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UPREME COURT OF THE STATE OF NEW YORK
COUNTY OF ORANGE
_______________________________________________
Sam Sloan
Petitioner
INDEX
No. 2004-7739
-against-
Beatriz Marinello, Tim Hanke, Stephen Shutt,
Elizabeth Shaughnessy, Randy Bauer, Bill Goichberg,
Kenneth M. Chadwell and United States Chess Federation
Respondents
________________________________________________
Memorandum of Law In Support of Petition
__________________________________________________________
This is a special proceeding brought to enforce the rights of a
Not-For Profit Corporation under New York Not for Profit Law,
including 510, 511 of that Law.
In October, 2004, the United States Chess Federation sold its
principal asset, which was its building located at 3054 Route 9W, New
Windsor, New York. This building is located in Orange County.
The USCF is a Not-For-Profit Corporation which has resided in New York
State since its formation in 1939. Therefore, this court has
jurisdiction.
Sections 510 and 511 of New York Not for Profit Law establish an
elaborate mechanism for the sale of a building which is the principal
asset of a Not for Profit Corporation. The building at 3054 Route 9W
was the only significant asset of the corporation. The Executive Board
of the USCF has ignored this law and apparently is not even aware of
it. Indeed, they seem to be completely unaware of the obligations and
duties of board members of a Not for Profit Corporation. They voted to
move by a 4-3 vote and have taken steps to implement a move to
Crossville, Tennessee, without even making a cost analysis of the
costs of the move or developing a strategic plan as to the purposes
and benefits of the move or comparing Crossville to other possible
locations. No public hearing has been held on the move. The decision
to move was made in a secret telephone conference call on October 17,
2004.
Beatriz Marinello, who has president of the Executive Board of the
USCF, has made it clear that she intends to fire the entire staff of
25 at the New Windsor office and to replace the Executive Director
with herself. This would be illegal and a violation of Not for Profit
Corporation Law.
The Attorney General of the State of New York distributes brochures
and pamphlets explaining the rights, duties and obligations of Board
members of a Not-For-Profit Corporation. The Members of the Board of
the USCF have not read these pamphlets and are not even aware of their
existence. Much of this same material is available on the Internet at:
http://www.oag.state.ny.us/charities/role.pdf
http://www.oag.state.ny.us/charities/nylj/nylj1.pdf
http://www.oag.state.ny.us/press/1999/dec/dec05a_99.html
http://www.nyobserver.com/pages/story.asp?ID=2107
http://www.law.cornell.edu/nyctap/I04_0087.htm
A case in point is Matter of Manhattan Eye, Ear & Throat Hosp. v
Spitzer, 186 Misc 2d 126 (Sup Ct, NY County 1999). There, the
hospital, which was losing money every year, decided to sell their
building. The Attorney General of New York intervened to block the
sale. The Hospital argued that the building only constituted 79% of
the assets of the corporation and therefore the sale should be
allowed. The court ruled in favor of the Attorney General and blocked
the sale.
In the case presented here, the building was the only remaining asset
of the USCF because the USCF had lost nearly two million dollars in
the proceeding eight years. However, these losses were due entirely to
mismanagement and wasteful expenditures, since the USCF had a healthy
$6.5 million in annual sales.
From the facts presented here, it is evident that the board members
who voted in favor of the move to Crossville, Tennessee are guilty of
self-dealing. Beatriz Marinello has stated that she intends to fire
the entire staff in New Windsor and hire new staff of 25 of her own
choosing in Crossville. She also intends to fire the Executive
Director and appoint herself in his place. However, Beatriz Marinello
is a volunteer president elected to a volunteer board. She has no
legal right to do any of the things that she has done. The other three
board members who voted in favor of her plan are her political allies.
For these reasons, this court should issue an injunction against the
move and should remove Beatriz Marinello, Tim Hanke, Stephen Shutt,
Elizabeth Shaughnessy from the Board and bar them from running for the
USCF Executive Board in the future.
This matter is governed by Sections 510 and 511 of New York Not For
Profit Law. It can readily be seen that NONE of the procedures
required by that law were carried out. Here is the text of the law:
S 510. Disposition of all or substantially all assets.
