Conference 7.286::dcu

356.0. "Response to DCU BoD Message" by GUFFAW::GRANSEWICZ (Someday, DCU will be a credit union.) Fri Nov 08 1991 04:11

    
    [Permission to forward or re-post this note is granted.  However, the
     original note header and names at the end of the note must be
     retained.  The contents of the note may be shared with any DCU member.]
     

							7 November 1991

Dear Fellow DCU Members:

	The following message is from several concerned DCU shareholders.
	This message  represents some of  our beliefs  and  opinions.  It 
	should not be construed to be representative of a larger  body of
	individuals, and it specifically may  not represent the  opinions
	or  beliefs of any DCU member other than those whose names appear
	at the conclusion of this message.

	On  October  29,  1991, the members of the DCU Board of Directors
	posted a note in the VAXnotes DCU conference.  This  posting  was
	the  Board's  response  to  postings  in the conference that they
	allege  contain   mis-information   and   false   or   misleading
	statements.   As concerned shareholders and members of the credit
	union, those of us who have signed this letter would like to take
	this  opportunity  to  respond  to the Board's recent posting and
	offer our view as counterpoint to the Board's statements.


	The Board of Director's View of Our Efforts
        -------------------------------------------

	The DCU Board of Directors has characterized  the  people  behind
	the  recall  petition  drive  as  being  a  small  group  bent on
	discrediting the board of directors and the credit  union.   They
	allege  that  our  intentions  are to harass the board until they
	quit.   We  disagree  strongly  with this characterization.  Over
	1,000 petitions  were  filed  with  DCU  requesting  the  special
	meeting.   This  is  a  true  grass  roots  movement.   Concerned
	shareholders worked in cafeterias and  other  non-work  areas  at
	many  sites  across  the country, in full accordance with Digital
	Equipment Corporation's "Orange Book"  policies  and  procedures.
	In  just  a  few  days,  we  were  able  to  gather  in excess of
	1,200 signed petitions. 


	Our Goal for Digital Employees Federal Credit Union
        ---------------------------------------------------

	It  has not, and is not, a goal of any of the undersigned to take
	control of the credit union, or to discredit its good  name.   On
	the  contrary, we are most proud to be members, shareholders, and
	owners of one of the largest credit unions in the U.S. Our primary
	goal  is  insure  that  our  credit union - and our savings - are
	managed appropriately, and prudently, by individuals in  whom  we
	can  place, and verify, our trust. We hold to the philosophy that
	credit unions are  member-owned,  member-controlled  institutions
	established for the purpose of providing  above-average  interest
	on  member  savings,  and  highly  competitive  rates on loans to
	members. We believe that credit unions are not banks or S&Ls, and
	that the management  of a  credit union is ultimately responsible
	to the shareholders.

 
	Information Control by the Board
  	--------------------------------

	In their posting of October 29th, the Board wrote  that the NCUA,
	as  well  as  independent  auditors  and  legal  counsel,  having
	conducted  extensive  investigations,  concluded  that  no  board
	members,  official,  or  staff  member of the credit union, other
	than  Richard  Mangone,  was  involved  in  any  wrongdoing.   As
	shareholders, we are pleased to hear this.  On the other hand, it
	has been nearly impossible for concerned shareholders  to  verify 
	this statement.  Members have  asked,  and  continue to  ask, the 
	management of DCU to provide reports or other data as  conclusive
	evidence that nobody other than Mangone was involved.  The  Board  
	of Directors, through  DCU  management,  has  provided relatively
	little documentation to substantiate this claim.

	The board  says that a small group of shareholders has  inundated
	DCU with information requests,   and that  DCU has  responded  by 
	granting a majority of those requests.  This has not been our 
	experience or observation.  The Board has granted only a minority 
	of the requests that have been made. Other requests for data have 
	either  been  denied, placed  under review, or simply ignored.

	We  believe  that DCU has a legal obligation to provide access to
	certain  financial  documents  and  business   records   to   its
	shareholders  upon demand, so long as a proper business reason is
	given.  There are legal precedents  to support this belief.   We,
	the  undersigned,  would  like DCU to either grant our reasonable
	requests for information, or cite  appropriately  why  under  law
	the requests cannot be granted.

