ROBERT ACOSTA: A STUDY IN LAVISH LIVING AND LIMOUSINES by Kenneth Jernigan In mid-April of this year, Complaint number BC102521 was filed in the Superior Court of Los Angeles County. Its caption was "California Council of the Blind versus Robert Acosta." The circumstances leading up to this event are labyrinthine in nature and have ramifications far beyond the borders of the state. In 1977 Acosta became president of the California affiliate of the National Federation of the Blind, and in 1978 he was expelled from the Federation and found himself the center of a lawsuit, which dragged on for several years. Two of the charges against him were that he had put his wife on the state affiliate's payroll without the knowledge or consent of the board and that he had bought her an expensive clock with organization funds. Shortly after the conclusion of the lawsuit, early in 1983, Acosta became president of the American Council of the Blind's California affiliate and continued in that position until the fall of 1992, at which time he did not run for another term, being succeeded by John Lopez. By the time of his departure from the California presidency, he had achieved a high profile at the national level in American Council of the Blind (ACB) politics and affairs. He was the organization's second vice president and would clearly be a strong contender for its presidency at the end of the term of LeRoy Saunders. He was also president of ALL (the Affiliated Leadership League of and for the Blind), of which ACB is a principal constituent. It was widely believed that he had put a good deal of California money into both ALL and the American Council of the Blind and that his departure from the California presidency was meant to be a prelude to expanded horizons at the national level. Acosta could reasonably expect that he would not be giving anything up by relinquishing his California presidency since he was filling the position with a chosen lieutenant, John Lopez--but if this was his thinking, it would take only a few months to show its disastrous fallacy. As Lopez was to say before a roomful of people in the fall of 1993: "I guess Mr. Acosta doesn't like for me to be an honest man--but I will not change." Perhaps the best way to show where things stood when Lopez made his statement is to give pertinent parts of the recording of a board meeting of the California Council of the Blind held at the Crown Plaza Holiday Inn in Los Angeles, on Thursday evening, November 4, 1993. The tape begins with a lengthy discussion concerning several sets of minutes. Then, John Lopez, the President of the California Council of the Blind, says: Mrs. Parker is going to read the inventory to us--what the Council property is, what we have, and what maybe belongs to us but we don't have it with us and we hope to regain it or bring it back. Let me just briefly say a comment on the public relations. There was a discussion [in the previous budget report] about the reader for Mr. Urena. [This is Sid Urena, the California Council of the Blind lobbyist, the brother of Manuel Urena, who works for the California Department of Rehabilitation.] The $15,000 are very justified. If you remember, there was a discussion about the reader for Mr. Urena, our capital representative. There was quite a discussion on that. He discovered that if his wife was not allowed to read to him, it would be very expensive. Secretaries would be charging over $10 an hour, and they would only work 8 hours a day, blah, blah--I don't want to go into that. But the fact is that his wife reads to him now. If he needs her at 10:00 at night, she's there; 3:00 in the morning, she's there; and she gets paid only very little. [applause] She is not getting paid $10 an hour. She's getting paid $250 a month, and that is nothing. After these comments the inventory is read: 6 wooden desks; 5 credenzas; 2 typewriters; 3 computers; 2 laptop computers; 4 monitors; 2 laser printers, and 1 Star printer with printer stands; 7 filing cabinets; 1 Braille printer; 1 FAX machine with stand; 1 tape duplicator with stand; 1 postage machine with stand; 1 conference table with 6 chairs; 2 tables; 1 glass display for a CCB store; 5 storage cabinets; 13 chairs; 1 couch; 1 Franklin Dictionary Language Master; 1 miscellaneous plant [laughter]; 1 water cooler; 1 small refrigerator; 1 microwave; 1 computer unit. Mr. Lopez: If my memory serves me correctly, I believe there are two items that are not in the office which we're trying to retrieve, and that's the computer that now is under the--in Ms. Pat Urena's home [Pat Urena is the wife of Manuel Urena], and maybe we will be. . . [Mr. Lopez is interrupted by a board member.] Mr. President, I think that's something that the membership should know. Wouldn't every member in here like to have a laptop computer that belongs to the CCB for their use? [applause] I don't have a question that it's justified being there, but I would like to know why Ms. Urena has a laptop computer that belongs to the CCB. Also, where's the other one? John Lopez: Okay, I will give her the opportunity to explain that to us, but at the moment we're going to proceed, and we will. . . [Several voices interrupt with "She's right here; let her tell you."] John Lopez: Okay, does the board approve of her taking the time of the agenda now to answer that question? [Shouts of "yes!"] Okay, no objections to that. Okay, Pat, go ahead. Pat Urena: After years of providing services to the CCB such as doing the histories by typewriter, doing mailing lists for legislative receptions, having to buy some of those services, having terrible experiences in trying to buy those services because there's a limit to what the girls in the office can do, I was asked if I would be willing to undertake projects for the Council if I was provided with a computer. [unidentified board member, "And it's free".] It certainly is, Sir. I would be insulted. . . [momentary confused discussion] Well, I don't know what else to say. We all understood that it was not my computer, that it was for the Council. I provided to you--because apparently you did not have in the office--the information on what it consisted of. I don't know what else I can say. If there's some imputation that something crooked was going on, I certainly resent that. Now I trust that nothing like that was meant or intended here. But the fact is that that's what I've been up to with it. [Applause] John Lopez: Am I correct? The amount of that computer, I believe, ran up to about $5,500. I understand it has lap capabilities or is a lap computer. I don't know; I'm ignorant when it comes to computers. . . . The other item that needs to be retrieved is the Language Master Franklin Dictionaries, I believe. Like I said, I'm ignorant when it comes to computers. But I believe that's what it is, the Language Master Dictionary. I believe Mr. Acosta has that one. The Council did pay for it. We have the invoice on it, and that's another one we would like to have retrieved because it is CCB property. Marion Fisher: I am not saying that there's anything crooked about Pat having the computer. I simply asked the question. I don't say that there's anything crooked about Bob having the Language Master. My question now is: John came to this Board asking for a resolution and permission to buy a duplicator. [referring to an earlier discussion about the purchase of a tape duplicator] Did the Board give the authority to buy these laptop computers and the Language Master Dictionary? Is that on record as being approved by the Board, or is that something that. . . John Lopez: No, no, no there isn't. [An exchange follows about whether Board permission is required and why, if not, Mr. Lopez brought the duplicator question to the Board.] John Lopez: Let me tell you right now I'm being asked every time I spend something. I've