Thursday, August 26, 2010

Co-op Votes To Drop Suit Against Members

By John Severance

SOCORRO -- The Socorro Electric Cooperative Board of Trustees voted 5-2 Tuesday night to drop the lawsuit it brought upon the unnamed members of the co-op, Charlene West and the Mountain Mail et. al.
Whether the lawsuit will be dropped, though, is another story.
With a plethora of counterclaims, co-op attorney Dennis Francish said after the meeting, “we can’t dismiss the suit. It’s up to a judge. It could go or it could stay.”
Mountain Mail attorney Roscoe A. Woods said, “The co-op can drop the lawsuit but it will still have to contend with those lawsuits filed against it.”
Trustees Prescilla Mauldin and Charlie Wagner voted against dropping the suit.
The co-op filed suit to test three bylaw amendments that were passed by members at the April 17 general meeting.
The bylaw amendments will require the SEC to:
1. Abide by the New Mexico Inspection of Public Records Act and the New Mexico Open Meetings Act;
2. Permit the press and the members to participate in and be present during regular and special Board of Trustee meetings.
3. Guarantee transparency of actions with open access to SEC books, records, audits to members for a proper non-commercial purpose except those which would violate the Privacy Acts.
It also was announced after a lengthy executive session that employees Polo Pineda and Kathy Torres had been terminated.
Pineda and Torres were placed on unpaid leave last week after trustee president Paul Bustamante said the board discovered that money had been missing.
According to Bustamante, who said the money missing was around $35,000, said Pineda and Torres claimed they thought the money had been paid back with their 401-K Bustamante said the money was paid back a few months ago, “but we just need to find receipts.”
The vote to terminate Pineda and Torres was 6-1 with trustee Charlie Wagner abstaining.
“I think it might be premature,” Wagner said. “We have to make sure we have irrefutable evidence. If we don’t, they can come back and sue the co-op.”
All of this came on the heels of Wagner filing a counterclaim against the co-op in a suit filed Tuesday against all co-op trustees and four former trustees – Juan Gonzales, Herman Romero, Manny Marquez and Harold Baca and the former general manager Pineda.
In a 31-page suit, Wagner said present and former trustees have breached their fiduciary duties in the management of the SEC, maintained a system of grossly unequal election districts contrary to the bylaws, imposed and maintained restrictions on voting and breached their fiduciary duties in the accounting for and the management.
In addition, Wagner claims there has been a breach of fiduciary duties with excessive compensation, a breach of their contractual obligations to the Class, violation of contractual obligations of the Rural Cooperative Act.
Wagner also claims they breached their duties by voting on charitable contributions when a trustee may have a direct or indirect interest, manipulating quorum calls, engaging in wasteful spending, abusing the per diem and travel expense reimbursement system by failing to insure accountability and transparency for the board’s activity.
The suit was submitted by Ikard Wynne LLP of Austin, Texas and the law offices of Deschamps and Kortemeier in Socorro.
Lead attorney William Ikard represented plaintiffs in a suit that won a $23 million settlement against Pedernales Electric Cooperative in 2009 in Texas. The judgment led to an overhaul of the Pedernales board and top management and changed the way the co-op did its business.
After the meeting, Trustee president Paul Bustamante said, “Charlie has to decide whether he is going to be a trustee or a reformist. He is going to have to leave the room if the discussion of litigation comes up. He has to decide where he wants to stand.”
Wednesday night’s meeting actually was quite congenial for co-op standards. Wagner made motions and they were seconded and trustees voted to pass them.
In the week leading up to the meeting, the inquiry committee, led by Don Wolberg, had met on two different occasions and spent countless hours going over co-op records.
On Sunday, though, Wolberg received an email from Bustamante, saying the trustee president was going to disband the committee on Wednesday. A meeting had been scheduled for Monday but it was canceled.
Bustamante said he had plans to disband the committee. In an email to Wolberg, Bustamante wrote, “there has been some concern from some of the trustees in your handling of the Inquiry Committee and Luis (Aguilar) spending too much time in the Engineering Dept. also tying up the employees’ time, not informing the committee members on your meetings or the board of your findings.
“They are becoming annoyed and feel you are over controlling and not following board instructions. At Wednesday's meeting, my intentions are to dissolve the committee.”
Wolberg responded in an email by saying, “To look for excuses to stop asking questions about SEC finances and operations is very foolish and will certainly not be greeted with enthusiasm by SEC members or the press. Of course, meetings have been preceded by many hours of inquiry to see where we needed to go and what records we could obtain, as well as who on the staff could provide information needed. ...
“Unfortunately, the work of the Committee has barely begun and numerous and possibly actionable matters have surfaced that need to be pursued. We are not close to a final report but do have matters that need to be further investigated, as you and other Trustees must know. I am less concerned about the desire of trustees to make it all go away than on getting the job done.”
Interestingly enough, the subject of the inquiry meeting was not brought up at Wednesday’s meeting. Bustamante said, “We were gong to talk about it in the meeting but we didn’t.”

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