	The  Board  would like you to believe that as they worked hard to
	grant member requests for  data,  that  requests  for  more  data
	increased,  and  that  unsubstantiated allegations increased.  We
	disagree with these statements.   We  have  worked  carefully  to
	examine  the  data  that  has been provided to us, as well as the
	data that we have located in the public record.  We have made  no
	attempts  to  convey  or repeat statements known to be false.  We
	have  raised  concerns  that  have grown out of our analysis, but
	have been cautious and prudent in our use of information. 


	Who is the Board Protecting?
	----------------------------

	The Board claims that it's Information Protection  Policy  exists
	for  your  protection,  and  to  recover  costs  associated  with
	providing  data  for  unusual  requests.  The  Board  writes that
	written requests for data must be for legitimate business reasons
	and  not  for  the  purposes  of harassment.  Those of us who are
	requesting data from the  credit  union  are  not  attempting  to
	harass  the  credit  union  or  its  management.   We  do not see
	anything unusual about requests for information we believe we are
	lawfully entitled to review.  In fact, given the stringent nature
 	of state and federal legislation regarding information disclosure
	and confidentiality,  we  question  the  need  for any additional
	information "protection" policies whatsoever.


	Other Complaints by the Board
	-----------------------------
	
	The Board writes that they had two informal member meetings, each
	of which lasted 4 hours.  This is a  true  statement.   What  the
	Board neglected to tell you was that the first meeting was called
	with  only  24  hours  notice.   At  both  meetings   Jim   Rice,
	a  lawyer  working  for  DCU, carefully controlled what the board
	members said, and frequently intervened in the  discussions.   We
	feel that the meetings were not frank, informal conversation with
	our  board,  but  rather   orchestrated   encounters,   carefully
	controlled by legal counsel for the board.

	The board writes that users of VAXnotes have accused the board of
	being  compensated.   This  is  not   true.    VAXnotes  contains
	long-running  "electronic  conversations."  Writers have asked if
	the board was compensated, and replies have been written  stating
	that the board is not compensated.
         
	The  board  writes  that they have been accused of not scheduling
	the Special Meeting within the time frame established by the  DCU
	Charter.  A careful reading of the federal charter reveals subtle
	differences in charter language regarding the use  of  the  words
	"call"  and  "held."   We  believe  that  the board is within its
	rights to schedule the meeting for  November  12,  1991,  and  we
	encourage all DCU members, regardless of which "side" you are on,
	to attend the meeting and vote your conscience.  We criticize the
	Board  for  not  clarifying  the  issues  of the charter language
	several weeks ago when the issue of calling the  Special  Meeting
	was first raised.

	The board states that the  credit  union  is  at  risk  of  being
	controlled  by  individuals  with  little  or  no  experience  in
	management, finance, or understanding of credit union operations.
	We believe this assertion is inaccurate.  The membership  of  DCU
	represents  an  incredibly  diverse  body  of  people  of   great
	intellectual  ability.   We  believe  that many qualified members
	will step forward and run for the board should the recall  effort
	be succesfull.


	Efforts to Communicate?
	-----------------------

	Mark Steinkrauss,  Chairman of  the Board of  Directors, recently 
	wrote to  members  asking them  to attend the meeting and support 
	the board of directors.  He wrote, in part:

	"Efforts to communicate with this group to date have not  yielded 
	any  constructive results.  This  small group has  conducted what 
	would  seem to be a "witchhunt" with the intent to discredit  the 
	board of directors and the credit union."

	On October 28 1991, some  concerned  shareholders  met with  Mark
	Steinkrauss,  and  with  Chuck Cockburn  (President of DCU)  in a 
	forum  moderated  by Rob Ayres  (DEC Laison to  DCU) in  order to 
	create a dialog and open channels of communication with  DCU.  It 
	was the intent of the meeting to air common concerns, and try  to 
	establish common ground.  

