June 09, 2009

      Residents Voice

               Conrad Grundke
06/09/2009         Residents Voice   1
Topics for Tonight
• “To Tell The TRUTH !”

• “TOO MUCH TRUST ?”

• Saddleback Community College (SBCC)


06/09/2009      ...
“To Tell The TRUTH!”




06/09/2009   Residents Voice   3
A Search for TRUTH!
• General Manager Comments at 6/2/9 GRF
  Board Meeting referencing the PCM Incentive
  Plan;
     – H...
So! Where Does One Go?
• General Manager will use the following to get
  the “TRUE” information out to the public via
  “h...
Example of a Source of TRUTH?

• So! Channel 6 should most certainly be
  unbiased and a good source for getting out
  acc...
Credit Card EMERGENCY Uses!
User         Date       Description                   Amount
Price        12/01/06   Sees Cand...
Per Mr. Johns !
• The “Incentive Plan” has been “thoroughly
  VETTED;”
     – By all the Board Members.
     – It is inclu...
What He Doesn’t Say!
The General Manager is adept at utilizing half
  truths when he doesn’t tell you;

• The CRITICAL TIM...
In Light of This!
• From 1996 thru 2006 the Boards were
  unaware of any Incentive Plan.

• From 1996 thru 2006 there was ...
What the Boards Know!
• There is no line item in any financial report
  identifying “Incentive Plan Expenses.”

• There is...
A Classic Case OF:




Locking the door after the horse is stolen!

06/09/2009           Residents Voice          12
What the Resident Owners Know
      About The INCENTIVE PLAN ?




06/09/2009       Residents Voice     13
“TOO MUCH TRUST”


06/09/2009   Residents Voice   14
Consequences of Blind Trust
• Increased TRUST = Decreasing OVERSIGHT!
             100%




             75%




         ...
Where Are We Today ?
• The Boards Trust PCM 100%.

• There is almost 0% Oversight.

• What does that mean?
     – The Gene...
PCM Priorities
• Development of our land:

     – If PCM can benefit (directly or indirectly) that
       would be in thei...
Are “Independent” Auditors
           the Answer ?
• Auditing firm was hired by Board of Directors
  of large company (to ...
Other KPMG Activities
• Significantly involved in large number of high-
  profile collapses.
• $200 million claim by Austr...
Other KPMG Activities (cont)
• $1 billion lawsuit over New Century Collapse.
• $200 M paid to Rite Aid and Oxford Health.
...
Employee Priorities
• Increased Labor Costs:

     – Labor contracts have evolved to the level where
       we are charged...
LWV Priorities
• Reduced Assessments:

     – Retain our land!

     – Reduce labor costs!


• Who Looks Out For Us?
     ...
Saddleback
             Community
               College
06/09/2009      Residents Voice   23
Saddleback Community College
• A true symbiosis arrangement
• Saddleback College Provides:
     – Qualified/Certified clas...
Conclusion
Information that comes from PCM (and many of
  our Board Members) is often untrue and
  cannot always be truste...
Conclusion (Cont)
• By blindly trusting the General Manager, we
  have evolved to Boards that feel threatened
  when a Boa...
Conclusion (Cont)
• Many residents utilize the Emeritus Classes
  and without the college, the costs would be
  excessive....
The End
06/09/2009   Residents Voice   28
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June 09 2009

