| From: GUFFAW::GRANSEWICZ "Phil DTN 264-1680 TTB1-2/B1 pole 2A3 04-Nov-1991 1953" 4-NOV-1991 20:44:44.20
To: DCU_INTEREST_LIST
CC: VOLUNTEERS,GRANSEWICZ
Subj: DCU Special Meeting Information
[Permission to forward or post this mail is granted. However, the
original mail header and names at the end of the message must be
retained. The contents of the mail may be shared with any DCU member.]
November 4, 1991
--- DCU Special Meeting ---
The special meeting will be held on Tuesday, November 12, 1991 at
7:30pm at the Sheraton Tara Hotel, located at 1657 Worcester Road
(Rt. 9 Westbound side) in Framingham, MA. Directions are at the end
of this message. It is recommended that you plan on being there as
early as possible. When we called the Sheraton Tara to find out the
name of the room, they informed us that DCU had requested they give
out no information. DCU refuses to disclose the name of the room or
its capacity. So if you plan to attend, the earlier the better.
Though DCU denies it, two seperate sources have told us that DCU
has asked its employees to attend the meeting. DCU employees can also
join the credit union. One of the above sources has also said that
DCU employees have recently been given raises. The timing of the
raises and the request to attend the meeting is highly suspect. If
any of this information is true, it is very important that AS MANY
DCU members AS POSSIBLE attend the special meeting. There are still
many DCU members that are not aware of the importance of the meeting
and the reasons for it. You can help by forwarding this message to
others as well as by speaking to others about the meeting and its
importance. If we are to affect positive changes at DCU, we will
need the strong support of many DCU members.
A couple of frequently asked questions have been "What is the
quorum for the meeting?" and "What identification do I need?".
A quorum for the meeting is 15 DCU members. We should have no
problem with having that many people there. As for indentification,
any picture ID that matches your name on file at DCU will get you
into the meeting.
--- DCU Special Meeting Attendance ---
Thanks to all who responded back to GUFFAW::GRANSEWICZ stating
whether you could or could not attend. If you have not replied back,
please do. We are trying to guage our strength at the meeting.
For those people with joint accounts, DCU has stated that only the
primary member may vote at the meeting. We have received conflicting
messages as to whether the other person will be allowed into the
meeting or not. If you have any questions at all concerning who
can vote or get into the meeting, you should call DCU at
DTN 223-6735, ex. 207.
--- DCU Special Meeting Carpools ---
Many people responded back stating that they could drive people to
the meeting. If you wish to ride with somebody, please send mail to
Jim Syiek (LJOHUB::SYIEK).
--- DCU Fun & Games with the Membership ---
Besides not disclosing the room name and size, asking its employees
to attend the special meeting (even though DCU employees have been
instructed not to discuss it), DCU has also been up to some more
questionable activity. They refuse to post the special meeting notice
in the branches. Many believe reminders of such a significant event
for the credit union should be posted. But they have complied with
the legal requirements of mail notification. But it was shocking to
find that they tried to block its posting on VTX LiveWire and DTW,
Digital Equipment Corp. communication vehicles. Mark Steinkrauss,
Chairman of the Board, sent mail instructing that only DCU submitted
notices may be posted. When asked, DCU refused to submit the notice
for posting. After discussing the situation with the DEC people
responsible for LiveWire, they decided to post the notice of the
special meeting, regardless of DCU's wishes. We commend them for
doing what was right. We can only point to this as yet another
example of DCU's BoD trying to control information to the detriment
of the membership.
DCU also refuses to comment on whether or not their lawyer
will be present, has commented that cameras and recording devices
will be prohibited from the meeting, and won't even commit yes or no
to voting on the issue of the Board by secret ballot. Additionally,
they won't disclose whether or not an independent auditor or observer
will be present, won't comment on who or where a parlimentarian will
come from, and has at the last minute commented that the meeting
will be conducted using "the credit union's standing rules" in
addition to Robert's Rules. It is also worth noting that, while it
is within the bounds of propriety, Mark Steinkrauss will be chairing
the meeting which determines his fate.
