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You are here: Home / Archives for Masters

Masters

We Probably Will Not Meet That

January 21, 2008 By LakeHolidayNews

LHCC President Wayne Poyer
Back in April of 2007, we wrote about the contingent payments that LHCC might receive from Aqua Virginia. These payments made it on to LHCC’s 2006 financial statements, audited by Kositzka Wicks & Co of Alexandria. They made it on in a big way – in the amount of $794,213. In our April post, Dear Mike Kilmer, we criticized allowing contingent gains that might never be received to be recorded on financial statements. We expressed the view that recording contingent gains was inconsistent with the accounting principle of conservatism and inconsistent with FAS No. 5. Despite this criticism, the only response we received was from Mike Kilmer, which was really no response at all. Through LHCC’s 11/30/07 Balance Sheet, the most recent one we have available as of this writing, the contingent gain remains on the books.

We quote from Kositzka Wicks’ 2006 audit letter:

…we conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made the Association…

2007 is now in the history books, and we don’t think any check is coming from Aqua Virginia for 2007’s contingent payment. Let’s forget what actually took place and consider only the reasonableness of the estimates provided by LHCC.

In our earlier post, we provided a variety of readily available data to show that no reasonable estimate would predict the contingent payments would be received for the next several years. In fact, Aqua Virginia’s publicly available SCC filings from February 2007 show that their accounting entries do not record these contingent payments on their financial statements. If Aqua Virginia’s auditors believed there was a reasonable expectation that these contingent payments would be made, wouldn’t they be recorded on Aqua Virginia’s books?

Did LHCC give its auditors complete and accurate information?

In February, Wayne Poyer told the auditors in his management representation letter:

There are no estimates that may be subject to a material change in the near term that have not been properly disclosed in the financial statements. We understand that near term means the period within one year of the date of the financial statements.

Then, in July Lake Holiday homeowner Bill Masters raised the issue of collecting the contingent payments at a public meeting. Wayne Poyer openly told members:

Mr. Masters criticizes the $76,000 which Aqua America will return to the association, assuming we meet a certain number of hookups. And he’s right about that, that’s part of the contract. He’s also right that during this terrible market downturn we’ve got, we probably won’t meet that.

Here’s an actual audio recording of Wayne Poyer’s remarks:

https://www.lakeholidaynews.com/wp-content/uploads/sites/244/2008/01/Probably_wont_meet_that.mp3

We. Probably. Won’t. Meet. That.

Evidently, Wayne Poyer convinced the auditors on February 26th that the Aqua Virginia contingent payments would be received. Then he flip-flopped when speaking to members – a little more than 4 months after his representation to the auditors. That seems to fall within the near term time frame, and not getting the money seems to be material.

Maybe not collecting the early year payments that make up the $794,213 is not a “material change” to Wayne Poyer.

Unfortunately, LHCC’s representations to its auditors also raise other questions. Wayne Poyer informed the auditors that “…as of February 26, 2007…there are no liens or encumbrances on such assets nor has any asset been pledged.” Really? Does the $750,000 Wachovia note executed on February 2, 2007 count? Does the deed of trust pledging LHCC real estate count? Those documents are part of the balloon note that Wayne Poyer and John Martel signed to refurbish the clubhouse. Both the loan documents pledging assets and the letter to auditors claiming there were no assets pledged were signed by the same person – Wayne Poyer.

These are simple and straightforward representations to LHCC’s own auditors. Why aren’t they accurate?

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Filed Under: Board Conduct, Finances Tagged With: Aqua-Virginia, Kilmer, Kositzka-Wicks, Martel, Masters, Poyer

Silent Sitters Vote Unanimously To Raise Dues

November 21, 2007 By LakeHolidayNews

Have you ever read something and thought to yourself “Wow, that’s a great idea. Why didn’t I think of that?”

We had just such a reaction to the phrase coined by an anonymous poster on Bill Master’s website in a thread discussing LHCC’s then upcoming 2007 election of directors. The phrase: Silent Sitter. That phrase succinctly describes the conduct of too many of LHCC’s directors at board meetings. A Silent Sitter just occupies a chair during a board meeting, contributes very little and seriously questions even less, and ultimately votes in support of the decision already made by the powerful few.

