Truthteller email to Homeowners

YOU BE THE JUDGE…

Attached are two documents:

1. The Borrower Application Form submitted by SCLH on May 22, 2020 to obtain a $1.4 million loan under the Small Business Administration’s (SBA) Paycheck Protection Program (PPP)

2. Certificate of Secretary or Company Officer submitted on May 26, 2020

Making a false claim to obtain a PPP Loan from the SBA is a violation of law and is punishable by fines and imprisonment (18 USC 1001 and 18 USC 3571).  The following are questions to consider before drawing any conclusions as to whether false or fraudulent claims were made in these two documents to obtain the PPP Loan from the SBA.

THE APPLICATION 

With regard to the Application, were any false or fraudulent claims made?  Consider:

• A requirement to apply for the loan was that the funds were “necessary to support the ongoing operations” of SCLH, “taking into account all other sources of income, investments and liquid assets.” Was SCLH eligible to receive a loan at the time the application was submitted?

• Was any financial analysis provided to the entire Board of Directors (BoD) by the Finance Committee, BoD Treasurer or Executive Director to support SCLH’s financial necessity? If so, that financial analysis should also be made available for residents’ review.

• Did Mr. Christopher O’Keefe in his capacity as Executive Director, perform minimal due diligence by asking for BoD approval to consult SCLH’s legal counsel regarding the HOA’s eligibility and the legality of its application documents? If so, counsel’s opinion should be made available for residents’ review.

• By signing and submitting the Application, didn’t Mr. O’Keefe represent that the SBA requirement of “necessity” was met?

• Did SCLH, as a business entity, qualify for the loan under “Other” – a 501(c)(4) organization?

• Does Mr. O’Keefe own 100 percent of SCLH Community Association?

• Is Mr. O’Keefe an Officer of the Company?

• Mr. O’Keefe is required to keep the BoD fully informed on all important aspects and factors that are about to impact or influence the HOA. Is there any evidence that he formally presented the full details of the PPP Loan to all members of the BoD? 

• If not, why not? Could there have been intent to withhold information from them?

• Did Mr. O’Keefe have the authority to encumber SCLH residents with a $1.4 million loan obligation?

• In doing so, did Mr. O’Keefe usurp the authority and fiduciary responsibilities of the BoD?

• Did the Board of Directors pass a Resolution to participate in the SBA PPP and borrow up to the maximum amount of eligibility?

• According to our Bylaws Sec 9.01.(r) and 11.07, the power to borrow money is specifically reserved for the BoD. The ability so sign contracts is specifically reserved to the President of the BoD (with the BoD’s authorization) unless specifically delegated to another party. Did the BoD specifically authorize Mr. O’Keefe to borrow $1.4 million and to act on its behalf, as its Representative to the lender (Newtek) and the SBA?

• If the BoD did not authorize Mr. O’Keefe, did he again usurp the authority and fiduciary responsibilities of the BoD?

• Was Mr. O’Keefe an “appointed officer of the Company?”

• By signing and submitting the Application, didn’t Mr. O’Keefe legally represent that the loan was “necessary?” That he had 100% ownership of the Company? That by proper Resolution, the BoD had authorized the Company to participate? That he was duly authorized to act in the name of and on behalf of the Company? And that he was a duly appointed Officer of the Company?

• Is there any evidence whatsoever that any of the above items were on the Agendas, in the Minutes or on Video Recordings of BoD meetings and/or Executive Sessions?

• If you think that there were improper actions taken, what consequences would you recommend?

THE CERTIFICATE OF SECRETARY

The “Certificate of Secretary or Company Officer” was relied upon by the lender to obtain a loan under the SBA’s Payroll Protection Program.  Were any false or fraudulent claims made?  Consider:

• Was a BoD Resolution passed to authorize our Community Association to participate in the SBA PPP and to borrow up to the maximum amount of our eligibility?

• Did the BoD pass any motion to designate Mr. O’Keefe as the HOA’s “duly authorized” representative in seeking a PPP loan?

• Did the BoD appoint Mr. O’Keefe as Officer of the Company in accordance with Section 11.03 of the Bylaws?”

