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The Montgomery Village Observer |
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Comments on this issue on the blog on Follow the Money - March 28,1999 to July 4, 2007 |
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Follow the Money in MS Word or pdf format |
Volume I, Issue 3 July 2007 |
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Follow the Money March 28, 1999 – July 4, 2007 Déjà vu all over againMay 2007 was supposed to be a good month for the Montgomery Village community. Spring was finally here and the village’s 40,000 residents were looking forward to the Memorial Day weekend traditional opening of the Village’s pools, summer recreation facilities and activities. As we read the May 2nd edition of The Gazette we were overcome with a sense of closure and justice as staff writer Sebastian Montes reported that 761 days after it occurred Judge Gary G. Everngham sentenced Laura Buttry to 2 years probation, 100 hours of community service and a 2 years suspended prison and a 5,000 fine ($4000 suspended) for embezzling nearly $14,000 from the Montgomery Village Foundation. Unfortunately, Sebastian put an abrupt end to the community’s May euphoria as the headline in May 30th article edition screamed “Embezzler faces new charges-Investigation uncovers scheme in which an additional $86,000 was stolen from the foundation”. Buttry had been had been routinely making cash withdrawal from MVF’s cash, investment and benefits accounts going back 2,286 days to March 28, 1999. If this additional embezzled amount is not returned, with interest off course, by September 19th, 2008 MVF will exceed Cal Ripken’s streak of 2,632. The financial adventures of MVF closely resemble the 1993 comedy movie Groundhog Day. The movie takes place in Punxsutawney, Pennsylvania on this day the main character (played by Bill Murray) is forced to relive the day over and over again until he can learn to give up his selfishness and become a better person. However, the MVF version of Groundhog Day is an going tragedy that as best as we can determine began on March 28, 1999 in Montgomery Village, Maryland, Zip Code 20886, and entitled “Follow the Money”. “ Follow the Money’s”’ recurring plot line plays out like this: 1. Media News - The Gaithersburg-Montgomery Village edition of The Gazette reports on a condition or event that appears to adversely affect the financial condition or health of the foundation.
2. Public Concern - Questions and concerns are raised and explanations sought by the community from those of power, responsibility and duty at the various public forums and board meetings of the foundation and the various homes corporations, condominiums and community associations in the Village. Digital and regular mail and letters to the editor of The Village News and The Gazette, are directed to the foundation staff, board of directors and community at large.
3. Setting the Record Straight - The major portion of the next regularly schedule MVF board of directors’ meeting and next edition of The Village News are almost exclusively devoted setting the record straight and explaining how the event or condition never took place; was in effect a positive event with the financial health of the foundation, organization effectiveness; staff performance, moral and loyalty at an all time high despite or because of the event.
4. Damage Control - The MVF financial damage control emergency plan for such events includes requirements that any questions, comments and/or perceived criticisms by individuals, organizations and media components will be minimized, marginalized and/or ignored. The persons expressing a comment, opinion and/or concern will be demonized, patronized, judged unworthy, treated rudely and declared a disloyal enemy of the foundation.
5. The Code of Communications - Deeply embedded among the Brotherhood of MVF Spokes Persons (BOMS) is a secret code of opaque communications that mandates never acknowledge or accept the existence of an adverse condition, never apologize, be held accountable or offer substantiation for claims; after the fact swear the alleged fact or condition, with no supporting substantiation, has already been routinely remedied and will never happen again; only accept responsibility for all actual and fictitious positive events or conditions; always blame others and finally there is a public relations explanation that will suffice for all perceived or alleged adverse conditions.
