Answer by Sam Sloan to Ethics Complaint by Grant Perks

Grant Perks has filed an ethics complaint against me dated July 26,
2006 in which he alleges that I made statements in the USCF Election
campaign concluded a few days earlier which I "knew or should have
known to be false". Essentially, he is claiming that had it not been
for the allegedly false statements made by me, he would have been
elected and l would have been defeated. Therefore, he apparently wants
the Ethics Committee to reverse the results of the election.

I believe that he is mistaken. All of the statements he cites by me
were made on the USCF Forums at http://www.uschess.org/forums in the
USCF Issues section. This section had small readership and few
posters. A former USCF President has stated that he has not even been
able to find it, much less post anything there. During the period in
question, that forum seems to have had less than 100 regular readers
and only about 10 or 20 regular posters. In addition, Grant Perks
conducted no election campaign at all, other than his postings to the
USCF Forum, whereas I on the other hand spent three solid days at the
World Open handing out flyers and talking to voters. I am sure that
even if every reader of the USCF Forum had switched their vote and
voted for Grant Perks instead of for me, I still would have defeated
Grant Perks by a wide margin, as I finished more than 200 votes ahead
of him in the election.

However, this is all irreverent to the issues before this committee.
One of the issues here is whether statements made during an election
campaign can be the subject of an ethics complaint. The voters have
decided. I won the election. Does a sore looser have the right to file
a complaint of this nature with the Ethics Committee?

I believe that he does not. His complaint is entirely frivolous and
without basis. I believe that his complaint should not merely be
dismissed, but that Grant Perks should be reprimanded for filing such
a ridiculous complaint, especially since Grant Perks is both a former
USCF Executive Director and a Former Chief Financial Officer, and he
should have known better than to file this absurd complaint.

In addition, Grant Perks has violated several rules in fining this
complaint. In the first place, he failed to pay the required filing
fee of $25. He stated in his complaint that Executive Director Bill
Hall agreed to waive the requirement that he pay the $25 fee. Bill
Hall clearly did not have the right to do this. Even though Grant
Perks is an employee of the USCF (all though he denies this), he still
has to pay the fees just like anybody else. This issue was discussed
during the August 14, 2006 meeting of the Executive Board and Bill
Hall was reprimanded by the president for failing to require the
payment by Grant Perks of the $25 fee. Bill Hall was also instructed
to contact Grant Perks and ask him to pay the money.

A tremendous amount of time has been spent discussing this issue of
the $25 filing fee. Not only was this issue discussed at a meeting of
the Executive Board, but there have been email exchanges and telephone
conversations over this issue of the $25. It is a small amount of
money, but still Grant Perks must pay it. The fact that he is paid for
his work by the USCF is more reason, not less reason, why he should be
required to pay the $25.

In addition, Grant Perks states in his submission of his ethics
complaint that he is donating the $25 to the US Chess Trust instead. I
have asked the manager of the US Chess Trust about this and was
informed that Grant Perks has donated no money to the US Chess Trust.
Thus, it appears that Grant Perks has lied.

In addition, the US Chess Trust is a separate organization from the
USCF. Donations to the US Chess Trust are tax deductible. In no way
can a donation to the US Chess Trust be used to offset a filing fee
required to be paid to the USCF.

I believe that even if Grant Perks belatedly now pays the $25 filing
fee, he should be reprimanded. In addition, his fee should not be
returned, because his complaint is entirely frivolous and without
merit.

Grant Perks has violated another requirement for the filing of an
ethics complaint, because he failed to specify what provision of the
USCF Code of Ethics I violated. None of the provisions of the USCF
Code of Ethics cover the subject matter of his complaint.

The Code of Ethics sets forth nine different grounds for filing an
ethics complaint, numbered a through i. None of the allegations by
Grant Perks fall into any of these nine categories. Thus, the Ethics
Committee is without jurisdiction to consider his complaint.

See http://www.uschess.org/org/govern/codeofethics.php

In addition, Grant Perks did not sign his ethics complaint. He
apparently sent it over the Internet. Since I personally am the victim
of hundreds of false messages posted on the Internet by the Fake Sam
Sloan, I strongly feel that the filing of an ethics complaint by email
should not be allowed and that no complaint should be received unless
it is signed.

His ethics complaint consists of a one page cover letter and six pages
of postings by me to the USCF Forum. He makes a broad general
statement that my statements were untrue, but he fails to describe
with particularity why they were untrue. Indeed, I would have welcomed
a complaint which would have stated what he disagreed with and
provided some facts, so that I would have had an opportunity to
correct any errors I may have made and to hear his side of the story.