• Did the BoD vote to empower Mr. Tom Dunipace to act for the HOA in addressing PPP loan questions from the SBA or the lender?

• Was a vote of the BoD conducted to authorize Mr. Dunipace to sign this Certification which was relied upon by the lender to obtain a loan under the SBA’s Payroll Protection Program?

• The Certificate specifically states: “If not understood, proper advice should be obtained from the Company’s legal counsel.”  Since Mr. Dunipace seems to have stated that he had some confusion, did he obtain legal counsel prior to signing this document?

• As an attorney himself, wouldn’t one expect him to take proper precautions and perform due diligence before signing such an important document?

• Why did Mr. Dunipace not share the full extent of his knowledge with his fellow BoD members and bring it to the attention of Mr. O’Keefe and the BoD that they needed to vote to authorize this loan?

• Is there any evidence whatsoever that any of the above items were on the Agendas, in the Minutes or on Video Recordings of BoD meetings and/or Executive Sessions?

• Were Mr. Dunipace’s actions in accordance with the BoD’s Code of Ethics?

• If you think that there were improper actions taken, what consequences would you recommend? Censure? Removal as Secretary? Asked to resign from BoD?

According to the Certificate of Secretary, the Lender (Newtek) was assured that the BoD passed a proper Resolution to participate in the PPP Loan Program. It further instructs Newtek that they are entitled to rely on Mr. O’Keefe’s status as an Officer and his empowerment to act on behalf of the HOA. Therefore,

• Does it seem doubtful that it was within Mr. Rabuck’s purview (as representative of the Lender) to research the authenticity, accuracy or legally correct status of documents submitted by SCLH, since they had already received such certification?

• Is it more likely that Mr. Rabuck’s statement of “nothing wrong” likely applied only to the fact that Mr. O’Keefe did not misrepresent SCLH’s 501(c)4 status in the application process?

• Did Newtek obtain and research any of the following documents: BoD Resolution authorizing participation in the PPP, its delegation of authority to Mr. O’Keefe to act on behalf of the HOA, or his appointment as an Officer? If so, we request that Mr. Rabuck be required to produce such documentation that it be made available to residents.

HOA LAW & SCLH GOVERNING DOCUMENTS

According to The Davis Stirling Common Interest Development Act, SCLH’s Governing Documents, Mr. O’Keefe’s CCAM Certification (California Association of Community Managers) and his Employment Agreement, an Executive Director is required to have full knowledge of the HOA’s Governing Documents and to act in compliance with them accordingly.

Were there any violations of our Governing Documents?  Consider:

• Did Mr. O’Keefe keep the BoD fully informed on all important aspects and factors that were about to impact or influence the HOA in accordance with his Employment Agreement and Sec 7.12 of the Bylaws?

• Does encumbering the HOA with a $1.4 million loan obligation meet this criterion?

• Did he seek and obtain a BoD Resolution authorizing HOA’s participation in SBA’s PPP program and authorization to borrow up to the maximum amount?

• Was there a BoD resolution authorizing Mr. O’Keefe to act on behalf of the HOA?

• Was Mr. O’Keefe made an Officer of the Company in accordance with Section 11.03 of the Bylaws?

• Did Mr. O’Keefe again usurp the authority and fiduciary responsibilities of the BoD?

• Did he comply with the Bylaws Sec 11.07 that only the BoD is empowered to borrow money?

• Did  he ignore Sec 11.07 of the Bylaws which states that only the BoD President is empowered to sign contracts?

• Our Bylaws Section 9.02 state that a vote of residents is required to borrow money whenever the funding to amortize the obligation will be an Assessment, for which Member approval is required pursuant to Section 4.04. Should a vote of the membership have been required?

• Our Bylaws specify that money can only be borrowed for specific purposes. Did the PPP Loan meet these requirements?

• Did Mr. O’Keefe, with BoD approval, consult legal counsel to ensure that the borrowing would have been in compliance with our Bylaws and other Governing Documents?

• Is there any evidence whatsoever that any of the above items were on the Agendas, in the Minutes or on Video Recordings of BoD meetings and/or Executive Sessions?