The cast of characters for this 2 Act Play in alphabetical order they are:
* Member of the MVF Brotherhood of Spokespersons (BOMS) Act One - The Discovery
The April 2005 “suspicious transfer” in April 2005 of $13,684 was discovered and communicated to appropriate MVF officials when uncovered as a result of the MVF 2006 annual audit. The news of an embezzlement by long time trusted employee sent shock waves in all directions. How can something like this happen and go undetected for so long? Even Zakian was having a hard time getting his mind wrapped around this one, only the offender herself could answer all the questions. To better understanding about how embezzlements are discover from the book Polices & Procedures to Prevent Fraud and Embezzlement – Guidance, Internal Controls, and Investigation published by John Wiley & Sons, Inc. in 2006 and written by Edward J. McMillan, CPA, CAE we learn that despite belief to the contrary, most fraud is discovered by accident and due to unanticipated work interruptions. McMillan point out internal thefts are discovered by: ¶ CPAs financial audit 2% - The embezzler knows the auditors routines and what its supervisors look for and do not look for. The auditor engagement is to render an opinion on fairness and accuracy of the financial statements and not to uncover fraud. ¶ Results of internal audit 18% - A good internal audit program is very effective if effective established procedures and internal controls are followed between annual audits. ¶ Whistle blowing 30% ¶ Luck or by accident 50% - Stumbling into something or the thief’s careless accounts. As District Court Judge Everngam said to Laura Buttry at her sentencing hearing “The only reason you did it is you knew you would get away with it”. The judge recognized MVF is a fertile territory for embezzlers and the lack of effective and enforced internal controls allowed the embezzlement and to go undetected for so long. Act One – Scene One “A Reasonable Answer”
Where we dealing with one transfer from a desperate employee who was about to loose her home to foreclosure and “was driven to saver her family” as Justin Buttry made in an emotional appeal for his wife at her sentencing hearing on April 27th? Was this an isolated incident that can happen in any organization no matter how well developed the internal accounting and cash controls, competency of the staff, management and oversight structure in place? Is it not reasonable to assume that if:
then we can assume this is an isolated occurrence and we should move on? This is position taken by Lois Campbell, Interim Director of Finance and Administration, Pat Huson, Interim Executive President and Keith Silliman, Board Member and Immediate Past President and best summed up by Silliman as quoted in the February 2nd edition of The Gazette “I think under the circumstances, this is as reasonable an answer as we can expect” Here is what each had to say on the subject. Lois Campbell “All foundation money has been accounted for…If there’s $37.21 missing, I wouldn’t know it, but hundreds of thousand of dollars missing, which is kind of the implication, absolutely not.” The Gazette 8/1/06 “All foundation money has been accounted for…inconsistent bookkeeping and the misdirection of funds resulted in the inflated numbers… But among the things the foundation won’t do, is get a new audit.” The Gazette 9/6/06 “Arrangements have been made to recover all of the funds, plus interest. Since the audit, and subsequent resignation of the employee, details of the transactions were investigated and thoroughly documented. Furthermore, other suspicious activity was determined to have occurred, and all other related audit results found the financials clean. Contrary to other published reports, the MVF Retirement Fund was not affected in any way by the incident. ..MVF audit policies prevented this theft from going unnoticed. No funds will be lost and MVF retirement accounts and all other foundation accounts are in order”. February 16, 2007 The Village News 2/16/07 Pat Huson “I wanted to be sure everyone knew how the auditors and staff tracked down the misdirected money and that step that were taken to recover absolutely all the funds. ...We are committed to letting all of you know that the money you have paid to the Foundation for services is secure…The MVF retirement accounts have not been affected, and a subsequent audit showed that the Foundation's books and accounts are in excellent shape. One of the reasons I have stepped in the EVP's job is that I love this community and want to do everything I can to make sure it is managed and operated to your benefit. I am proud of the way our staff auditors, local police and Board of Directors have worked together to make everything right.” “Internal controls are strengthened by an excellent staff, now in place, who follow advice from our auditors on such matters, Detail of the loss will not be given since the case in not yet entirely closed. Anyone with a background of financial management such as a CPA is welcome to submit for membership of the MVF Audit Committee to review the handling of MVF finances.” The Village News 2/16/07 “ We are pleased that they money was returned with interest…This has not been the easiest term, attempting to bring things back in order after a period of discontent and questionable top-level management. Worries about financial conditions have been heard, but a look at the audit report for 2006 will assure