We’re going to award a Silent Sitter award to that board member that contributes the least at each board meeting in the hope that highlighting this bad behavior prompts potential Silent Sitters to change their conduct. We make it in the spirit of Sen. William Proxmire’s Golden Fleece award.

The November 12th board meeting to review and approve the 2008 budget is a good place to start. After the organizational meeting on November 5th, this was the first meeting to take up the business of Lake Holiday. Despite the fact that the board was reviewing 2008 expenditures that will exceed $2.275 million, the board meeting on the budget was the shortest meeting that we’ve watched on video, coming in at 38 minutes. Most of the discussion for the entire budget focused on how a single, unbudgeted $9,000 dock repair expense could be deferred or delegated to a committee. This lack of debate shows that the Silent Sitter race will be a close one.

Dave Buermeyer
LHCC VP Dave Buermeyer said next to nothing at the November 12th meeting. But in light of the nearby photo from that meeting, we can’t be sure if Dave Buermeyer was actually awake throughout. We don’t want to turn the award into the Sleeping Sitter. We also don’t think it’s fair to the other board members vying for our award to credit what little he did say at the meeting in light of our uncertainty over his sleeping status.

We also had to seriously consider Jo-Anne Barnard. Among Jo-Anne’s many qualifications to serve on LHCC’s board, she is LHCC President Wayne Poyer’s neighbor. She recovered somewhat from the “deer in the headlights” look she displayed at the board’s organizational meeting and managed to ask several questions. One of her questions helped clarify a caption on a budget line item. Unfortunately, substantive contribution requires more than debating captions.

Jo-anne Barnard
We also had to consider Suzy Marcus and Ken Murphy, who stayed true to their usual performances and contributed next to nothing. Had Noel O’Brien been in attendance, our decision may have been even more difficult since she’s expected to be a regular contender for our award. We’re sure these three will put up strong showings in future Silent Sitter contests.

Despite the close race, we give our first Silent Sitter award to LHCC board newcomer Rick Bleck, who did not meet the 1 year ownership requirement for nomination set forth in LHCC’s bylaws and was invisible on the campaign trail but was elected anyway. During the board’s organizational meeting, Rick Bleck managed to correct his own phone number on a board member contact sheet. That apparently talkative performance was not repeated on November 12th, when Rick Bleck was virtually silent. He didn’t question any element of the 2008 budget, nor did he suggest any change. When it came time to vote for the budget, he dutifully raised his hand. He fulfilled the role of a Silent Sitter to perfection. He questioned nothing and voted in favor of everything. Congratulations, Rick Bleck, the first recipient of our Silent Sitter award. We have to wonder: did his involvement peak very early?

11/12/07 Winner, Rick Bleck
We think LHCC’s board erroneously believes that unquestioned unanimity indicates a good decision. In contrast, we believe that open, thorough examination of alternate and sometimes opposing views is a better approach. At the very least, those holding the minority view can take comfort in the fact that their position was given careful consideration and had a fair chance to capture support.

For example, in an earlier post we reviewed LHCC’s administrative expenses and discussed the need to adjust these expenses downward by the portion reimbursed by LHEUC. This shows how dramatically LHCC’s administrative expenses have grown since 2006. After deducting LHEUC’s share, LHCC budgeted $182,826 for 5 administrative expense categories (office supplies, office equipment, printing/copying, administrative salaries, and telephone) in 2006. Based on the approved budget for 2008, these expenses are projected to jump to $297,429, an increase of $114,603 or about 63% in 2 years. That is one example of out-of-control spending. Yet no director had the common sense to ask: “Why are these expenses going up so much?” No director made any effort to discuss ways to reduce LHCC’s expenses at the November 12th meeting.

Another example of the perils of blind acceptance can be found in John Martel’s discussion of the balloon note used to finance the clubhouse remodeling, which is part of the above video clip. John Martel says that both he and the 2007 board have been criticized for committing LHCC to a balloon note. To directors operating reasonably, at a minimum criticism indicates an issue that should be carefully scrutinized. John Martel defends this decision:

We have a commitment from Wachovia that they will refinance the loan when it comes due in 5 years.

Unfortunately, the Promissory Note dated February 2, 2007 that John Martel himself signed doesn’t support his claim. That note provides for full repayment of all principal and interest by February 2, 2012 (which is less than 5 years away) and contains no language committing Wachovia to extend the loan. The Promissory Note itself states that:

This Note and the other Loan Documents represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties.