(a) A sale, lease, exchange or other disposition of all, or
substantially all, the assets of a corporation may be made upon such
terms and conditions and for such consideration, which may consist in
whole or in part of cash or other property, real or personal,
including
shares, bonds or other securities of any other domestic or foreign
corporation or corporations of any type or kind, as may be authorized
in
accordance with the following procedure:
(1) If there are members entitled to vote thereon, the board shall
adopt a resolution recommending such sale, lease, exchange or other
disposition. The resolution shall specify the terms and conditions of
the proposed transaction, including the consideration to be received
by
the corporation and the eventual disposition to be made of such
consideration, together with a statement that the dissolution of the
corporation is or is not contemplated thereafter. The resolution shall
be submitted to a vote at a meeting of members entitled to vote
thereon,
which may be either an annual or a special meeting. Notice of the
meeting shall be given to each member and each holder of subvention
certificates or bonds of the corporation, whether or not entitled to
vote. At such meeting by two-thirds vote as provided in paragraph (c)
of
section 613 (Vote of members) the members may approve the proposed
transaction according to the terms of the resolution of the board, or
may approve such sale, lease, exchange or other disposition and may
authorize the board to modify the terms and conditions thereof.
(2) If there are no members entitled to vote thereon, such sale,
lease, exchange or other disposition shall be authorized by the vote
of
at least two-thirds of the entire board, provided that if there are
twenty-one or more directors, the vote of a majority of the entire
board
shall be sufficient.
(3) If the corporation is, or would be if formed under this chapter,
classified as a Type B or Type C corporation under section 201,
(Purposes) such sale, lease, exchange or other disposition shall in
addition require leave of the supreme court in the judicial district
or
of the county court of the county in which the corporation has its
office or principal place of carrying out the purposes for which it
was
formed.
(b) After such authorization the board in its discretion may abandon
such sale, lease, exchange or other disposition of assets, subject to
the rights of third parties under any contract relating thereto,
without
further action or approval.
S 511. Petition for leave of court.
(a) A corporation required by law to obtain leave of court to sell,
lease, exchange or
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At 10:04 AM 11/13/2004 -0500, Paultruong@aol.com wrote:
Is this lawsuit in the best interest of US Chess?
It certainly is. Without this lawsuit, there would be no USCF any
more. That would be the end of the organization as we know it.
Sam Sloan
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My intention is to prevent Beatriz Marinello, Tim Hanke, Elizabeth
Shaughnessy and Steve Shutt from writing checks and paying out money,
because they are board members and board members have never been
authorized to spend the money of the federation. Board members are
only supposed to meet four times per year and set the policy of the
USCF. That is why it was called the Policy Board.
I do want Bill Goichberg and the others in the office with check
signing authority to continue to write checks to pay the bills and
employee salaries. However, Goichberg does not have access to the big
account with $513,000. Only Beatriz and Hanke have access to that
account. I want to stop them from spending that money, as they have no
right to do so.
Sam Sloan
At 04:52 PM 11/13/2004 -0500, Joel Benjamin wrote:
It's hard to see how preventing the USCF from paying their bills is in
anyone's interest.
Joel
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My intention is to prevent Beatriz Marinello, Tim Hanke, Elizabeth
Shaughnessy and Steve Shutt from writing checks and paying out money,
because they are board members and board members have never been
authorized to spend the money of the federation. Board members are
only supposed to meet four times per year and set the policy of the
USCF. That is why it was called the Policy Board.
I do want Bill Goichberg and the others in the office with check
signing authority to continue to write checks to pay the bills and
employee salaries. However, Goichberg does not have access to the big
account with $513,000. Only Beatriz and Hanke have access to that
account. I want to stop them from spending that money, as they have no
right to do so.
And that at the request of the LMA committee.
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On Sun, 14 Nov 2004 09:16:30 -0500, "StanB" <stanbooz@comXXXcast.net>
wrote:
And that at the request of the LMA committee.
What authority does the LMA Committee have to spend the money, as
opposed to investing it?
Sam Sloan
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And that at the request of the LMA committee.
What authority does the LMA Committee have to spend the money, as
opposed to investing it?
Who says they are? If you're making a statement, support it. If you're
asking a question, you're asking the wrong guy. Why not run it by the bylaws
committee?
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On Sun, 14 Nov 2004 12:26:56 -0500, "StanB" <stanbooz@comXXXcast.net>
wrote:
And that at the request of the LMA committee.
Who says they are? If you're making a statement, support it. If you're
asking a question, you're asking the wrong guy. Why not run it by the bylaws
committee?
Good idea, but I have a better one.
Let's run it by Horowitz and see what he has to say about it.
Sam Sloan
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Eric needs to read again, assuming that he has read before, what is
said at
http://www.oag.state.ny.us/charities/role.pdf
The statute specifically refers to the sale of buildings, not to the
sale of shares in a mutual fund or the like.
For example, if a church wants to sell its church building in order to
buy a bigger or a smaller church, it must first take a vote of its
parishoners and then must apply to the Attorney General and to the
courts. The church will have to state how much it intends to sell its
church for and who the buyer will be and what other church it intends
to buy with the money and how much it will pay for it.