owners that the Foundation remains in excellent financial condition. Even the missing money, misdirected by a former employee, has been returned with interest.” The Village News 3/16/07 “We’re happy to receive the money…all transactions have since been checked and monies accounted for. News of the theft came as the foundation was working to shore up its bookkeeping. Within financial records now straight – and a raised level of awareness – Huson said the foundation is in a good position to avoid such thefts in the future. I don’t know that anybody can ever guarantee it 100 percent…but I think overall management and supervision is much better than it was.” The Gazette 5/30/07 Keith Silliman "I think it's been methodically pursued and based on what I'm seeking, it will be resolved and there will be no loss to the foundation, I think under the circumstances, this is as reasonable an answer as we can expect." The Gazette 2/7/07 “In April 2005 a former employee working in the finance area diverted MVF funds t a personal account. The discrepancy was noted approximately a year later during the 2005 audit. The auditors verified that this was the only fraudulent transaction carried out by this employee. Arrangements have been made to recover all of the funds, plus interest.” The Village News 2/16/07 Act One – Scene Two - Failure to Protect MVF’s Assets and Resources
Or was this single act of embezzlement only symptomatic of long standing epidemic of fiscal and financial mismanagement and incompetence that has failed to protect, preserve, enhance and maintain the foundation’s assets, resources and public trust? This is appears to be the position of James Deye of Whetstone, Robert Hess of Maryland Place, Marilyn Cadoff of The Points, and the late Barry Locke who have written letters to the editor, attended and spoken at MVF public board, committee and special meetings about the troubled state of the foundation’s financial recordkeeping, reporting and communications. And it is surely the opinion of “Shan”, “Sane Again” and “Waiting to See” who have posted comments to the MV Observer’s blog. This view is best summed up by Robert J. Hess in his pre MVF election letter to the editor of The Gazette “The recent revelation about embezzlement of MVF funds by a former staff member goes to the heart of the debate about electing new candidates to the board of directors… Perhaps this problem would have occurred anyway, but we will never know, because the people elected to protect Montgomery Village did not focus on one of their important duties.” This group has somewhat the same feeling that Senator Howard Baker (R-Tenn.), the vice chairman of the Senator Watergate committee describes the role of the CIA in the sandal. It was like “animals crashing around in the forest – you can hear them but you can’t see them”. Almost any evening, in the wooded area surrounding the Apple Ridge heavily secured foundation headquarters, you can still hear the “enablers” crashing around. Here is what this group had to say. Robert J. Hess “The recent revelation about embezzlement of MVF funds by a former staff member goes to the heart of the debate about electing new candidates to the board of directors. I am appalled that any sitting board member would continuously accept verbal financial reports, “summaries”, or anything other than a complete and comprehensive financial statement each month. Would any of us accept a verbal report concerning our checking or brokerage accounts? Perhaps this problem would have occurred anyway, but we will never know, because the people elected to protect Montgomery Village did not focus on one of their important duties. Please pull out those pink ballots and vote for Katherine Gray, Scott Johnson and Jim King. We need people who understand the bottom line. The Village News Letter to the Editor 3/07 Stop whitewashing truth over embezzlement-Let me get this straight: The Montgomery Village Foundation was alerted to an initial embezzlement that was only brought to public attention because of The Gazette. The former MVF board of directors had cut a deal with the person responsible without investigating if more was missing. Now, according to police, at least $100,000 in embezzlement has been discovered only because a former lifeguard tipped the MVF. Otherwise, the MVF board and staff was telling us all that everything was fine. Now, now a very small group of disgruntled residents wants to reinstall a certain individual as MVF interim treasurer who was the interim treasurer when much of the embezzlement occurred. There is something very wrong with this picture. We do need anyone as MVF treasurer who is in anyway associated with the large MVF deficits or the current effort to tell resident all is well. Let’s get a financial competent who will not whitewash the truth or favor deficits. This is our money The Gazette 6/20/07 http://themontgomeryvillageobserver.blogspot.com Waiting to See With the elections over, I’ll take a wait and see approach for a little while. Hopefully the 3 new board members recently elected to the board can start the process of cleaning up. My biggest concern isn’t the small amount of money pilfered from the retirement funds, it’s the lack of direction the previous board had in creating a balanced budget that wouldn’t eat into the reserves that we have built up. Loosing 100’s of thousands of dollars a year, what can we say but WOW. 3/16/2007 Shan As a former employee of the Foundation, I can assure you the Buttry situation was kept very quiet. I am guessing that only three MVF employees even knew about it once the auditors alerted them, and one, of course, was Zakian.” March 10, 2007 Sane Again I am a former MVF employee. Zakian was a monster. That does not excuse the MVF board for letting him happen along with the money mess. He was thrown out of every job he had. Lon Haman, Keith Silliman, Dick Wright and the rest of that board are responsible for everything bad that has happened in Montgomery Village. 