The Wailuku Main Street Association and its board chairman have come under fire again by the state Department of the Attorney General after the organization and its top officer failed to comply with an order to provide additional financial and organizational records in an ongoing investigation into the nonprofit's operations and governance, a court filing details.
In 2nd Circuit Court on Friday morning, state Supervising Deputy Attorney General Hugh Jones filed a petition against the association - which has been predominantly funded by county money - and Board Chairman Thomas Cannon, asking for compliance with a subpoena and to appear at a Dec. 5 court hearing.
The hearing is to determine whether Cannon and the organization should be compelled to obey the subpoena.
THOMAS CANNON, Wailuku Main Street Association board chairman
In an email Friday, Cannon said the organization was looking "forward to an honest, evenhanded judicial review."
On Aug. 30, the state attorney general's Tax & Charities Division issued a report detailing its several-month-long inquiry of the association that has received more than $2.2 million from the county since 2002, the vast majority of its funding.
The report cited nepotism, lobbying in violation of its grant contract, conflicts of interest, inaccuracies with its IRS Form 990, little evidence of program services and a "terribly confused" structure of governance, among other issues. It also called for the removal of then-Executive Director Jocelyn Perreira as well as conducting some review and revamping of board functions and bylaws, among other measures.
In a letter released at the time of the division's report, Cannon said the organization had not had time to thoroughly review it but he said an initial review led the WMSA and its board to be in "nearly complete disagreement with its analysis and conclusions."
He added that the report was clear that there was no missing money, no malfeasance and no misappropriated funds.
In an email Friday afternoon, Cannon said that Jones had informed him recently "that (in essence) we will have our day in court to discuss the deputy's second subpoena with an independent objective Maui Circuit Court judge, which was the goal of our response."
"We have been working on our detailed point-by-point response to Deputy AG Jones' report and look forward to an honest, evenhanded judicial review," Cannon wrote.
Cannon also shared a copy of an Oct. 3 letter voted on by WMSA's executive committee that was sent to Jones responding to the earlier subpoena for the documents requested.
In the letter, Cannon writes that WMSA "refuses to comply based upon the fact that compliance would be both unreasonable and oppressive. You have already conducted a thorough investigation of WMSA's financial affairs for 2009 thru 2011 and found no improprieties."
In the letter, Cannon also suggests that Jones, at the suggestion of former WMSA Director/Chairman Sam Clark, "who violated his duty of loyalty to our corporation," is now seeking to "belatedly expand" the investigation into 2012.
Clark has said in the past that he and another board member had been "chastised" by Cannon and Perreira, for allegedly working against the organization, after they complained publicly that key operations and finance information had been withheld from board members.
Friday's filing shows a copy of the subpoena served to Cannon on Sept. 20. The subpoena asks for:
* Copies of WMSA's monthly bank statements for the period of Jan. 1, 2012, to the present.
* The association's check ledger for the period of Jan. 1, 2012, to the present.
* Minutes of board of directors and board committee meetings for the period of Jan. 1, 2012, to the present.
* All correspondence or electronic mail communications between WMSA and the accountants or certified public accounting firm auditing WMSA's financial statements during the period of Jan. 1, 2012, to the present.
* Copies of email from Jan. 1, 2012, to the present by and between any officers or directors of WMSA, including the executive director.
Friday's filing says that just prior to the return date of the state subpoena Oct. 3, Cannon notified the attorney general's office that he did not intend to obey the subpoena.
Before Friday's filing, the attorney general's office also received a Sept. 10 letter from the then attorney for the WMSA board, Kevin Jenkins, in which he refers to a letter he wrote to Jones on Aug. 24 that says that WMSA "is not adverse" to providing a July 2012 bank statement, but he asks for an explanation of why it is relevant and material to the state's investigation.
In the letter, Jenkins said Cannon had represented that WMSA will implement the remedial actions (as requested in the report on Aug. 30) within the time periods specified.
Jenkins also noted that WMSA was forced to downsize and had laid off its entire staff, including its executive director.
Friday's filing said there are serious concerns about the "financial solvency of WMSA," the "abrupt closure of its offices," "staff layoffs, and relocation of its assets and office equipment and furniture to other locations including the Salvation Army."
A footnote in the filing said the state believes the disposal of the office furniture and equipment to the Salvation Army violates the terms of the organization's grant agreement with the county that requires property purchased with county funds to be transferred to the county at the end of the term of the grant agreement.
The filing also says that the attorney general's office "has been informed" and "believes" that several officers or directors of WMSA listed with the Department of Commerce and Consumer Affairs Business Registration Division have resigned, including Bill Frampton, Mich Hirano, Amy Hanlon, Madelyn D'Enbeau, Royce Fukuroku and James Lawrence, while the association's executive director and staff have been laid off.
* Melissa Tanji can be reached at firstname.lastname@example.org.