If the court aproves this plan, then the funds received upon sale of
the church building will be placed in escrow so that the Board which
governs the church cannot spend the money on some wild scheme such as
building a new church on undeveloped farmland in Crossville.
I expect that Judge Horowitz will ultimately order the $513,000
received from the sale of the building to be placed in an escrow
account under the supervision of the Attorney General, because that is
what the law requires. Then, poor Beatriz will not get to spend the
money as she wishes and will have to go back to selling pet food on
the Internet.
Sam Sloan
At 12:11 AM 11/14/2004 EST, chesspride@aol.com wrote:
In a message dated 11/14/04 12:02:58 AM Eastern Standard Time,
samsloan@samsloan.com writes:
1. The Board
2. The Voting Membership. There are 40,000 voting members. When were they
given the opportunity to vote on this?
3. The Attorney General
4. The Courts
Nobody can seem to remember whether the Board voted on the sale. I do not
see it in the minutes.
Even if the Board did approve the sale, steps 2, 3 and 4 were not undertaken.
Sam Sloan
Sam,
The Board voted on the sale.
The delegates pre-approved the sale 2 YEARS ago.
Keep in mind that the only interest of NY state will be 1) is this entity
liquidating assets to go out of existence (or avoid creditors), or 2) is
this entity funneling money to a private person?
They will not care in the slightest whether the entity is simply
liquidating a physical asset for equivalent cash and moving its HQ.
Why do you think that was?
Answer: Because there is a clear approval process in place for such normal
transfers/liquidations...and because the statute is not concerned with
normal business.
ECJ
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Sorry, I meant
http://www.oag.state.ny.us/charities/sales.pdf
sales.pdf
On Sun, 14 Nov 2004 19:17:45 GMT, sloan@ishipress.com (Sam Sloan)
wrote:
Eric needs to read again, assuming that he has read before, what is
said at
http://www.oag.state.ny.us/charities/sales.pdf
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What authority does the LMA Committee have to spend the money, as
opposed to investing it?
Who says they are? If you're making a statement, support it. If you're
asking a question, you're asking the wrong guy. Why not run it by the
bylaws
committee?
Good idea, but I have a better one.
Let's run it by Horowitz and see what he has to say about it.
About what?
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On Sun, 14 Nov 2004 15:00:14 -0500, "StanB" <stanbooz@comXXXcast.net>
wrote:
What authority does the LMA Committee have to spend the money, as
opposed to investing it?
Who says they are? If you're making a statement, support it. If you're
asking a question, you're asking the wrong guy. Why not run it by the
bylaws
committee?
About what?
About putting the $513,000 proceeds from the sale of the building into
an account where Beatriz Marinello has the authority to write checks
on the account.
Sam Sloan
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sloan@ishipress.com (Sam Sloan) wrote:
On Sun, 14 Nov 2004 12:26:56 -0500, "StanB" <stanbooz@comXXXcast.net>
wrote:
Good idea, but I have a better one.
Let's run it by Horowitz and see what he has to say about it.
Sam Sloan
This would have the potential of becoming quite amusing if you weren't
such a nitwit. You can't prove any of your allegations, and the ones
that aren't irrelevant hearsay are most likely untrue.
Judge Horowitz, if he has any sense, will send you home with your tail
between your legs again. But that won't deter you. You will find some
equally silly cause to pursue.
Incidentally, are you paying for the court fees out your wife's
unemployment check?
Jrgen
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About putting the $513,000 proceeds from the sale of the building into
an account where Beatriz Marinello has the authority to write checks
on the account.
More slander?
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Is Illinois law also pertinent? I recollect that USCF was chartered
in the State of Illinois in 1939.
David Ames
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On 14 Nov 2004 14:12:29 -0800, worldrecord@juno.com (David Ames)
wrote:
Is Illinois law also pertinent? I recollect that USCF was chartered
in the State of Illinois in 1939.
David Ames
The USCF is an Illinois Corporation. However, I believe that since the
USCF has always been headquartered in New York State and the land and
building which is the subject of this suit are located in Orange
County New York, that therefore New York has jurisdiction.
I doubt that the Illinois courts would take jurisdiction over this
case, under these circumstances.
Sam Sloan
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sloan@ishipress.com (Sam Sloan) wrote in message news:<4197d979.14833343@ca.news.verio.net>...
On 14 Nov 2004 14:12:29 -0800, worldrecord@juno.com (David Ames)
wrote:
The USCF is an Illinois Corporation. However, I believe that since the
USCF has always been headquartered in New York State and the land and
building which is the subject of this suit are located in Orange
County New York, that therefore New York has jurisdiction.
