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Conference 7.286::dcu

Title:	DCU
Notice:	1996 BoD Election results in 1004
Moderator:	CPEEDY::BRADLEY

Created:	Sat Feb 07 1987
Last Modified:	Fri Jun 06 1997
Last Successful Update:	Fri Jun 06 1997
Number of topics:	1041
Total number of notes:	18759

373.0. "Newspaper articles about 11/12 meeting" by MLTVAX::SCONCE (Bill Sconce) Thu Nov 14 1991 13:26

from the Boston Globe, 14 November 1991, front page of Business Section
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FRAMINGHAM --  A showdown for the top executives of the state's largest credit
union came at a raucous meeting in a hotel ballroom here Tuesday night stuffed
to the seams with more than 1,300 people.  It ended after midnight, and the
directors of the Digital Employees Federal Credit Union were still standing.
But just barely.

After months of a simmering controversy amid a whiff of scandal at the $375
million credit union, most of it publicized over Digital Equipment Corp.'s
electronic mail system, the members were whipped into a near frenzy and the
high turnout should have been predicted.  But by the look of the paltry
buffet table set up outside the meeting room at the Sheraton Tara, the credit
union appeared to be expecting about 100 people instead of 1,300.

"This is democracy in action," said one member, surveying the throng of fellow
credit-union depositors.  "They should have done this in Rhode Island two
years ago."

The Digital employees credit union, which is a separate corporate entity from
the computer-maker, is one of the most financially sound credit unions and in
no danger of failing.  Nonetheless, it has its share of troubles.

"The issue here is really over who owns the credit union," said Paul Kingelman
[sic], a credit union member and one of the dissident organizers.  "The
depositors or the directors."

The trouble started earlier this year when the directors fired the credit
union's founding president, Richard D. Mangone, after uncoverins a series of
"suspicious" loans to nonmembers.  The board also discovered that Mangone was
simultaneously serving as chairman of another Massachusetts credit union, the
troubled Barnstable Credit Union that was seized by regulators in March.  The
directors sued Mangone over the apparent conflict of interest and accused him
of playing a "central and pivital [sic] role in the origination, administration,
and management of ... loans, which have involved extensive fraud and other
acts of wrongdoing."

Using stand-in borrowers, fraudulent documents and inflated real estate
appraisals, Mangone steered loans, some made in conjunction with Barnstable
loans, through the Digital credit union's board of directors, the lawsuit
said.

In June federal regulators sued Mangone and other Barnstable officials, saying
they defrauded the failed credit union of more than $47 million through the
creation of "straw" borrowers, falsified loan documents and bogus real estate
transactions.

The US Attorney's office in Boston also started a criminal investigation.

Meanwhile, many of the 88,000 members of the credit union wanted answers:
How could Mangone have worked for two credit unions simultaneously without
the board's knowledge?  How could he steer non-member loans throught the
credit union?  And, most important, how safe is my money?

The members say their attempts to get answers were stymied by the board.
Although they were told that the bank was insured through a performance
bond for much of the loss attributatble to Mangone's actions, they learned
little else.

Kingelman and other members say they tried for months to inspect the minutes
of the directors' meetings, to get a complete accounting of the finances
and to see loan records, but to no avail.

"They're very arrogant", Kingelman said.  "They don't believe that the members
have a right to know how things are being managed.  We're not worried about
our money, but we want to know what's going on".

Even supporters of the board members agreed that the directors were too
defensive.  "They didn't take the dissidents seriously," said a man who
declined to give his hame but who said he was a friend of several of the
directors.  "They treated them like rebelling adolescents."

The dispute led to a petition signed by 1,221 members calling for a special
meeting to oust the seven directors.  For more than a month, the company's
electronic mail system has been abuzz with the latest updates and details
of the impending vote.

Tuesday night, amid chaos and confusion in the overcrowded ballroom, the
members voted by raising their hands.  After the first vote the directors
called for a second to insure accuracy.  After the second vote the directors
called for another vote of only those opposing the motion to remove them
from their jobs.

Finally, after more than three hours of debate and rhetoric, the tally was
announced by the credit union's chairman, Mark Steinkrauss.  The totals showed
540 members had voted to remove the board members, while 651 voted to retain
them.  However, a proposal to hold new elections within 90 days passed
easily.

Outside after the meeting one of the dissident leaders said the night wasn't
a total loss.  "We really got a good turnout," said Ronald Boyan.  "I'm not
sure the votes were counted right but I guess the people have spoken."

