A Publication of Residents Voice June 2009 Volume 2 Issue 5

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Inside this issue:

The VoiceThe VoiceThe Voice

Residents Voice Meetings

Thursday, July 09 Thursday, July 23

CH #5 6:30 pm

They are unwilling to make this public so that every owner understands what this meant to the United Mutual assessments. Not only will they not make this public, but, they will not even admit that if this happened, it was potentially against the Cor-porate Code and is an illegal operation of a Home Owners Association Managing Agent.

Mr. Johns continuously states that he only does what the Mutual Boards tell him to do. Did the Boards tell him to give his staff $5.4 million in in-centive bonuses? No! That action was initiated solely by Mr. Johns without the knowledge of the Boards. The people being recalled want us to ig-nore this past action and to start afresh with a clean slate.

Most residents support the objective of Mr. Curtis which includes an understanding of how the Incen-tive Bonuses were derived, AND, are there other similar expenses of which the Boards and owners were unaware?

The Elephant 1

Should we Recall? 2

Senior/Criminal 3

Spec United Mtg 3

Transfer Fee 4

San Sebastian 5

Smash & Grab 6

Opinion 8

T he United Board is facing it’s first ever re-call of a director, in fact, FOUR Directors!

These Directors believe that the action was ini-tiated by Direc- tor Mike Curtis, “so he can run the Mutual by himself, as he sees fit.” The re-call is actually the result of the board concen-trating on Mike Curtis and being blind to the ELE-PHANT in the room to the tune of $5.4 million dollars that PCM has

spent between 1996-2006 without justification, consensus or even knowledge by the majority of any of the Mutual Boards of Directors.

Elephant! (What Elephant ?)

$5.4M

United Board


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A ll United Owners will be receiving a letter in the mail during the next couple of weeks.

This will contain a ballot to allow you to either “recall” or “not recall” any or all of the four cur-rently seated Directors. Obviously this will be a critical decision for each of us to make and will take some research to come to a reasonable con-clusion.

Here are some thoughts on how one might ap-proach this decision. You should be able to ask the following questions, and get a logical and con-structive answer directly from the mouths of these Directors:

1. What level of trust do you put in PCM? If the answer is 100% then you probably feel that there is no need for oversight on your part and you acknowledge that PCM does not need any oversight today (see page 1 of this newsletter).

2. If your answer is less that 100%, then please explain to us what oversight you have pro-vided, or plan to provide, where you do not have 100% trust?

3. It has been 2 years since the rumors of an “Incentive Plan” became “public” knowledge, accounting for approximately 5.4 million dol-lars in Bonuses. Do you believe that this plan was legally implemented?

4. If not! What are your plans for a review? 5. When would you consider that the justifica-

tion, implementation and oversight for this plan for the years 1996 thru 2006 be made public to every owner?

6. Do you think it should be made public? Should the owners understand the details of the In-centive Plan?

7. Do you believe that we should review the pub-lic statement by the General Manager that the Credit Cards that were issued to his staff, were for “emergency use only?”

8. Do you feel that just because you have been made aware of these areas of PCM expenses, there is no reason for further oversight and/or auditing in these or other areas of our Budget?

We have been unsuccessful in getting answers to

Why Would We Recall United Directors?

these questions and all of the Boards are remiss in accepting their responsibility to oversee the ac-tions of our Managing Agent. PCM has had a free rein by default. Yes! They continually emphasize that they only do what they are told to do by the Boards, and if this is true, then a recall surely is essential.

(Continued on page 3)

L. Foster L. Wilson

G. McNulty M. Rubin


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O n 6/19/9 The United Board called a special Open Board Meeting.

The formal “Open Session Agenda” that was provided to the Board members was;

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

1. Call Meeting to Order—Lloyd Foster, Chair

2. Establish Quorum and State Purpose of Meeting—Lloyd Foster, Chair

3. Entertain Motion to Approve Recall Election Ballot

4. Members Comments

5. Adjournment

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

On 6/19/9 the following events occurred at this meeting;


Seniors or Criminals

Residents Voice does not suggest how you should vote. But, by the answers to the above questions, it will be easy to make your own choice.