I doubt that the Illinois courts would take jurisdiction over this
case, under these circumstances.
Sam Sloan
What you say is correct. However, *if* Illinois law is more favorable
to the defendants, then defendants on appeal may seek removal to a
Federal court on grounds of diversity or otherwise, and may plead want
of jurisdiction in New York State. I am not familiar with the issues
at law. I merely point out this possibility.
David Ames
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Sam, as usual, doesn't have a clue. I have no idea of the
jurisdictional or standing issues; that's why the judge wants an
affidavit from a lawyer accompanying the refiling. However, which law
is to be applied has nothing to do with jurisdiction. I would be
extremely surprised to hear that USCF has to comply with the specific
NY statutory scheme rather than IL vis a vis corporate affairs.
Sadly, due to Sam's incompetence, we probably won't find out from this
lawsuit. The judge's initial ruling had some compassion in it for a
non lawyer filing in forma pauperis. If he indeed has simply refiled
the same garbage without following the court's explicit instructions,
we may see some sanctions this time around.
Gotta admit, it's gonna be fun to watch him get hammered.
==Dondo
On 15 Nov 2004 02:26:40 -0800, worldrecord@juno.com (David Ames)
wrote:
sloan@ishipress.com (Sam Sloan) wrote in message news:<4197d979.14833343@ca.news.verio.net>...
What you say is correct. However, *if* Illinois law is more favorable
to the defendants, then defendants on appeal may seek removal to a
Federal court on grounds of diversity or otherwise, and may plead want
of jurisdiction in New York State. I am not familiar with the issues
at law. I merely point out this possibility.
David Ames
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I suspect that Sam couldn't raise the 340 dollar filing fee. Maybe it'll all
be a moot point.
Sam, as usual, doesn't have a clue. I have no idea of the
jurisdictional or standing issues; that's why the judge wants an
affidavit from a lawyer accompanying the refiling. However, which law
is to be applied has nothing to do with jurisdiction. I would be
extremely surprised to hear that USCF has to comply with the specific
NY statutory scheme rather than IL vis a vis corporate affairs.
Sadly, due to Sam's incompetence, we probably won't find out from this
lawsuit. The judge's initial ruling had some compassion in it for a
non lawyer filing in forma pauperis. If he indeed has simply refiled
the same garbage without following the court's explicit instructions,
we may see some sanctions this time around.
Gotta admit, it's gonna be fun to watch him get hammered.
==Dondo
On 15 Nov 2004 02:26:40 -0800, worldrecord@juno.com (David Ames)
wrote:
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On Mon, 15 Nov 2004 20:26:31 -0500, "StanB" <stanbooz@comXXXcast.net>
wrote:
I suspect that Sam couldn't raise the 340 dollar filing fee. Maybe it'll all
be a moot point.
Apparently you do not read too good.
I have posted about 10 times that I paid the $305 filing fee.
Moreover, even if I had not it would eventually have been accepted
anyway. It would just have taken the agreement of the Orange County
Attorney for the filing.
Sam Sloan
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I have posted about 10 times that I paid the $305 filing fee.
Where'd you get the money?
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On Mon, 15 Nov 2004 20:45:19 -0500, "StanB" <stanbooz@comXXXcast.net>
wrote:
Where'd you get the money?
I never reveal my sources but let me just give you the broad hint that
25 people are going to lose their jobs because of your actions.
You should spend some time thinking about the implications of that.
Sam Sloan
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Um, let me see. Who profits the most by stopping the move to Crossville. Um,
let me see. Um ....
Connect the dots yet?
--
Tom Klem
"Resistance is futile!"
--- The Borg
Where'd you get the money?
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Um, let me see. Who profits the most by stopping the move to Crossville.
Um,
let me see. Um ....
Connect the dots yet?
Sloanberg?
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Sloanberg?
Geez, sounds kinda familiar doesn't it?
--
Tom Klem
Keep your eyes on the prize! Solvency!
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On Mon, 15 Nov 2004 22:44:21 -0500, "StanB" <stanbooz@comXXXcast.net>
wrote:
Sloanberg?
I cannot figure out what Tom Klem is talking about. Certainly the 25
people who are losing their jobs because of this move have an interest
in stoping this.
I was given a list of names of four people who are USCF Employees who
are thinking of filing a lawsuit against the USCF because of this
move. It was suggested that I contact these people and invite them to
join me in this suit. I have not done so, however.
If they do file their own suit, they will be represented by hungry
lawyers expecting to be paid. This will be a lot worse for the USCF
than merely defending against my suit.
Sam Sloan
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