| T.R | Title | User | Personal
Name | Date | Lines |
|---|
| 330.1 | Let me know if I can help | 11SRUS::SCONCE | Bill Sconce | Mon Oct 21 1991 12:06 | 43 |
| re: .0
More power to you! And the membership, although as yet unknowing, thanks you
in advance.
I've observed to Phil via e-mail that most of our current attention naturally
tends to focus on the upcoming Special Meeting -- but that the battle is only
joined then, not won. The real challenge will just be starting: with the old
BoD out, the new elections called (on what schedule?), and with the current
election process still in place.
Note
Requesting an "open" election process is not one of
the items on the Special Meeting's agenda. And the
Bylaws prohibit raising any issue in the Special Meeting
which is not on the announced agenda.)
So the new elections will likely require another petition drive. That, in
itself, is no problem. We got 1200 signatures last time. I'll gladly man
a table again, this time to get signatures on petitions for each and every
new candidate willing to run. And we "only" need 500 signatures for that.
But by the time the membership receives the (DCU-approved, official) ballot,
we need to have solved a real communication problem. ALL members have the
obligation to vote. ALL members will have the obligation to become familiar
with the facts. But all members do NOT have time to follow NOTES. And we
have a carefully-crafted election process which grants the installed officials
power to edit all candidates' platform statements. It would be foolish to
expect the ballot mailing to include a comprehensive treatment of the issues.
So we'll have a lot of work ahead of us to distribute the word AFTER the
Special Meeting. (In my opinion, THAT'S the time by which the BoD sees it
as critical to have consolidated effective control over communication channels
such as Livewire. The skirmishes we've been seeing before the Special Meeting
are almost irrelevant, except insofar as they establish precedents.)
There is, of course, a prerequisite to distributing the word: to develop
the word to be distributed. It needs to be complete enough to be convincing,
balanced enough to be fair, but brief enough to be read.
So. Good for you! What you are undertaking may be a pivotal task in
creating the new DCU.
|
| 330.3 | Here's hoping! | ULTRA::KINDEL | Bill Kindel @ LTN1 | Mon Oct 21 1991 16:14 | 43 |
| Re .1:
> Note
>
> Requesting an "open" election process is not one of
> the items on the Special Meeting's agenda. And the
> Bylaws prohibit raising any issue in the Special Meeting
> which is not on the announced agenda.)
This is true. Actually the call for new elections is redundant (in and
of itself). The important part is forcing the elections to occur
within 90 days of the Special Meeting rather than being postponed until
the Annual Meeting next April.
A petition isn't the right place to specify an election process, so we
had to make use of the existing process (warts and all). We HOPE that
any Nominating Committee will be chosen to serve the DCU rather than
the incumbent BoD. We can't GUARANTEE that, though. Sometimes one
must take a chance (bet the "come line", so to speak) on people doing
the right thing.
> So the new elections will likely require another petition drive. That,
> in itself, is no problem. We got 1200 signatures last time. I'll
> gladly man a table again, this time to get signatures on petitions for
> each and every new candidate willing to run. And we "only" need 500
> signatures for that.
Alas, this will probably be the case. (Sigh...)
> But by the time the membership receives the (DCU-approved, official)
> ballot, we need to have solved a real communication problem. ALL
> members have the obligation to vote. ALL members will have the
> obligation to become familiar with the facts. But all members do NOT
> have time to follow NOTES. And we have a carefully-crafted election
> process which grants the installed officials power to edit all
> candidates' platform statements. It would be foolish to expect the
> ballot mailing to include a comprehensive treatment of the issues.
Also true. Actually, the "carefully-crafted" procedure is fairer than
that, which is why things aren't as bleak as they might seem. If the
existing BoD stays OUT of the selection process (as they are required
to do), then there's a fighting chance that reasonable candidates (by
merit, rather than by incumbency et al) will be on the ballot.
|
| 330.4 | | WLDBIL::KILGORE | Digital had it Then! | Tue Oct 22 1991 10:07 | 76 |
|
This is the first pass at the list described in .0. Observations,
corrections, or help filling in the blanks would be greatly
appreciated.