The one and really the only issue Grant Perks raises in any detail is
he writes that I said that he was fired twice by the USCF. He says
that he was never fired. However, my information is that he was fired,
expect that when he was informed that he was being fired, he was
allowed to resign rather than to be officially fired.

This incident took place in November, 2003. It was discussed at length
on the chess politics newsgroup at the time. I have spoken to two
different board members who were on the board at this time. The both
say the same thing, which is that the board voted to fire Grant Perks
and gave the president the authority to do so. The president proceeded
to have a polite conversation with Grant Perks. When Perks learned
that the board had voted to authorize his firing, he said that he
wanted to resign, rather than to be fired.

Grant Perks still apparently wants to split hairs over this issue.
However, he what he says in his ethics complaint is absolutely not
true. He states that his employment was "temporary in nature, with an
agreed duration." This implies that he left his office because his
term was up. This is not true.

Similarly, his claims about the subsequent July 2005 incident are not
true either. On or about July 20, 2005, the board voted 3-1 to hire
another person to replace Grant Perks. I have spoken to a member of
the board at that time, who informs me that Grant Perks was being paid
$5,000 per month, which was an exorbitant amount, especially since
Grant Perks was a do-nothing person. Several USCF insiders have told
me the same thing, which is that Grant Perks does nothing and
accomplishes nothing. He is completely laid-back and never does
anything. When he is involved, nothing gets done. Also, the rates he
charges for doing nothing are well above industry standard. Therefore,
the board voted to replace him. Again, this was not because his term
was up.

Now, turning to his six pages of quotations by me, he fails to specify
why these statements were false. I stand by them.

In addition, he has quoted them out of context because he fails to
include his statements to which I was responding.

For example, he quotes me as stating that, while he was Chief
Financial Officer of the USCF, he improperly paid to the President
$18,919. However, he fails to explain what is wrong with my statement.
Does he claim that he did not pay $18,919, or that he paid more or
less or that he paid nothing at all?

Also, he implies that his payment of $18,919 was documented.

Now that I am on the board, I have inquired of the USCF office about
these documents, with the result that no documents have been found.

Since the USCF office apparently does not have the documents, I ask
that Grant Perks provide the documents, if he has them. If there are
no such documents, I believe that Grant Perks should be required to
reimburse the USCF for the $18,919 that he improperly paid.

Another example, in his ethics complain the states that he was not
employed by the USCF. However, in a posting to the USCF Forums during
the election campaign he stated that he was employed by the USCF.

The by-laws of the USCF state that "no employee" may run for the
board.

Grant Perks, in his postings to http://www.uschess.org/forums admitted
that he was working for the USCF. In three postings, all on June 1,
2006, Grant Perks wrote:

Topic: Zoning of New HQ Bldg.
GrantPerks Posted: Thu Jun 01, 2006 10:35 am ? Subject: Zoning of New
HQ Bldg.

"Sam, I am sitting in a building in Crossville TN that has a sign on
the front that states "The home of US Chess"."

Topic: Zoning of New HQ Bldg.
GrantPerks Posted: Thu Jun Ol, 2006 7:11 am ? Subject: Zoning of New
HQ Bldg.

"Sam, while I was also opposed to the move to Crossville, since we are
here and in a new building I see no justification to move."

Topic: Two Tiered Membership in USCF GrantPerks Posted: Thu Jun 01,
2006 5:13 pm ? Subject: Two Tiered Membership in USCF

"It helps to be in Crossville around the first of the month. I hope to
get a better look at it tonight after work."

So, as anybody can plainly see, Grant Perks was waiting until he gets
off from "work" in the USCF office in Crossville.

Also, GrantPcrks Posted: Tue Jun 20, 2006 5:39 am

"At this point, we are still considering what to do about this."

So, Grant Perks, as a member of the USCF Office Staff, was
participating in the decision about what to do about the messed-up
ballots, in which he was a candidate.

Anybody can realize that this was improper and possibly even illegal.

The Executive Board hires the Executive Director and the Executive
Director in turn hires the employees. Thus, obviously, if a member of
the board is also an employee, this is a major conflict of interest.

In addition, recently, just within the past few weeks, Grant Perks has
being doing job interviews for the USCF, interviewing candidates for
the position of CFO. He is obviously being paid for this work, as
Grant Perks never works for free. I wonder why the USCF Office keeps
hiring him for these jobs. Is there no other person willing to work
for the USCF?

