CRIMINAL NEGLIGENCE OR PRUDENT STEWARDSHIP?

A source, who was not anonymous but of unproven
veracity, contacted me about 24 hours ago. Here is
the story that I was told.

As we all know, the USCF's Book and Equipment
business was outsourced to Hanon Russell's Chess Cafe.
The latter undertook to provide a minimum annual
commission of $350,000 or 13.5% on sales,
whichever proved greater.

The current claimed amount owed by the Cafe is $180,000.

However, this debt figure of $180,000 included
monies only up to April 2005, according to my source.
Mr. Russell, I am told, has not provided sales figures
for several months and, says the source, the estimated
debt has skyrocketted to $250,000 -- and, of course, growing
daily, in this version of events.

I am told that there is now a cash flow problem
at the USCF, which if true, comes three to four months
after my prediction earlier this year for April or May.

This source says that the USCF has yet to issue
a default of contract notice on Mr. Russell because of
Board majority sympathetic to him. The issue thereby
becomes one of possible criminal negligence in failing
to protect USCF interests by pursuing legal recourse or
one of prudent stewardship by a Board majority that feels
this moment is the wrong one to lay down an ultimatum.

According to my source, Bill Goichberg relayed
an ultimatum from Mr. Russell to the EB with two
demands:

1. The 13.5% commission rate be lowered;

2. He will only pay what he owes if the Federation EXTENDS HIS
CONTROL OVER B & E UNTIL THE YEAR 2012.

My source states that Mr. Russell's demands
were defeated by the Board and that a compromise
proposal passed. It was apparently rejected by Mr.
Russell. I do not know the terms of this compromise.

IS THE USCF BEING BLACKMAILED BY HANON RUSSELL?

My source, who may be speaking on behalf of
interested chess book and equipment dealers, believes
it is "certain" that "the USCF is being blackmailed and
faces losing the entire B&E business."

Mr. Russell, states my source, "is a lawyer and now
he has all the customer information. Someone should
be asking the question why is the USCF not getting its
money??? And why is the Board submitting to blackmail?"

That is the situation which comes from one
source of as yet unproven veracity -- a new source
among my stable.