-----------
NOTE: Due to the references to an internal Notes conference, this
material is to be considered DIGITAL INTERNAL USE ONLY.
The following attempts to summarize the major points of contention
between the members of DCU and Board of Directors elected by those
members, as expressed in the Notes conference BEIRUT::DCU. Numbers in
brackets are references to relevant notes (eg, [278]) or ranges of
notes (eg, [300.35-36]).
o Appropriateness of participation loans with Barnstable CU:
- TBD
o Past misinformation or disinformation with regard to the state of
the DCU:
- The 1985 Annual Report has not been made available, and was
probably not published. Since that time, auditors notes have
been excluded from the Annual Report. [258.21] Prior to 1985
(the year in which participation loans with the Barnstable
Credit Union began), the auditors notes were considered "an
integral part of these financial statements." [278.0]
- The 1990 Annual Report contains the following statement: "As
the industry reported unprecedented losses, DCU's financial
performance improved with Net Income for 1990, on target at
.8% or $.3 million." [258.7] This is is contrast with a 1989
Net Income of $3.3 million -- in reality, a 90% decrease in
Net Income over one year.
- DCU has stated through its Communication Department that the
Barnstable CU participations loans have "cost DCU nothing."
[258.6] This is in contrast with the inordinate value of loan
delinquencies and Allowance for loan losses on the more recent
Statements of Condition [272.6, 277.0]
- The "Lifestyle Checking" brochure of Aug-1991 attempted to
pass off the institution of sharedraft charges as "More
Choices! More Options!" [253.*]
o Current measures to further restrict DCU information:
- When questioned about a possible problem in the 1988 election
of two directors, the DCU Communications department responded
that the auditor's report for that election was unavailable
(although reports for other elections were available).
[289.0]
- Subsequent to the above request, an Information Protection
Policy was instituted by DCU. [300.0] Practical application
of this policy results in a charge of $132.25 for a small
percentage if the information requested with regard to the
Special Meeting, past elections, minutes of Board of Directors
meetings, audited financial reports, etc, and denied access to
the rest of the information. [300.35-36]
o The Board of Directors attitude with regard to the rights of DCU
members:
- TBD
|
| 330.5 | Spelling correction | CSC32::J_OPPELT | Illiterate? Write for free help. | Tue Oct 22 1991 19:38 | 2 |
|
percentage *OF* the information requested...
|
| 330.6 | 2'nd pass, typos and more info | CROW::KILGORE | Digital had it Then! | Tue Oct 22 1991 20:10 | 87 |
|
NOTE
---------------------------------------
Due to references to an internal Notes
conference, this material is to be
considered DIGITAL INTERNAL USE ONLY.
---------------------------------------
The following is an attempt to summarize the major points of
contention between the members of DCU and Board of Directors elected
by those members, as expressed in the Notes conference BEIRUT::DCU.
Numbers in brackets are references to relevant notes (eg, [278]) or
ranges of notes (eg, [300.35-36]).
o Inappropriateness of participation loans with Barnstable CU:
- From 1985 through 1991, Richard Mangone (DCU president during
that period) brought "participation loans" from the Barnstable
Credit Union (BCU) into DCU. Theas loans evantually totaled
$18 million or 6.7% fo DCU's loan portfolio. [240.33] Richard
Mangone cofounded BCU and was at one point a director of BCU.
- The participation loans, on closer inspection after the
defaults, are actually high-risk commercial real estate and
construction loans [258.16].
- Despite the nature of the loans and the obvious connections to
BCU, DCU was content with reviewing the loans by confirming
the completeness of the paperwork. [268.40] DCU considered
these loans "investments". [253.141]
o Past misinformation or disinformation with regard to the state of
the DCU:
- The 1985 Annual Report has not been made available, and was
probably not published. Since that time, auditors notes have
been excluded from the Annual Report. [258.21] Prior to 1985
(the year in which participation loans with the Barnstable
Credit Union began), the auditors notes were considered "an
integral part of these financial statements." [278.0]
- The 1990 Annual Report contains the following statement: "As
the industry reported unprecedented losses, DCU's financial
performance improved with Net Income for 1990, on target at
.8% or $.3 million." [258.7] This is is contrast with a 1989
Net Income of $3.3 million -- in reality, a 90% decrease in
Net Income over one year.