3/07 I am a former MVF employee who has posted to this site in the past. For the record, I left of my own accord because I could not stand the place anymore. The MVF staff and older board members will attempt to vilify anyone who opposes their restricted viewpoints. They readily ridicule residents and board members behind their backs. No criticism is acceptable to them. From talking with current staff, the MVF is dysfunctional and morale is at an all time low. Pat Huson is providing no leadership and Lois Campbell is running the place. Several staff people are going to quit. Staff is looking to the new board to be their salvation from Lois Campbell. Everyone detests her. She meddles in every department and does no work. There are a few good people left at the MVF. I hope the new board will do something quickly to salvage the mess. 6/20/07 Pissed Off Resident The MVF officers and all staff you have to do with the money should resign. How much have you lost for us so far 5,6,7,8 or more hundreds of thousands of dollars? Just move on and try loosing your own money for a change not mine. 3/15/07 Anonymous This is but the tip of the iceberg. It gets worse way worse, Keep digging. 3/15/07 Act One – Scene Three – The Cover Up
Probably the most egregious and damaging aspect the series of employee thefts embezzlement is the improper response and misinformation campaign by responsible parties during the 9 month 13 day gap between the discovery, in April of 2006 and the alleged recovery of the initial theft on March 14th 2007. In the current May-June 2007 edition of Common Ground Magazine in and article on board responsibility entitled “Eternal Truths” author Louis D’Angelo states that the “fundamental responsibility of the board of directors is to “Protect the assets of the Association. This requires the board to confront problems as early as possible and to take whatever actions are necessary to deal with them effectively, efficiently and economically for the assets of the Association must not be allowed to deteriorate.” MVF leaders would have us believe that during this 346 day “discovery-recovery gap” the staff offices at 10120 Apple Ridge Road resembled the movie scene when Elliott Ness stood amidst a legion of accountants, FBI suits and police officials as they built an income tax evasion case against Al Capon. The image of members of the board of directors, and other MVF officials looking under desks, in file cabinets and poring over evidence in their “more-than-year-long-investigation as they quietly went about reconstructing what happened” is absurd. As we have come to learn it is not crime but the cover up that destroys public trust. Please read the following and you judge for yourself what truth is and who has it right. What Should Happen? Before discussing what actually happened in the 346 days between “The Gap Between Discover & Recovery” it would be reasonable to know what should be done and how long each step should take. Otherwise we would not have a frame of reference to compare “what we know”, to “what we don’t know” and to “what we have been told”. Being a victim of fraud is an embarrassment to any organization but a reality all organizations. Prudent business practice is to have in place a preplanned strategy of action if and when fraud occurs. From the book Policies and Procedures to Prevent Fraud and Embezzlement by Edward J. McMillan, CPA, CAE the following action plan for a large-scale community association was developed.
¶ Provision on Duties in Event of Loss A. Notify us as soon as possible, B. Submit to examination under oath at our request a signed statement of the answers. C. Give us detailed sworn proof of lost within 120 days. D. Cooperate with us in the investigation of any claim. ¶ Discovery Period for Loss We will pay only for covered loss discovered no later than one year from the end of the policy period. Bob Hydorn should by pass the source that assured him “that MVF is insured” for the latest discovered series of thefts and have a discussion with the MVF insurance agent and see for himself the exact “Discovery Period for Loss” provision in the current MVF Employee dishonesty insurance policy. While he is at it he should find out the details and outcome of the first discover theft. Was a claim ever filed? If not, why not? Considering it took 9 months and 13 days to recovery the money back wouldn’t make sense to have immediately filed an insurance claim to recover the funds. In addition to quicker recovery it would have saved a lot of bad press and loss of public trust. 5. Do not have discussions in the employee’s office, cubicle or other work areas The offender’s office almost always contains vital evidence related to the incident.
Zakian filed a police report on July 11th, 2006, day 460, 102 days after the “auditor’s notation”. If filing a police report was a prerequisite of filing an insurance claim when was the insurance claim filed?
