In The Spirit Of Openness

I regret to inform you that the Legion of Tech Board of Directors (“Board”) recently discovered that a previous board member had taken money from the organization.  That person spent thousands of dollars on personal expenses using a credit card that the Board was unaware carried a balance.  That card was connected to a bank account that the former director was to have closed months ago.  The account remained open and the former director wrote personal checks from the money in the account–money that was to have been transferred to the new bank account upon its close.

Upon learning of this fraud last week, the Board acted swiftly to hold an emergency board meeting.  Actions were taken to freeze both accounts and the individual was removed from the Board.

The Board has appointed myself (Adam DuVander) and Raven Zachary as the team to deal with this matter on behalf of the Board. Additionally, the board elected Raven Zachary to serve as interim chair for the remainder of 2009.

How does something like this happen?  First, remember that we are volunteers that are motivated to bring people together for great events.  To pull off something like Ignite Portland or BarCamp, all the organizers need to count on each other to do their part.  The same is true on the Board.  At this point it probably goes without saying that we misplaced our trust.

As current treasurer, this discovery came after months of repeated attempts to gain access to the financial records for the account where the fraud took place.  Prior to this event, I never had any association with the account, outside of receiving a check for what I was told was the closing balance.

The new account at a different bank of which I do have control, has always had an up-to-date accounting available to the finance committee.  In addition, we have improved our financial process.  All expenses, of which we have few, will be signed by myself and another Board member.  Additionally, all Board members will be aware of each expense.

With the assistance of an attorney, the Board is attempting to reach an agreement with the former Board member to repay all funds.  It was only the pursuit of this agreement, on the advice of our counsel, that kept us from making this matter public earlier.  Know that we have and will share as much as we possibly can.

Thank you for taking the time to understand this issue.  Legion of Tech remains committed to producing Ignite Portland, BarCamp Portland, and related events.

Update: Raven posted a comment below with additional clarification – please read it.

11 thoughts on “In The Spirit Of Openness

  1. I would like to commend the Legion of Tech board for approaching this with openness, honesty, and integrity. Your foresight will ensure that LoT remains trusted in the future. Thank you for being leaders.

    -JH

  2. I honestly think that this will end up being a positive experience for the board and the organization as a whole. As many wise men have said you learn more from your setbacks and failures than you do from your successes. Is this a failure? Perhaps but it’s more importantly an opportunity to grow in new ways that will better the board members as well as improve the overall Portland tech community.
    While recent setbacks have made me unable to fully support or help the Legion of Tech if there is anything I can do don’t hesitate to ask.

  3. I applaud the LoT leadership for making the difficult decision to be open about this situation. I used to work as a practice management consultant to dentist and embezzlement was/is rampant in the industry. However, few dentists will admit to being embezzled by an employee and even fewer take legal action. This results in the embezzler simply moving on and taking a position in another dental office, allowing them to engage in the same illegal behavior again and again.

    While being open about an embezzlement is difficult, embarrassing and (potentially) painful, it positions the victim organization for a faster recovery and provides others an opportunity to learn.

    Once again, LoT demonstrates it is about community and acts in the best interest of the community.

  4. Didn’t the guy stealing from you all get his golden event production elf? The one that comes with every event produced because we all make so much money doing it? He polishes your diamond fingernails. Amirite?

    Event production is hard enough without a jerk like this being a total shit and making things 17 times harder than they already are. Jerk.

  5. Pingback: Legion of Tech falls victim to embezzlement « Silicon Florist

  6. Hi everyone. I am posting this on both the Silicon Florist and Legion of Tech blogs to answer some questions that people have concerning our announcement yesterday.

    First of all, thank you to everyone for the outpouring of support on Twitter and in the various blog posts. Last week was a very difficult week for the Legion of Tech board members and delivering bad news is a hard thing to do. It’s understandable that people in the community have a mix of emotions – shock, disappointment, sadness, anger – we as board members are experiencing these same emotions. So far, time isn’t making these wounds heal any faster.