In one day I received two calls from DCU members that did not work
for DEC anymore. Seems they had contacted people they still knew at
DEC to find out who they could talk to about the special meeting. They
had called DCU headquarters as the meeting notice instructed and were
given misinformation. They were told that only 200 signatures were
needed to call the special meeting, not that 1220 WERE SUBMITTED. I
guess that misstatement fits better with DCU's line that this is all
because of a few people. But even worse, when the caller asked for
the name of the person who submitted the petitions, the official DCU
spokesperson outright lied when she said she didn't know. Needless to
say the DCU members were not pleased when I told them that DCU was
well aware of who submitted them. Information packets were sent to
the two people who called. They were very appreciative. I called the
DCU person in question and requested that she not misinform people
who call for information. She had no comment. We have since been
told that this person will be giving out her personal opinion to
callers who request it. If DCU refuses to give out facts, should it
be giving out opinions?
--- DCU Interest List ---
If you received this message via forwarding and wish to be added to
the original distribution list, please send mail to GUFFAW::GRANSEWICZ.
Please include your location with the request.
--- DCU Notes File ---
For more information concerning DCU, please try to read BEIRUT::DCU.
It is a very busy conference lately so you may have some trouble
getting to it. If you get "Network partner exited" messages, it is
because the maximum number of people are accessing the conference at
the time.
--- Future Messages ---
Many people have been requesting more information about what the
issues are with DCU. Due to the heavy interest in the subject, the
DCU notes file has been hard to access. Over the next week we will
send out a series of messages detailing the issues with DCU's BoD.
--- "Small group" ---
The DCU Board of Directors has been trying to guage the number of
people involved in this effort since it started. It is in our best
interest for them to continue to believe that we are a small group
of people. The fact that we submitted 1220 signed petitions didn't
seem to mean much to them. This message will reach thousands of
DCU members at over 42 different sites. We are not a small group.
We also have many site volunteers that have helped gather signatures,
post bulletin board notices, create documents detailing the issues
with the current Board, etc. All of these volunteers stepped forward
and were not solicited. Please come to the special meeting to send
a clear message to the DCU Board of Directors; WE are DCU.
Regards,
Phil Gransewicz Christopher Gillett
Ron Boyan Dave Garrod
Bill Kilgore Bob Ainsley
Paul Kinzelman Wes Plouff
Ron Roscoe Bryan Williams
Beverly Chase Paul Wierzbicki
And Many Other Concerned Members of DCU
Directions to the Sheraton Tara Hotel, Framingham (508-879-7200):
From 495:
Take the Route 9 EAST exit.
Go several miles, (through 3 lights) you'll come to the
Mass. Turnpike entrance.
Go another 1/2 mile to a light and make a U-turn.
Go by the El Torito mexican restaurant.
The Sheraton Tara Hotel is on the right, just after the Mass.
Turnpike off-ramp.
From Rt 128:
Take either the Mass. Turnpike west or Rt. 9 west.
Follow the directions below.
From Masspike:
Get off at Route 9, (exit 12)
Follow sign directing you to Route 9 west (Worcester).
After getting on Rt. 9 west, the very first entrance on your
right will be for the Sheraton Tara.
From Route 9 (East of Framingham)
Follow Route 9 west
Watch for the El Torito restaurant on you right. (you're close)
Just after the Masspike off-ramp, the very first entrance
on your right will be for the Sheraton Tara.
Note:
Due to traffic on Rte. 128 at rush hour, it is recommended that
New Hampshire attendees approach Framingham from Rte. 495.
Along the same line, it might be easier, simpler or faster to get on
the Mass. Turnpike from Rt. 495. (keep going past Rt. 9 exit off of
Rt. 495, it's about a mile further south on Rt. 495)
Head towards Boston and you'll be getting off at the very first exit.
