"Tom Klem" writes:

The question still remains (I asked it over a year ago), where are the
millions which were donated to the Chess Trust. According to one poster on
this group, there is only around 200k left in it?

The last 990 I located online said that they had over $700K.
--
Mike Nolan

(WPraeder) wrote in message ...
Wayne, I think most of us are interested, aside from perhaps Bill "No Name
Calling" Brock. If you have dirt, spill it please.




"In summary, there are real limits to transparency, and forces mobilized in
favor of opacity. The experience of emerging economies and of the United States
clearly shows that opacity breeds corruption, market failures, and poor
underlying business conditions. Stakeholder webs are an unstoppable force for a
new glasnost in business and capitalist society. The train has left the
station. Nevertheless, as we've seen, battles around openness rage on."
[Don Tapscott, The Naked Corporation]


The USCF is an Illinois corporation. The US Chess Trust is incorporated in
Massachusetts. The standard of care imposed upon a nonprofit director or
officer is established by statute or by common law. The modern trend is to hold
nonprofit directors and officers to a standard of conduct comparable to their
counterparts in for-profit corporations. Notwithstanding this trend, nonprofit
directors and officers may be held to a higher standard of care whereby
liability is imposed for mere negligence or inattention, comparable to the
standard of care imposed upon a trustee managing funds entrusted to his/her
care.

What I know follows below. Since some apparently get so upset about my posting
USCF documents as well as emails from USCF officials, I have edited, merged,
and reformatted the information to try to make it more understandable. This can
cause inaccuracies.

Note, some USCF insiders are concerned about what they call the mindless drivel
posted on rec games not proving an accurate picture about who the good ones are
and who is out for themselves. However, the information provided below is from
USCF insiders themselves who have had the opportunity to provide greater
transparency into this situation. I encourage those in charge, involved, or in
the know to correct or update any of this information. I will leave it to the
rgcp readers to draw their own conclusions.


Question: What Happened?

Answers:

The Trust was apparently used to pay USCF-only expenses last year. Doyle has
billed the USCF over $60K for undocumented or clearly improper expense money.

As I recall, the $62,000 amount was a total of items Steve Doyle had proposed
as not being Chess Trust expenditures.

I have been told by Chess Trust Treasurer E. Steven Doyle that there are some
$62,000 in expenditures charged to the Trust which he believes are
questionable--ie. probably should have been paid by USCF. He has been
attempting to get detailed information from USCF on this. Last year his
requests for information were not responded to by the USCF (just as my concerns
and questions were ignored by Frank Niro et al)--so this represents charges
over at least a year and a quarter. I do not know at this time what part of the
$62,000 was in fact incorrectly charged. Re the $62,000 that appears to have
been incorrectly charged in the past, an invoice for that amount has been sent
to the USCF by Mr. Doyle. Repayment has started by having USCF pay charges that
would otherwise be paid by the Trust. Considering USCF's cash flow problems I
do not know when this matter will be settled in full.

As to the speculation over what we are owed, he should check with Frank Niro.
He made the deal to reimburse us for certain expenses. Now the Trust is of the
opinion that they don't owe us not because of the type of expenditures but
rather because they never approved the deal. This is typical of what we've had
to clean up from Niro.

As far as I know, the books between the USCF and the US Chess Trust are
complete and as accurate as our systems will allow at this point. There was an
unreconciled difference going back two years (about $30K I think) to the Loomis
period when no USCF transactions at all were formally recorded. It didn't have
to do with Chess Trust expenses, but with USCF expenses that were supposedly
paid on behalf of the Chess Trust that the USCF wanted to be paid for. The
difference was never paid, pending follow-up. I think it was left in the "due
to/ due from" accounts for further review. The auditors didn't ask for a
reconciliation due to "immateriality". It was one of the many "hits" we (i.e.,
the USCF) took during the fiscal 2003 audit.


Question: I understand there may be some $62,000 in expenditures charged to the
Trust which were undocumented or clearly improper expense money --i.e. probably
should have been paid by the USCF?

Answer: This is not a correct summary--words like clearly improper and
undocumented are not correct characterizations. The disputed amounts fall into
3 categories:

a) Clear mistake--will be corrected
b) Personnel related--will be reimbursed and
c) Dispute around Olympic team Reimbursements for expenses to the extend funds
were raised

I am still waiting for some documentation from personnel on various expenses
submitted.

ON "c" a donor backed out and never made the contribution expected. Therefore
the amount raised was less than the amount paid. The result in that
circumstance was USCF was to pay and not the Trust. I have asked that to be
honored and the funds reimbursed. This is over 1/3 of the $62K invoice.

Of the $62K invoiced to USCF ($20K relates to this matter) the USCF has sent
out sets and boards since October 1st to many schools. This already totals over
$4K.

We owed them for shared personnel costs thru September. This is approximately
$8K. So 12K has been paid on behalf of the Trust by USCF and would offset
against the $62K. I have been informed that the USCF will be reimbursing the
Trust for the amounts charged in error by December 30th.

It is not uncommon for us to have an annual payable/receivable between USCF and
the Trust. In fact every financial statement in the last 15 years at least as
had some accounting A/P & A/R during the year end process. They have always
been resolved within the following fiscal year.