Yet no director – especially not the Silent Sitters – saw fit to ask John Martel if he had that commitment in writing. Apparently, they accepted his unsupported statements as fact. LHCC’s board operates on the principle of “don’t question – just blindly accept.” Silent Sitters are an important component of this “question nothing-act unanimously” culture.

Lake Holiday owners pay a price for Silent Sitters. A portion of that price is the higher dues discussed in the above video and unanimously approved by LHCC’s board. Lake Holiday does not have a board of 11 people who independently and critically evaluate information. Instead, it has a board packed with Silent Sitters that gives the community the illusion of an independent and thoughtful governing body yet keeps power in the hands of a few.

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Filed Under: Board Conduct, Board Meeting, Finances, Silent Sitter Tagged With: Buermeyer, Golden-Fleece, Jo-anne-Barnard, Martel, Masters, Murphy, Noel-OBrien, Poyer, Proxmire, Rick-Bleck, Suzy-Marcus, Wachovia

Defendant Steve Locke Will Stop At Nothing…

August 28, 2007 By LakeHolidayNews

At the June 25th board meeting, LHCC directors debated defending against the Masters lawsuit. Directors evaluated whether they should use Rees Broome, a Vienna-based law firm that LHCC Treasurer John Martel compared to an “ambulance chaser” with “extravagant” rates or the lower-priced Segan Mason & Mason. (For more on John Martel’s evaluation of Rees Broome, watch Use Rees Broome Pts 1 & 2 on our Videos page.) The board also considered whether LHCC should defend the 5 directors individually named in the Masters suit: Dave Buermeyer, Suzy Marcus, Ken Murphy, Noel O’Brien, and Steve Locke.

On this last point, defendant Dave Buermeyer suggested that the individual defendants recuse themselves or abstain from voting on whether LHCC should defend the 5 directors. After all, it would be very self-serving for these 5 directors to vote in favor of a motion to get LHCC to pay for their defense. But that created a little problem. Earlier in the meeting, with everyone – including Steve Locke – in the room, LHCC President Wayne Poyer announced that director Chris Allison was “called away unexpectedly.” At no time during the 3 hour meeting did Chris Allison appear and, in light of Wayne Poyer’s comment, there was no reason to believe that Chris Allison was nearby.

LHCC has 11 directors. With 1 absent, that left 10 directors. If the 5 director defendants recused themselves from voting on that motion, that would leave only 5 directors able to vote. However, 6 directors are required for a quorum, or the minimum number that can transact business. The 5 non-defendant directors actually present at the meeting would not be able to approve a motion to pay for the defense of the 5 defendants.

To get what he wants – a motion passed for LHCC to pay for his legal representation, director Steve Locke suggests:

I can go outside and in 30 seconds get Chris Allison’s signature on a piece of paper. I’ve been trained. I’ve watched and observed how to do that. Yeah.

Since Chris Allison was “called away unexpectedly,” he is not in the immediate vicinity. Obtaining his legitimate signature in 30 seconds is an absolute impossibility, particularly if Chris Allison were allowed any time to review what he is asked to sign. It’s pretty clear what Steve Locke is suggesting to the board. Steve Locke will do whatever it takes, even if it means coming up with the signature of a director who is not even present, to pass a board resolution authorizing LHCC to pay for his legal counsel.

Instead of a negative reaction to Steve Locke’s repugnant suggestion, he gets a warm reaction. Pat Shields can be heard on the video interjecting in a complimentary way: “You had training.” When Steve Locke says that he has “watched and observed how to do that,” one senses that this is business as usual. This conduct reminds us of defendant Noel O’Brien’s suggestion that LHCC fabricate costs for non-existent employees as a response to Masters’ information requests. Fabricating things must be, as Pat Shields and Steve Locke remark, part of the Lake Holiday training. Ray Sohl, the current GM, sat through this entire episode and said nothing. We can imagine that former GM Dave Ingegneri witnessed equally troubling episodes, yet said nothing.

When Bill Masters heads to court on Thursday against Steve Locke and the other defendants, these are the kind of people he will be up against: soul-less people who will stop at nothing to get their way.

