||| FROM MICHAEL RIORDAN, FRED KLEIN, and ROBERT AUSTIN |||
This morning brought yet another in a misleading series of emails from Eastsound Water Users Association, this time about all the legal expenses it has been running up during the past two years — and blaming the more than $160,000 in costs on the usual suspects. But the table provided somehow neglected to include the tens of thousands in legal costs attributable to EWUA General Manager Dan Burke.
As he told one of us (RA) in an email, almost $71,390 were spent on “employment-related claims” that were largely “due to the considerable time that was spent during the second half of the year resolving an employment dispute.” Including that in the mix brings the total legal expenses to more than $230,000 — and growing — in two years.
A closer look at the record reveals that the first person to threaten major legal action was Burke himself. In March 2023 his attorney Beth Van Moppes accused Tenar Hall and Steve Smith of harassment at the very moment they were trying to do their jobs as EWUA board members and question his unauthorized self-payments of over $10,000 in late 2022.
Despite confirmation of this serious problem by CPA Tiffany Couch of Acuity Forensics LLP, the board majority caved in to Burke’s demands in a confidential settlement agreement reached in August. Due to its secrecy, we cannot confirm the exact amounts involved but can confidently conclude that the bulk of the more than $101,240 EWUA spent for legal fees in 2023 stemmed from this threatened action — including an estimated $25,000 reimbursement of Burke’s legal expenses. Another, lesser cost resulted from a complaint lodged against him by a female employee that she had received unfair compensation.
What’s more, most of the legal expenses of over $80,000 quoted in the table for defending against the Farm to Market lawsuit over the botched 2023 election could easily have been avoided by running the election again, correcting the EWUA omission of a third slot on the ballot. Instead, the board decided to contest the lawsuit in Court, and most of the legal expenses were the result. So it’s unfair and indeed wrong to blame them entirely on Farm to Market LLC. The board decided to spend our money on it.
Looking at the record of the past eighteen months and comparing the legal expenses with those occurring under Paul Kamin’s tenure as general manager, a clear, alarming pattern emerges. During the last five years of Paul’s tenure, EWUA spent an average $3,305 for legal expenses, according to IRS Form 990s filed for 2016 through 2020. But those costs have literally exploded to at least an average $123,488 (and growing) during 2023-2024 when Burke has been serving as general manager. That’s an increase of more than 3700 percent. Only the financially naive can attribute such a mountainous increase to external factors.
uch factors likely play a role, but another plausible contribution arises due to a general manager who doesn’t think much about engaging attorneys and a compliant board majority that doesn’t try to rein him in. Correlation does not imply causation, of
course, but it’s hard to ignore the Everest of legal expenses draining the EWUA bank account and paint them entirely on the backs of outsiders — especially when the very first major costs were the direct result of his threatened legal actions.
These mounting legal expenses provide further evidence of the EWUA management failures we discussed previously in these pages. They give members additional reasons to recall the board majority of Teri Nigretto, Jim Nelson, Michael Cleveland and Leith Templin on September 28.
A further observation on the constant stream of misinformation coming from the EWUA Board:
This last Tuesday, 9/23, all members of EWUA received an email from EWUA, titled “A Letter from Your Vice President, Jim Nelson”. This letter contains substantial misrepresentations.
In the second paragraph of his note, Jim Nelson states:
“After carefully reviewing our financials, studying the claims posted on the RecallWater website, studying the reams of court filings, and speaking with Orcas Island water customers, the WA Department of Health, Office of Drinking Water (ODW) concluded that EWUA is “an exemplary water utility” and a “positive influence on the local communities they serve.”
I note that the phrases “an exemplary water utility” and “positive influence on the local community” occur in a recent letter from the WA Department of Health, which was distributed to EWUA members in an official letter from Teri Nigretto (9/11/24) titled: “Letter from Your President: The Department of Health!”. So I presume this is the careful review that Mr. Nelson is referring to.
The 1-page letter, from Raquel Callans, PE, Regional Engineer, N.W. Drinking Water Operations, WA DOH is here:
https://www.eastsoundwater.org/wp-content/uploads/2024/09/Eastsound_Water_Users_22170_SJ_20240911.pdf
The letter mentions no detailed financial review, no review of the RecallWater website, no review of the “reams of court filings”. It mentions simply “To carry out this goal, we inspect water system facilities and review planning documents. Which include technical, managerial, and financial information.”
I found Mr. Nelson’s claims quite curious, as the DOH does not typically review “reams of court filings” or perform forensic accounting services. I served as President of EWUA for more than a decade, and have some passing familiarity with the WA Department of Health and how it interacts with EWUA.
So, I contacted Raquel Callans earlier this week, and asked what level of review the DOH performed, and did that level of review conform to the claims made by Mr. Nelson.
She promptly replied:
“I made my statement in regards to our legal authority, implementing 246-290 (drinking water regulations). I did not review information on the Recall water website. I came from the standpoint of working with EWUA on a continuous basis, for multiple projects, emergency response, planning documents, sanitary surveys, customer response. We have also had Dan Burke present at local AWWA trainings. I do not know financial details, we have reviewed their budget in their water system plan. “
That is to say, DOH simply did not perform the level and types of analysis Mr. Nelson claims. It appears from her response that Mr. Nelson, in his official mailing to the entire membership, days before his own recall is up for a vote, has misrepresented the work of DOH.
Mr. Nelson needs to correct his statement, with an explanation. His use of the EWUA official email list to distribute biased misinformation, and to call for the removal of his fellow board members, is highly inappropriate, and the membership should not tolerate this.
Yes, Brian, anything coming from the “Eastsound Water Team” must now be swallowed with a large grain of NaCl. Looks like brine is getting into our local water supply. Saltwater intrusion. ¡ And trust has largely evaporated. Sad.