||| FROM TERI NIGRETTO for EASTSOUND WATER USERS |||
Dear Members and water users,
There are two Important items we need to address
Director Misconduct
We write today to notify you that that two of our elected Board members, Ron Claus and Carol Ann Anderson, have breached their fiduciary duties as Board members of the Association.
This fiduciary breach of these two director’s duties to the Association and our membership took place on May 28, 2024, when Ron Claus and Carol Ann Anderson filed Affidavits with the SJC Superior Court in support of Farm to Market, LLC, who is suing the Association to overturn last fall’s Director election.
The Affidavits they filed have been adopted by the Farm to Market attorney and are likely to be used against the Association during our July 3rd Superior Court case. We have currently spent approximately $60,000 fighting the Farm to Market lawsuit to date
Recall Emails, Website and Postcard
A second item that we need to address is the confusing “Recall Water” emails and postcards that have been sent to our customers and members over the past week. We apologize for the distress they may be causing.
Rest assured, the Association is functioning well and is more financially sound than it has even been. Quarter after quarter the Association remains profitable, report after report from financial professionals comes back with zero legal, ethical or operational findings – and best of all – the staff is as strong as it has ever been in our 69-year history.
We urge anyone who has questions or concerns about the running of the business, the solvency of the organization or the cultural health of the staff to please come into the office, call or email us. We are committed to take as much time as needed to answer any of your questions or clarify any accusations until you are satisfied.
You can contact us in the following manner:
- Visit our office at 286 Enchanted Forest Rd, Suite B102, Eastsound WA 98245
- Call our office at (360) 376-2127
- Email our General Manager at: info@eastsoundwater.org
- Email or call our Board President at: president@eastsoundwater.
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Please know that we will do everything possible to protect this great Association and its members.
Teri Nigretto
Board President
Your Privacy
We want to ensure you, the membership, that we did not authorize the use of our member list, nor do we condone the use of our member list and your private information for any reason other than Eastsound Water business.
Please read my statement regarding these allegations by clicking recallwater.com. The breach of fiduciary duties of the majority of Board members began much further back than the allegations provided in this report. Through the affidavit to the court, the intention was to give the court true and accurate facts.
I highly recommend that individuals look at both sides of this argument with an open mind. To do this, it is imperative to read the docmentation provided by we Concerned Eastsound Water Users. This is not a personnality contest, but a presentation of the facts. Please take all the inforomation into consideration. If you are interested in supporting the recall, please sign the Proxy and the Petition at recallwater.com. Thank you!
Teri Nigretto’s stunning admission that EWUA has already spent $60,000 in legal fees trying to defend what was likely an indefensible series of mistakes in its 2023 elections process boggles the mind. Looks like we are headed for the second successive year of more than $100,000 in legal expenses under Dan Burke’s management.
It’s beyond doubt that there should have been three director seats up for election, not two. The responsibility for that blunder falls either on the previous board or general manager. It’s also beyond doubt the Jim Cook came in third in the voting tally. Had there been a third slot on the ballot, as there should have been, he would have been elected to a three-year term as EWUA director. I would surely have voted for him. But the newly elected board decided instead to appoint him to a one-year term and then kept him off the board until after Leith Templin had been appointed to fill the position Joe Cohen had vacated by resigning in mid-November. No persuasive reason has yet been given for these decisions, which may be why Farm to Market LLC sued in San Juan County Superior Court to overturn the election.
It seems that a middle course and settlement could be pursued here that would avoid tens of thousands of dollars more in legal fees and the hardship of repeating the 2023 elections. With agreement of the parties, the judge could decide that Cook was indeed elected to his director position, and that holding him out from the subsequent appointment process was invalid. That, of course, could invalidate Templin’s appointment and thus her subsequent replacement of Carol Anderson as Secretary/Treasurer. But it would be a better option than having to repeat the 2023 elections, which is a possible outcome if left solely to the judge.
Teri is also mistaken in her use of the term “fiduciary” in the phrase “fiduciary duties as Board members.” The word applies instead to a board member’s core responsibility to represent the interests of the members of an organization, not one’s fellow board members — which is secondary. If s/he reasonably thinks that the interests or rights of the members are being violated, then s/he has the duty to say so, no matter what the board majority says or thinks. That is what Carol Anderson and Ron Claus did by submitting sworn affidavits to the court.
By the same token, the members of the board majority may in fact be violating their own fiduciary responsibilities to EWUA members by pursuing a risky attempt to preserve the results of an obviously flawed election process — and by spending more than $60,000 of members’ money to do so.
I believe your comment is spot-on and very well-stated. Thank you.
No competent reader of the accounting report by Acuity Forensics, which was completed just one year ago, would conclude that outside analysis by “financial professionals comes back with zero legal, ethical or operational findings.” Go to recallwater.com to download this report, which uncovered significant failures of financial oversight.
The article above claims that EWUA is “more financially sound than it has even been.” But the problem is not that people are worried about EWUA going broke. The problem is that rates keep going up because EWUA might not be managing its finances properly, might not be providing full access to its financial records, and might not be holding fair Board elections.
Instead of getting the lowest possible rates, EWUA members are paying more, and some of this money is going directly into the pockets of Seattle lawyers and a General Manager whose annual salary is reportedly 80% higher than the salary of the previous GM who retired just four years ago.
All that EWUA members are asking for is transparency. If the current Board members who are subject to a recall effort won’t provide transparency, they should probably be replaced by new Board members who will.
Thank you, David. For your insightful comment.
At the last EWUA board meeting, I was publicly humiliated for asking a question about information I read in the Acuity Forensics Investigation. Rather than answer my question, Burke demanded to know where I got my information. When I told him that I got my information from the Acuity Forensics Report, he immediately accused me of spreading misinformation to the meeting attendees. Before the confrontation was over, Burke admitted that Acuity Forensics did not lie. He stated that he and some of the past directors disagreed with some of Acuity’s findings.
Members should not be verbally attacked or publicly humiliated by the manager for asking legitimate questions at an open meeting. And I am not Burke’s first victim. For some unknown reason, the board tolerates these outbursts. Yet, the board president tells us the culture of the employees is good.
Regarding fiduciary duty: it is my understanding that a director is considered to have breached a fiduciary duty when they did or said something that is not in the non-profit’s financial best interests. The term “fiduciary” only applies to non-profit financial duties. It is not a litmus test of internal board loyalty to other members, which directors simply do not owe to one another. The duty of loyalty means that all directors and officers must act without personal economic conflict. The duty of care requires that directors inform themselves prior to making a business decision, of all information available to them. Not an easy task in an organization, keeping secrets from its members.
Finally, the alleged “breach of duty” must have resulted in some monetary loss for the non-profit. In other words, the alleged breach must have directly caused the harm, which is not the case in this situation.
The previous board and officers are solely responsible for the botched election. Not the two directors who submitted affidavits to the court in the Farm to Market LLC suit.
I received an email from Mr. Dan Burke, the EWUA manager, yesterday, that stated:
“I thought you were dancing a bit between us and them, but it appears that the them are you too.”
The problem here is this “us versus them” attitude that Mr. Burke and some current Board members have decided to adopt towards those of us who have dared to criticize or question the details of how our water system is being run by them, including how our money is being spent. Frankly it’s time to re-boot the system and resume a more fiscally and operationally sane system, as we once had under Mr. Kamin.