Hugh R. Jones, supervising deputy attorney general for the Tax and Charities Division, has recommended the termination of Jocelyn Perreira, executive director of Wailuku Main Street Association (WMSA).
He was also highly critical of the organization's board and their failure to exercise proper oversight of Perreira and her activities.
The WMSA Website lists the officers for 2012-2014 as: Tom Cannon, chair; William Frampton, vice chair; Diane Sumida, secretary; Amy Hanlon, treasurer; and Madelyn D'Enbeau, organization committee chair.
On Friday, Sept. 7, at midday, the door to the Wailuku Main Street Association (WMSA) office was locked and the shades were drawn.
Photo: Susan Halas
Board members are shown as: Marcial Basbas, Artemio Baxa, Richard Dan, Royce Fukuroku, James Guequierre, Cindy Nagata-Hanscam, Mich Hirano, James Lawrence, August Percha, Kahala Takenouchi, Douglas Sameshima, and Calvin Shibuya.
In preliminary findings issued in an Aug. 30 letter, Jones stated: "WMSA has failed to comply with its governing documents and policies in numerous respects and the WMSA appears terribly confused about its corporate structure. It appears that the directors have violated their statutory duties of care in numerous respects including, but not limited to delegating (or largely abandoning) governance of the organization to the executive director."
The letter said there is "little evidence of actual program services by the WMSA in the in the last two years." It also noted that "the apparent absence of concrete program services appears to have allowed WMSA to build up a significant reserve of over $250,000 from county/taxpayer funding."
The document also cited in detail numerous instances of failure to comply with state laws regarding access to organization records, voting by proxy and other procedural irregularities, failure to have written policies and guidelines in place, improper lobbying and other political activities and inadequate record keeping.
The letter also noted that the organization violated its own anti-nepotism policy when it hired Perreira's daughter as an accountant/office manager, a position she has held for 15 years.
Payment to Perreira and her daughter and other employees totaled $156,916 according to the group's 2010 IRS 990 Form. According to earlier published reports, that year, Perreira's pay was $96,207, while the total WMSA revenue from all sources was just over $251,000.
The lengthy correspondence totaling 11 pages was addressed to J. Kevin Jenkins of the Wailuku law firm Jenkins & Jenkins, who represents all of the WMSA directors. The attorney general's findings were termed "preliminary" because, according to Jones, the WMSA had failed to produce additional information that was requested.
Throughout the letter, the attorney general warned that the organization has made sworn statements on tax returns under penalty of perjury and may well find its tax-exempt status in question or subject to further scrutiny by the IRS for failure to keep proper records and accurately report its expenditures.
In his introductory remarks, Jones noted that the WMSA is nonprofit charitable organization incorporated on Oct. 5, 1987. He stressed that the group received approximately 95 percent of its funding from the County of Maui.
In his conclusion, Jones requested the board of WMSA implement remedial measures to re-asset control over the proper and effective governance of the operations and program services of the WMSA as a tax-exempt charitable organization.
Along with the termination of Perriera and the recruitment of a qualified successor, he urged the board to review and eliminate contradictory or illegal provisions of its bylaws and refrain from proxy voting.
There were an additional 16 policy compliance points requested within 90 days, including conflicts of interest, whistle blower, procurement, document retention and destruction, annual evaluation of the executive director by the board and staff and the grant makers, periodic rotation of external auditors, substantiation of expense allocations and many more.
"We look forward," he wrote, "to the board's favorable response to these findings and remedial measures requested by the attorney general."
Jones wrote that a copy of the letter was sent to the Maui County Planning Department, because as noted, "Maui County is virtually the WMSA's sole funder and the matters discussed in this letter are relevant to compliance with past County of Maui grant agreements."
A few days later, in a Sept. 4 response to Jones, WMSA Board Chair Tom Cannon fired back. He stated that the board disagrees with the attorney general's "analysis and conclusion."
There is no missing money, no malfeasance, no misappropriated funds," he wrote, and asserted the organization had a record of "consistently clean yearly audits."
Cannon charged that the state official never questioned any existing officers, only a former employee and a former board member. He accused Jones of being in possession of materials stolen from the WMSA office and refusing to return them. (The letter did not say what those materials were or how they related to the issues, only that they had been used against the organization.)
Cannon also objected to what he termed "the presumption of guilt" and the lack opportunity for cross-examination. He went on to give a lengthy endorsement of Perreira, calling her an "outstanding employee for 26-plus years." He listed many awards and distinctions she had earned. He concluded by calling her "Hawai'i's premier small town specialist."
Cannon said that "due to a breach of contract by a primary WMSA client (the County of Maui) who has not paid us for work performed, the board was forced to temporarily lay off our executive director (effective soon) due to our lack of sufficient funds. This makes AG Jones' suggestion that we terminate our executive director a moot point." Others, he wrote, have also recently been temporarily laid off, "also due to lack of funding, and not at all due to any other reason."
While those at the heart of the dispute exchanged salvos, County of Maui personnel seemed reluctant to comment on the situation.
County Planner Erin Wade, who is deeply involved with planning for the future of Wailuku, wrote in an email, "FYI all Departments were instructed to refer questions to the Mayor's Office."
Maui County Planning Director Will Spence wrote, "I think the AG's letter speaks for itself. Really any request for comments should be directed to the Mayor's office.
Rod Antone, a spokesperson for the administration, commented, "Will's right. The document speaks for itself. Our Corp Counsel attorneys are looking over the AG's report and we'll know better what are options are after they're done. As far as their funding, earlier this year--March I believe--the mayor proposed to the council that we move the WMSA's $243,000 into a small-town planning fund for fiscal year 2013."
Meanwhile in Wailuku Town itself, those asked to express an opinion had little to say on the record regarding the charges and counter charges.
Richard Priest, who heads the Wailuku Community Association, had no comment, nor did more than a dozen other Wailuku business and community leaders contacted by the Maui Weekly.
The last word came from Joe Myhand, a Market Street merchant and a frequent critic of Perreira and WMSA. Asked for comment, he wrote: "What did the Maui taxpayer get in return for the $2.2 million the WMSA received from the County of Maui? That money could go a long way towards solving our parking problem."
To read copies of the attorney general's letter and Cannon's letter, view this story online at www.mauiweekly.com.