[quote="Hal Terrie"]Sam Sloan began this thread with a post in which
this claim appears:
[quote="samsloan"]In 1999 there was $2 million in the LMA. However, it
was discovered during the 2003 delegates meeting in Los Angeles, that
the entire $2 million had disappeared.[/quote]
Later, in response to an explanation offered by Mike Nolan, he again
claims to be baffled about what happened to the money:
[quote="samsloan"][quote="SysAdmin"]Much of it was 'loaned' to
operations to cover operational deficits in that time period, a
practice that had started by 1998 (possibly earlier) to meet the
requirement that the bank line of credit be paid down once a year.
They'd pay off the credit line, then borrow it back after the end of
the month and repay the loan from LMA. Eventually those loans, which
don't show up on the financial statements since they are intra-company
transactions, were made permanent, because operations was losing money
and had no way to repay it. They used to show up on the trial
balance, and may still be there. Don't you have a copy of that from
around 2006?
There were also market losses in the portfolio, in part because some
investments had to be liquidated below cost after the market peaked in
March of 2000 in order to keep loaning money to operations, but those
losses aren't easily determined from the audited financials.[/quote]
Thank you for this explanation.
My point is that if you take each of the certified financial
statements from 1998 through 2004, you will see a small loss for every
year. However, when you add up all these losses, it comes to less than
$200,000.
Yet, $1,591,120 in cash and securities disappeared.
What happened to all the money?[/quote]
In a previous post, I gave the short answer: that the money was
transferred to Operations bit by bit until most of it was gone but
that this process was fully documented. Now, here is the long answer,
including direct quotes from documents provided to the Delegates.
We begin in FY 2000. For whatever reason, in this fiscal year USCF
began a string of years with severe financial problems. The causes of
those problems are NOT the subject of this post; if anyone wants to
discuss that and assign blame, that's a topic for a different thread.
Here, I am only going to track the results of those losses on the
balance in the LMA, as reported to the Delegates in documents handed
out each year.
At the Delegates Meeting of August 2000, held in St. Paul, MN, one of
the documents handed out was the most detailed report on the LMA ever
distributed. This report ran to over 100 pages and included copies of
the actual statements from the LMA investments (Vanguard, Charles
Schwab etc.). Every single transaction for the entire year was listed.
The introduction to this report notes the beginning of the financial
problems. It reports that LMA made the normal payments to Operations
(totalling about $104,000) but goes on to report:
[b]"Two draws against the LMA were approved and effected in FY2000,
one for $100,000 on September 1, 1999 and a second one for $200,000 on
September 29, 1999."[/b]
On the following pages, the cash and securities are analyzed with the
conclusion that the value of those items alone (building not included)
as of June 1, 2000 was $1,313,982.00.
The next Delegates Meeting was in Framingham, MA in August 2001.The
minutes of that meeting (which have been available for years) reveal
that in his report, VP for Finance Pechac revealed that,
[b]"The USCF line of credit was closed by the bank in December 2000.
USCF Operations was forced to borrow from the LMA fund to pay the
bank. This action increased the indebtedness of Operations to the LMA
to $665K..."[/b]
So, that accounts for another $350K+ removed from the LMA. At that
point in time it was still planned to repay these "loans" (over a
seven year period), by discontinuing regularly scheduled transfers
from LMA to Operations. The line of credit with the bank was
subsequently reestablished but there was more bad news to come.
The next fiscal year was another bad one. The LMA Committee report,
which was printed in the 2002 Delegates Call, showed that the liquid
assets of the LMA declined from $1,210,781.00 as of May 31, 2001 to
$516,368 as of May 31, 2002:
[b]"...a reduction of nearly $700,000 for the year. The changes can be
summarized into three major components:
Pay down of Line of Credit (June 2001) $375,000
Transfers to Operations $250,000
Unrealized losses in Investments $ 80,000"[/b]
The minutes of the Delegates Meeting for 2002 reveal some interesting
facts. The USCF auditor, Mark Levy, addressed the Delegates and took
questions about the enormous loss USCF had taken for the recently
completed fiscal year, including some substantial one-time
adjustments. [i]Among those listed as participating in this discussion
was Sam Sloan (Del., NY). [/i]Yes, that's right Sam. YOU were in that
room, holding in your hand the Delegates Call which reported the
$700,000 reduction in LMA assets.
That bring us to FY 2003. There were more severe financial problems
that year. In the minutes to the 2003 Delegates Meeting (another
easily obtained document), VP for Finance Camaratta reports that the
LMA reserves were down to about $300,000.
So, there you have it. Not a pretty picture but not a mysterious (or
undocumented) one. Let's see that Sam Sloan quote one more time:
[quote="samsloan"]In 1999 there was $2 million in the LMA. However, it
was discovered during the 2003 delegates meeting in Los Angeles, that
the entire $2 million had disappeared.[/quote]
Another wild claim by Sam Sloan refuted.
-- Hal Terrie[/quote]
Thank you. It is true that I missed this posting. It is also true that
I was at the 2002 delegates meeting in Cherry Hill NJ. However, I do
not believe that it was ever said that the USCF had just lost another
$700,000. Perhaps that fact was buried in the footnotes somewhere. I
do clearly recall that the 2002 meeting was disrupted by an out-of-
order motion by a former USCF President that we sell the building and
move to Miami Florida. Frank Niro, who was still highly regarded at
the time (this was before it was discovered a year later that Niro was
a big crook), spoke at length about the wisdom of moving to Miami. The
result was the close vote to move somewhere which resulted in the
disaster known as Crossville Tennessee today.
I really do not think that even the board noticed the $700,000 loss. I
know that Brady was on the board and is astute financially. He was
complaining that USCF President John McCrary was not telling him or
the other board members what was going on. I wonder if even McCrary
knew about the $700,000 loss. Sitting up there on the dais, he seemed
to be pretty confident that everything was going fine. McCrary was
surprised when he was not re-elected president the following year. Do
you think that he knew?
Sam Sloan