In the event of embezzlement, the logistics of implementing a preplanned strategy of action in the event of embezzlement should not be difficult or take long, items 1 through 13 and 15 within 10 days, 14 and 16 not longer than 90 days. “Who knew and when did they know it?” Senate Watergate Investigation Committee
April 1, 2006 It is a reasonable assumption, when RB&L finished the audit field work on the MVF 2005 financial books, records and statements in April 2006, day 365, the details of “who”, “how”, “how much” and “when” concerning the misdirected-embezzled-stolen- missing money was known documented and communicated to MVF authorized representatives. At the time, the dominant and controlling force of John Zakian, Executive Vice President, was in charge, in control of the staff, the board and the flow of information about the audit in progress. He undoubtedly signed the auditors engagement letter and it’s a fair assumption that Regardie, Brooks & Lewis audit staff knew John was “the go to guy”. Geraldine Barber had been the Director of Finance and Administration for only a few months and Lois Campbell had just been appointed the treasurer. From the MV Observer’s blog, Shan said, “As a former employee of the Foundation, I can assure you the Buttry situation was kept very quiet. I am guessing that only three MVF employees even knew about it once the auditors alerted them, and one, of course, was Zakian.” Keith Silliman in the February 16, 2007, issue of the MV News “President’s Report” wrote in guarded and euphemistic language “In April 2005 a former employee misdirected approximately $14,000 of MVF funds for her own advantage...The discrepancy was noted approximately a year later during the 2005 audit. (April 2006) From Keith’s admission we can assume he was informed as president of the board of directors, a member of the executive committee and an elected board director he was fully informed by the auditors, Zakian or Lois Campbell. Lois Campbell was appointed treasurer and a member of the executive committee in March of 2006 only a month or so before the discovery of the theft. It would be hard to imagine Lois not being on the “notify immediate in case of emergency list”. John had been in tough situations before. His instinct is to take care of these kinds of public relations problems quietly and when the cure is in progress reveal to as many as possible how he discovered the condition and how his quick action saved the community from great lost and embarrassment. There was growing public concern over the handling of the foundation’s financial affairs, it was becoming difficult to spin a positive financial allusion narrative without revealing actual understandable, detailed and accurate balance sheets and operating reports. Soon after he was informed of the incident Zakian defaulted into his best Dick Cheney damage control mode described “how he was taken care of the situation” version of events to John Silliman and Lois Campbell. Sometime later, the remaining members of the MVF executive committee, Toni Negro, VP and probably Richard Wright, recently replaced interim-treasurer were treated to a Zakianese style updated briefing of the “local-police-and-board-of-directors- working-together-to-make-everything-right-with-interest” rendition. In compliance with the MVF long standing closed and opaque communications policy this version was only to be revealed on a need to know basis or made public if “talk around the water cooler,” leaked a distorted account to “other published report” sources. The remaining board members were part of the “don’t ask, don’t tell” level of awareness group. The news of an embezzlement by long time trusted employee sent shock waves in all directions. How can something like this happen and go undetected for so long? Even Zakian was having a hard time getting his mind wrapped around this one; only the offender herself could answer all the questions. The department of finance and administration by any standards was stretch very thin, understaffed and leaderless. If there was at any time a system of internal controls it slowly eroded as valuable personnel left, remaining employee struggled to keep up and new and temporary employees became uncomfortable with the unproductive working environment. Damage Control Meetings
There were in all probability a series of secret meetings of those with appropriate security clearance to work through the initial panic, denial and non-assumption of responsibility. Zakian was worried about the public relations aspect and how he could spin a happy face out of this one. The Accused is confronted