been criticized, so that's the way it's going right now. Let's move on to the agenda. I hadn't planned to have brought this up, but items that have been going out and writing letters humiliating me and accusing me of many things have forced me. I don't believe none of you have received letters from me humiliating any of the board members, and some of these letters that are circulating are humiliating to your president of the CCB. I want to say that I'm sure that the first vice president, Mr. Acosta, has probably regretted that he chose a man for the presidency of the CCB--that he chose the wrong man. And I agree, he chose the wrong man. Because it's a man of honesty. [loud applause and shouts of praise] Thank you very much; let's please have order. I am also a president of integrity. Therefore, I am not going to give you reasons, any further reasons as to. . . . I could sit here and tell you many reasons why I'm bringing this about, but I think the presentation will explain--will be self-explanatory. The last year of my presidency has been a very difficult one because I've had no support from my first vice president. There are reasons I could give you here tonight, and I think one of the biggest reasons--I'll give it to you briefly--was that he wanted me to agree that he should continue with the president's financial privileges. And I said, "Mr. Acosta, I cannot permit that. No first vice president in this organization, as far as I can remember, has ever come in and to continue having the financial privileges that the president has, and I'm not about to start that." [applause] Therefore I proceeded--now I found these things eventually. Two months later I found out those privileges do not belong to anybody but the president. So two months later, when Bob and I had a meeting, I asked him to please put on my desk his credit card--his gasoline credit card--and to please turn in his cellular phone. At this moment Mr. Acosta became very angry, and I think that's when he slammed the door in my face and walked away, and things just went against--you know I just had to go against the grain there for the rest of the year, and that's the way it's been. The last thing that I also told him at our budget and finance committee meeting--after the budget meeting I said, "Mr. Acosta, I cannot continue paying your phone bill, which the CCB is paying for. I will reimburse you like anybody else, but we have been paying a monthly bill from you; the lowest one that I paid--that the CCB paid--was $104. This last year there have been bills for $140, $130, etc. This last one is the one that triggered off my suspicion. And that suspicion is that by accident one of my secretaries found that a number, or a couple of numbers--at least one--you were calling a mortgage company. Mr. Acosta said,"Well, there was a mistake on my reader." I said, "Well, perhaps it was a mistake. What if you hadn't found it? How many mistakes has the CCB paid for in the last year?" [applause] So with that in mind it just makes things worse. I guess Mr. Acosta doesn't like for me to be an honest man. [laughter] But I will not change. [applause and cheering]. . . John Lopez: Okay, so anyway, I have been elected by you, and I will stand by you and make this organization a democratic one and bring it back to you members. [applause] I will now read to you the agenda item no. 8, and we'll have our legal counsel take it from there. Number 8 reads, "The report by retained counsel, Allan Grossman, to evaluate and advise with respect to Mr. Acosta's refusal to sign the 1992 management representation letter by the Council's auditor as well as other materials which might arise in reference to such evaluation." And I present to you Mr. Grossman. [applause] Allan Grossman: Good evening ladies and gentlemen. My name again is Allan Grossman; I'm an attorney, and, Mr. Lopez, I hand you now my letter report, which I will now read: _______________ John B. Lopez, President and Chair of the Board of Directors California Council of the Blind 8700 Reseda Blvd., Suite 208 Northridge, California Dear Mr. Lopez: Upon the vote of the board of directors at its September, 1993, meeting, I understand that you are authorized to retain me to review the records of the Council concerning problems with Mr. Acosta and to advise the board of ways it could resolve the problems. This letter represents my interim report, which you have asked me to read to the board of directors at its meeting tonight. At the outset of my work you provided me with the following background information: 1. In May, 1977, Mr. Acosta became president. 2. In November, 1992, rather than seek another term as president, he chose to run for and was elected first vice president. 3. All during that time, i.e., May, 1977, to the present, he has also been a member of the board of directors--this by virtue of the bylaws, which makes the president chair of the board and all other officers members of the board. 4. In November, 1992, upon assuming responsibility as president, the matters which you asked me to investigate started to come to your attention. Particularly troublesome was Mr. Acosta's refusal to sign the management representation letter to Michael Finch, the Council's auditor, authorizing him to finalize the 1992 audit, which to date Mr. Acosta still refuses to sign. The Fiduciary Duties of Officers and Directors of Public Benefit Nonprofit Corporations Under California Law Officers and directors of nonprofit corporations are held to high fiduciary standards typically associated with trustees of charitable trusts. However, California statutory law has limited the liability of such officers and directors for negligent acts and omissions. On the other hand, California law does not limit the liability of an officer or director for intentional, wanton, or reckless acts; gross negligence; or actions based on fraud, oppression, or malice. The president of the Council serves on a volunteer basis, i.e., without compensation. However, even though serving as a volunteer and without compensation, the president is entitled to reimbursement for or payment of reasonable, necessary, and actual expenses incurred (a) for the benefit of the corporation and its public or charitable purposes and (b) in the performance or execution of his or her duties as an officer or director of the corporation. Put another way, it is the president's duty to ensure that any funds raised by your organization be used only to serve its purposes, and it would be an abuse and violation of the president's fiduciary duties of care and loyalty to the Council if the president used his or her position in order to reap personal benefits at the organization's expense or ignored his or her fiduciary duty to actively promote its purposes. Findings With the above-mentioned principles in mind, I examined Council records which you presented to me. After reviewing those records, I discovered that many charges by Mr. Acosta while president apparently were not for the benefit of the Council, but were instead for his personal benefit. While my investigation into those disbursements continues and is by no means complete or final, I present to you a sampling of such items for which apparently he has not reimbursed the Council: 1. From 1989 to 1991, he incurred nineteen separate charges for limousine service to transport Mrs. Acosta's niece, Julie Barth, and sometimes her husband, Dennis Barth, to and from the Los Angeles International Airport and from UCLA Medical Center and the Acostas' home in Chatsworth for a charge of $2,131. 2. From 1988 to 1992 he incurred thirteen separate charges for limousine service to transport himself and his wife to and from his parents' home in San Gabriel-- $1,756. 3. In May, 1990, he incurred charges for limousine service to transport himself, his wife, his son, and others to his son's (Tom's) wedding reception and hotel, etc.