- DCU has stated through its Communication Department that the
Barnstable CU participations loans have "cost DCU nothing."
[258.6] This is in contrast with the inordinate value of loan
delinquencies and Allowance for loan losses on the more recent
Statements of Condition [272.6, 277.0]
- The "Lifestyle Checking" brochure of Aug-1991 attempted to
pass off the institution of sharedraft charges as "More
Choices! More Options!" [253.*]
o Current measures to further restrict DCU information:
- When questioned about a possible problem in the 1988 election
of two directors, the DCU Communications department responded
that the auditor's report for that election was unavailable
(although reports for other elections were available).
[289.0]
- Subsequent to the above request, an Information Protection
Policy was instituted by DCU. [300.0] Practical application
of this policy results in a charge of $132.25 for a small
percentage of the information requested with regard to the
Special Meeting, past elections, minutes of Board of Directors
meetings, audited financial reports, etc, and denied access to
the rest of the information. [300.35-36]
o The Board of Directors attitude with regard to the rights of DCU
members:
- TBD
|
| 330.8 | | TOMK::KRUPINSKI | Repeal the 16th Amendment! | Wed Oct 23 1991 12:50 | 5 |
| Could you please repost this, and include an explicit permission
to copy it to other conferences, and to forward it within
the company?
Tom_K
|
| 330.9 | final version | WLDBIL::KILGORE | Digital had it Then! | Wed Oct 23 1991 13:05 | 108 |
|
NOTE
---------------------------------------
Due to references to an internal Notes
conference, this material is to be
considered DIGITAL INTERNAL USE ONLY.
---------------------------------------
The following is an attempt to summarize the major points of
contention between the members of DCU and Board of Directors elected
by those members, as expressed in the Notes conference BEIRUT::DCU.
Those unfamiliar with the circumstances surrounding the Special
Meeting (scheduled for 12-Nov-1991, 7:30 PM, Sheraton Tara, Framingham
MA) may find this information useful to obtain a better understanding
of the meeting agenda from the DCU conference.
Permission is granted to forward this note at will throughout the
company, and to repost it in other Notes conferences, providing it is
copied in its entirety and keeping in mind the note above.
Numbers in brackets are references to relevant notes (eg, [278]) or
ranges of notes (eg, [300.35-36]).
o Inappropriateness of participation loans with Barnstable CU:
- From 1985 through 1991, Richard Mangone (DCU president during
that period) brought "participation loans" from the Barnstable
Credit Union (BCU) into DCU. These loans eventually totaled
$18 million or 6.7% of DCU's loan portfolio. [240.33] Richard
Mangone cofounded BCU and was at one point a director of BCU.
- The participation loans, on closer inspection after the
defaults, are actually high-risk commercial real estate and
construction loans [258.16].
- Despite the nature of the loans and the obvious connections to
BCU, DCU was content with reviewing the loans by confirming
the completeness of the paperwork. [268.40] DCU considered
these loans "investments". [253.141]
o Past misinformation or disinformation with regard to the state of
the DCU:
- The 1985 Annual Report has not been made available, and was
probably not published. Since that time, auditors notes have
been excluded from the Annual Report. [258.21] Prior to 1985
(the year in which participation loans with the Barnstable
Credit Union began), the auditors notes were considered "an
integral part of these financial statements." [278.0]
- The 1990 Annual Report contains the following statement: "As
the industry reported unprecedented losses, DCU's financial
performance improved with Net Income for 1990, on target at
.8% or $.3 million." [258.7] This is is contrast with a 1989
Net Income of $3.3 million -- in reality, a 90% decrease in
Net Income over one year.
- DCU has stated through its Communication Department that the
Barnstable CU participations loans have "cost DCU nothing."