Special United Board Meeting 6-19-9

I f you have been listening to the Board Meetings over the past few months, it is

evident that as we get older we lose the abil-ity to communicate with one another. A

prime example is the ti-rade that the GRF Board President, Erwin Stuller, exhibited in his last Board Meeting on June 6, 2009.

In response to Kay, he said, “You have a loud

mouth and I’m not going listen to it!” His re-sponse to Jane was, “I don’t feel that I should have to be polite to you madam. I’ve had quite a bit ..uh enough of this this morning!”

(Check out the following website if possible. It will give some insight into what this GRF President thinks of a Leisure World Senior;

http://www.redcounty.com/stuller-should-apologize-then-resign )

Both women were attempting to air a com-plaint, as is their Home Owners Association right. In return they were treated as though

they were hardened, un-repenting criminals. We should be thankful that we never came be-fore this “Judge?” looking for understanding and an open mind.

We are faced with Directors who fail to real-ize that their fiduciary responsibility to the owners includes both monetary oversight, and, civility when communicating with the owners for whom they work.


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This kind of nonprofessional control of our Mutual Board meetings by our Direc-tors is becoming altogether too common-place. It is embarrassing to the owners to see a $30 million dollar corporation being managed with no regard to oversight of our money or responsibility by the Board Members to the owners. The result is chaos through their behavior interfacing with the owners and they can’t seem to under-stand the importance of common cour-tesy.

It is mind-boggling that the Directors fail to understand why owners are upset when they come to the microphone with their complaints, and then are promptly ig-nored or verbally trampled on.

U p thru 1987, members were assessed a fee when they sold a manor in Lei-

sure World. This was usually paid by the buyer and the amount varied from year to year. At times it was as high as $5,000. This fee was determined to be illegal by the state and it was subsequently terminated.

GRF was the recipient of this fee and when it ended, the result was to account for this “lost“ money by increasing the yearly as-sessments. The manor owners paid this fee, one way or another, via a transfer fee, or,


1. At 2:02 pm the United President, Lloyd Foster, called the meeting to order.

2. At 2:03 pm the United President, Lloyd Foster, adjourned the meeting so that the Board could go into a closed ses-sion.

3. Considerable Board discussion oc-curred on the objective of this open meeting before it was finally adjourned so that the Board could meet in closed session.

The corporate code and Roberts Rules of Order specify how a meeting is to be noted, and the provision of an agenda for the meeting, for either an open or closed meeting. The United Board, and PCM, ig-nored their responsibility and obligation to the owners which resulted in;

1. Failure to provide the owners with the Agenda at the meeting,

2. Failure to follow the published agenda that was given to the Board.

Even though the formal Agenda that was distributed to the Board members had;

1. Entertain Motion to Approve Recall Ballot, and,

2. Members Comments

the president adjourned the meeting with-out addressing a motion to approve the ballot or, allow any member to speak, ig-noring the resident who was standing at the microphone with the intent of making a statement.

(Continued from page 3)

Transfer Fee


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San Sebastian

responsibility of our Boards. The Boards just need the backbone to make PCM do it.

The costs associated with trying to imple-ment a transfer fee are horrendous. PCM has plans to consolidate the effort with other HOA’s, initiate efforts through a lob-byist, hire a facilitator to manage the proc-ess and take it through the state courts for a legal judgment.

They plan on doing this on the backs of the current residents. At a time when home sales are critical, they plan on add-ing an additional cost that will devalue our home. If we implement a $5,000 transfer fee, the value of the manor will undoubt-edly be reduced by $5,000 making a diffi-cult sale even more difficult for the seller.

If PCM would spend as much effort on managing our housing mutual costs as it does on various and other questionable “developments,” we could live within our means.

an increase in assessment. Supposedly, the money went into our budget and was to be spent by our four corporations.

