State AG seeks end to nonprofit WMSA
The Wailuku Main Street Association Inc./Tri-Isle Main Street Resource Center appears to be on the verge of ceasing to exist as a nonprofit entity.
This week, the organization received a letter from the state Department of the Attorney General that threatened legal action to dissolve the organization, if it failed to do so voluntarily.
In a email statement to The Maui News late Thursday afternoon, WMSA Board Chairman Tom Cannon ended a statement by saying: “We must now finally give in to the forces of money and politics.”
Cannon could not immediately be reached to clarify his response.
The letter from the state to WMSA set a May 31 deadline to voluntarily dissolve or face the filing of a legal complaint to end the nonprofit’s existence.
The more than 25-year-old organization’s mission has been to revitalize Maui’s small towns, but since last year it has been under investigation by the state Department of the Attorney General. Last fall, the department’s preliminary findings detailed nepotism, illegal proxy voting, violations of the nonprofit’s bylaws and little evidence of actual program services by WMSA in the last two years.
On Monday, Maui County sued WMSA in 2nd Circuit Court, claiming that the organization violated its county grant agreement and demanding that the organization return more than $11,000 worth of personal property brought with county funds and any remaining county funding.
In its lawsuit, the county said the organization failed repeatedly to give the county adequate information, particularly of how county money was being spent.
WMSA’s county grant was terminated Oct. 26.
Throughout the state’s investigation, Cannon has maintained WMSA’s innocence, and he continued to reflect that in his statement to The Maui News on Thursday.
“Despite consistent yearly certified audits that prove WMSA was not mismanaged and that our funds were appropriately used, 28 years of accolades for community service and saving the unique character(s) of our small towns, . . . an excellent specialized staff directed by outstanding community-minded board volunteers using a locally adapted Main Street program that provided the framework for many hours of pro-bono professional services, we must now finally give in to the forces of money and politics,” he wrote in an email.
He also referred to and attached a digital copy of a 2006 resolution from the Maui County Council congratulating WMSA on its 20th anniversary celebration as well as its work in the community. Cannon included a digital file of a response he sent to the attorney general’s office as well as media in November addressing the state’s inquiry, claiming a biased investigation and that the state attorney general’s office used information coming only from disgruntled former board members and an employee.
This week, The Maui News obtained the letter sent from the Department of the Attorney General to WMSA. The letter was obtained from a source outside the attorney general’s office.
Attached to the letter dated Tuesday was a draft legal complaint that would be filed if the organization and its board of directors did not voluntarily dissolve the organization.
The letter from Supervising Deputy Attorney General Hugh Jones of the Tax & Charities Division asked WMSA board members to dissolve the organization.
In a follow-up to a Jan. 7 letter, the Tuesday letter to the organization asked WMSA to remove its directors and return its remaining assets to Maui County. The county has been the principal funder for the nonprofit. Since 2002, WMSA received more than $2.2 million in county grants.
WMSA’s remaining assets will be returned to the county after payment is made to creditors, the letter said.
If WMSA does not agree to voluntarily dissolve itself, the draft complaint says it will ask for judicial removal of any of its directors as well as the appointment of a receiver for WMSA’s remaining assets. It also will seek an order to judicially dissolve the organization because it is “insolvent, its assets are being misapplied and wasted,” and it cannot carry out its activities. The draft complaint also seeks other nonspecified relief.
Much of what is detailed in the draft complaint has been publicly reported in the state attorney general’s report in 2012 regarding its preliminary findings of its investigation of WMSA.
But the draft complaint does reveal some new and more detailed information of the state investigation.
For example, it reveals that Cannon underwent a state deposition in which he refused under oath to disclose the current location of WMSA’s remaining assets and equipment even though he was ordered by the court to provide sworn testimony to the attorney general and that the location of the remaining assets is nonprivileged information and relevant to the state’s subpoena.
* Melissa Tanji can be reached at email@example.com.