After a period of indecision and delays of days and maybe even weeks a conference was held with the alleged offender. At a minimum Zakian, along with the RB & L audit team leader met with the Buttry. What wasn’t known with any degree of certainty was this one isolated event or part of much broader break down of MVF’s asset protection and security system? The odds heavily favor the later. However, among those assembled in spring of 2006 it was in everyone best interest to believe otherwise. RB&L had been MVF auditing firm forever and have collected close to $175,000 in fees from the foundations from in the 2000 to 2006 fiscal years. It might be difficult to explain considered the firms supposedly familiarity with the account how any serious financial irregularities could or should go unnoticed. The John and Keith had been the leadership tandem as MVF EVP and board president since John was appointed Executive Vice President in the spring of 2004. And off course Buttry must have been sitting at the meeting with mixed feeling or pride and pain. For at least seven (7) years expanding 6 audits she used her extensive access to MVF bank accounts, payroll records, wire transfer codes and general ledger accounting system to reach into every department’s cost center and steal cash at will. She must have known it would come to an end someday. She had to be thinking through her options. What if it’s true that “they” only have uncovered one lone check transfer equal to only a fraction of the total cash stolen? It didn’t take her long to figure out if she could convince her accusers it was just one desperate act and only one misdirected transfer, she might be able negotiate a resignation for a promise to repay the amount, with interest off course, in a reasonable sort time period and forgo filing criminal charges. She could quietly leave MVF after her “retirement party” and find another job in an accounting department of a large-scale community association. Even if criminal charges where filed and the “one desperate act” defense holds up she would probably on receive some minimal additional finds and a suspended jail sentence. But if the truth about the whole scheme becomes public she would be facing some real extended jail time. She had to sense that her accusers were in “damage control” mode and were as desperate as she was to keep this under wraps and make it go away. From subsequent public statements and the 108 day delay in the filling of criminal chargers, it appeared Buttry was able to easily convince those present her sin was only “one desperate act” and the whole incident could escape public notice. One possibility was an arrangement was agreed upon for her to make restitution by selling or refinancing her home. The real estate values in the Village had increased substantially in recent years reaching its peak early in 2006. The pre planned embezzlement action plan wasn’t necessary. It is doubtful that at this early stage an employment attorney had been properly consulted, Zakian was always quick to assure the board that attorneys were not necessary when the “A” word came up. It is doubtful that many of the other 15 steps on McMillan’s “fraud action plan and strategy” were considered or preformed. This had to be kept quiet. Prosecution was too public. John placed his “I’ve take care of the situation” plan in motion with the complicity from MVF leaders’ and compliance out of fear from senior staff. May 19th 2006 In The Village News” “In the New” column Lois Campbell was quoted as saying “we are more vigilant than ever to anticipate unforeseen events so that this year’s performance will meet or improve on budget.’” It was still early. The summer of Discontent
June 14, 2006 The Village News reported, “Over 100 residents attended a community forum and a lively dialog involving the future of Lake Whetstone, the boat house and the dock”. There were closer to 120 residents present and although lively there was no dialog. As the MVF board, senior staff and members of the Parks and Recreation committee sat mute MVF board member Eric Smith, the forum facilitator and enforcer presided over a question and non answer session as one anguished, angry and annoyed speaker after speaker commented and questioned the board on: Why this Zakian inspired initiate to spending $500,000 on a modernized heated boathouse palace and safe haven for Montgomery County children at risk was in the best interest of the Village residents? After decades of general deterioration of Lake Whetstone’s park and lake’s natural resources with its crumbing walkways, dying, crippled and diseased tree life, the turf conquest by invasive and wild plants, eroding and inadequate turf coverage and neglected physical structures; with a long standing absence of normal care and maintenance routines, punctuated by eroding soil washing into the adjacent lake and streams, temporary and inadequate stop gap shore line repair measures; with its substantial backlog of capital needs why would the board bless this ill advised boathouse erection? Was this boathouse initiative the lake and parks’ component of the secret comprehensive funding and capital and improvement plan? If so make it public. Why wasn’t the decision to seek a state grant to restore the boathouse structure at a cost of a half a million dollars not part of a general public discussion? And why didn’t this decision proposed, discussed and voted on by the board of directors in an open board meeting as called for in MVF’s governing document and county and state law? The July 5th, 2006 As reported in July 5th and 19th editions of The Gazette The Friends of Whetstone Lake (FOWL) filed a request for a hearing with the with the MVF’s Executive Committee and subsequently six Village residents file a complaint with the county’s Commission on Common Ownership Communities (CCOC) alleging MVF did not approve the grant request and project in open meeting, approved the project at a closed meeting of the board and failed to provide meetings of closed meetings as required by the MVF by-laws and in violation of the Maryland Homeowners Association