[258.6] This is in contrast with the inordinate value of loan
delinquencies and Allowance for loan losses on the more recent
Statements of Condition [272.6, 277.0]
- The "Lifestyle Checking" brochure of Aug-1991 attempted to
pass off the institution of sharedraft charges as "More
Choices! More Options!" [253.*]
o Current measures to further restrict DCU information:
- When questioned about a possible problem in the 1988 election
of two directors, the DCU Communications department responded
that the auditor's report for that election was unavailable
(although reports for other elections were available).
[289.0]
- Subsequent to the above request, an Information Protection
Policy was instituted by DCU. [300.0] Practical application
of this policy results in a charge of $132.25 for a small
percentage of the information requested with regard to the
Special Meeting, past elections, minutes of Board of Directors
meetings, audited financial reports, etc, and denied access to
the rest of the information. [300.35-36]
o The Board of Directors attitude with regard to the rights of DCU
members:
- The Board continues to exert control over the members of DCU,
by preventing the posting of information about the Special
Meeting in Live Wire as requested by members, by disallowing
posting of Special Meeting information in DCU branches, and
even by suppressing information on the size of the room in
which the meeting will be held. [372.0]
- The Board has expressed the opinion that members are not part
owners, but customers of DCU. [289.61-63] This position
permeates their actions leading up to, and fanning interest
in, the Special Meeting, and is in sharp contrast to the
concept of "shares" and the fact that the Directors are
representatives elected by the members.
|
| 330.10 | Participation loan issues | SEILER::SEILER | Larry Seiler | Wed Oct 23 1991 13:10 | 21 |
| re .8:
o Inappropriateness of participation loans with Barnstable CU:
I have two comments to add to this category. I can't cite specific
references for these points, but I believe that the evidence can be
gathered.
- The participation loans put the vast majority of risk of loss on a single
participating credit union (the DCU). I assume that this is not the usual
way participation loans loans work, since they seem to be designed to
spread risk of loss, not to concentrate it in a place other than the
originator. Can we find out about standard practices for participation loans?
- The participation loans begin in 1985, but new loans were granted for a
number of years after that. Real estate prices for private homes started
dropping in 1987 (at least, that is what I determined in 1988), and prices
for condos started dropping earlier. I don't know when commercial real
estate started showing problems, but I assume that it was around the same
time. Shouldn't this have caused a review of the participation loan policy?
|
| 330.11 | | WLDBIL::KILGORE | Digital had it Then! | Wed Oct 23 1991 13:34 | 28 |
|
I can't comment on your first point, but as to the second, there is an
interesting remark in note 240.33, "Notes from the DCU [1991] Annual
Meeting":
"Since DCU doesn't normally loan money for commercial
property, they have hired someone with expertise in
commercial RE to assist DCU in determining how best to
handle these loans."
From this (and other material in this conference), I have come to the
incredible conclusion that Richard Mangone was:
o cofounder of the credit union that originated these loans;
o originator of the loans;
o the only person in DCU who had any substantive knowledge about
the loans;
o the only person in DCU who knew how to "deal" (and this in the
darkest sense) with commercial real estate.
It is hard to believe that if we'd had a Board member during this period
who was also a hardware engineer, they would not have eventually
realized that this is a classic single point of failure, waiting to
happen.
|
| 330.12 | A couple points... | ALPHA::gillett | And you may ask yourself, 'How do I work this?' | Wed Oct 23 1991 15:55 | 92 |
| [The following is all my personal opinion, which was developed after reviewing
some of the materials on file in the case of DCU v. Mangone, and after also
reviewing some of the official correspondence sent to DCU members by DCU.
I would happily welcome comments, here or in my mail, from DCU Board Members
who feel that my opinion is incorrect, or developed from flawed information]
.10 writes....
> From this (and other material in this conference), I have come to the
> incredible conclusion that Richard Mangone was:
...
> o the only person in DCU who had any substantive knowledge about
> the loans;
Don't be too sure of this. In their suit against Mangone, the complaint by
DCU alleges:
"...the Participation Loans were approved by the Board of Directors
of the Credit Union following, inter alia, a presentation by Mangone
which included a detailed discussion by him of the investment
potential of the property at issue, the loan documentation in the loan
file, and the creditworthiness of the borrower."