    We first learned of the fraud on Monday, October 19th. It consumed the entire day for a set of board members investigating the matter and we held an emergency board meeting in the early evening with all board members present to make a number of quick decisions. These decisions included the hiring of an attorney (who we had spoken with earlier in the day), the hiring of a bookkeeper for a detailed audit, and new accounting policies for all future expenditures requiring at least two board members to approve. The two board resignations in August occurred months before we knew of this fraud, so those resignations are unrelated.

    How did this fraud happen? Adam walked through this in his posting on the Legion of Tech blog, but I wanted to add a few comments. This fraud was the act of a single individual, acting alone, without the knowledge of the other board members. We were regularly presented with false information, and a bank account that we were told was closed was kept open to abuse a credit card. We’ve been producing events as a group in Portland before there was a Legion of Tech. When Legion of Tech was formed, roles and responsibilities carried over into the organization. There was a proven trust coming in, and that trust was abused. If there is a lesson here to be learned for others, it’s that where money is concerned, friendships and past trust should not be a justification for minimal oversight.

    In terms of why we are making this issue public but not specifically naming the individual at fault here. As a board of five members, there is a diversity of opinions about how we should handle this matter. As we are taking the advice of legal counsel, someone who has dealt with these exact types of situations before, our own opinions as board members are not important. We have to follow the advice from an expert at this time as to how to best handle the situation. We are definitely not making decisions based on a desire to minimize the negative impact to the person who committed the fraud – we are following the guidance of our attorney, guidance that may change over time depending upon how this situation unfolds.

    The events will go on, and our hope is that the community will continue to allow us to serve. We remain committed to these events and hope that the community will continue to enjoy attending them as much as we enjoy hosting them.

  7. A couple of questions: Is Legion of Tech a 501(c)(3) organization? How are board members selected? If not a 501(c)(3), who is the board answerable to? What does it use for recommended organizational practices? Just trying to understand more of the backstory…

    I’m glad to hear an attorney is involved. The one consistent complaint I’ve heard expressed about Legion of Tech (amidst lots of praise) is the perception that the group/board is comprised exclusively of people who are friends…kind of an insider group thing. To recover from this, and gain or regain the confidence of people who have supported the organization’s efforts financially or otherwise, I think it’s really important to demonstrate that you are treating this seriously, ensuring that the money is repaid and justice is served, and taking steps to ensure it can’t happen again. Having a larger board, including “outsiders”, might help with the perception mentioned above. Making this public is an important first step.

  8. [i posted this on the silicon florist comment section on his story on this issue, and thought i’d post it here too.]

    here’s just what i wanna say —

    LoT has put on some great events in the year or so i’ve been hanging out with this community (introduced to them all by the ubiquitous & talented mr. @donpdonp, my former roomie & tenant & a great pal). i’m very happy they exist, bar camp exists in portland, ignite exists, etc. i would not enjoy or know half the things i needed to help bring up my sagging skill set in web & coding back up to par, after a five year hiatus, if it weren’t for their existence and these events. and i am very grateful for this. and i say this as a person who got his ignite presentation given the beeg ol’ thumbs down. oh well, i can always submit another next time. ;o)

    and yes, we all need to work together, not overly criticize what’s done is done, to make sure there is still are many, many more next times, that there is still a legion of tech or whatever form it takes, and that this and other burgeoning tech community creative, informative & fun events (hello? steven walling championing a TED PDX?) continue and gain momentum, despite set backs like this. or, as raven & adam have indicated, that they are learned from and actually make the board and wider community stronger for it.

    to raven, adam, chris, etc., i agree & stand with you on this.

