A black day for Mutual 15, LW
On Monday, Black Monday, July 18, five members of the Leisure World Mutual 15 board of directors demonstrated how, by assuming unauthorized dictatorial power, they can maneuver shareholders into feckless, frustrated, antagonistic disarray.
On that day the clearly stated wishes of the people who own every inch of Mutual 15 were totally rejected by a M-15 board majority.
In a petulant board reaction to shareholder demands that a previous illegal action taken by the board be corrected, all the traditional safeguards for our reserve funds were tossed into the trash barrel.
The seeds for Black Monday were planted more than a year ago when Ron Kravitz began his first term as a M 15 director. Ron was elected CFO—chief financial officer.
Ron took the seemingly unheard-of step of actually reading the stack of Resolutions he was given that were supposed to govern board actions.
Resolution 7306, in effect as long as anyone could remember, specified that all mutual funds must be placed in accounts that are federally insured.
Ron found that all the reserves of Golden Rain Foundation and the mutual had, at the behest of GRF Administration, been removed from safe haven at Wells Fargo and turned over to B NY Mellon to invest as they saw fit.
Why?
Nobody seemed to know, but we were assured it had nothing to do with the unsecured loan Mellon then made to Mutual Two for the reconstruction of Building 29.
No, of course not. Nor did anyone seem to be bothered by the charge that the move was illegal. All concerned with the move denied any knowledge of the restrictions.
Of greater concern than a possible legal misstep was the fact that Mellon had invested all our funds in California interest-free municipal bonds. The bond ratings, being based on past performance, were still good, but there was widespread expert opinion that continued shrinking of the tax base made muni bonds too risky an investment for homeowner association reserves.
Widening of the recession, worldwide, increased concerns, prompting a group of M-15 shareholders to form a committee and circulate a petition asking the board for an orderly disposal of municipal bonds, the proceeds placed in insured funds. 158 signatures were attached and delivered to the board several weeks ago.
Without the knowledge or agreement of the full board, Crandall took it upon himself to put out an insulting and mean-spirited denouncement of the shareholders who had the audacity to reconsider a decision. He questioned the legitimacy of the committee, as he had not authorized its formation, its honesty, its intent to conceal pertinent facts. The rest of the paper was a collection of twisted facts and convoluted logic, predicting heavy revenue losses if the switch was made.
Despite the petition and the protests of attending shareholders, the board voted to not only scrap 7306, but to let the board put our reserves into any investment that struck their fancy.
Ron was removed as CFO. A very black day for democratic process.
Most of the mutuals are, or soon will be, up against the same type of autocratic behavior. If we can’t bring boards around, we will have to bring them down. Stay tuned. You may learn something you can use. The tug-of-war has just begun.
Duane Pickerell is a resident of Mutual 15.