--$1,609. 4. From 1989 to 1990 he incurred thirty-three separate charges for limousine service to transport himself and his wife to the Weight Watchers' office in the Capri Shopping Center in Tarzana--$1,531. 5. From 1989 to 1992 he incurred ten separate limousine charges to transport Mrs. Acosta to and from medical appointments, and on one occasion, from home to the doctor, then to the beauty salon, and back home--$976. 6. In 1990 and 1991 he incurred two separate charges for limousine service to transport himself and his wife to Dodger Stadium--$569. 7. In January, 1987, he incurred credit card charges for NutriSystem Weight Reduction Programs for himself and his wife--$533. 8. From 1990 to 1991 he incurred four separate charges for limousine service to transport himself and his wife to the Glendale Galleria and to Mission Jewelers at the Golden Mall in Burbank--$824. 9. The August 19, 1992, statement from American Express Corporate Card reflects a charge for a Franklin Language Master Computer Dictionary. To date he has failed to return it, notwithstanding your request for the return of all Council property in his possession-- $500. 10. In March, 1991, he incurred a charge for limousine service to transport him and his wife to the Fisher wedding--$465. 11. In October, 1988, he incurred two separate charges for limousine service to transport himself, his wife, and Mr. and Mrs. Stockstill to the Lawry Center in Santa Barbara-- $406. 12. In August, 1992, he incurred two separate charges for limousine service to transport himself and his wife to and from the Big Bear Inn in Big Bear, California--$397. 13. In 1986 he incurred a credit card charge for Tom's Men's Wear in Alhambra--$367. 14. In 1991 he incurred two separate charges for limousine service to transport himself to and from his tailor, Ron Rinker Clothing in Los Angeles--$221. 15. On April 16, 1992, he incurred a charge for limousine service to transport Mrs. Acosta and Lynn Curtis to the Seafood Broiler in Northridge--$130. 16. On July 30, 1992, he incurred a charge for limousine service to transport Mrs. Acosta's sister from LAX [acronym for Los Angeles International Airport] to the Holiday Inn in Brentwood--$68. The total of items 1 through 16 equals $12,183. Please understand that the above listing of disbursements by Mr. Acosta, apparently for his personal benefit, is not total or complete, but merely a representative sampling of those items that I have been able to identify since commencing my work for you. In that regard my investigation continues. There are, nevertheless, several items which I believe are important enough to call to your attention at this time and which in my opinion require further study and evaluation. For example: 1. During the time that Mr. Acosta was president, he held a Council American Express card, which he was entitled to use for charging Council expenses. Reviewing some of the American Express card statements from 1984 to 1991, I have identified numerous restaurant charges incurred by him totalling $4,462. There are other charges by Mr. Acosta on those statements which appear to be personal. 2. From 1990 to 1992 he incurred charges for limousine service to various restaurants in the amount of $833. 3. He also had available to him a Council Unicard [gasoline] charge card. From 1985 to 1992 he charged $7,206. I'm informed that Mr. Acosta lives in Chatsworth, which is just a few miles north of the Council office in Northridge, and that he teaches at Chatsworth High School, which is also close to his home. It is difficult to understand, especially in light of all of the limousine charges he incurred over the same period of time, how he could have spent so much for gasoline on Council business. I am informed that these gasoline charges were incurred by his drivers for the Acostas' personal use and benefit. Because of the short time that I've been involved in this matter, I am unable to form an opinion whether these charges or any portion thereof were properly charged to the Council or whether they should be borne by Mr. Acosta personally. 4. I am informed that from time to time during Mr. Acosta's presidency he hired part-time drivers to assist him with his duties for the Council. Apparently [the State of] California paid those people for up to fifteen hours of work as readers. The balance of their time was paid by the Council. For example, the Council paid Ana Banovac $13,875 from September, 1990, through December, 1992; Vanessa Price, $1,828 from January, 1992, to January, 1993; Barrie Mikell, $6,109 from August, 1984, to February, 1986. Other drivers were Sandy Terry, Kim White, Ruth Olivetto, Lisa DeAngelo, Lisa Brew, Kenny Marco, Bethany Eisland, and Julie Harris. I understand that while some of these people did on occasion work in the office doing photocopying and some secretarial chores, they were used primarily by Mr. Acosta to run personal errands for himself and his wife. This item also needs further investigation to determine whether the amounts paid by the Council to these people or any portion thereof were properly charged to the Council or should have been paid by Mr. Acosta because they were for his personal benefit. 5. I have also identified cash draws in varying amounts from $100 to $1,000 from the Council's bank account, purportedly to cover Mr. Acosta's out-of-pocket expenses at meetings, conferences, and conventions. In this regard, during 1991 and 1992, he drew $10,920. I am informed that he has not supplied any receipts for those withdrawals, nor has he returned any portion of those funds to the Council. Findings Regarding Helping Hands for the Blind In October, 1990, Mr. Acosta incorporated Helping Hands for the Blind, a California public-benefit, nonprofit corporation. The officers of Helping Hands were Mr. Acosta as president; his wife, Ruth Ann, as vice president; and the Council's secretaries- -Barbara Parker as treasurer, and Marnie Alveno as secretary. He used the facilities of the Council office and its staff to assist him in the formation and operation of that corporation. I believe that, soon after incorporation, Mr. Acosta acquired a thrift store in Lancaster for Helping Hands. That thrift store was in direct competition with the exclusive contract the Council had with Bill Ashe and his American Way thrift stores. In the spring of 1991 Mr. Acosta on behalf of the Council was renegotiating the Council's contract with Mr. Ashe. Mr. Ashe complained to Mr. Acosta that he thought it was improper for him to be running a thrift store in direct competition with the Council's thrift stores, and apparently he used that fact among others to help him renegotiate his American Way thrift store contract with the Council. The new American Way thrift store contract became operational July 1, 1991, resulting in more than a $100,000-a-year reduction in the amount that Mr. Ashe pays the Council. At this time it is not clear whether Mr. Acosta's Helping Hand thrift store is still operating. Further investigation is needed in that regard. Nevertheless, if the above facts are true, Mr. Acosta may be liable to the Council for monetary damages, including compensatory and punitive damages for operating a thrift store in direct competition with the Council's American Way thrift stores. In my opinion this would constitute a breach of his fiduciary duty of loyalty to the Council and its public and charitable purposes. I inquired of the Council's staff, particularly Barbara Parker and Marnie Alveno, long-time secretaries with the Council, whether they assisted Mr. Acosta in the formation/operation of Helping Hands. They stated that they had assisted him but only because he compelled them to do so under threat of losing their jobs. [boos from audience] In January, 1993, both Barbara Parker and Marnie