The Wailuku Main Street Association is refusing to comply with an additional subpoena, calling it "unreasonable and oppressive" and adding that a state attorney is just "fishing" for information to "harm us."
The association's statements come after it has been under investigation by the state Department of the Attorney General for almost a year.
Wailuku Main Street Association/Tri-Isle Main Street Resource Center Chairman Thomas Cannon maintained in court documents filed last week that the nonprofit gave the department "everything" it asked for in its first subpoena.
He said that subpoena yielded nothing of "significance," and investigators found no wrongdoing by the formerly county-funded organization, which was under scrutiny for possibly violating Hawaii's nonprofit laws. He added that the organization has a "privacy interest" in its financial information and should not be forced to give it up.
"However, the never-ending administrative investigation casts a cloud over WMSA and continues to make it difficult or impossible for WMSA to seek new funding. This is oppressive," Cannon said in court documents.
Association officials have been ordered to show why they should not be required to release information sought by the state's subpoena.
This morning, 2nd Circuit Judge Joseph Cardoza is scheduled to determine whether Cannon and the organization should be compelled to obey the subpoena.
In October, the state Attorney General's Office filed a petition in 2nd Circuit Court against the association and Cannon asking for compliance with the subpoena and to appear at a court hearing.
The subpoena of the more than 2-decade-old organization asks for items, including this year's bank statements, minutes of board of directors and board committee meetings, all correspondence or electronic mail communications between the organization and its accountants or certified public accounting firm auditing the organization's financial statements along with copies of email this year between any officers or directors of the organization, including the executive director.
On Friday, in the state's reply to the association's contentions, supervising state Deputy Attorney General Hugh Jones of the Tax & Charities Division said, the records and testimony sought by the AG's subpoena are "relevant and not privileged."
He added that Cannon, who filed the response for himself and the organization, is not a licensed attorney and noted that nonattorney agents are not to represent corporations in litigation.
The response further said that Cannon and the association's refusal to comply with the subpoena rests on inadmissible documents and hearsay.
In the filings, Jones said it's not for the court to determine whether the state's preliminary investigation findings have merit.
Jones noted that according to Hawaii law, the attorney general and other state agencies with prosecutorial powers have the power to issue subpoenas to allow the agency to "discharge duties imposed upon them by law in the public interest."
If the court orders the association to comply with the subpoena, Jones asked that the sought-after documents be produced within 20 calendar days of the date of the court's ruling or other reasonable period determined by the court. He also asks that Cannon appear for sworn testimony.
On Aug. 30, the state attorney general's Tax & Charities Division issued a report detailing its several-monthlong inquiry of the association that has received more than $2.2 million from the county since 2002. The association has been primarily funded by Maui County.
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.
Since the report was issued and its county funds frozen, the organization said that it was forced to downsize and laid off its entire staff. The association vacated the Main Street office in Wailuku.
In an Oct. 26 letter, the county informed Cannon that the organization's outstanding $243,000 grant had been terminated.
The organization had received one-quarter of the funding grant in December 2011, but it was informed in January that because of vague and inadequate financial accounting and a failure to provide requested information, the county did not have adequate understanding of how the county grant funds were being spent. So, the second quarter of future invoices for payment would not be approved.
The letter said the county would take action to recover anything the organization has bought with county funds. The county said that it had tried repeatedly to obtain more information from the organization.
Maui County Deputy Corporation Counsel Michael Hopper said Tuesday afternoon that the county has not taken legal action against the association and would await the outcome of today's hearing, noting that if the court orders the association to comply with the subpoena there may be documents the county would be interested in reviewing.
In November in light of the recent events, the county opened up the opportunity for small towns to receive funding through its $243,000 "Small Town Planning Grants" program for towns identified as Haiku, Hana, Kaunakakai, Keokea-Waiakoa, Lahaina, Lanai City, Makawao, Paia, Waihee, Waikapu and Wailuku. Proposals will be received through this month.
The request for proposals and application forms are available through the county's website at www.mauicounty. gov/index.aspx?nid=121 under Hot Topics. For more information, contact the Planning Department at 270-7735.
As he had done previously, Cannon contends in his recent filing that Jones "has not conducted a fair and impartial investigation of WMSA" and had "done the specific bidding of his star informant" and disgruntled former board member and chairman Sam Clark.
Clark has publicly spoken out about being denied key documents and information about the organization's operations and finances.
In the state's earlier filing with the court to try to enforce the subpoena, the state said there were serious concerns about the "financial solvency of WMSA," the "abrupt closure of its offices," "staff layoffs" and relocation of it assets and office equipment and furniture to other locations including the Salvation Army.
The association's filing said the organization's "primary reason" for downsizing was because of legal costs incurred from responding to the state investigation.
The association said it has securely stored "all assets of value" until a new, suitable office can be found and assets without value to the corporation were donated to the Salvation Army.
None of the donated items was purchased with grant funds, the organization said.
The association was organized to promote, preserve and restore the culture, history and architecture of Wailuku.
* Melissa Tanji can be reached at firstname.lastname@example.org.