Act, Not something John couldn’t handle. He felt a new sense of confidence and arrogance after the backing and support the board showed him at the lake meeting. The board message was clear – “stay the course”. Didn’t he take the heat for the board that night? John was truly a “war time” EVP. As spring turned to summer the plan was falling apart. Village real estate values were in decline. For some reason Buttry couldn’t come up with the money. (Wonder what she did with all that money?) Good chance an insurance claim had to be filed within 120 days and only after a police report had been filed. The leverage MVF had with quick and early prosecution had been lost. Ninety-six (96) days after the “discovery”, as the Village enjoyed the Independence Day fire works, a different type fire works were in the offering in the Village during the next year. The Missing Money Watch
July 11, 2006 The February 7th 2007 edition of The Gazette reported that on this day “John R. Zakian the foundation’s executive vice president, alerted police to the suspicious transfer, according to police reports”. The foundation routinely files claims in the District Court for liens on assessment collections. It is not something anyone other than the affected homeowner would necessarily notice. The insurance company and local police quietly were added to the team. The Gazette obtained a copy of the police report at this time, but did not make mention or reference it until almost 7-month later on February 7th, 2007 edition. Sebastian took every opportunity in questioning MVF leaders about such subjects as the budget process, the annual audit and/or the financial reporting system to make inquires about the possibility of “missing money”. Beginning with its August 2nd 2006 edition, shortly after Zakian “alerted the police”, The Gazette began running denials on a regular basis by MVF leaders, especially from Lois Campbell, the MVF media attack dog, that any fraud or embezzlement had taken place. July 14, 2006 Three days after Zakian “altered the police” his EVP Message in the July 14th edition of The Village News titled “Preparing 2007 budget is a delicate balancing act”. John failed to mention the budget was not his only balancing act that was occupying him at the time. He had a lot on his mind and he could be forgiven he did not handling the misdirected funds issue immediately. Trouble at the Top - Zakian “Resigns”
July 27th, 2006 In a closed session of the MVF board of directors John Zakian’s resignation was accepted in a unanimous vote of the board. The Gazette in its August 2nd edition quoted Toni Negro; board vice president, “neither the deficit nor the lake dispute played a role in Zakian’s departure.” Were the “missing money” and the general state of the financial affairs, factors in his leaving? Was it even discussed? Why since his departure has there been no admission, acknowledgement or apology for his serious negative impact on the Village? Or was he just following orders? It is possible that the board was still not fully informed? Did his resignation include a negotiated settlement of silence? August 2, 2006 The Gazette reported, “John R. Zakian, the embattled executive vice president of the Montgomery Village Foundation, resigned last week. His departure after two-and-a-half years on the job comes amid mounting concerns over the tracking and reporting of the finances and plans to improve Lake Whetstone. This year’s audit of the foundation’s $6 million-plus budget showed a $475,000 of that gap was anticipated, the shortfall has alarmed residents who are demanding reforms. September 6, 2006 The Gazette reported that “Montgomery Village Foundation leaders have not found any money missing in their review of community finances, but they may have to look at assessment increases or cuts in services to make up for a budget deficit. The foundation is undertaking the review of its finances following last’s month’s resignation of its top executive, John R. Zakian. Lois Campbell confirmed that… ‘All foundation money has been accounted for…inconsistent bookkeeping and the misdirection of funds resulted in the inflated numbers.’ The discovery of poor record keeping, coupled with lagging financial reports and the resignation of Zakian and the Director Finances Geraldine Barber has the foundation working to regain its financial footing...Campbell-in her mid-year report promises that the foundation will be more forthright about finances. ‘But among the things the foundation won’t do, is...a new audit.’ The residents said they were asking for the audit largely due to concerns of malfeasance or fraud.” As a senior member of the MVF Brotherhood of Spokesperson (BOMS), Lois, following the “Damage Control Emergency Plan” was setting the record straight. In her interview with Sebastian’s she made several thought provoking points:
The Gazette article also stated “Pat Huson, a former foundation official who agreed to step in as executive vice president after Zakian’s resignation…has never seen the foundation is such a financial morass. …Still, Huson …doesn’t think ‘these are problems that can’t be fixed, I’m very optimistic about that.’ But the situation has created concern among residents: several at (the board) meeting called it a crisis of confidence.’ In all fairness to Pat she had been away for a few years and been updated on the “damage control plan” and the “code” during the Zakian era. September 15, 2006 In The Village News “Money Matters” column staff writer Jude Gustafson writes, “It is important for residents to know and understand decision on Foundation finances; however, it is sometime difficult to know where to find reliable facts. In that in mind, in response to the article “Village moves toward raising assessments” written by reporter Sebastian Montes and published in the September 6 issue of The Gazette, Lois Campbell has provided feedback and corrections that yield a fact-based picture of that report…. Forgiving Montes’ terminology glitch in his statement, “Foundation leaders pored over the Village’s finances…” …As with all media information, audiences must reflect on the motivations of those holding the pen…The Foundation is working hard to keep everyone informed and put an end to inaccuracy in report that would divide our community.” Like any good BOMS Jude knew how to treat the “enemies of the foundation”. January 30, 2007 In the February 7, 2007 issue of The Gazette it was reported that Lois Campbell, interim treasurer, reported the prior week that all accounts in arrears have been wrapped up and that through the November 2006 report”. Does “arrears accounts are wrapped up” mean the account totals are:
Ground Hog Day 2007
February 7, 2007
The Gazette February 7th edition reported that on Ground Hog Day February 2, 2007 “a warrant application that seeking the arrest of Laura Buttry on charges of felony theft” had been made. The Gazette‘s “Media News” had just launched another Montgomery Village “Ground Hog Day tragedy. Members of the Montgomery Village Brotherhood of Spokespersons (BOMS) knew they could not wait for “Public Concern” momentum to mount. After 7 months of “Code” driven denial statements that there was no thefts from the foundation and homes corporation’s cash, investment and benefit funds the BOMS’ had to dig down deep to make the Code’s driving principle work. That being “There is a public relations explanation that will suffice for all perceived or alleged adverse conditions. Setting the Record Straight
February 16, 2007 The Village News “Set the Record Straight” edition featured senior BOMS Lois Campbell writing in the “Money Matters” column skillfully and seamlessly presented Keith Silliman’s “Reasonable Answer – One lone desperate act” explanation, “the audit will validate our financial position” and the “audit policies save the day” fiction. Pat Huson in her in her “Executive Vice President’s Message” article proudly explained Zakian’s back up “local police-board of directors-hard working and dedicated staff-audits-insurance agents working together to make everything right” rendition of events. Keith Silliman in his “President’s Message” proudly announced, “Arrangements have been made to recover all of the funds, plus interest.” In her letters to editor Marilyn Cadoff of The Points and a CPA wrote, “It was very distressing …to read of the embezzlement that occurred with MVF funds…I felt …there were still many questions that had not been answered. Specifically, what was the nature of the theft and what weakness (es) existed in the internal controls that allowed the theft to happen? Who discovered the theft and what led them to believe that it had happened? What internal control(s) are being put into place by the Foundation to prevent this from happening again?” Pat Huson’s responding in behalf of the foundation from the “MVF damage control manual” state that “Internal controls are strengthened by an excellent staff, now in place, which follows advice from our auditors on such matters, Detail of the loss will not be given since the case in not yet entirely closed. Anyone with a background of financial management such as a CPA is welcome to submit for membership of the MVF Audit Committee to review the handling of MVF finances”. May 1, 2007 Sebastian Monte, staff reporter for The Gazette reported in its March 14th edition Judge Gary G. Everngham in his sentencing statement. “The only reason you did it is knew you would get away with it.” Prosecutor Tracy Bortnick stated an investigation is continuing into “other deposits” Buttry made. Pat Huson, interim EVP was quoted as stating “We’re happy to receive the money…all transactions have since been checked and monies accounted for.” News of the theft came as the foundation was working to shore up its bookkeeping. Huson told Monte “With the financial records now straight with a raised level of awareness, the foundation is in a good position to avoid such thefts in the future. I don’t know that anybody can ever guarantee it 100 percent…but I think overall management and supervision is much better than it was.” The Brotherhood of Montgomery Village Spokespersons (BOMS) must have been proud of Pat after reading Monte’s report on Judge Everngham sentencing hearing. She had come a long way since her return almost 10 month prior as she flawlessly following the principles of their “Damage control emergency plan” and “Code of communications” in defending the indefensible and denying the obvious. They should enjoy it while they can because in Montgomery Village, when it comes to financial matters, everyday is Ground Hog Day.
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Volume I, Issue 3 July 2007 |
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