I am Richard Wollrich, a long time member of the AES and current Treasurer of the Los Angeles Section, one of the largest and most active sections in the society. I do not speak for everyone in my section and I may be only one person, but I assure you that I am speaking for many who feel as I do. Most of the subject matter you will read here has been kept secret by the members of the Executive Committee, and is what we have been able to uncover and currently know.

Let’s lay the cards on the table; it was not the Executive Director’s choice to leave. At your last meeting on June 20th, you told the Executive Director, you were not going to renew his personal service contract, when it expired at the end of the year. However, the current press release on July 21st makes it appear to the public, that the decision was his. He had done a good job and its business as usual. You then add insult to injury by rewarding him with emeritus status for an additional year, and it’s implied, with pay.

Let’s look at some of the facts we now know to be true.

1. In 2009, the Society’s Controller made you aware of possible financial impropriety being committed by Mr. Furness, the Executive Director, your direct employee. You chose to do nothing.

2. In February of this year, the Controller made you aware of the assault on her person by Mr. Furness, at the offices of the AES in New York. You chose to do nothing.

3. In March of this year, the Controller made you aware of the continuing possible financial impropriety being committed by Mr. Furness. You chose to do nothing.

4. On March 22nd, following a teleconferenced meeting of the Executive Committee, you allowed Mr. Margolis, the Society’s Treasurer to terminate the Controller for “economic reasons”. According to the minutes of your meeting, held on March 21st, there was never any motion made concerning the Controller. There was never any motion made giving legal authority to Mr. Margolis to terminate the Controller. You received word, this was going to happen, but did nothing to stop it. Why not? Who’s in control?

5. Immediately following the termination of the Controller, Mr. Margolis closed an AES account (approximately $250,000.00) without authority from the Board of Governors. Opened another account in a different branch with him being the only signatory on the account. This is in direct violation of our bylaws. Who’s in control?

6. Following the termination of the Controller, Mr. Furness directed the auditors to make journal entries into the AES accounting system without any supporting documentation, allowing the British section to keep $15,150.00 for office space. The British section has no office on record and does not lease space. Who got this money? Who’s in control?

7. In 2010 & 2011 for the London conventions, Mr. Furness altered or caused to be altered, the vendor registration form printed in the journal and shown on the AES website, diverting vendor payments for convention space, to an account located in a London bank that is controlled only (not by HQ) by Mr. Furness and Ms. Heather Lane. When did you know about this and why did you let this continue? Who’s in control?

8. In July of this year Mr. Margolis transferred approximately $82,000.00 of AES funds into the very same London bank account controlled only by Mr. Furness and Ms. Lane. When did you know about this and why did you let this happen? Who’s in control?

9. Prior to 2005 Mr. Furness while being employed as the Executive Director secreted funds totaling over a million dollars, belonging to the AES, in a personal savings account in his name in Germany. In 2005, the funds were subsequently recovered through the efforts of Mr. Ron Streicher and Mr. Marshall Buck. Why wasn’t Mr. Furness terminated at that time? How can you know for certain, something similar hasn’t happened again?

10. Mr. Furness has allowed the British section for the past six years to retain the membership dues they have collected thus depriving HQ of a key revenue stream. How could you let this happen for so many years? Who’s in control?

The bylaws of the AES express intent to enforce fiscal prudence and accountability.
The diversion of two key revenue streams namely convention income and membership dues are a direct violation of this organizations bylaws. Article VI, Section 9, of the bylaws defines the responsibilities of the Treasurer. It states:

“The Treasurer, under direction of the Board of Governors, shall generally supervise the financial affairs of the Society, and shall cause all funds received by the Society to be deposited in an account or accounts designated by the Board of Governors, requiring the signature of at least two of the following for withdrawal: President, President-Elect, Immediate Past President, Secretary, Treasurer.”

I can find no articles or sections in the bylaws that gives the Executive Director the authority to cause the diversion of funds or to allow the withholding of funds belonging to the corporation.

These transactions I’ve outlined would fail all tests of prudent corporate governance. Our current financial practices are a mess. They violate Generally Accepted Accounting Principles (GAAP) and our own bylaws. Some transactions could even be categorized as fraud and embezzlement. It is important to make clear that embezzlement is not always a form of theft or an act of stealing, since those definitions specifically deal with taking something that does not belong to the perpetrator(s). Instead, embezzlement is, more generically, an act of deceitfully secreting assets by one or more persons that have been entrusted with such assets. The person(s) entrusted with such assets may or may not have an ownership stake in such assets. There is an old saying that if something walks like a duck, looks like a duck, and quacks like a duck, it is probably a duck.

The Controller of our organization, our internal watchdog, cried foul and you ignored the warnings without a formal and impartial investigation. You’ve simply accepted the word of those accused of possible financial impropriety and allowed them to maintain total control of the Society’s funds. Then you allowed our watchdog to be terminated without using the proper procedures necessary for taking such action. Where are our checks and balances for our financial system now? Who’s in control?

I’m incensed that you have rewarded the Executive Director with emeritus status, instead of marching him to the curb. In my opinion, this is the person primarily responsible for our financial mess. Your inaction (or slow action) will no longer be tolerated by informed members. We are willing to bring legal and governmental intervention to correct the financial problems we have identified.

You have been elected by the membership and entrusted with the responsibility to uphold the Society’s bylaws and protect the interests of its membership. The very survival of The Society is now at stake. These are painful distractions from The Society’s mission, and can be avoided if you are willing to take the necessary corrective action.

I implore you to stand up and be part of the solution. Use your powers now to stop further erosion and protect our assets. Please put us on the road to recovery so that we may have a better future.

Richard A Wollrich

(Response from Jim Kaiser and Roger Furness)

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