You'll give Mass. a $.50 contribution I believe but traffic on
Rt. 9 can be heavy.
The Sheraton Tara is a very large hotel that has a medieval castle
appearance, just like the one in Nashua NH.
For those wishing to grab a bite to eat before the meeting, there are two
places very close to the Sheraton Tara. The El Torito (mexican) on Rt. 9
west about 1/4 mile before the Sheraton Tara (just after U-turn in
directions above). Beware of the Giant Chimichanga though.
About 200 feet after the entrance for the Sheraton Tara, there is a Ground
Round. You could probably walk to it after parking at the Sheraton.
Otherwise you will have to make some U-turns on Rt. 9 to get back to
the Sheraton Tara.
If you are more into fast food, heading WEST on Rt. 9 (from 495) for 1
mile will bring you to a Burger King. It is at the first light. If you
make a U-turn at that light you will be heading towards the Sheraton Tara
(about 6 miles) and a MacDonalds (about 1/2 mile).
|
| From: HPSRAD::RIEU "MR01/2 DTN 297-7089" 8-NOV-1991 07:55:33.95
To: SAW
CC:
Subj: Another DCU Note
From: GUFFAW::GRANSEWICZ "Phil DTN 264-1680 TTB1-2/B1 pole 2A3 08-Nov-1991 0353" 8-NOV-1991 04:21:44.31
To: DCU_INTEREST_LIST
CC: VOLUNTEERS,GRANSEWICZ
Subj: Response to DCU's BoD
[Permission to forward or post this mail is granted. However, the
original mail header and names at the end of the message must be
retained. The contents of the mail may be shared with any DCU member.]
November 7, 1991
--- DCU Special Meeting ---
We now know that the special meeting will be held in the ballroom
of the Sheraton Tara in Framingham. Seems there was a
"misunderstanding" between DCU and the Sheraton that has now
been cleared up. Everybodys calls to DCU probably helped clear up
this "misunderstanding". Capacity of the ballroom is 1,000.
For those attending, you may wish to write down what you are
planning on saying, if you intend to speak.
--- Response to Board of Directors ---
At the end of this message is our response to the DCU Board
of Directors statement (along with the BoD response in case you have
not seen it). Please take a moment to read it. It discusses some
of the issues of the current situation. Other information
will follow in the next message.
--- DCU Special Meeting Attendance ---
Thanks to all who responded back to GUFFAW::GRANSEWICZ stating
whether you could or could not attend. If you have not replied back,
please do. We are trying to guage our strength at the meeting.
There is no such thing as too many people.
--- DCU Special Meeting Carpools ---
Many people responded back stating that they could drive people to
the meeting. If you wish to ride with somebody or have open seats
please send mail to Jim Syiek (LJOHUB::SYIEK). He'll try to hook
you up with a driver or rider.
--- DCU Interest List ---
If you received this message via forwarding and wish to be added to
the original distribution list, please send mail to GUFFAW::GRANSEWICZ.
Please include your location with the request.
--- DCU Notes File ---
For more information concerning DCU, please try to read BEIRUT::DCU.
It is a very busy conference lately so you may have some trouble
getting to it. If you get "Network partner exited" messages, it is
because the maximum number of people are accessing the conference at
the time.
Regards,
Phil Gransewicz
And Many Other Concerned Members of DCU
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
DCU's Board of Directors is submitting the following statement for the
purpose of clarifying mis-information that has circulated in this
VAXnotes conference.
We thank you for taking the time to read this statement and
hope that it clarifies many of the issues that are of concern
to all of us.