    i personally appreciate this “spirit of openness” they are attempting here. we can all “monday morning quarterback” until we’re bloody blue in the face about when it should have been done, how it should have been done, how much more privacy should have been employed, etc. personally, i’m trusting they followed the advice of their legal counsel, and didn’t say a word until it was ok to do so. personally, this is what i want to see. trust me, i’ve been there (more on that in a bit). i’ve been a big, hyooooge corporations and start-ups where just the sort of private, behind-closed-doors skullduggery and “keeping it private for legal” or “keeping it private to save a person’s feelings/reputation” is given as an excuse to a bunch of people who are directly effected by the outcome anyway. we may wish that we don’t live in the social media facebook/twitterverse, amongst the twitteratti, as i call them, any more. guess what? that genie don’t fit so easily back in the bottle (neither does barbara eden, but no matter). even before social media, twitter, blogs, etc., word would still get out. and then, at these companies, you heard it through gossip — which always makes you look over your shoulder and question if you’ve really gotten the whole true story. LoT is not a big corporation. i have no idea if they ever filed for 501c(3), or the like. but they are a group of dedicated volunteers who love tech & this community & want to see it grow. until the case of this one person making this breach of trust, who has been removed and is being dealt with by their legal counsel, i have never had any reason to doubt their motivations or what they do for this community. in fact, this spirit of openness, now that the situation is dealt with, makes me trust them all the more. they are not, in any way, beholden to any of some of the very corporatesque standards & suggestions people seem to want to hold them to about what should be private when. this is the new way of doing things — the new openness. i like this better. the openness. yeah, i like it a lot.

    as the saying goes, sunlight is the best disinfectant.

    as for rick & silicon florist — he’s doing his job. he reports on portland/nw tech scene and has an angle of encouraging it to flourish. jokingly, i call rick my “newman” or “arch-nemesis” just to have a laugh with him at gatherings & such about how much we can over-market & hype anything, especially in tech. but i know his aim here is true. it was a story that was out there on a blog, about something that effects the tech scene here in a big way. he reported on it and gave us his view. that’s just doing his job, not creating “hoo-hah” (wotevah dat is).

    now, on a more personal note — i have a very personal sort of feeling & somewhat of a connection to this situation, because i have been in the position, in the past, of the person who took the money & hid what they were doing. yes, that’s right, i’m coming clean about this. in the 90s, i worked for a very big software company, kind of well-known. while working in one department dealing with corporate clients, i was given a card to make long-distance calls to call back important clients on evenings & weekends. when i moved to another department, i just very purposefully neglected to mention i still had the card. i ran up about $2300 in long-distance charges on that card over the next 2 years. when it was found out by a manager, i got fired, had to re-pay back the money charged on the phone card, and lost a career i had built up over 6 years. i was lucky — they could have also called the cops. and i paid a price in reputation, especially as a fledgling zen buddhist at the time.

    so i’m not excusing what this person has done in any way — anymore than i’m excusing what i did way back in the day (a decade ago, now). both were a breach of trust, wrong and just very dumb ass. but i’m saying i understand, maybe better than a lot of people, how he or she feels right now. our tendency, as we try to come off as all so hip, superior, witty & snarky in the blogosphere/twitterverse, would be to vilify and ‘erect gallows.’ [note: someone actually said that on the silicon florist blog comments, i’m just quoting.] i’m hoping, as someone who has been through this, maybe not. yes, this person will need to bear the brunt of people’s hurt feelings & abused trust for a while. maybe a long while. the best thing they can do is to hear people’s hurt & anger, and say, “you’re right, i did that, and it was horribly wrong and i will never do that again” (and of course, back that up with action). and previous status & responsibilities entrusted with this person are not going to happen now. but i’m hoping restitution and real amends (which is different from “i’m sorry,” amends is actual changed behavior), over time, they can begin to re-integrated in the community.

    that’s what i hope, at least. as someone who has been there.

    and i don’t think LoT has anything to apologize for here. that is way too much ‘blame the victim’ for me. they have my support, in this trying time. as they should from anyone who has benefitted from what they’ve done here in portland tech.

    if anything, we should re-double efforts to help get them sponsors for events like ignite, now that their dealing with a very obvious short-fall.

    my $0.02, plain.

  9. Pingback: Legion of Tech Board Elections for 2010 at Legion of Tech

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