Hawaii Attorney General Asks Wailuku Main Street Assoc. President Tom Cannon To Dissolve Embattled Organization

Lady_Justice

This week the situation at the embattled Wailuku Main Street Association, the once mighty community nonprofit that’s been under fire for all manner of alleged violations and impropriety, got a whole lot worse. On Tuesday, May 21, Deputy Attorney General Hugh Jones–whose office has been investigating allegations against WMSA since early 2012–emailed WMSA Board Chairman* Tom Cannon the electronic equivalent of a gun with just one bullet in the chamber.

“As a result of our investigation and more recent developments, attached is a draft complaint for removal of the directors of WMSA and for its dissolution, that the Attorney General intends to file in Circuit Court, unless the directors accept the proposal set forth in our January 7, 2013 letter to you: WMSA’s board consent to the voluntary dissolution of WMSA and the distribution of any remaining assets, after payment of creditors, to the County of Maui, its principal funder,” Jones wrote in his brief letter, which MauiTime obtained. “Please advise me whether the five remaining directors of WMSA will accept this proposal on or before May 31, 2013.”

The 10-page draft complaint Jones attached to the letter–two copies of which MauiTime obtained from sources not in the Attorney General’s office–lays out in nauseating detail all the reasons Hawaii’s Second Circuit Court should dissolve WMSA once and for all. Put together, the letter and the draft complaint present Cannon with a stark choice: dismantle WMSA now and provide an accounting of all its remaining assets, or risk facing a court order requiring as much.

To put additional pressure on the Cannon, Jones also sent copies of both his letter to Cannon and the draft complaint to the five remaining WMSA directors. In response, at least one director has already resigned.

“I called him [Cannon] and told him I quit,” said Richard Dan, who owns Ka’amaina Loan and a few other pawn shops in Wailuku, on May 23. “He asked me to stay on for the next meeting, but I quit.”

Dan said he joined the WMSA board relatively recently, in March/April 2012. He said he joined because of people like former WMSA director Artemio Baxa and former WMSA executive director Jocelyn Perreira.

“It’s a real bad thing that we’re going to lose this board, if we lose it,” Dan said. “WMSA did a lot for this community. Jocelyn Perreira was at every single MRA [Maui Redevelopment Authority] meeting, except when she was sick. The woman really helped Wailuku.”

David Jorgensen, Dan’s attorney, said he would inform Jones of his client’s resignation. Jones said he couldn’t comment on his letter to Cannon or the draft complaint and hadn’t yet received any official notification of Dan’s resignation.

Reading over the draft complaint, the only question about Dan’s resignation is why he didn’t leave sooner:

• WMSA allowed its directors to vote by proxy–a practice “not permitted by Hawaii’s nonprofit law.”

• “Defendant Directors have failed to enforce provisions in the WMSA bylaws providing for the removal of directors who are absent at three consecutive meetings of the Board.”

• “The Board has failed to adopt, by board resolution, policies recommended by professional advisors for the protection of charitable assets of WMSA and for good governance of the organization.”

• Though former Executive Director Perreira testified that WMSA had a conflict of interest policy, “The policy that was produced is one sentence long and not meaningful or effective.”

• “There is little evidence of actual program services by WMSA in the last two years.”

That last charge is most damning. Until November 2012 WMSA was getting nearly a quarter million dollars every year from the County of Maui. It was the organization’s only real source of funding. Ostensibly they were spending the money on projects and services benefiting the community of Wailuku and other small towns on Maui.

What they were actually doing with the money remains a mystery–one made even more sensational by this bombshell of a revelation from Jones’ draft complaint:

“Defendant Thomas R. Cannon, the Chairperson of the WMSA Board refused under oath to disclose to Plaintiff the current location of its remaining assets and equipment even though he was ordered by the court to provide sworn testimony to the Attorney General and the location of WMSA’s remaining assets is non-privileged and relevant to an Attorney General Subpoena and investigation of breaches of fiduciary duty.”

Let me make this point explicit: According to Deputy Attorney General Hugh Jones, Wailuku Main Street Association Chairman Tom Cannon refused to say where he has placed the nonprofit’s remaining assets, which are actually the County of Maui’s assets, even when sworn under oath.

Add all this to the recent lawsuits filed against what remains of WMSA (Jonathan Starr is suing for about $10,000 in unpaid lease payments incurred when WMSA recently vacated their Wailuku Town office and the County of Maui is seeking $11,000 worth of property that county officials say WMSA owes them), and it’s clear Cannon has placed himself in a very bad spot.

What he intends to do is unknown. Though Cannon used to provide extensive and often insulting comments in response to my questions, he did not answer an email requesting a statement for this story.

* This story originally misidentified Cannon’s title.

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