DCU's Board of Directors
Dan Infante
Jef Gibson
Charlene O'Brien
Mark Steinkrauss
Susan Shapiro
Jack Rugheimer
Abbott Weiss
October 29, 1991
During the past few months, the National Credit Union
Administration (NCUA), our independent auditors and
legal counsel have conducted extensive investigations of
DCU to determine the extent of the fraud committed by
the former president, Richard Mangone. They have
concluded, without question, that no board member,
official or staff member, except Mr. Mangone, was
involved in any wrongdoing at the credit union.
Despite the results of these investigations, however, a
small group of members have used the VaxNotes and
VaxMail to raise questions about the board's actions in
handling this situation. This same group has
continuously requested information about the credit
union and DCU has responded by granting the majority of
those requests. As the information was reviewed, more
information was requested and false statements,
unsubstantiated accusations and allegations increased.
Furthermore, the board has held two informal member
meetings, lasting 4 hours each, to discuss the credit
union. These meetings were open. At each meeting a
total of 15 to 19 members attended. Many of those
members attending the first meeting also attended the
second.
Recently, the board has enacted an Information
Protection Policy. This policy provides a list of
information available at all DCU offices and asks member
who have requests, other than those regarding products
and services, to submit such requests in writing,
stating the business reason for the request. The fees
associated with this policy are to recover the time,
labor and cost incurred by these unusual requests. This
policy does not prevent information from being provided
to members. It does, however, require a legitimate
business reason and not merely for the purpose of
harassment. Of course, some information cannot be
released in order to protect the credit union and its
members.
Some Examples of the Most Recent False Allegations
DCU member, Phil Gransewicz has suggested that the board
approved a 6.5% mortgage loan for Mr. Richard D. Mangone
and that the loan was for interest only payments.
Another VaxNotes writer suggested that the Mangone
mortgage is not the only DCU loan of this type. These
statements are ABSOLUTELY UNTRUE. Mr. Mangone received
a standard mortgage at prevailing rates and nothing
more. Our members, including employees and officials of
the credit union, are offered the same savings and
lending rates and programs. Preferential loans are
illegal and, if written, would be discovered by the NCUA
examiners and our independent auditors. The responsible
parties would be terminated.
The VaxNotes file has accused the board of being
compensated. THIS IS UNTRUE. DCU's board members are
volunteers, elected by the entire membership and
responsible to the membership as a whole. They cannot
and do not receive any added benefit for volunteering.
The fact that the board was defrauded and betrayed by
Mr. Mangone does not imply that the board has done
anything wrong. As we have communicated previously, the
Federal Examiners have carefully reviewed all areas of
our credit union, current board members, officials and
staff and have cleared them from any involvement in the
fraud. It would seem that the actions of this small
group of members is to harass the board until they quit.
The board will not allow members with limited or no
finance or management experience to control
Massachusetts' largest credit union.
VaxNotes file has stated that DCU is not complying with
NCUA regulations on the Special Meeting. THIS IS
UNTRUE. On September 17, 1991, DCU received a petition
from members to hold a Special Meeting. DCU validated
the petition signatures on September 18, 1991.
According to our bylaws and confirmed by our legal
counsel, the Chairman of the Board, within 30 days, must
call (ie. choose a date, time and place) to hold the
Special Meeting. On October 15, 1991, in accordance with
our bylaws, the following date, time and place were
chosen: November 12, 1991, at 7:30 p.m., at the
Sheraton Tara Hotel, located at 1657 Worcester Road in
Framingham, MA 508/879-7200. NCUA has issued no
written interpretation on this issue.
This date was selected so we could provide ample notice
to our members, offer a convenient time and location to
the majority of our members and allow us sufficient time
to prepare and print the mailing and reserve
accommodations. For your information, it will cost DCU
members over $35,000 to hold this Special Meeting.
Implications are that the DCU board manipulates the
election process. THIS IS UNTRUE. As with previous
years, the October NETWORK has been a vehicle to
communicate a call for candidates to run for DCU's Board
of Directors. According to our bylaws, DCU must notify
our membership of the opportunity to run. Utilizing our
member newsletter saves the credit union thousands of
dollars.
