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Fix Our Elections!

The investigation into the proxy fraud conducted during our last election opens more questions than it resolves, leading SPBuzz to ask why it is objectionable to properly investigate this issue. Correspondence to and from our Board pertaining to this issue is presented below in reverse chronological order.




April 24, 2011

 
 

Dear SPC Directors:

I have spoken to many of you with regard to investigating the fraud that was reported in conjunction with last year’s election. Some of you share my concerns, and to my surprise, some of you object to them. I appreciate all the work you do on behalf of SPC, and I recognize that there are many competing demands for your attention. Still, I sincerely don’t understand how any of you can be opposed to pursuing an unambiguous resolution of this matter. There was an election, there was fraud, and the report from counsel not only fails to resolve the issues in a convincing way, but casts doubt on whether the investigation we have paid for had been conducted properly if at all! What on earth can you object to?

Mr. Weinstein assured our community that this very real issue would be investigated. Our community has been exceedingly patient and trusting. Finally we learn, from Mr. Weinstein’s October 20th letter, that one of the two fraudulent proxies that was shown to Mr. Weinstein was never turned over to the American Arbitration Association. Are you not disturbed by this?

In the same letter, rather than acknowledge this failing, Mr. Weinstein opts to trivialize the entire nature of the investigation by referring to the one fraudulent proxy that was turned over to the American Arbitration Association as a “crude attempt to send in a ballot”. It needs to be noted that this “crude attempt” was not a colored piece of construction paper with the words “fraudulent ballot” scrawled in crayon across the top. It was a convincing and legally complete document which was submitted to the American Arbitration Association and considered to be valid until, by chance, the Shareholder in question turned up to vote in person.

In light of this, and the specific unresolved issues I outlined in my prior message (excerpted below for your convenience), do any of you honestly believe that this investigation has been conducted robustly or appropriately?

If the past is any indication, our Board would be inclined to let this issue slide. Our past Election Committees deferred to new administrations, and our new administrations purportedly wanted to “move forward” rather than investigate the “past”. In light of the irregularities that have plagued every one of our recent elections, it is clear that this is not a successful strategy. Irregularities this year rose to the level of criminal behavior aimed at altering the results of our election, and there is reason to believe that investigation of these irregularities has not been properly conducted. How is this not a priority? How is this a divisive issue? When we face problems in our elections year after year, it stops looking like honest mistakes, conflicting priorities, or a desire to “move forward”, and starts to look like deliberate foot-dragging and obstruction.

Our new election is coming up, and this issue needs to be resolved now. It is essential that our previous Election Committee, our current Election Committee, and all other members of our Board join together to resolve this issue now, once and for all.

Sincerely,

Dan Strum

 


Unresolved issues raised in my March 28, 2011 message

Mr. Weinstein’s letter leaves some essential questions unanswered, and I believe it is important for our Directors to obtain clarification before acceding to his recommendation for closure.

  1. The first question to be answered pertains to the four uncontactable shareholders. A window of four shareholders removes accountability from the report – anyone who claims not to have been contacted can just be assumed to be one of the four. Our Directors would be remiss not to question this.
     
  2. Another question to be answered pertains to whether there are shareholders for whom multiple proxy ballots were received. If fraudulent proxy ballots were received together with valid ones, who is to know which one was counted? A count of voters for whom multiple proxy votes were received needs to be provided, and if enough multiple ballots were received to affect the election results, these voters need to be contacted to ascertain whether they did indeed submit multiple proxy ballots.




 

 




March 28, 2011

 
 

Dear Margarett,

I appreciate your response, and hope it indicates a determination on the part of our Directors to add a new level of oversight and accountability to our election process.

Mr. Weinstein stated the following at last year’s annual meeting, in response to a shareholder who reported that a fraudulent proxy had been submitted in his name:

"I discovered that at least two and perhaps three proxies were placed in envelopes by somebody who was not entitled to do so.” [Recording Part 5, 2:20]
“I've gotten a copy of one of those...” and “I would like to get a copy of your proxy so I could see what the signature looks like...” [Recording Part 5, 2:30 and 3:30]

Based on this, it is clear that Mr. Weinstein was aware of and had seen evidence of at least two fraudulent proxies. This casts doubt on Mr. Weinstein’s very first sentence:

“…he and I are assured that the only rejected vote was the one crude attempt to send in a ballot discovered by one shareholder when he attempted to vote in person.”

Based on this, in my opinion, Mr. Weinstein seeks closure rather than clarification.