Since it was terminated, many Boards have wanted to re-implement this fee since the Boards are always interested in finding ways to generate income (even though we are a non-profit organization). The current effort to re-initiate the fee is in response to the Boards need for additional monies. For what purpose? To try to limit increases in our yearly assessments, or, to build a new Clubhouse #2?

The major fault of PCM is similar to the problem that our country faces. We see an ever increasing cost for our services while no one makes any effort to reduce those costs. We are going to be “taxed” beyond our capability to pay with no regard to es-tablishing a limit on expenses.

We are currently going through the budget process and THERE WILL BE AN INCREASE in assessments. This is a guaran-teed fact and the Boards have taken no steps to stop the spiraling increase in yearly costs. The Board should have had the courage to stand up to PCM and limit the assessment to a 0% increase in 2010. If PCM is one of the “premiere” Managing Agents in California, they could prove it by living within our means. Instead they feel that they have a never-ending well of money that allows them to reach in our pocket whenever they need it.

There are ways to reduce costs and it is up to PCM to find those ways via the fiduciary

A t the last Residents Voice Meeting a resident commented on the access

between LWV Library Parking lot and the Long’s Drug Store parking lot. We had not looked at the final construction and the resident was absolutely correct.

The cart path from our property goes di-rectly from the library parking lot onto the San Sebastian property. There is a gate



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overstated profits (which turned out to be non-existent) with the unwitting (?) help of Arthur Andersen auditors in order to justify huge bonuses to executives. Bernie Madoff allegedly defrauded thousands of investors in an elaborate Ponzi scheme. These are activities that victimized the rich, faceless institutions, or investors who become faceless because individuals are lost in the sheer numbers of victims.

Does this seem remote from your daily life? It shouldn’t. We are often victimized by those who should be our strongest al-lies. We elect our boards based on what turns out to be meaningless campaign promises and stances. For openness, against secrecy. For residents, against profligate spending. And what happens?

Over in Third, a group of self-styled law-yers decide they can remove a dissenting director by majority rules. They will fight to the bitter end no matter how long it takes, no matter what the expense in terms of dollars or human cost. (Just as they did in the case of Lucie and Joe Falk.) In the mean time, the bullies continue to verbally abuse the honest minority who actually follow their campaign pledges. Majority rules and anyone who dissents is victim-ized by the majority. The theme is “win at any and all cost.” Settlement means the case is lost, just as they have lost their credibility.

Consider United—oh, please consider United. A director, Mike Curtis, is elected by a record majority of votes. He promises openness and vows to disclose financial ir-regularities (so many, so irregular.) Here

“Smash & Grab”

R ecently a number of very upscale smash and grab robberies made the

news. One or more people run into a large jewelry store, smash cases, fire guns, grab a fistful of diamonds and run as the alarms go off, increasing the confusion and fear which facilitate their escape. Some consider the true victim to be an insurance company with swollen coffers, bloated from feasting off the pennies gained from widows, or-phans, and other needy persons. It is easy to forget a crime which victimizes a faceless corporate entity.

Enron and other corporate giants vastly

at the parking lot that will open for either a cart or pedestrian using our ID card that has been keyed for this gate. The gate can also be opened for a vehicle to provide the Fire Au-thority access from the San Sebastian onto our library parking lot. We will ask the city to identify all of those who have keys for this gate.

When you leave our Library Parking lot to go to Long’s Shopping Center, you will have to drive on San Sebastian property and pass by their entrance using the same street that the residents of the San Sebastian will use to get to their entrance door. Once past the San Sebastian, you will be behind the Bank Amer-ica parking lot and on the shopping center parking area. Classic GRF planning!


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is a voice crying out in the wilderness, alone, standing up while they revile him publicly, demean him and his motives, make false and misleading statements about him. PCM managers even tried to get him fired from his high security job. Why do they do this? They are in the majority, an over-whelming majority and feel entitled to kick and excoriate Mike. But in actuality they are abusing all of us. We elected Mike to stand up and make a difference and the United thugs abuse all of us who supported and voted for Mike. Mike is the face, we are their victims.