It is important to note that this process always runs
approximately 7 months. At this time, 2 of the 3
nominating committee members have been selected. None
of them are DCU officials.
Rather than continue responding to other false
allegations, we believe it is appropriate to summarize
the positive steps the board has taken to recover from
the fraud and to improve DCU's operations.
New President/CEO - Mr. Charles Cockburn joined DCU in
early September, 1991. Through member correspondences
and statements, Mr. Cockburn has communicated DCU's top
priorities, which are to ensure quality service and to
improve the credit union's financial condition. In the
next few months, the management team will collect and
analyze information to develop a more insightful
strategic plan that will enable the credit union to make
long-term progress toward both goals. As part of the
information gathering process, Mr. Cockburn is visiting
many Digital facilities to speak with members and to
obtain input from DCU staff and members on how to
improve the credit union. In some instances, the
changes suggested are being implemented immediately,
others will take time. Some of the new changes include:
1. Discontinued the checking account fee until
the strategic plan is completed.
2. Discontinued the DCU ATM fee for savers who do
not have a checking account.
3. Simplified rates for new and used vehicle
loans.
4. More flexible terms for new and used vehicle
loans. This includes no maximum loan amount
and 72 month financing.
5. Eliminated the checking account requirement for
having a line of credit or Home Equity Loans.
6. Eliminated the need for branch staff to call
the main office to waive fees and to make
decisions that relate to member service.
Internal Controls - The board has implemented or is in
the process of implementing the following improved
internal controls:
Supervisory Committee - This committee consists of
members appointed by the board. Their primary
responsibilities are to ensure that proper internal
controls exist. They represent "checks & balances"
between the board, the staff and the membership. Mr.
Cockburn will work with the committee to improve their
effectiveness and to implement numerous policies and
procedures at the credit union.
Outside Auditor - The Supervisory Committee also has the
responsibility to select and work with an independent
auditing firm. Mr. Cockburn has extensive experience in
this area and he will recommend that the committee
select an alternative firm who can provide a fresh
approach.
Internal Auditor - We will have a full time employee who
conducts thorough audits of all areas of the credit
union. This person will not report to the board, but
will have a direct line reporting relationship to the
Supervisory Committee and the President/CEO.
General Counsel - The board has recently hired the law
firm of Styskal, Wiese, and Melchione. Mr. Melchione
has extensive experience with credit unions. As general
counsel, Mr. Melchione works with DCU staff on
compliance, employment, etc. One of his many roles will
be to ensure appropriate credit union policies are in
place, and to make sure checks and balances exist. All
lawyers retained by DCU for mortgage closings,
compliance issues or pending litigation are working for
the credit union. They are not representing any
individual, but the membership as a whole. DCU does not
provide legal representation for any member or group of
members.
Legal Actions - The board had hired the law firm of
Bingham, Dana & Gould to pursue legal remedies, and to
recover any losses from all parties associated with the
fraud. To date, the credit union has received $6
million (the maximum) from our insurance carrier,
commenced a lawsuit against Mr. Mangone and others, and
has successfully attached $200,000 of Mangone's personal
assets. In addition, we are cooperating fully with
federal and state investigators.
The membership will continue to be updated regarding
these litigations. As with Mr. Melchione, none of the
credit union's attorneys represent any member of the
board.
In summary, a small group of members have conducted what
would seem to be a "witchhunt" with the intent to
discredit the board of directors and the credit union.
Their efforts have culminated in a petition to remove
the present board.
The removal of the board would be disastrous to the
credit union. At best, the credit union would be
paralyzed for several months. Given the board's current
efforts to strengthen the financial condition while
improving service, the credit union will be seriously
undermined without strong leadership.
If the entire board is removed, there is a substantial
risk that a newly elected board would have NO experience
in management, finance, or understanding of the
credit union operations. It is, therefore, extremely
important that members attend the Special Meeting and
show support for DCU's current board of directors.