Alveno resigned as officers of Helping Hands. Recommendations 1. It is my recommendation for the board that these matters be settled with Mr. Acosta, which I understand would be the preference of the Council in light of the many years he served as an officer and director. I would urge, however, that negotiations begin within fifteen days and that the matter be settled within thirty days. 2. If the matter is not amicably settled within thirty days, it is my recommendation that the Council immediately commence litigation against Mr. Acosta, seeking all remedies which the law makes available to the Council under such circumstances. Resolution of the above matters with Mr. Acosta is in my opinion necessary for the following reasons: 1. Possible loss of tax-exempt status with the Internal Revenue Service. The Council's tax-exempt status as a nonprofit corporation is granted under Section 501(c)(3) of the Internal Revenue Code--the Code provision applicable to charitable organizations. This section requires "that no part of the net earnings of the exempt organization inure to the benefit of any private shareholder or individual." Courts have construed this requirement to prohibit self-dealing by officers and directors of tax-exempt corporations. Since the IRS polices those organizations for violations of fiduciary duties established by the Code, if it finds such self-dealing by an officer or director, it may among other penalties include forfeiture of the corporation's tax-exempt status. 2. Possible loss of grants and donations. 3. Complaints filed with the state's attorney general. The other day I spoke with Mr. Baumann, the auditor for the charitable trust section of the state attorney general. Mr. Baumann informed me that he has received a number of telephone calls complaining about improper disbursements by the Council which may have occurred while Mr. Acosta was president. Mr. Baumann stated that he had requested those telephone callers to put their complaints in writing but to date has not received any letters from them. He said that, if the attorney general receives letters of complaint about the Council, his office is charged by law to investigate such written complaints and, if true, to prosecute appropriate actions to remedy violation of the state's nonprofit corporations laws dealing with improper and illegal disbursements. 4. Possible action by the state attorney general against the directors personally if they should fail to pursue Mr. Acosta if it is established that the above matters related in this letter are true. Respectfully submitted, Allan F. Grossman __________ Marion Fisher: By your last statement does that mean that, if we do not pursue any action and the state attorney general investigates this and finds that there is wrongdoing, that this wrongdoing falls on the shoulders of every board member? Allan Grossman: Yes, Mr. Fisher. I have in the course of my research of the law found several cases--not from California but from other states, sister states--where the state attorney general commenced litigation against innocent board members of nonprofit corporations because they were neglectful and had failed to prosecute the errant officer or director. Roger Peterson: Mr. Chairman, I think before we go on with this discussion, it would be appropriate to move, and I therefore do move, that we accept this report. [Someone seconds the motion.] John Lopez: All in favor please signify by saying "Aye." [Ayes are heard.] Opposed. [No opposition is heard.] Thank you. Allan Grossman: I would like to add two comments that are not in the letter, Mr. Lopez, if I may. John Lopez: Yes, you may. Allan Grossman: Number one, I want you to know and your board to know that I have--and I have them with me if anyone would like to examine them--the records that I used which will support the matters stated in my letter report tonight. That stack of records from your office weighs in excess of six pounds [Whistles from the audience] and is about five inches high. The other thing that I would like to state, as I mentioned in my report: this is a tentative report, an interim report, and no more than a couple of hours ago in the corridor I was advised that the item that I reported here of some $1,600 for limousine service for Mr. Acosta's son's wedding was actually understated and the actual invoices for the limousine service for that wedding was $2,200. So it is important that your board understand that this investigation is still ongoing and is not meant to be a total, final, and complete report at this time. Jeff Tom: Regarding the length of time in your recommendations, can you tell us why you chose such short periods for commencing litigation if negotiations don't work? Allan Grossman: Well, as I mentioned, Mr. Baumann, the auditor in the charitable trust section in the nonprofit corporation section of the attorney general's office for Southern California, has advised me that there are these telephone complaints about your Council--about your organization--and he was, I think, glad to hear that your organization is looking into these matters, and he asked me to call him next week and to report back to him what action if any your board took. There's also the possibility, as I mentioned, that if the IRS should choose to investigate--they do do random checks of nonprofit corporations--whether your organization would come up during one of those random audits by the IRS, I don't know. But it seems to me that these are matters that have gone on for a long time. There may be other problems as more time goes on, the memory of people fades, witnesses move away, records are lost or destroyed. I think now that this effort has been made to look into these matters, and because they involve possible violation of fiduciary duties, it's incumbent upon your organization to act promptly. Winifred Downing: In view of the fact that not one letter of the phone calls that have been registered with the attorney general, that there's been no supporting evidence of those complaints in writing--not one--I would like to propose, since Mr. Acosta hasn't had a chance to do this kind of investigation and may have some replies to all of this, that the period be extended. I don't think we're going to jail if it's a month longer. Roger Peterson: I think the appropriate way to do this would be to get a motion on the floor; then we can do whatever we wish with the motion. Therefore, I move that the board of directors directs the president to continue to follow the advice of legal counsel and to implement the recommendations as stated in the letter report. [The motion is seconded.] Unidentified speaker: I think what Win and Jeff are saying is that every member has a right to defend himself, to have access to these documents, and to have their attorney. To date, Mr. Acosta hasn't been able to get in to look at the books. I think the supporting documents need to be examined, and as slow as legal matters are and arranging for attorneys, I think that thirty days is much too short--Mr. Acosta is not the president, he does not have the credit cards--that this matter can wait certainly another thirty or sixty days. Let's give him a fair chance to answer these charges. [applause] Jeff Tom: My position was misstated, not intentionally, I think. I was asking a question to our attorney. That wasn't necessarily my position, and I just wanted to see what his reasoning was. I think that upon his recommendation, and especially in light of the fact that it's obvious that just the commencement of litigation won't mean the end of it, that in that case everything is going to be seen by everyone, that I think we should indeed go along with the recommendation of our attorney. Marion Fisher: Mr. President and other members of the board, I've been on this board for approximately a year. Apparently most