ORIGINAL POST: FEBRUARY 8, 2018
There may be a few boards in America that are not as corrupt as State Parkway’s Board of Directors. Sooner or later they’ll want to know how to commit proxy fraud.
This blog post will not only tell you how to commit proxy fraud, it will show how State Parkway’s board of directors have done it since 2005.
In September 2005, unit owners received a 10-day notice of a special membership meeting for the recall of a director. The meeting was held with over 80% of the unit owners in support of the recall. How did the association accumulate over 80% of the proxies in such a short time? It was accomplished through a massive proxy collection effort between March 2005 and September 2005. During these six months, board members held secret meetings with unit owners for the purpose of collecting proxies. Doormen were literally shoving unit owners in the management office so the property manager, Candy Starbuck, could demand their proxies. A future board member claimed in his Candidate Information Sheet to have collected most of the proxies during this recall. So to commit proxy fraud, collect the proxies first, then call the meeting within the 10-30 day window.
In June 2009, a special membership meeting was called to discuss two proposed amendments, including the sale of the Engineer’s Unit. Notice was properly given (within 10-30 day window). Prior to the meeting, however, Donna Weber opened voting shortly before the meeting, which I protested. There was a huge turnout at the June 2009 meeting, but President Mary Marta hijacked the membership meeting and made it a special meeting of the board instead. All proxies and ballots were discarded and there are no minutes of this meeting. However, the Association immediately restarted the proxy-collection process. So to commit proxy fraud, do not acknowledge a quorum so the vote can be “postponed.”
At the September 2009, Annual meeting of the members, a quorum was present. However, when the two proposed amendments, initially brought up in June 2009, came up, property manager Donna Weber declared there was not enough proxies for a quorum. I interrupted to say there was a quorum but not two-thirds, and that Weber was confused with the words “quorum” and “two-thirds majority.” So to commit proxy fraud, continue to deny the existence of a quorum until at least two-thirds of the proxies have been accumulated.
In November 2009, at a regular board meeting (not special meeting of the members), the board voted the proxies and, lo and behold, the board had enough proxies for its main initiative, sale of Engineer’s Unit, pass. So to commit proxy fraud, cast the proxies at a regular board meeting, not at a special meeting of the membership, and throw in an unimportant proposed amendment so when it does not pass, the entire proxy voting process will appear legitimate.
In early April 2015, a special membership meeting was called for the purpose of adopting several proposed amendments. Notice was within the 10-30 day window. At the start of the membership meeting, President Mary Marta, in response to my question if we had a quorum, refused to acknowledge the presence of a quorum and hijacked the packed meeting to a “Town Hall” meeting. No minutes were maintained and the association continued to collect proxies. So to commit proxy fraud, do not allow for a quorum to be established, and convert the meeting to an unofficial town hall meeting.
Later in April 2015, a second special meeting of the membership was held. President Mary Marta refused to allow unit owner discussion prior to “voting.” Two of the three initiatives passed, with one falling juuuuuuuuusst short of the required two-thirds. So to commit proxy fraud, delay the special membership meeting by denying the presence of a quorum until at least two-thirds of the proxies have been collected; don’t allow unit owners to speak at the membership meeting (even though they have every right to); and throw in an extra proposed amendment so voting appears to be legitimate. After this meeting, I requested to inspect the ballots and proxies and found many of the proxies were not signed and/or dated, which makes them invalid. However, despite being informed of the unsigned and/or undated proxies, the Association’s attorney went on to record the changes to the Declaration at the Cook County’s Recorder of Deeds Office. (Had the unsigned ballots and/or proxies been excluded, none of the proposed amendments had the required two-thirds majority to pass.) It should be noted that over two-thirds of proxies were purportedly collected in record time (less than 1 month).
In November 2016, the board called a special meeting of the membership for the purpose of reducing the sale price of the Engineer’s Unit. Proper (within 10-30 days) notice of the meeting was given. The presence of a quorum was acknowledged but the proposed amendment fell well short of the required two-thirds majority. This is what happens when you try to do it right when there’s pending state court litigation that alleges fraud, oppression, and misapplication or wasting of assets.
On October 11, 2017, the association began soliciting proxies and regarding four proposals to be considered by the membership at a special membership meeting on March 27, 2018, and encouraged unit owners to vote their preference on the proxies. Board secretary, Terry Leja, had a table and chairs in front of the two passenger elevators in the lobby in an obvious effort to solicit proxies. She ceased doing this after I objected to board and management. In December 2017, the association spent $1,000 for two tabulations of ballots and proxies. Earlier this week the board announced that it still did not have a quorum. However, yesterday I learned that a special meeting of the membership will be called on March 26, 2018, instead of March 27, 2018. So to commit proxy fraud, continue to deny the presence of a quorum so the time to collect proxies can be extended. Since the meeting has yet to be held, I wouldn’t be surprised if the past pattern of fraud and oppression continues, namely unit owner comment will be severely restricted, association will not follow parliamentary procedure during the membership meeting, and an proposed amendment will fall short of the required two-thirds majority.
Meanwhile, to put everything in perspective, since 2003 when my family and I moved in State Parkway, the Association has never had a problem obtaining a quorum (20%) at its annual membership meetings that are only noticed 10 to 30 days in advance. In fact, the average percent of unit owners present in person and/or by proxy is almost 40%, or almost double of what is required for a quorum. Moreover, the board members themselves collectively represent 4.84% of the total ownership, which means only another 15.16% is needed for a quorum. This suggests the association is delaying acknowledgement of a quorum for the sole purpose of getting the remaining 46.6% (66.66%-20.00%) of the votes.
The bottom line is are we to trust board President Cleavenger, who signed State Parkway’s false federal and state tax returns; let alone the board and management, and a CPA firm that intentionally prepares false federal and state tax returns in order to help State Parkway evade the payment of federal and state taxes, during the upcoming membership meeting? Are we to trust a board that is mired in various litigation but fail to acknowledge its obvious conflict of interest? Are we to trust a board that not only has an extensive history of engaging in proxy fraud but also refuses to follow Roberts Rules of Order at membership meetings?