So, they approved the loans after a presentation by Mangone. They knew about
them, and knew that they were in fact for commercial real estate.
The suit claims additionally that:
"The documentation comprising the Participation Loan files, however,
was, unbeknownst to the Credit Union's Board, often fraudulent in
all material respects and grossly misrepresented (1) the true
creditworthiness of the putative borrower; (2) the true value of the
subject property; and (3) the true purpose and recipients of the
proceeds of the Participation Loans."
So, it seems evident to me that the Board knew that the credit union was
engaging in real estate speculation, and that there exists a possibility that
they were unaware of the fraudulent nature of the paperwork in the loan.
Regarding the section of the grievances entitled
"o Past misinformation or disinformation with regard to the state of
the DCU:", I would offer the following comments:
Something to consider is that, according to the suit, the Participation
Loans at issue were made on the following dates:
04/30/87
06/02/87
06/15/87
10/08/87
03/02/88
03/23/88
10/19/88
02/20/89
11/08/89
03/22/90
06/19/90
But 7-1/2 years after the credit union was founded (if I'm thinking correctly
that would be mid-1987, or perhaps 1988), the Chairman of the Board of
Directors wrote to the membership and, among other things, wrote the following:
"Q. How does DCU invest its money?
A. Because we view DCU as the guardian of members' savings we are
very conservative in our investment policies. We reinvest savings in
member loans. Additional investments are in government securities and
federally insured banks. We deal with the highest quality financial
institutions and don't invest in any sort of "speculative" instruments."
So, my reading is that while DCU held obligations on real estate in the amount
of approximately at least $8,850,000.00 (the total of all Participation Loans
at issue made during April & June of 1987), we were being told that money
was not be speculatively invested.
Another interesting thing about the quotation is the use of the term "federally
insured banks." BCCU, who originated the loans, was a credit union, not a
bank.
I'm certain that if my reasoning is flawed or incorrect here, that one of
the DCU Notes readers from the Board of Directors will correct me and post
the relevant facts disputing my assertion. Note that the previous is all
pure hypothesis on my part....all I'm doing is reading the official
correspondence sent to members by DCU and reading the Verified Complaint filed
in Superior Court by DCU against Mangone et al. Mr. Steinkrauss, since you
wrote the letter I quoted above, perhaps you should reply here and set the
record straight.
Just thinkin',
/Chris
|
| 330.13 | Correction to .9 | AIMHI::TINIUS | Asleep at the wheel. | Thu Oct 24 1991 13:09 | 14 |
| Re: .9, your summary:
> - Subsequent to the above request, an Information Protection
> Policy was instituted by DCU. [300.0] Practical application
> of this policy results in a charge of $132.25 for a small
> percentage of the information requested with regard to the
> Special Meeting, past elections, minutes of Board of Directors
> meetings, audited financial reports, etc, and denied access to
> the rest of the information. [300.35-36]
^^^^^^^^^^^
Note 300 has only 19 replies. This should be [289.35-36]
-stephen
|
| 330.14 | | WLDBIL::KILGORE | DCU Meeting, see BEIRUT::DCU | Thu Oct 24 1991 13:12 | 4 |
|
re .13: (I did that on purpose to see how many people were actually
reading the references. Keep up the good work! :-)
|
| 330.15 | another grievance | CIMNET::KYZIVAT | Paul Kyzivat | Fri Oct 25 1991 19:49 | 7 |
| You can add to the list of grievances:
DCU is providing incomplete and misleading information on the special
meeting to people (including non-Digital employees who may have no other
source) who call the DCU for information. [328.9]
Paul
|
| 330.16 | updated version of .9 - sent to MET building | CIMNET::KYZIVAT | Paul Kyzivat | Wed Oct 30 1991 01:34 | 114 |
| NOTE
---------------------------------------
Due to references to an internal Notes
conference, this material is to be
considered DIGITAL INTERNAL USE ONLY.