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Filed Under: 10/06 Election, Board Conduct, Board Meeting, Lawsuit Tagged With: Allison, Buermeyer, Ingegneri, Locke, Martel, Masters, Murphy, Noel-OBrien, Pat-Shields, Poyer, Ray-Sohl, Rees-Broome, Segan-Mason, Suzy-Marcus

Off To Court They Go…

August 27, 2007 By LakeHolidayNews

In late May, Lake Holiday resident Bill Masters filed a lawsuit in the Frederick County Circuit Court, seeking a judicial review of the October 2006 board of directors election.

[Read more…] about Off To Court They Go…

Filed Under: 10/06 Election, Board Conduct, Lawsuit Tagged With: Allison, Fuerst, Jim-Vickers, John-Conrad, Margie-Hoffman, Masters, Miller-&-Smith, Moriarty, Oakcrest, Pat-Shields, voting

Ladies, Check Your Watches!

June 20, 2007 By LakeHolidayNews

It’s time for the LHCC Board to get ready for the October 2007 election, and that means creating a Nominating Committee.

[Read more…] about Ladies, Check Your Watches!

Filed Under: 10/07 Election, Board Meeting Tagged With: Akeley, Allison, Anderson, Barbara-Blake, Dot-Wallace, Fuerst, Harriet-Smith, Kearney, LeeAnn-Stevens, Margie-Hoffman, Masters, Noel-OBrien, Poyer, Tom-Wallace

Ray, Ray, Ray…Please

March 6, 2007 By LakeHolidayNews

LHCC Treasurer John Martel and GM Ray Sohl review spending at the February 26th board meeting. An obviously frustrated Martel begins the discussion after Sohl finishes his opening remarks:

I have a couple of questions, Ray, and I have one more than I had before you started talking.

[Read more…] about Ray, Ray, Ray…Please

Filed Under: Board Meeting, Finances Tagged With: Allison, Martel, Masters, Ray-Sohl

Show Me the Financial Documents

February 23, 2007 By LakeHolidayNews

We’re closely following the response to the questions posed by Bill Masters about money issues at Lake Holiday. So far, a few emails have been exchanged, one of which has triggered calls for the resignation of at least 1 director, Noel O’Brien. We’ll update this post as additional responses are received.

[Read more…] about Show Me the Financial Documents

Filed Under: Finances, Utilities Tagged With: Martel, Masters, Miller-&-Smith, Noel-OBrien

It’s Time For Answers

February 19, 2007 By LakeHolidayNews

Bill Masters, a longtime Lake Holiday resident, has sent an email to John Martel, LHCC’s Treasurer, and most of the other LHCC directors. His email addresses a topic important to us all: money. He makes a request for additional documents and asks to get answers to certain questions.

[Read more…] about It’s Time For Answers

Filed Under: Finances, Utilities Tagged With: Allison, Martel, Masters, Moriarty, Poyer, Rees-Broome, Wachovia

Rumbling In the Community

November 16, 2006 By LakeHolidayNews

There’s an active discussion on the topic we raised about Chris Allison illegitimately allowing Miller & Smith and its builders to vote certain lots taking place on Bill Master’s website.

[Read more…] about Rumbling In the Community

Filed Under: 10/06 Election, Lawsuit Tagged With: Allison, Masters, Miller-&-Smith

Facts Trounce Hate Speak

October 12, 2006 By LakeHolidayNews

Shame on Sue Fuerst. Her childish letter repeatedly refers to my brother Bill as “Sneazy”, a dwarf in a fairy tale. Bill is short and suffers from a rare bone disease. Her outright hate speak is among the most despicable behavior I have ever witnessed. Chris Allison and the LHCC board apparently support mocking the handicapped. Who’s next on their attack list? Recently, the supporters of the Board have stooped to spreading the false rumor that we have “sold out” and abandoned our reform efforts. This is not true. And by now you have the latest lie-filled panic attack from the Chris Allison supporters. Their strategy: If you can’t win based on the facts, attack someone’s handicap and resort to spreading lies.

[Read more…] about Facts Trounce Hate Speak

Filed Under: 10/06 Election Tagged With: Allison, Aqua-Virginia, Fuerst, Locke, Masters, Miller-&-Smith, Poyer

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