7 years of operating unethically

[Guest Dtat720]

11 years ago i built a bmx track in my hometown. Formed a 501c3, operated under roberts rules, etc. After 4 years, I assisted a group to form an association to take it over. Once that was done, i took the proper steps to dissolve my 501. 
 

Fast forward 7 years, this group has gone through many board changes, theft, completely unethical actions, almost zero record keeping. They have asked me to come back in as President and clean it up, get it back to operating legally and ethically. When i say legally, for the past 5 years they have been soliciting tax exempt donations and sponsorships while having their tax exempt status revoked by the IRS. Taxes were never filed after the new assoc. was formed. Meetings have been run out of order, by laws changed on the fly without taking the proper steps. It is a mess. 
 

So, my question is, knowing by laws were changed not following proper instruction, this association actually should still be operating under the original by laws, correct? 
 

I am currently going through audio recorded minutes for the monthly meetings over the past 7 years. Very few meetings were called to quorum, minutes have never been voted in to record. Am i correct in thinking we are starting from scratch, and about to spend a boatload of cash on an attorney and cpa? 

[Richard Brown]

I’m afraid this question is more of a legal question than one about parliamentary procedure  and is outside the scope of this forum. Our answers are limited to giving advice on parliamentary procedure according to the rules in RONR to keep from getting into this type situation..  At this point I believe you need legal advice more so than advice on parliamentary procedure.

Edited June 15, 2020 at 03:36 PM by Richard Brown
Typographical correction

[Josh Martin]

1 hour ago, Guest Dtat720 said:

11 years ago i built a bmx track in my hometown. Formed a 501c3, operated under roberts rules, etc. After 4 years, I assisted a group to form an association to take it over. Once that was done, i took the proper steps to dissolve my 501. 
 

Fast forward 7 years, this group has gone through many board changes, theft, completely unethical actions, almost zero record keeping. They have asked me to come back in as President and clean it up, get it back to operating legally and ethically. When i say legally, for the past 5 years they have been soliciting tax exempt donations and sponsorships while having their tax exempt status revoked by the IRS. Taxes were never filed after the new assoc. was formed. Meetings have been run out of order, by laws changed on the fly without taking the proper steps. It is a mess. 
 

So, my question is, knowing by laws were changed not following proper instruction, this association actually should still be operating under the original by laws, correct? 
 

I am currently going through audio recorded minutes for the monthly meetings over the past 7 years. Very few meetings were called to quorum, minutes have never been voted in to record. Am i correct in thinking we are starting from scratch, and about to spend a boatload of cash on an attorney and cpa? 

Based on the limited facts available, I am not comfortable making a blanket declaration that the association "should still be operating under the original by laws" or that the association is "starting from scratch."

I will say the following regarding the various parliamentary matters which have been raised:

There is a general statement that "meetings have been run out of order." This statement is too vague to know what effect, if any, this would have on the validity of business conducted at these meetings. Generally speaking, a Point of Order (and an Appeal, if necessary) must be raised at the time of the violation. Some violations, however, are so egregious that they constitute a "continuing breach," in which event a Point of Order may be raised at any time during the duration of the breach. What exactly this means for the business conducted, however, will depend on the specific facts and circumstances.

There is a general statement that "by laws [were] changed on the fly without taking the proper steps." Again, this statement is too vague to know what effect, if any, this would have on the validity of the bylaw amendments, as explained above. To the extent that the violations of the proper steps constituted continuing breaches, this would mean that those amendment(s) would be invalid. Conceivably, this could mean that an older version of the bylaws would still be in effect. I suppose it is even conceivable (although one hopes it would be unlikely) that every amendment ever adopted to the bylaws has such a breach, and in such an event this would mean that the association "should still be operating under the original by laws," but that is not a conclusion to jump to. Rather, the circumstances around each of the amendments adopted would need to be carefully reviewed.

There is a statement regarding "going through audio recorded minutes for the monthly meetings over the past 7 years." It should be clarified that while RONR notes that audio recordings may be helpful to the Secretary in drafting the minutes, the audio recording itself is not the minutes, which are a written record of the business conducted at the meeting (and, if taken properly, will contain a great deal less information than the audio recording). As a result, there is no such thing as "audio recorded minutes."