Signed,
DCU's Board of Directors
|
| From: SCHOOL::RIEU "Support DCU Petition Candidates 20-Mar-1992 0814" 20-MAR-1992 08:16:24.30
To: @loons
CC:
Subj: Ceriouser and curiouser...please pass it on!
<<< SMAUG::USER$944:[NOTES$LIBRARY]DCU.NOTE;5 >>>
-< DCU >-
================================================================================
Note 505.0 Cape Cod Times article on 1986 Report No replies
GUFFAW::GRANSEWICZ "I'm voting for REAL CHOICE can" 189 lines 20-MAR-1992 00:27
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[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.]
[Re-printed without permission from the Cape Cod Times, March 19,1992]
"Digital had tip-off in '86 about bad loans to Cape"
By Susan Milton
Staff Writer
Millions of dollars of risky Cape real estate loans were first
investigated in 1986 by the Digital Equipment Corp., according to
investigators at the international computer company.
Checking out a tip about the Cape loans, the investigators were
surprised to learn that the primary lender was their own credit union,
the Digital Employees' Federal Credit Union, based in Maynard.
Their report, intended as a warning, was rejected by credit
union leaders, the former Digital employees said.
Now the credit union has lost millions of dollars because of such
loans, now known to be faked and channelled through the closed
Barnstable Community Federal Credit Union in Hyannis.
Due to the loan losses, the Hyannis credit union was taken over
a year ago and closed last June by federal regulators. Last April,
the Digital credit union fired Richard Mangone, its president since
1983.
Mangone and other Barnstable credit union insiders secretly siphoned
millions of dollars in loans shared by the two credit unions between
1987 and 1990, according to two civil lawsuits.
Digital's 1986 report has resurfaced to draw new attention to the
$345 million credit union, the largest in New England, and its parent
computer company.
The Cape Cod Times has learned:
o The Federal Bureau of Investigation has supoenaed and obtained the
1986 report.
o The 1986 investigation and report was denied last week by Digital
credit union chairman, Mark Steinkrauss, also Digital's director
of investor relations. He described "an informal inquiry" in 1986
that revealed Mangone was serving on the Barnstable credit union
board that developed and sold the large loans to his own credit
union.
o A Digital lawyer, by letter and telephone, last year warned two
former Digital employees to keep quiet about the company's 1986
investigation of Cape loans.
Those early loans, all repaid, included $2.8 million for the 41-lot
Yankee Village commercial/residential subdivision in Brewster and a
$2.7 million mortgage for the Sands Motor Lodge and Greenbrier Motel
on Route 132 in Hyannis.
Later, between 1987 and 1990, Mangone led the Digital credit union
to invest another $18 million in 12 similar loans for Cape motels
and real estate projects, all now in foreclosure.
The 1986 report has resurfaced during a campaign that will decide
the future management of the Digital credit union, created as an
employee benefit for Digital employees.
Under fire for months over the Cape loans and other operating
policies, the entire Digital credit union board, many of whom are
high-level Digital managers, is being replaced.
The unusual election, involving 81,000 voters at various worksites
in 83 countries, was mandated last November at a special meeting
called by rebelling depositors. The ballots were mailed March 14,
with results due at the credit union's April 23 annual meeting.
At the heart of the campaign are the Cape Cod loans. The primary
focus according to board critics, is not the fraud nor the credit
union's losses. It was the board decision in 1985 to make such
loans at all.
"The issue is that our credit union funds were being funnelled
into what many consider to be risky investments, land development
on the Cape.", said candidate Phil Gransewicz, a Digital engineer
and board critic.
Digital investigators, also credit union members, had the same
reaction in 1986. That is why the 1986 report was an early warning
to the board about its lending policies.
Confirmation about Digital's 1986 investigation came from two
former Digital employees. Although known to Digital, both men asked
the Cape Cod Times not to publish their names.