	The very next day, October 29th, the Board  of  Directors  posted
	their message in VAXnotes.    This  message,  and  well  as  Mark
	Steinkrauss', both accuse concerned shareholders as engaging in a 
	"witchhunt."   We find the  characterization  offensive  and  not 
	accurate.  Further, we find these types of remarks unproductive - 
	especially given recent efforts to establish a dialog between DCU 
	and concerned shareholders.


	Facts for your consideration
	----------------------------

	As concerned shareholders, we would like to enumerate some of the  
	facts that we have gathered.  These facts, in part, are what have 
	led us to the conclusion that the current board must be replaced, 
	and that fair and  open elections  for new  board  must  be  held 
	as soon as as possible.


	FACT:   DCU Board of Directors did not provide complete notes to
		financial statements to shareholders

	Since 1984, the credit union has not published notes accompanying
	it's  financial  statements.   Notes  to financial statements are
	important  in  understanding  the overall condition of the credit
	union.  Had members been provided with  notes  to  statements  in
	years   past,   the   fact  that  the  credit  union  was  making
	participation loans would have been known much earlier.


	FACT:	DCU Board of Directors has made incorrect or mis-leading
		statements about DCU investments

	DCU  made  participation  loans  on  the  following  dates.   The
	following  chart  shows only some of the participation loans, not
	all.

                      Total         Digital
	Date	      Amount         Share     Borrower
	===================================================================

	04/30/87    $1,241,936    $1,750,000   Highview Realty Trust
	04/30/87     1,947,170     2,450,000   Perch Pond Realty Trust
	06/02/87     2,655,000     2,950,000   Santuit Woods Realty Trust
	06/15/87     1,530,000     1,700,000   Signal Hill Realty Trust
	10/08/87     1,138,830     2,150,000   Second Green Island Trust
	03/02/88     1,146,600     1,525,000   Plainfield Development Realty Trust
	03/23/88     1,615,500     2,400,000   Curtis Village Realty Trust II
	10/19/88     2,250,000     2,500,000   Walcott Realty Trust

	Approximately 7-1/2 years after the credit union's 1980 founding,
	Mark Steinkrauss, Chairman of the Board, wrote to DCU members:

	"Q.  How does DCU invest its money?
	 A.   Because we  view DCU as the guardian of member's 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."


				***

	In  conclusion,  we  feel that the Board of Director's accusation
	that  we  are  on  a  "witchhunt"  (their  word),  is  an  unfair
	characterization  of  our intentions.  We feel that the Board, by
	their past actions in the making  of  real  estate  participation
	loans,  and  by their subsequent attempts to withhold information
	from shareholders, have not served in the best interests  of  the
	members  of DCU.  Our only intention is to exercise our rights as
	shareholders, and put the matter of the future direction  of  the
	Board  squarely  where  it belongs - in the hands of credit union
	members.



Sincerely,

Phil Gransewicz		Christopher Gillett
Larry Seiler		Ron Roscoe
Paul Kinzelman		David Garrod
Bill Kilgore		Robert Ainsley

	Concerned DCU shareholders

    RE: .0
    
    Thank you for writing that statement.  I support you and our right to
    "Question Authority"
    
    Joyce A. Tomao
    Still a DCU member

    It's a nice statement.  It sticks to the important issues and is
    temperate in tone.
    
    I suggest you proof read it one more time before sending it anywhere.
    It does have some minor problems (which I would list if I were at a
    workstation where I could read and comment at the same time.)
    
    Have you considered sending it to the same distribution list that
    Steinkrauss's letter was sent to?
    
    twe

    I applaud the statement, and particularly its factual nature and its
    temperate tone.
    
    I am, alas and alack, unable to attend tonight's meeting owing to a
    previous obligation, but I can't wait to 'log-on' tomorrow and hear the
    initial results.  I am hoping for a 'victory' for DCU members, of
    which, I, am still one...but a very disgruntled one...
    
    Best of luck to the DCU membership tonight!  My thanks go to those who
    are able to make time from busy schedules to attend the meeting and
    stand up and be heard.
    
    Marina
    (DCU member and VERY occasional Noter)