Although the voting results showed that 1,191 members voted, more than 1,600
numbered agenda cards were handed out as members entered the ballroom.  The
discrepancy led some members to feel the voting wasn't completely accurate.

Steinkrauss could not be reached for comment and other credit union officials
declined to comment.  In a statement, the credit union's director of
communications said "The board welcomes the opportunity to allow DCU's entire
88,000 members to elect a board of directors."

T.R	Title	User	Personal Name	Date	Lines
373.1	Middlesex News article, 14 November 1991	KALI::PLOUFF	Owns that third brand computer	`Thu Nov 14 1991 18:41`	78
	DEC Credit Union critics call for communication by Connie Paige News Staff Writer {Middlesex News (Mass.), Nov. 14, 1991 p. 5A} {This is the entire article} Morning-after explanations of why Digital credit union shareholders voted to hold a special election for new directors painted a picture of a board failing to frankly discuss allegations that the former president siphoned off $18 million of their money. It was more this lack of communication than a desire to cast blame that prompted shareholders Tuesday night to challenge the Digital Employees' Federal Credit Union board, they said. "I don't accuse the board of doing anything wrong. I don't think they did. What they're guilty of is not communicating with the members," said Bryan Williams, a principal telecommunications engineer at Digital Equipment Corp. and a member of the credit union. "All they had to do was answer questions and indicate a little sorrow for having it happen on their watch. If they did that, I'd be really happy with it." "Our objective is not a witchhunt, as a member of the board has accused us of doing. Our objective is to make the board stand up before the membership and either get a vote of no-confidence or of confidence," said David Garrod, Digital software engineering supervisor. Mark Steinkrauss, Digital credit union chairman and DEC spokesman to investors, did not return phone calls Tuesday or yesterday. Through an assistant, credit union spokeswoman Mary Madden declined comment yesterday. Madden sent out a terse press release yesterday confirming the vote at a meeting of more than 1,300 credit union members in favor of holding a special election for new directors within 90 days but against removing all board members immediately. Several shareholders explained the vote against dumping the board this week as fear over having no directors governing the 88,000-member credit union for 90 days. "That's a legitimate concern," Williams said. "It's probably not a good idea." Former Digital credit union President Richard Mangone is accused in a state court lawsuit of authorizing $18 million in loans from the credit union from April 1987 to June 1990 for real estate development on Cape Cod. The National Credit Union Administration also named Mangone in a federal lawsuit seeking $46.5 million in damages for alleged fraud against the Barnstable Community Federal Credit Union, where he served as an officer and director. That suit alleges Mangone arranged for the Digital credit union to participate in loans that the Barnstable credit union originated. A federal criminal grand jury is also examining the allegations. Garrod said the Digital credit union, with a reported $375 million in assets, was able to recover $6 million in insurance from Mangone's bad loans because, as president, he was bonded. Meanwhile, shareholders expressed surprise that a National Credit Union Administration attorney on Tuesday denied his oversight agency had conducted any investigation into whether any other board member participated with Mangone in the alleged fraud. The credit union directors said an NCUA investigation exonerated them of any such wrongdoing. "If there was a formal investigation, I would have been involved in it, because I am the attorney assigned to that particular credit union, and there has been no investigation of any other board members," said Richard Schulman, a National Credit Union Administration attorney in Washington, D.C. "I'm very surprised there has been no investigation to exonerate the board," said Christopher Gillett, a senior software engineering [sic] at Digital.
373.2	waiting to hear official responses to this...	BEATLE::REILLY	So I rewired it...	`Thu Nov 14 1991 19:19`	16
	So let me get this straight.... The BoD refused refused to answer many of the complaints and questions members have made about them and have refused to provide information related to those complaints. Then they pretended that we were complaing about possible (illegal) wrongdoing on their part. They claimed that the NCUA had exonerated them of wrongdoing, and seemed to feel, therefore, that the "dissidents" had no real gripes. This penchant for centering on the "no wrongdoing" issue was exemplified at the special meeting. Now, their one defense may in fact not even be true? Wow. - Sean
373.3	Verification of my contribution to MN article	SMAUG::GARROD	An Englishman's mind works best when it is almost too late	`Fri Nov 15 1991 00:17`	16