In further confirmation, Digital lawyer William Sutton's letter
warned against disclosing information about a 1986 investigation.
Sutton contacted the two former employees, first by telephone, then by
Express Mail, just before the November debate over the board's removal.
Because of such warnings, each refused to comment on the 1986
investigation and report. But the two former employees said there was
no reason to protect Sutton's letters, which puizled and angered them.
The report, one former employee said, was not about Digital at all,
but about the credit union, a seperate corporate entity, which had shown
no interest in the report's contents in 1986.
He asked, "Why is Digital keeping this from the (credit union)
membership which has a right to know if people (board members) running
for office were delinquent in their duties or not?"
Sutton did not respond to a request for comment. In a later letter
to the two men, he said his purpose was not to intimidate the two former
employees but to remind them of their legal and professional
obligations.
In a telephone interview last week, Steinkrauss downplayed the 1986
events by saying, "I'll say again - and I am in a position to know,
there was no investigation. There was no report. There was no
subpoena. There was none."
He did remember meeting with Digital management in 1986 over an
anonymous phone call. He said the call "suggested some sort of
impropriety and I'm not even sure it was with (Digital credit union)
but with Barnstable."
Told about Sutton's reference to the 1986 investigation, Steinkrauss
then recalled there had been "an informal inquiry but all the
references were to the Barnstable credit union."
Steinkrauss suggested that the newspaper was being fed distorted
information by board candidates who were politicking or trying to
tarnish past or present board members. He also suggested that the
likely sources about the 1986 investigation had ulterior motives.
He said, "I can't tell you the circumstances under which they left,
(their jobs) because that would be a violation of trust."
One former employee said they retired early, by choice, when
Digital offered to buy out their pensions. Known, not anonymous,
sources started the investigation. Both men said that an in-depth
investigation resulted in a lengthy report about the early loans.
The Cape Cod Times also confirmed, through non-Digital sources, that
the report had been obtained by the FBI by subpoena from Digital.
Through the 1986 inquiry, Steinkrauss added, the Digital credit
union board did learn its president, Richard Mangone, was also
serving on the Barnstable board. The board asked Mangone to sever
his Barnstable relationship, Steinkrauss said, because "he was
drawing his salary, after all, from DCU."
Mangone complied, but continued to make weekly visits to the
Barnstable credit union to prepare the fraudulent loan applications
that he then presented and sheparded through a deceived Digital credit
union board, according to a pending lawsuit.
Steinkrauss even visited the Cape investments on trips to the Cape,
he said. He is among four Digital credit union board members who
own second homes or timeshare units on the Cape. He did not know if
other board members made similar visits.
In another change after the 1986 report, the Digital Credit Unions
participation, usually 75% to 90%, was concealed. Its participation
was denied, in 1987 and early 1991 by Mangone and other Barnstable
credit union officials interviewed then by the Cape Cod Times. The
loan's were recorded in the Barnstable credit union's name.
The Digital credit union is now suing Mangone, as well as Robert
Cohen of Newton, former counsel for both credit unions; Cohen's
Wellesley law firm, Cohen & Kushner; Rockport developer Ambrose
Devaney; Barnstable developer and credit union founder James K. Smith;
and Centerville appraiser Paul C. Brown.
Its suit claims that each man played a role in a scheme to locate
properties, fake loan and legal documents, recruit "straw borrowers",
inflate property values and siphon money for personal use.
About last year's revelations, Steinkrauss said, "I know that I was
deeply saddened to see that the trust we had put in Mr. Mangone was
broken. It was a blow to all of the board and all of the staff and
certainly all the membership at Digital (credit union)."
Claiming $47 million of fraud at the Barnstable credit union,
federal regulators are suing Mangone, Smith and Cohen, as well as
former Barnstable credit union leaders Michael O'Neil, a lawyer now
living in Scituate, and Bruce Harris, now living in Florida.
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