The embattled Wailuku Main Street Association Inc./Tri-Isle Main Street Resource Center soon may be dissolved following a motion filed Tuesday in 2nd Circuit Court by the state Attorney General's Office.
The attorney general said that following an investigation it has deemed WMSA "insolvent" with all of its directors having resigned, including its most vociferous supporter, Chairman Thomas Cannon. In addition, WMSA shuttered its offices and laid off all of its staff in September.
The court has been asked to judicially dissolve the organization and to appoint a receiver to marshal and distribute all remaining assets according to WMSA's bylaws. The deputy state attorney general handling the case said that it was hoped that the remaining assets would be returned to the County of Maui, which funded WMSA with grants totaling at least $2.2 million through the years.
A hearing on the motion is scheduled July 31 before 2nd Circuit Judge Joseph Cardoza.
The court filing is the culmination of the attorney general's investigation of WMSA, a more than 20-year-old nonprofit whose mission includes revitalization of Maui's small towns. Through the years, many of Maui County's top governmental, community and business leaders sat on the WMSA board.
In a preliminary report released in September, the attorney general said that WMSA may have violated federal tax requirements and that its board failed to follow its bylaws and did not keep close tabs on its longtime executive director, Jocelyn Perreira, whom the report said should be fired.
Perreira was laid off with the rest of the staff due to funding issues related to the state attorney general's probe, according to WMSA.
The attorney general's investigation and report were just the beginning of WMSA's woes.
On Oct. 26, the county notified WMSA that it would be terminating its current $243,000 grant, which was the agency's main source of funding. WMSA had received about $60,000 of that grant.
In December, its former landlord sought legal action over nearly $10,000 in unpaid rent and other fees.
In May, the county filed suit claiming the organization violated its county grant agreement and should return more than $11,000 worth of personal property bought with county funds and any remaining funds obtained under the grant. Since 2002, WMSA had received more than $2.2 million in grants from Maui County, the vast majority of the organization's funding during those years.
Several days after the county's lawsuit, the attorney general threatened legal action to dissolve the organization if its leaders did not do so voluntarily. The remaining directors resigned after the attorney general sent the letter to the organization, according to court records.
Cannon could not be reached for comment Wednesday. The staunch defender of WMSA had contended that the nonprofit organization had clean certified yearly audits and had done well for the community.
In a June 17 email to Deputy Attorney General Hugh Jones, who is handling the case, Cannon continued to defend the organization and even lashed out at Jones, claiming he had personal and political motives for his actions.
"What happens now that you have crushed a 28-year worthy nonprofit and proven cost-effective advocate for local concerns, for no valid reason . . . ?" Cannon asked. "You were on a politically motivated mission to kill WMSA, and you achieved your mission with no valid cause. You are a legal pit bull, who eats any nonprofit that gets out of line with the political powers that be, by draining their coffers and by fierce legal intimidation until they finally evaporate."
Although he has resigned, Cannon said that he still wants to be considered an "interested party in your further actions on this matter."
Jones said in an email Wednesday that "dissolution of the county-funded charitable organization is the final step in a prolonged investigation by the attorney general that required court-ordered testimony and court-ordered production of documents.
"Despite Chairperson Cannon's steadfast rejection of the attorney general's findings of widespread governance dysfunction and poor management practices, all directors have quit, the charity has closed its doors and laid off all staff and is being sued by the county and by its former landlord."
It is the attorney general's hope that any remaining cash and tangible assets of WMSA can be returned to the taxpayers of Maui County, who funded the operations of WMSA and paid its staff for the last several years, Jones said.
What was left of the WMSA board was asked by the attorney general to dissolve the organization, but regrettably the board would not accept that "olive branch," he said. Without a board, Jones was forced to seek the court's help in dissolving WMSA.
Jones added that WMSA's governance practices were the impetus for Act 126 signed into law recently by Gov. Neil Abercrombie to ensure that directors of nonprofit corporations have a right to inspect basic financial and operational records of the corporation, a right that is enforceable by the courts if necessary.
Former WMSA board members ignited concerns over the organization's practices when they went public with their complaints about being denied key operational and financial information by the executive director. Their complaints helped spark the state investigation.
WMSA, through Cannon, has fought the state attorney's demands for information. Eventually, a court ordered Cannon to turn over documents and to comply with a state attorney general demand for a deposition, to which he eventually submitted.
During that deposition March 4, Cannon said that he "was not authorized" to share information about the physical location of the remaining records and property of WMSA, according to information in Tuesday's filing.
In an April 8 letter, Cannon told Jones that WMSA is "not averse" to giving out information about its stored assets. However, Cannon said that he and the board wanted Jones to explain why certain information was relevant to the investigation and was concerned about privacy and security.
Cannon added that the assets of the organization are "in a secure temporary location at no charge" and that the area is within 20 minutes or so of WMSA's meeting location.
Court records indicate that in a Jan. 7 letter from Jones to Cannon that a "very cursory" review of newly produced documents to the state show that WMSA has less than $13,000 in remaining liquid assets.
* Melissa Tanji can be reached at email@example.com.