There is an important principle of law here. Not-for-Profit
Corporations are supposed to be not for profit. This means that the
elected officers of the corporation are not supposed to receive any
financial benefit. This means that Grant Perks was not supposed to pay
$18,919 to the president. By paying $18,919 to the president, Grant
Perks jeopardized the tax exempt status of the USCF.

The USCF has already been investigated by the IRS for this. The USCF
was under IRS investigation during the early to middle 1990. The USCF
survived that investigation, but it might not survive the next one.

Regarding the $18,919 paid by Grant Perks as CFO, about half of that
was in per diem allowances at $50 per day. However, under IRS rules,
per diem allowances are only to be paid for "Away from home travel".
However, Grant Perks was paying this $50 per day seven days a week, 30
days a month, for a total of $1500 per month, starting January 3, 2005
through at least the end of May 2005. The President was not away from
home during that entire period. Therefore, those payments were
improper. Since Grant Perks was the CFO and since he is a CPA and
should know better, I believe that Grant Perks should be required to
repay the money.

There is another question of how much money Grant Perks paid himself.
As noted previously, a majority of the board felt that his payments to
himself were exorbitant, and for that reason he was fired or
officially replaced a second time on July 20, 2005.

Moreover, by filing this ethics complaint, Grant Perks has brought
these issues to the public view. It is entirely possible that his
ethics complaint will ultimately bring on another investigation by the
IRS.

For Grant Perks to run as he did for USCF Election while he was
employed by the USCF Office was a violation of the by-laws. The by-
laws of a corporation are enforceable by the courts. Violations of by
laws are serious matters which can result in jail time, as the Enron
Case has demonstrated.

In his ethics complaint, Grant Perks states "I did some consulting
work during the last week of May 2006". This coincides with his June
1, 2006 Internet posting I have cited above. Note again that he says
that he did "work" for the USCF. This means that he was employed and
therefore was prohibited by the by-laws from running for election.

In addition, I have twice directly asked Bill Hall whether Grant Perks
ever paid the $250 filing fee to run for election. I have received no
reply.

Almost all of the quotations cited by Grant Perks involve questions
about improper payments or the propriety of his running for election.
However, there is one other subject that interests me.

Perks has underlined the following statement by me as being malicious.

Posted: Sat June 24, 2006 8:365 am

"At the end of year 1999 the USCF had $2 million cash and equivalent
in the LMA. We know that the money was real, that it existed, because
it was invested in a mutual fund, the Oberweiss Fund. By 2005 the
money had vanished. It had been lost. The Oberweiss account no longer
existed. That is how we know that the USCF lost two million dollars."

By underlining the above words, Grant Perks is stating that those
remarks were "the most malicious".

However, in what way does he disagree with these remarks?

At about this time, Grant Perks made a posting that ever since I
searched for and have not been able to find. It seems to have been
deleted. It shows how disingenuous Grant Perks really is.

The gist of his statement was:

"In 1999, the USCF had a retained earnings deficit of $200,000. Now,
the USCF has a retained earnings surplus of $100,000. Therefore, the
USCF is now $300,000 better off than it was in 1999."

This statement by Grant Perks was especially outrageous. It brings up
the well-known adage that there are, "lies, damn lies and statistics"
and that "87.53% of all statistics are made up on the spot'.

Everybody who has studied the financial statements knows that the
reason why on the surface the USCF seems to be better off by $300,000
in 2006 than it was in 1999 is that in 1999 the USCF was carrying on
the books a LML or Life Member Liability of $2,000,000. Since then,
that minus $2,000,000 has simply been eliminated from the books. Also,
the USCF sold the building in New Windsor for $513,000, thereby
creating a paper profit from the depreciated costs.

Thus, Grant Perks has used false and misleading financial figures to
make the USCF seem to be much better off than it really is.

In summary, the ethics complaint by Grant Perks should be dismissed
and Grant Perks should be reprimanded by the Ethics Committee for at
least the following reasons.

1. There is no jurisdiction, because none of the matters alleged in
the ethics complaint are violations of the Code of Ethics of the
United States Chess Federation

2. Grant Perks failed to pay the required $25 filing fee.

3. Grant Perks failed to sign his ethics complaint.

4. His complaint concerns purely political matters which are outside
the purview of the Ethics Committee.

5. Grant Perks has failed to demonstrate that any of the statements
made by me were false or that I knew or should have known that they
were false.

Dated: Bronx, New York
October 10, 2006

Respectfully Submitted,
Samuel H. Sloan