of these things, these allegations, existed--happened--more than a year ago. I myself, as a present member of the board of directors, do not feel like taking a chance of having this fall on my shoulders for something that happened in the past. I do take my responsibilities as a member of the board of directors to what extent that I should, but I don't think that I should take a chance on having something that happened two years ago, five years ago, ten years ago, that I was not any way related to, being a party of, or having any knowledge of--I don't want it falling on my shoulders, and I feel that we should definitely follow the recommendations of the attorney. [applause] [At this point the tape runs out, and some words are missing as the new side begins.] Chris Gray: . . .there's a thing for CCB. We've been tied up in knots for the last nine months. Our initiatives are dampened, in many cases, taken away from us, and we don't need to be tied up for thirty days, or three months, or six months, while we wrangle back and forth, sending a lot of letters back and forth. If our attorney feels that twenty days is better than fifteen, or if we're making a lot of progress in forty days instead of thirty, I'm sure he'd tell us, and I'm sure John would follow it. Winifred Downing: I want to amend the motion in spite of all the conversation and things that have been said. I would like to amend the motion to give Mr. Acosta more time [Applause and shouts of "no"] We are going to get to vote on the amendment, Board of Directors, so it will not be rammed down your throat, and the members of the audience is not going to get to vote on it. I wish to amend the motion to be just to somebody who has given the organization, whatever his faults are, many years of service. And I'm not denying his faults, but you guys cannot deny the service either. And you can't deny the fact. . . [much commotion of scattered applause and shouts] Please let me finish. John Lopez: [shouting] Let's have order, please; let's have order, please. Winifred Downing: I'm not denying that there are faults here. I am telling you that the Council now is an extremely--and a year ago was when Bob left it--extremely large organization, much stronger than it was in 1978 when we had the split. Somebody worked, a lot of people worked, but he also worked very hard. In justice I think we should give him a little time to answer these charges. That does not say that I'm forgiving him these charges. It says that I think he should have time to answer them and that thirty days is a very short time. He has not been in the office to look at the books, and he may not be able to find the readers right away to do that. I can't sometimes. . . [jeers] I don't think it's right for the audience to comment. This is a board decision, and the board will get to vote. [jeers and comments about kicking out] I'm not kicking anybody anywhere. I really resent this kind of activity. I think it's very unjust. If I were in a position, I would want to be given a fair shake, and I think you guys--you're not going to lose it for giving it a month. And Marion isn't going to go to jail if we give [Bob Acosta] an extra month. I'm not going to jail either, so an extra month isn't going to mean anything to us, really, and it may mean a great deal to him. I don't know if it matters--I know nothing about legal action, and I don't therefore know how much it will mean. [confused comments in the background as she speaks] Will anybody second the amendment before we go any further than that? Unidentified voice: What was it? I just said I amended the motion to extend the time by thirty days. Unidentified voice: What was Roger's motion please? John Lopez: Roger, what was your motion please? Roger Peterson: The motion was to follow the recommendations of the legal counsel. Winifred Downing: And I am not amending that process. I think we should follow the recommendations. All I'm asking is an extension in time. So, you know, don't boo me out of the organization. Connie Schoeman: Is there a second to that--was it seconded? John Lopez: Yes it is. Mr. Grossman, was your recommendation fifteen to thirty days? Allan Grossman: Yes. Connie Schoeman: Excuse me, Mr. President, point of information. This hour of the night I tend to get confused. We have an amendment now, am I correct, that says you wish to extend the time? Winifred Downing: Yes. Connie Schoeman: And that was seconded by Don. And we're not voting on Roger's motion? We have to vote now on the amendment. Am I correct? Winifred Downing: That's correct. Connie Schoeman: Good for me. [laughter] Could we hear the original recommendation? Would you read it back to us please, Mr. Grossman?. . . Allan Grossman: Let me read all of my recommendations again so that--there are only two short paragraphs. [He rereads the recommendations from his letter.] Marion Fisher: Mr. President, I for one think the amendment has not stated any amount of time. Winifred Downing: It did! it did! thirty days! Marion Fisher: It did state another thirty days? Pardon me. But my feeling is that I would love to see us settle this matter with Mr. Acosta because I expressed to Mr. Acosta in the board meeting--at the end of the board meeting on September 25--that it really pained me to see the way, as Chris put it, that he kept this Council tied up in knots for the last nine months. Because I, among many other people, realize what one hell of a bunch of work Bob put into this Council over the years. And it just breaks my heart to see him tear down what he worked so hard to do in fifteen years--to tear it down in one year. Winifred Downing: Well, is thirty days going to make a lot of difference here? Marion Fisher: Well, I'm afraid I don't think thirty days is going to make any difference. I don't think sixty; I think it's either going to be settled now or it's not going to be settled. Unidentified male voice: Mr. President, I would like to speak in favor of the amendment. If we--when we talk about initiating litigation and things like that, it's kind of like atomic war because this will tie up the organization for at least four or five years if we go to court. Every court case that I've ever been involved in or seen with organizations lasts forever. The last one we were in lasted longer than the Second World War. So let's give another thirty days and hope we can resolve this matter. Unidentified female voice, interrupting: Mr. President, I have a point of information for Mr. Grossman if I may? Mr. Grossman, I'm not a lawyer person. I was tangled up with an organization you mentioned a while ago; I worked for them for eighteen years, but I'm still not a lawyer. And my question to you is, isn't it usual--if we did follow your recommendation, if his lawyer doesn't have enough time, they have the ability to call you and say we need more time--haven't I seen lawyers do that back and forth? Allan Grossman: Yes, certainly. If a good faith effort is being made by both sides to settle this matter, I certainly would--and some additional time was needed--I certainly would come back to your board and recommend that. I think it behooves the organization in light of these matters that some effort be made by Mr. Acosta to promptly begin the process. And I take it that these are not brand new matters. Perhaps the specificity of what I have said is new, but apparently, as I've heard here, there's been problems about these things for the past nine months. So it's not as if--as far as I know--it's not as if it's a brand new item. So I think I would--my recommendation is as I stated. Let the negotiations begin. If there is good faith and more time is needed to give Mr. Acosta an opportunity to be heard, I would certainly recommend that to the Board. The unidentified female voice: Mr. Chairman, I call for the question on the amendment. John