Now let us consider the biggest smash and grab of all—GRF. Elected by bloated pluto-cratic directors (who often vote for candi-dates simply to remove directors that are even too crass to remain on the housing mu-tual boards) they feel immune and omnipo-tent, free from oversight and regulation. Check out the latest plan hatched (pun in-tended) to extort up to $5,000 from anyone who sells a manor. Thwarted by legislation notably Civil Code Section 1368(c), these di-rectors sought the advice of counsel to find ways to weasel (pun intended) around the law. When advised that any weaseling would end up defeated and at huge cost to the community, GRF is now proposing another wonderful line of attack against what they consider a “bad law” according to Robert Hatch. Milt Johns, at a recent GRF meeting stated that they would (did?) hire a consult-ant (Richard Kingston of California Political Consultant Group) to determine the feasi-bility of getting support of other HOAs and lobbying to have the law changed. Can you

imagine the cost of a lobbying effort to change a law that protects the rights of those of us who sell property? The vic-tims? Not just those who chose to move on, but those who must sell to go to shel-tered care, those who sell because they can no longer afford the continually es-calating assessments, those who have lost loved ones and must sell to liquidate their estates. But that’s all right. Seniors are the ultimate faceless victims. No rights, no voice, no protection. Smash and grab all you can and we are the vic-tims. It is not about personalities, it is about real issues. The noise and brutality of a smash and grab are simply to distract the innocent while the crime is commit-ted.

What can we do when we are told by the President that he doesn’t like our voice, when he tells us to shut up, when he closes a meeting without allowing mem-ber comments (a right supposedly guar-anteed by law?) I don’t know what oth-ers will do, but I will lend my support and vote to the recall. Let’s face it, if we replace four (United) directors the re-placements cannot possibly be worse than those currently on the board. Let’s go through (remove) them again and un-til we find a set that will honor the wishes of the membership and shoulder their fiduciary duties. Let’s recall them without fondness.

“YES” on RECALL.


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One of the precautions directed at a 501(c)4 is, there is no “excess benefit transac-tion” between a Disqualified Person and the organization. A disqualified person is one who benefits from an excess benefit trans-action. This potentially includes an Or-ganization Manager who may also be liable for an excise tax on the excess benefit transactions that might occur.

Not being an expert on taxes, Residents Voice can make no opinion on what are some of the possible “Benefit Transactions” that might be chargeable by the IRS. “An excess benefit transaction is a transaction in which an economic benefit is provided by an applicable tax-exempt organization directly or indirectly, to or for the use of a disqualified person, and the value of the economic benefit provided by the organi-zation exceeds the value of the considera-tion received by the organization.”

It would be interesting to get an opinion on where the “Incentive Plan Bonuses” would fall in the eyes of the IRS.

T he IRS has many options when filing your income tax. Two of them that

LWV would consider are;

1. A 501(c)3 Non-profit Corporation, or,

2. A 501(c)4 Non-profit Corporation

The 501(c)3 requires that the organization must be organized and operated exclu-sively for exempt purposes. These are nor-mally characterized as charitable organi-zations.

The 501(c)4 is a social welfare organization and must be operated exclusively to pro-mote social welfare.

PCM has defined LWV as a 501(c)4. We are therefore an organization that operates primarily to further the common good and general welfare of the people of the com-munity (such as bringing about the civic betterment and social improvements).

One of the acceptable activities of a 501(c)4 is the seeking of legislation that is ger-mane to the organization’s programs. PCM is increasing it’s headcount (thusly our as-sessments) for considerable lobbying in-terests that are not always in our best in-terest. Many Managing Agents have differ-ent objectives than do the owners in a Home Owner Association and yet we (the owners through the Boards) are paying money for lobby activity that is in the best interest of the Managing Agents.

Opinion

Contact;

Residents Voice 24100-D #296 El Toro Rd Laguna Woods, CA 92637 (949) 683-7317 [email protected]

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united board recall & the elephant in the room

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