Question: It is also my understanding that the Chess Trust Treasurer must keep
accurate books of all of the financial transactions of the Trust. The Treasurer
is responsible for depositing all funds of the Trust, for paying all its bills,
and collecting all monies due to the Trust?

Answer: It does and they are audited each year. The audit and the books are
reviewed by the Trustees. All these issues were raised during the audit. We pay
an Accountant and a Managing Director to handle these tasks. The Treasurer sets
the annual budget along with the Trustees. The Treasurer reviews the work
papers and reviews the work of the auditor. It was during this review that the
billings were identified


Question: First, did such questionable actions actually occur? If not, what
exactly was the amount paid to the USCF by the Trust and, if it was higher than
normal, what legitimate Trust expenses were being paid?

Answer: The budget was followed and all the expenses charged were part of one
of our programs. Some examples of budget items paid the last included the Kolty
seminars, chess set program, administration of the Chess HOF and Museum, Denker
Tournament, World Youth, Pan American Youth etc. Some of the expense levels
were above budgeted amounts.


Question: If such questionable actions actually did occur...Was the Chess Trust
Treasurer involved in approving or paying such expenses? If not who was?

Answer: The Managing Director and Exec Secretary signed the checks in question.
The checks in fiscal year 2002-03 you refer to were signed by Mr. Niro and Ms
Demaro


Question: If only Mr. Niro and Ms. DeMaro were involved in billing and paying
the undocumented or clearly improper expense money, how was there no negligence
on the part of the Chess Trust Treasurer?

Answer: It's up to the Trustees to answer this question.


Question: Per the Illinois Compiled Statutes Business Organizations General Not
For Profit Corporation Act of 1986, the USCF must keep correct and complete
books and records of account and must also keep minutes of the proceedings of
its members, board of directors and committees having any of the authority of
the board of directors; and must keep at its registered office or principal
office a record giving the names and addresses of its members entitled to vote.
All books and records of the USCF may be inspected by any member entitled to
vote, or that member's agent or attorney, for any proper purpose at any
reasonable time. Are the requests for information to get to the bottom of this
issue still being ignored by the USCF, as we were told they were last year? How
can this financial information not be available or no action taken on behalf of
the Trust about ignored requests?

Answer: That is correct [the Illinois statute]--and I did travel to New Windsor
to review these issues as soon as they surfaced. No, they have answered.
Beatriz had Grant Perks review immediately.


Question: Has an investigation of this matter been completed but covered up by
the current USCF Executive Board or Chess Trust Trustees?

Answer: The Trustees and USCF were both informed about the disputed amounts. A
complete review of the fiscal year charges was made by me and shared with the
Trustees. Beatriz notified the Exec Board. Mr Perks and the USCF Accountant
have reviewed the information and responded to all questions. We are still
pending some documentation on the personnel matters from the party involved.


Question: If an investigation has not been completed or auditors not brought in
to review the issue, why not?

Answer: I called the auditor about the Year end payable which USCF disputed.
This is one of the personnel expenses I referred to previously.

As I previously explained the expenses fall into three categories 1) Charged in
error--no question on these--USCF charged by mistake--they were inventory items
for the Chess Museum & HOF (Which the trust operates)--and will be reimbursed.
2) Personnel related which is being resolved between the involved parties. 3)
Olympiad expenses described in detail previously.


Question: What must be done to improve internal controls to mitigate such
questionable practices in the future?

Answer: Re the USCF-Trust financial matters, Steve Doyle has told me that all
of the Trust's accounting has been pulled from the USCF office. Trust checks
must be signed by Doyle or Winston. Doyle has eliminated intercompany transfers
between the USCF and the Trust so that now an invoice is required for any
payment that the USCF seeks from the Trust. Finally, the USCF Executive
Director will shortly no longer be the Executive Secretary of the Trust. Rather
Trustee Jim Eade has volunteered to do this without compensation. All these
changes should prevent any further overcharges of the Trust by the USCF.

The term questionable is not a fair word. Some mistakes occurred which are
being fixed. A sponsor backed out on Olympiad expenses as previously described.
So I have asked for a true up. The balance is personnel related.

Charges like these can happen between two entities. Disputes or mistakes have
always been handled thru the A/P A/R process.

I don't believe the mistakes were done on purpose.


Question: How can USCF members and Trust donors be better assured that our
Trust money is being used to make a difference in the life of a young person
rather than subsidizing USCF shortfalls?

Answer: Trust monies are being used for purpose in which they were intended.
The USCF is working down the payable as previously described.


Question: What is the current status of any effort being made to resolve this
matter?

Answer: I think I have addressed all your questions.



Regards,
Wayne Praeder

Fact-laden, no name-calling noted, but uncomfortable facts presented
in a professional manner.

Sunshine is good.

Thank you!

Thank you for the correction.

Still, there are a number of folks out here who remember the eccentric's
death benefit to the trust as being between 3 and 7 million dollars. What
happened to the money?

Tom Klem

"Mike Nolan" wrote in message
...
"Tom Klem" writes:

The question still remains (I asked it over a year ago), where are the
millions which were donated to the Chess Trust. According to one poster
on
this group, there is only around 200k left in it?

The last 990 I located online said that they had over $700K.
--
Mike Nolan