---------------------------------------
The following is an attempt to summarize the major points of
contention between the members of DCU and Board of Directors elected
by those members, as expressed in the Notes conference BEIRUT::DCU.
Those unfamiliar with the circumstances surrounding the Special
Meeting (scheduled for 12-Nov-1991, 7:30 PM, Sheraton Tara, Framingham
MA) may find this information useful to obtain a better understanding
of the meeting agenda from the DCU conference.
Permission is granted to forward this note at will throughout the
company, and to repost it in other Notes conferences, providing it is
copied in its entirety and keeping in mind the note above.
Numbers in brackets are references to relevant notes (eg, [278]) or
ranges of notes (eg, [289.35-36]).
o Inappropriateness of participation loans with Barnstable CU:
- From 1985 through 1991, Richard Mangone (DCU president during
that period) brought "participation loans" from the Barnstable
Credit Union (BCU) into DCU. These loans eventually totaled
$18 million or 6.7% of DCU's loan portfolio. [240.33] Richard
Mangone cofounded BCU and was at one point a director of BCU.
- The participation loans, on closer inspection after the
defaults, are actually high-risk commercial real estate and
construction loans [258.16].
- Despite the nature of the loans and the obvious connections to
BCU, DCU was content with reviewing the loans by confirming
the completeness of the paperwork. [268.40] DCU considered
these loans "investments". [253.141]
o Past misinformation or disinformation with regard to the state of
the DCU:
- The 1985 Annual Report has not been made available, and was
probably not published. Since that time, auditors notes have
been excluded from the Annual Report. [258.21] Prior to 1985
(the year in which participation loans with the Barnstable
Credit Union began), the auditors notes were considered "an
integral part of these financial statements." [278.0]
- The 1990 Annual Report contains the following statement: "As
the industry reported unprecedented losses, DCU's financial
performance improved with Net Income for 1990, on target at
.8% or $.3 million." [258.7] This is is contrast with a 1989
Net Income of $3.3 million -- in reality, a 90% decrease in
Net Income over one year.
- DCU has stated through its Communication Department that the
Barnstable CU participations loans have "cost DCU nothing."
[258.6] This is in contrast with the inordinate value of loan
delinquencies and Allowance for loan losses on the more recent
Statements of Condition [272.6, 277.0]
- The "Lifestyle Checking" brochure of Aug-1991 attempted to
pass off the institution of sharedraft charges as "More
Choices! More Options!" [253.*]
o Current measures to further restrict DCU information:
- When questioned about a possible problem in the 1988 election
of two directors, the DCU Communications department responded
that the auditor's report for that election was unavailable
(although reports for other elections were available).
[289.0]
- Subsequent to the above request, an Information Protection
Policy was instituted by DCU. [300.0] Practical application
of this policy results in a charge of $132.25 for a small
percentage of the information requested with regard to the
Special Meeting, past elections, minutes of Board of Directors
meetings, audited financial reports, etc, and denied access to
the rest of the information. [289.35-36]
- DCU is providing incomplete and misleading information on the
special meeting to people (including non-Digital employees who
may have no other source) who call the DCU for information.
[328.9]
o The Board of Directors attitude with regard to the rights of DCU
members:
- The Board continues to exert control over the members of DCU,
by preventing the posting of information about the Special
Meeting in Live Wire as requested by members, by disallowing
posting of Special Meeting information in DCU branches, and
even by suppressing information on the size of the room in
which the meeting will be held. [372.0]
- The Board has expressed the opinion that members are not part
owners, but customers of DCU. [289.61-63] This position
permeates their actions leading up to, and fanning interest
in, the Special Meeting, and is in sharp contrast to the
concept of "shares" and the fact that the Directors are
representatives elected by the members.
Just recently, the DCU BOD posted a rebuttal to some of the issues
which have been raised. [343.0] All DCU members are encouraged to
follow up all these references (pro and con) in BEIRUT::DCU in order
to make well informed personal decisions on the matter. Then, all are
encouraged to ATTEND THE MEETING!
|