I am confident that you and our other Directors want our elections to be fair and accurate, but there is a tendency in our community to seek closure rather than clarification. That was the case last year in dismissing rather than reporting on details of the hallway fiasco; that was the case two years ago when the chair of our Election Committee published a statement that “proxy receipts have gone out” when, in fact, they hadn’t.

Mr. Weinstein’s letter leaves some essential questions unanswered, and I believe it is important for our Directors to obtain clarification before acceding to his recommendation for closure.

  1. The first question to be answered pertains to the four uncontactable shareholders. A window of four shareholders removes accountability from the report – anyone who claims not to have been contacted can just be assumed to be one of the four. Our Directors would be remiss not to question this.

    I know of at least one shareholder who was not contacted. I propose that Counsel or the Election Committee receives the names of the four uncontactable proxy-voters, and writes the name of each on a separate sheet of paper. I don’t want to know their names, but I would want to verify that there are four sheets. Then I would share the names of uncontacted voters of whom I am aware. If the names I share are included among the four sheets, I should be shown these sheets (this would not disclose anything I haven’t documented that I know). If all records match, I would believe that there were indeed four uncontacted voters and would accept that the effort to contact proxy-voters was “good enough”.
     
  2. Another question to be answered pertains to whether there are shareholders for whom multiple proxy ballots were received. If fraudulent proxy ballots were received together with valid ones, who is to know which one was counted? A count of voters for whom multiple proxy votes were received needs to be provided, and if enough multiple ballots were received to affect the election results, these voters need to be contacted to ascertain whether they did indeed submit multiple proxy ballots.

Once again, I appreciate your attention to this matter, and I hope that our Board will start documenting and implementing “best practices” as to continually improve our election process.

Best regards,

Dan Strum





 

 




March 28, 2011

 
 

Dear Dan, Thank you for your recent email concerning last year's election. On behalf of the board, I apologize for the perception, perhaps correctly, that the circumstances of the election were not investigated and reviewed. Although it may not been publicly disclosed, the board did review last year's process. The corporation's general counsel, upon request of the board, produced a memo detailing his findings based on discussions he had with the American Arbitration Association. I attached counsel's memo for your reference.  

Please note that this year the board has made changes to the process which are intended to address the problems that arose last year, including changing vendors and instituting the use of absentee ballots. 

Sincerely,
Margarett Jolly
SPC President





 

 




March 15, 2011

 
 

Dear SPC Directors:

Nine months have passed, and questions revolving around our last election have not been resolved.

At the annual meeting on June 11, 2010 it was discovered that at least two incidents of proxy fraud had taken place. Counsel Art Weinstein stated unequivocally that this issue was being taken seriously. He said that proxy ballots that were received would be inspected, that shareholders who voted by proxy would be contacted, and that reporting would be made of the findings. Nine months later, not all proxy voters had been contacted, and no report was ever issued.

Elections are not just exercises in counting. The consequences of an improperly conducted election are serious. Have those serving as Directors for the past nine months been properly elected? Were those candidates who were not seated as Directors improperly excluded from our Board? If either of these is the case, it would result in an unacceptable misrepresentation of Shareholders interests with regard to all issues of governance, management and finance that have come before the Board.

It is absurd that follow-up to our election was never done, and I call for four measures to address this:

  1. The reporting that was promised should be made immediately, together with an indication of how the investigation was conducted, what was discovered, and what was the cause for the delay.

  2. Establish a formal Election Process to be followed year after year. This should include procedures, timelines, checklists, methods of verification, and methods of dealing with foreseeable contingencies (such as investigation of fraud and follow-up on the types of problems we have seen in recent elections). The idea of "signature verification" of proxy ballots, which has been discussed in the past, should be carefully considered.

  3. Part of the Election Process should stipulate that the outgoing Election Committee remains intact as a Taskforce until all issues related to the election they oversaw are satisfactorily resolved. There  can be no more blaming “last years’ election committee” or deferring to “the new election committee” as a means of disavowing responsibility for unresolved election issues. Directors in charge of overseeing our elections must be held accountable for completing their work in a robust manner. If their election-related obligations are not properly met, they Directors should be censured, as to make it clear to our community that our Board has zero-tolerance for election-related impropriety, and that our Directors don’t give each other carte blanche with regard to the performance of their duties.

The question of instituting fair elections ought not become an election issue! We have had serious problems with our elections for years, and these problems will not go away by themselves. Improperly conducted elections cast doubt on the legitimacy of our leadership and their mandate, and the lack of official election policy and accountability opens the door to ineptitude, inappropriate enforcement, or outright corruption. It is time to address this issue once and for all.

Incidentally, I have gotten quite a bit of flak over my documentation of problems and follow-up on election-related issues. Think about it.

Thoughtfully,

Dan Strum