	Re .1 I just logged in to enter the Miiddlesex News article. I'm glad to see that it has already been entered. Typing with one finger is not that efficient! But I bet I'm close to the fastest one fingered typist on the planet! I'd just like to state for the record that I was correctly quoted. In addition some of the background information in the article exactly ties in with what I told Connie Page when she interviewed me. I'm very glad to see from what I see reported in the news articles that the board have decided not to try and challenge the validity of motion 3. Dave
373.4	Cape Cod Times article, 11-13-91	GUFFAW::GRANSEWICZ	Someday, DCU will be a credit union.	`Fri Nov 15 1991 10:49`	57
	[Reprinted without permission from the Cape Cod Times dates Nov. 13, 1991] Digital employees vote for new board Management of credit union at issue By Susan Milton Staff Writer FRAMINGHAM - Employees of Digital Equipment Corp. last night overwhelmingly decided they want to elect a new board of directors for the state's largest credit union. The vote came at the end of a monthlong campaign questioning the management of the Digital Employees Federal Credit Union, fueled, in part, by speculative investments made through a failed Hyannis credit union. The revolt, originally sparked by new fees on checking accounts, was later fueled by the credit union's participation in $18 million in speculative real estate loans funneled through the now closed Barnstable Community Federal Credit Union in Hyannis. Members voted 641-540 against recalling the current board but overwhelmingly voted to hold new board elections in 90 days. They also voted to rescind controversial new checking fees. The three hour meeting erupted in cheers after the last vote. The outcome surprised the board, which had a press release prepared describing its vindication. Spokesperson Mark Madden, who snatched back the erroneous press release, later said, "We think that keeping the current board was representative of our 88,000 members." DCU's members, also its owners, are past and present employees of the computer company and their families. DCU is based in Maynard. The turnout of between 1,200 to 1,500 people surprised both supporters and critics of the board. It was a referendum on the future of the $383 million credit union. "You seldom have an opportunity in your life to use the democratic process," said shareholder Janet Levy before the meeting. "I am really amazed and encouraged that it works." To vote, many people carpooled to the meeting. One brought a month-old baby and others carried campaign information circulated via computer at Digital. DCU's president, Richard Mangone, also a founder of the Barnstable credit union, was fired in April for his alleged role in defrauding the two credit unions. The meeting was closed to nonmembers and tight security sealed off the ballroom at the Sheraton Tara in Framingham.
373.5		MLTVAX::SCONCE	Bill Sconce	`Fri Nov 15 1991 11:00`	6
	.4> The outcome surprised the board, which had a press release prepared .4> describing its vindication. Spokesperson Mar[y] Madden, who snatched .4> back the erroneous press release,... Oh please, PLEASE, did someone get a copy of that?
373.6	Gary Trudeau?	LJOHUB::SYIEK		`Fri Nov 15 1991 11:31`	3
	>Oh please, PLEASE, did someone get a copy of that? Maybe "Doonesbury" got one :-).
373.7	I'd pay real $$$ for a copy of that press release...	SCAACT::AINSLEY	Less than 150 kts. is TOO slow	`Fri Nov 15 1991 16:21`	3
	Maybe I should send a written request for it via the IPP. Bob
373.8		BIGSOW::WILLIAMS		`Fri Nov 15 1991 20:41`	18
	Since Dave has entered his statement, I'll add mine too. For the record, my statements in the Middlesex News are mostly correct - the statement about the ousting of the board isn't exactly what I said. I said that there were those in the room who were against removing the board without replacements being ready to take control, and that that was probably a legitimate concern. I said that "one school of thought in the meeting was that it's probably not a good idea" to have no board. I also said that the effect of voting down Q2 unamended and passing Q3 had the same effect of passing the amendment to Q2 and Q2 itself. That didn't get printed. I identified myself as a Principal Engineer and I work on networks, and that got translated to "Principal telecommunications Engineer." Don't ask me how. So, I think it was a reasonable article, as paraphrasing goes. Bryan Williams
373.9		CNTROL::MACNEAL	ruck `n' roll	`Wed Nov 20 1991 13:35`	2
	I curious, since the meeting was closed to non DCU members, how were the quotes and information on vote totals gathered?
373.10		CVG::THOMPSON	Radical Centralist	`Wed Nov 20 1991 13:36`	9
	> I curious, since the meeting was closed to non DCU members, how were > the quotes and information on vote totals gathered? Reporters used a new method. The asked people leaving the meeting what happened and what was said. Those people then told them. There were a number of reporters outside the meeting room talking to people entering and leaving. Alfred