Lopez: I would like to make a comment before that. . . . I would like to say that in this negotiation we include that Mr. Acosta no longer continue issuing letters, harassing the president of the CCB, harassing the staff, and downplaying or humiliating the president and the CCB officers--that this stop now! [applause] I have had it! This kind of childish play must stop now; we cannot focus our attention on CCB work if we're going to have to tolerate childish and rotten letters that are not beneficial to the benefit of this organization. [applause] The same female voice: We've called for the question to the amendment, Mr. President. [After a good bit of confusion and effort to clarify the intent of the amendment, it fails when put to the vote, but not resoundingly. applause]. . . John Lopez: On Roger's, the motion was to accept the recommendation of the attorney, and we'll vote on it. All in favor of the recommendation of the attorney signify by saying "Aye." [The motion passes unanimously.] Thank you. [applause] Okay, Mr. Grossman, just for the point of clarification, would you please state the recommendation that we just now passed? Allan Grossman: Yes. That settlement negotiations with Mr. Acosta and his attorney begin within fifteen days from today, and that the matter be amicably resolved by settlement within thirty days. In the event that the matter is not settled within thirty days, that litigation be commenced immediately thereafter. John Lopez: Okay. I think at this point it's appropriate that we ask Mr. Acosta to come forward and make a statement. If you wish, Mr. Acosta, the floor is all yours. [After some discussion Bob Acosta reads a resolution commending Denise and David Weddle for their work at CCB for twenty-three years.] John Lopez: Okay, Mr. Acosta, you have the floor to talk in regard to the issues. Bob Acosta: My dear friends,. . . My dear friends, I guess we're dealing with trust. In the political letters that we sent-- and they were, I thought, mostly political--I told you that I would be sued. I told you that it would happen because we haven't dealt with another issue that must be dealt with, and that is the $16,000 of overtime for secretarial assistance last year. I understand what is going on. I lived through 1978, and at that time Ken Jernigan sued me for $15,000,000. [An unidentified voice interrupts with, "Because you hired your wife."] And by the way, if my home were burning, I don't know that I'd go to some of you guys for help. But that's all right. I can assure you that I've never gotten rich on the Council. I categorically deny all of those charges, and I look forward to the opportunity of responding in writing. And yet this board, many people have pre- judged, they said hey, let's throw this blind man in jail and let's give him only fifteen days to respond. But you've made your choice, and I will respond to it. I ask you in spite of the fact that I wonder what this lawyer is charging us for his time at the end of the agenda. You gotta think about that. I wonder what's up--you know these charges, many of them, all of them, are totally untrue, and I look forward to responding to them. But see it for what it is: a political smear--an attempt to avoid the question of a $16,000 overtime which I never authorized, and we've got to deal with that. You can't avoid it. Thank you, and God bless you all. John Lopez: I must repeat what Chris Gray said a while ago: Bob, you wrote the book. The remainder of the meeting consisted of comments concerning the amount of time worked by CCB staff and discussion of a motion to do whatever was necessary to work with the National Federation of the Blind to see that a strong Braille bill is passed by the California legislature. At the close of the meeting members of the audience were invited to comment on the issues raised during the evening. The California Council of the Blind convention at which this board meeting occurred was one of the most turbulent in the organization's history, with each party (the staff, the board, and Bob Acosta) having its own attorney, dealing at arm's length, and prepared to do battle. There was tumult among the membership as well. One of those attending was Peter-Marc Damien, who said in the Spring, 1994, Blind Californian: The Fall CCB Convention for 1993 will no doubt be remembered in the blind community as one of the most contentious in history. . . . . Bob Acosta was president of the CCB for sixteen years. In November, 1992, he hand-picked John Lopez to succeed him due to directives from the American Council of the Blind, to which Acosta aspired for national office. John was chosen because Bob thought he could control him. John, on the other hand, decided to be his own man. In an audit for 1992, there were some discrepancies which came to John's attention. Lopez fired the longtime accountant/treasurer, hired another and studied the books going back to the beginning of Acosta's tenure, finding all kinds of misuse of funds. One thing led to another and by October, 1993, Acosta had hired lawyers and set up a slate of officers (who were bound to support him) for the election to be held in LA at the Convention. Lopez set up another slate (who were bound to support "CCB") through the CCB Nominations Committee. Acosta had also accused the sighted staff of financial discrepancies. So they hired lawyers. CCB was really forced to hire lawyers, too! The first public showdown, Thursday night, revealed that the new accountant/treasurer had found receipts for the misuse of CCB funds. Some examples were limo services, a taxi hired to drive roundtrip from LA to Big Bear (that one was for $2,200 alone), fees at NutriSystems and Weight Watchers, men's wear, and so forth. The Convention exploded on the spot, dividing into several camps. The longtime membership, many of whom were older people, divided into two groups, those who supported Acosta no matter what, and those who felt betrayed and angry. The newer membership, mostly younger people, including students, as well as older people, new (within the last five years) to the organization (people like me) were mostly disgusted with the whole thing. We were, it turned out, ready to vote for change. A coalition became apparent when voting began Friday evening. Lopez dragged the whole Convention through all the accusations yet another time before entertaining a motion to stop debate. Acosta wanted the debate to continue. It was a measure to test the water, as it turned out, because the Acosta faction lost about two to one. In the election for second vice president, Don Queen, Acosta's candidate, lost to Cathy Skivers, also by about two to one. Lopez's candidate for treasurer, the same man appointed to review the books, who made the best treasurer's report in the history of CCB the night before, won by better than two to one. He was nominally opposed, not by Acosta's candidate, Pat Urena, who was never nominated, but by someone else. By the time the positions on the board came up for a vote, Acosta's candidates either declined nomination or were not nominated at all. Basically, it was a rout, followed by a motion to recall Acosta from his position as first vice president, which was voted at the final session on Sunday. This is how one convention attendee viewed the November meeting of the California Council of the Blind, and national repercussions were soon to follow. Acosta either resigned from (or in some other way was separated from) the position of second vice president of the American Council of the Blind. This was done quietly with only a brief routine announcement in ACB's publication. Acosta also ceased to be president of ALL, again with no public statement or fanfare. The situation was obviously and understandably a cause of extreme embarrassment. Meanwhile, the months dragged by, and the California Council of