There is a statement that "very few meetings were called to quorum." I am not entirely familiar with the phrase "called to quorum," but if this statement means that some meetings did not have a quorum present, that is potentially a continuing breach. RONR notes, however, that due to the difficulty in determining the presence of a quorum at a meeting in the past (especially those which may have taken place years ago), a Point of Order regarding the lack of a quorum may only be given retrospective effect if there is "clear and convincing proof" that a quorum was not present at the time. Ultimately, the assembly will determine what constitutes such proof. To the extent that the assembly determines that there is "clear and convincing proof" that a quorum was not present for a particular meeting (or portion of a meeting), then action taken during that meeting (or portion of a meeting) are null and void unless later ratified by the assembly at a regular or properly called meeting with a quorum present.

The fact that "minutes have never been voted in to record" is problematic because the minutes serve as the official record of the assembly's meetings. This error should be corrected as soon as possible, by approving draft minutes of older meetings (or recreating them from the audio recordings first, if the draft minutes do not exist), and by approving draft minutes in a timely manner in the future. The fact that minutes have not been approved (or even if they have not been taken), however, has no effect on the validity of the business conducted at the meetings.

So based on all this, it seems exceedingly unlikely that the association will be "starting from scratch," since I rather doubt it is the case that the assembly has managed to screw things up so badly that every action it has ever taken has a violation in the nature of a continuing breach (and that there is sufficient proof of this in every case), but it may well be the case that certain actions taken by the assembly (including, potentially, amendments to the bylaws) are null and void.

The rest of these matters are not parliamentary in nature and are beyond the scope of this forum, and involve questions which should be directed to an attorney and/or an accountant.

I would also add that, even if it is desired to delve into the parliamentary issues further, it may be necessary to hire a professional parliamentarian who can give the issues the full time they deserve, since delving into what is alleged to be numerous issues over the span of seven years may be a bit beyond what this forum can offer. The National Association of Parliamentarians and the American Institute of Parliamentarians provide referrals.

Edited June 15, 2020 at 04:15 PM by Josh Martin

[Guest Dtat720]

Thank you both for the replies. 
 

when i say by laws were changed on the fly, i mean that literally. The elected president in 2013 changed by laws allowing himself to be president, secretary and his wife vice president and treasurer. Then amended by laws to shield financial disclosure to the membership. Being bmx parents, they didnt know any better, didnt question any of it. In late 2015, he was forced out, a new group took over and tried to bring order. The prior president destroyed all records, closed the bank account and handed the new leadership a cashier check for what he claimed to be the full balance. But no ledgers to prove so. 
 

So there really is no continuous record. Even worse is, each group since has simply picked up where the previous left off and nobody took the time to see what anything was. 

[Josh Martin]

23 minutes ago, Guest Dtat720 said:

when i say by laws were changed on the fly, i mean that literally. The elected president in 2013 changed by laws allowing himself to be president, secretary and his wife vice president and treasurer.

I'm not quite certain what the amendment means. Was there a rule in the bylaws which prohibited this previously? No rule in RONR prevents a husband and wife from serving as officers or prevents someone from holding more than one office.

In any event, it is certainly correct that amendments adopted unilaterally by the President are not valid and are null and void (unless the bylaws provide otherwise, which seems unlikely).

23 minutes ago, Guest Dtat720 said:

The prior president destroyed all records, closed the bank account and handed the new leadership a cashier check for what he claimed to be the full balance. But no ledgers to prove so. 

So there really is no continuous record. Even worse is, each group since has simply picked up where the previous left off and nobody took the time to see what anything was. 

This increasingly appears to be a matter for an attorney.

Edited June 15, 2020 at 05:25 PM by Josh Martin

[Joshua Katz]

It seems to me that, from a parliamentary perspective, you take the bylaws as you find them, then walk them back one at a time. That is, if a certain bylaw was adopted incorrectly, raise a point of order as to that point, and demonstrate it. I don't think it makes sense to do it the other way, by presuming all amendments invalid until shown otherwise.