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June 09 2009

  1. 1. June 09, 2009 Residents Voice Conrad Grundke 06/09/2009 Residents Voice 1
  2. 2. Topics for Tonight • “To Tell The TRUTH !” • “TOO MUCH TRUST ?” • Saddleback Community College (SBCC) 06/09/2009 Residents Voice 2
  3. 3. “To Tell The TRUTH!” 06/09/2009 Residents Voice 3
  4. 4. A Search for TRUTH! • General Manager Comments at 6/2/9 GRF Board Meeting referencing the PCM Incentive Plan; – He advised residents to “not believe” what you read in the Orange County Register. – He called them the “biased” words of a reporter. – He stated that OC Register articles are an “Invitation for a lawsuit.” 06/09/2009 Residents Voice 4
  5. 5. So! Where Does One Go? • General Manager will use the following to get the “TRUE” information out to the public via “his” Communication Team.; – Channel 6 – The Globe – LWV Website – LWV Publications (?) 06/09/2009 Residents Voice 5
  6. 6. Example of a Source of TRUTH? • So! Channel 6 should most certainly be unbiased and a good source for getting out accurate data (Right!?). • For example; – Interview of Milt Johns by Rob Merritt • Q: - What was purpose of Staff Credit Cards? • A: - “EMERGENCY USE ONLY!” 06/09/2009 Residents Voice 6
  7. 7. Credit Card EMERGENCY Uses! User Date Description Amount Price 12/01/06 Sees Candies $1,316.00 Storage 12/18/06 Claim Jumper $ 981.87 Lee 12/22/04 Lawry’s Five Crowns $ 834.31 Storage 12/17/05 Dave & Busters $ 811.12 Johns 12/18/05 Las Brisas $ 713.77 Residents Voice made the public aware of the above data, and yet, Rob Merritt never questioned Milt Johns when he stated on Rob’s interview that the cards were for “emergency use only.” The Orange County Register reporter “questioned Mr Johns answer in public,” to Mr. Johns dismay. Which reporter would WE want providing us information on what is happening within our walls and gates? 06/09/2009 Residents Voice 7
  8. 8. Per Mr. Johns ! • The “Incentive Plan” has been “thoroughly VETTED;” – By all the Board Members. – It is included in the Management Agreements. – It has been Audited by our Auditors. 06/09/2009 Residents Voice 8
  9. 9. What He Doesn’t Say! The General Manager is adept at utilizing half truths when he doesn’t tell you; • The CRITICAL TIME LINE. – The Incentive Plan came to light in late 2006 when it was “unintentionally” disclosed. 06/09/2009 Residents Voice 9
  10. 10. In Light of This! • From 1996 thru 2006 the Boards were unaware of any Incentive Plan. • From 1996 thru 2006 there was no mention of an Incentive Plan in the Management Agreements. • From 1996 thru 2006 there was no Board Action taken to implement an Incentive Plan. 06/09/2009 Residents Voice 10
  11. 11. What the Boards Know! • There is no line item in any financial report identifying “Incentive Plan Expenses.” • There is no breakdown of the Incentive Plan “Savings vs Expenses.” • They were not involved in any justification of the “Savings” that were supposedly incurred. 06/09/2009 Residents Voice 11
  12. 12. A Classic Case OF: Locking the door after the horse is stolen! 06/09/2009 Residents Voice 12
  13. 13. What the Resident Owners Know About The INCENTIVE PLAN ? 06/09/2009 Residents Voice 13
  14. 14. “TOO MUCH TRUST” 06/09/2009 Residents Voice 14
  15. 15. Consequences of Blind Trust • Increased TRUST = Decreasing OVERSIGHT! 100% 75% 50% 25% 0% Sit 1 Sit 2 Sit 3 Sit 4 Sit 5 06/09/2009 Residents Voice 15
  16. 16. Where Are We Today ? • The Boards Trust PCM 100%. • There is almost 0% Oversight. • What does that mean? – The General Manager has stated his priorities are: 1. PCM (his boss) 2. His Employees 3. Laguna Woods Village Residents 06/09/2009 Residents Voice 16
  17. 17. PCM Priorities • Development of our land: – If PCM can benefit (directly or indirectly) that would be in their interest. – Avoid by having independent monitoring of land development by someone who has the Resident Owners as their 1st priority. 06/09/2009 Residents Voice 17
  18. 18. Are “Independent” Auditors the Answer ? • Auditing firm was hired by Board of Directors of large company (to ensure independent auditor?). • $746 million class action suit on behalf of investors. • Investors are MFS Premium Income Fund. • Auditors are KPMG – Does anyone care to guess who KPMG is? 06/09/2009 Residents Voice 18
  19. 19. Other KPMG Activities • Significantly involved in large number of high- profile collapses. • $200 million claim by Australian Securities & Investments Commission on collapse of Westpoint. • Allco Finance Group classified $1.9 billion of current liabilities as non-current liabilities. – KPMG paid $3.1 million for audit work. 06/09/2009 Residents Voice 19
  20. 20. Other KPMG Activities (cont) • $1 billion lawsuit over New Century Collapse. • $200 M paid to Rite Aid and Oxford Health. • RMB300,000 to Suqian Wahaha Beverage • Involved with Ernst & Young in Tax Shelters that cost clients $5.7 m in auditor fees. • Etc. • Etc. 06/09/2009 Residents Voice 20
  21. 21. Employee Priorities • Increased Labor Costs: – Labor contracts have evolved to the level where we are charged $40.00 per hour by PCM for our landscaping. – General Manager is involved in the contracts. • What is his objective? – High Rate for his employee, or, – Low Rate for our assessments 06/09/2009 Residents Voice 21
  22. 22. LWV Priorities • Reduced Assessments: – Retain our land! – Reduce labor costs! • Who Looks Out For Us? – The General Manager/Boards – HA! 06/09/2009 Residents Voice 22
  23. 23. Saddleback Community College 06/09/2009 Residents Voice 23
  24. 24. Saddleback Community College • A true symbiosis arrangement • Saddleback College Provides: – Qualified/Certified class instructors. – Equipment. – Administrative personnel. • LWV Provides: – Space. – Equipment. – Administrative personnel. 06/09/2009 Residents Voice 24
  25. 25. Conclusion Information that comes from PCM (and many of our Board Members) is often untrue and cannot always be trusted. The Incentive Plan required concurrence by a majority of the Board members, and without that, the plan has been “ILLEGAL since 1996.” 06/09/2009 Residents Voice 25
  26. 26. Conclusion (Cont) • By blindly trusting the General Manager, we have evolved to Boards that feel threatened when a Board Member questions the actions of either PCM or a Board. – This is evident in the treatment of Mike Curtis on the United Mutual Board. • We Need More Mike Curtis’s! 06/09/2009 Residents Voice 26
  27. 27. Conclusion (Cont) • Many residents utilize the Emeritus Classes and without the college, the costs would be excessive. • Let’s continue to enjoy our time living in Laguna Woods Village. 06/09/2009 Residents Voice 27
  28. 28. The End 06/09/2009 Residents Voice 28
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