the Blind took no action against Acosta. Sources within the organization indicate that internal bickering and consternation were extreme--some hoping that Acosta would make restitution, others feeling that he should be prosecuted immediately, and still others holding that he should be given mercy. Many apparently felt totally disillusioned and simply turned away with disgust. Finally (on April 12, 1994) the CCB took action and filed a lawsuit against Acosta in the Los Angeles County Superior Court. Alleging fraud and violation of fiduciary duties, the Complaint sets forth the cause of action. Item 4 of the Complaint is noteworthy since it makes clear that others besides Acosta may ultimately be sued. It reads as follows: 4. Plaintiff sues fictitious defendants, Does 1 though 20, inclusive, and each of them, because their names and/or capacitates and/or facts showing them liable to plaintiff are not presently known. Unless otherwise indicated, each defendant is sued as the agent and/or employee of every other defendant acting within the course and scope of said agency and/or employment, with the knowledge, direction, and/or consent of said co-defendants. Plaintiff is informed and believes and therefore alleges that each defendant designated herein as a "Doe" was responsible, intentionally, or wrongfully, or in some actionable manner, for the events and happenings referred to herein which were a legal cause of the injury and damage to plaintiff as hereinafter alleged. Item 6 begins to give the specifics of the charges: 6. Defendant Acosta, while an officer and director of plaintiff corporation, breached the above stated fiduciary duties of care in the following manner and ways: (a) During the time Mr. Acosta was president, he held a Council American Express card which he was entitled to use only for charging Council expenses. From 1984 to 1991, he made numerous restaurant charges on that credit card totaling approximately $4,462. Plaintiff is informed and believes and therefore alleges that said charges were for Acosta's personal benefit at plaintiff's expense, in an exact amount that will be established at trial. (b) From 1990 to 1992, Acosta incurred charges for limousine services to various restaurants, in the approximate amount of $833. Plaintiff is informed and believes and therefore alleges that said charges were for Acosta's personal benefit at plaintiff's expense, in an exact amount that will be established at trial. (c) Acosta also had available to him a Council Unocal [gasoline] charge card. From 1985 to 1992, he charged approximately $7,206. Plaintiff is informed and believes and therefore alleges that said charges were for Acosta's personal benefit at plaintiff's expense, in an exact amount that will be established at trial. (d) During Acosta's presidency, he hired part-time drivers purportedly to assist him with his duties for the Council. For example, the Council paid Ana Banovac approximately $13,875 from September 1990 through December 1992; Vanessa Price approximately $1,828 from January 1992 to January 1993; Barrie Mikell approximately $6,109 from August 1984 through February 1986. Other drivers were also hired by him and paid by the Council. Plaintiff is informed and believes and therefore alleges these drivers were used primarily by Acosta to run personal errands for himself and his wife and were for Acosta's personal benefit at plaintiff's expense, in an exact amount that will be established at trial. (e) During his presidency, Acosta took cash draws in varying amounts from $100 to $1,000 from the Council's bank account, purportedly to cover his out- of-pocket expenses at Council meetings, conferences, and conventions. In this regard, during 1991 and 1992, he drew approximately $10,920; that he has not supplied any receipts for those draws nor has he returned any portion of those funds to the Council. Plaintiff is informed and believes and therefore alleges that these draws were for Acosta's personal benefit at plaintiff's expense, in an exact amount that will be established at trial. 7. Plaintiff is informed and believes and therefore alleges that during the time Acosta was president of the Council, he fraudulently, dishonestly, and unethically spent its charitable trust funds to maintain a lavish personal lifestyle at the Council's expense, in an exact amount that will be established at trial. The following are examples of the ways in which Acosta fraudulently, dishonestly, and unethically breached his fiduciary duties of care to plaintiff by spending corporate charitable trust funds to reap personal benefits: (a) From 1989 to 1991, he incurred 19 separate charges for limousine service to transport Mrs. Acosta's niece, Julie Barth (and sometimes her husband Dennis Barth) to and from Los Angeles International Airport, to and from UCLA Medical Center, and the Acosta home in Chatsworth, in the approximate sum of $2,131. (b) From 1988 to 1992, he incurred 13 separate charges for limousine service to transport himself and his wife to and from his parents' home in San Gabriel, in the approximate sum of $1,756. (c) In May, 1990, he incurred charges for limousine service to transport himself, his wife, his son, and others to his son Tom's wedding reception, hotel, etc., in the approximate sum of $1,609. (d) From 1989 to 1990, he incurred 33 separate charges for limousine service to transport himself and his wife to the Weight Watchers office in the Capri Plaza shopping center in Tarzana, in the approximate sum of $1,531. (e) From 1989 to 1992, he incurred 10 separate charges for limousine service to transport Mrs. Acosta to and from medical appointments and, on one occasion from home to the doctor, then to the beauty salon, and then back home, in the approximate sum of $976. (f) In 1990 and 1991, he incurred two separate charges for limousine service to transport himself and his wife to Dodger Stadium, in the approximate sum of $569. (g) In January, 1987, he incurred credit card charges for the Nutri-System weight reduction program for himself and his wife, in the approximate sum of $533. (h) From 1990 to 1991, he incurred four separate charges for limousine service to transport himself and his wife to the Glendale Galleria and to Mission Jewelers at the Golden Mall in Burbank, in the approximate sum of $524. (i) A statement, dated August 19, 1992, from American Express Corporate Card, reflects a charge for a Franklin Language Master computer dictionary, which he has not returned to plaintiff, notwithstanding plaintiff's request for the return of all Council property in his possession, in the approximate sum of $500. (j) In March, 1991, he incurred a charge for limousine service to transport him and his wife to the Fisher wedding, in the approximate sum of $465. (k) In October, 1988, he incurred two separate charges for limousine service to transport himself, his wife, and friends, Mr. and Mrs. Stockstill, to the Lawry Center in Santa Barbara, in the approximate sum of $406. (l) In August 1992, he incurred two separate charges for limousine service to transport himself and his wife to and from The Big Bear Inn, in the approximate sum of $397. (m) In 1986, he incurred a credit charge for Tom's Men's Wear in Alhambra, in the approximate sum of $367. (n) In 1991, he incurred two separate charges for limousine service to transport him to and from his tailor, Ron Rinker Clothing in Los Angeles, in the approximate sum of $221. (o) On April 16, 1992, he incurred a charge for limousine service to transport Mrs. Acosta and Lynn Curtis to the Seafood Broiler in Northridge, in the approximate sum of $130. (p) On July 30, 1992, he incurred a charge for limousine service to transport Mrs. Acosta's sister from Los Angeles International Airport to the Holiday Inn in Brentwood, in the approximate sum of $68. 8. As a result of Acosta's fraudulent breaches of his fiduciary duties of care owed to plaintiff as alleged above, plaintiff prays that the court assess the compensatory damages for all of the fraudulent and illegal breaches of the fiduciary duty of care owed to plaintiff in an exact amount that will be established at trial. 9. That because Acosta fraudulently breached his fiduciary duties of care to plaintiff in a despicable, deliberate, cold, callous, and intentional manner to injure and damage plaintiff, plaintiff requests the assessment of exemplary damages against defendants, and each of them, in an amount to be established according to proof at the time of trial. 10. Plaintiff also requests the award of attorneys' fees and costs pursuant to Code of Civil Procedure section 1021.5. 11. Plaintiff also requests the award of prejudgment interest to the extent allowable under section 3287 or 3288 of the Civil Code. Count 2 For Compensatory and Punitive Damages for Fraudulent Breach of Fiduciary Duties of Loyalty Against Robert Acosta. Does 11 Through 20, and Each of Them 12. The allegations contained in paragraphs 1 through 5 and paragraphs 8 through 11, inclusive, are realleged and incorporated by reference as though fully set forth herein. 13. In October 1990, Acosta incorporated Helping Hands For the Blind, a California public benefit nonprofit corporation. The officers of Helping Hands were Mr. Acosta as president, and his wife Ruth Ann as vice president. He used the facilities of the Council office and its staff to assist him in the formation and operation of that corporation. Plaintiff is informed and believes and therefore alleges that soon after incorporation, Acosta acquired a thrift store to benefit Helping Hands, and that thrift store was in direct competition with the exclusive contract the Council had with Bill Ashe and his American Way Thrift Stores. 14. Plaintiff is informed and believes and therefore alleges that in the spring of 1991, Acosta, on behalf of the Council, was renegotiating the Council's contract with Mr. Ashe. That Mr. Ashe complained to Acosta that he thought it was improper for him to be running a thrift store in direct competition with the Council's thrift stores and that he used that fact, among others, to help him to renegotiate his American Way Thrift Stores contract with the Council. The new American Way Thrift Stores contract became operational July 1, 1991, resulting in more than $100,000 a year reduction in the amount Mr. Ashe paid to the Council under the original contract. 15. Plaintiff is informed and believes and therefore alleges that Acosta has been running and representing to the public that Helping Hands Thrift Store is owned and operated by the Council, and by and through such fraudulent misrepresentation, made profits that rightly belong to plaintiff. That an accounting of such illegally obtained profits must be had in order to determine the exact amount of such illegally obtained profits and damages. Wherefore, plaintiff prays judgment against defendants Robert Acosta, Does 1 through 20, inclusive, and each of them, as follows: a. For compensatory damages according to proof; b. For exemplary damages according to proof; c. For attorneys' fees and costs pursuant to Code of Civil Procedure section 1021.5; d. For prejudgment interest to the extent allowable under section 3287 or 3288 of the Civil Code; e. For such other relief and damages as the court deems just and proper in the premises. This is what the Complaint says, and it boggles the mind. The Monitor has repeatedly tried to call Mr. Acosta for comment, but we only get his answering machine. Therefore, the documents must speak for themselves. In view of the charges and the circumstances surrounding them, certain questions inevitably occur. Since the charges against Acosta were well known and a matter of public record when he was expelled from the National Federation of the Blind in 1978, why did the California Council of the Blind elect and re- elect him term after term? Why did the American Council of the Blind make him an officer and one of their principal leaders? Why did ALL elect him their president? Why were auditors and officials of the California Council of the Blind not aware of the details of what is now being revealed? If they were aware, why did they not blow the whistle sooner? Why did cash draws in the amount of more than $10,000 (draws that were made with no receipts or explanations) go unchallenged when they were obviously apparent? Why was action not taken against the Helping Hands For The Blind corporation, and is it (as we have been told) still operating and raising funds? Why was action not taken when Helping Hands For The Blind began sending fundraising letters to blind persons throughout the country, a fact that was widely known? What is the full extent of the Helping Hands For The Blind operation, who is it really benefitting, and is the California Attorney General or others taking remedial steps? Why did the office of the California Attorney General not take action upon learning of the facts that have been revealed instead of saying that they would need an outside person to make a written complaint? Why was the lawsuit not filed last fall in accord with the vote taken at the November board meeting instead of in April, more than five months later? Whatever the answers to these questions may be, it is not just the American Council of the Blind or its California affiliate that is hurt. All of us are hurt--organizations of the blind, agencies for the blind, and individual blind people. Certainly the American Council of the Blind will find this situation embarrassing, but we must maintain perspective. I for one have found nothing but honesty and fairness in my dealings with ACB's president, LeRoy Saunders. I believe I would have the same experience in contacting many other ACB leaders. Neither the ACB nor its individual members can be blamed for the failings of one person, or even one leader. They can be blamed, however, if they fail to take proper action once the circumstances are known. The fact that Mr. Acosta is no longer an ACB national officer speaks for itself. But the fact that he was elected and was recognized as a leader year after year also speaks for itself. Something else is worth noting. We are told that phone number (818) 341-8217 rings in Mr. Acosta's home in Chatsworth, California. If this is true, it is troubling--especially in view of an item carried in the May, 1994, Braille Forum, the publication of the American Council of the Blind. Here it is: Cookbook Of The Month: Helping Hands For the Blind has formed a "Cookbook of the Month" club, which is currently producing Braille cookbooks on various food items. For more information, call (818) 341-8217, or write to Helping Hands For The Blind, 20734C Devonshire Street, Chatsworth, California 91311. Although this notice is carried in the Braille Forum, it is not absolutely and finally conclusive. It is possible (though difficult to accept) that the editors of the magazine did not know about Mr. Acosta's circumstances and his relationship with Helping Hands For The Blind. Even if they did know, it is possible (though, again, difficult to accept) that ACB's elected officers did not know that the Helping Hands item would be published in their magazine--especially, since they could (and probably should) have taken steps to prevent this. There comes a time when responsibility must be accepted. None of us should take joy in the shocking story of lavish living and limousines that has been revealed. Again, it must be emphasized that nobody gains and everybody loses. Rather than feel satisfaction or point fingers, we should consider the damage that has been done and how to mitigate it. Among the essentials in the process are accountability, organizational maturity, and lack of recrimination.