Porsche 356 Registry Litigation: Update?

[MMW]

Hi all, just signed up here. I'll have to make a post in the new member section in the near future but wanted to post here.

In response to Bruce's question ".....Why did Steve Heinrichs feel the need to start a lawsuit over dissatisfaction with the Registry?
"

Because of the Trustee's attitude? Sense of entitlement? To big to fail? This is how we always have done it? It's a good gig with perks & financial rewards for those at the top or close to it?

I have mostly stayed out of this whole situation as I was never a member & was about to join when this all started. So I waited & found The Samba in the meantime. But something recently really rubbed me wrong. I was told a picture of my car was in the latest issue of the Registry mag. That is cool. How do I get a copy? Well I thought I guess maybe I'll join just to get it. When I clicked on membership I see they upped the cost to $45 from $35 a year. What? Just last year the trustees were saying we have no financial issues, in fact we have to much cash which is why we are spending it down. So now if they do indeed have 7000 members at an extra $10 a year that $70,000 a year more. Something doesn't seem right, is it a money grab or maybe they are in financial trouble? I don't know but I didn't sign up. I'll try and find a copy some other way.

[bbspdstr]

Mic. here ya go....

I know people say something like "it's not all about the cars, it's the PEOPLE" or somesuch. Your reply above shows that it's people that also make the difference in things with 356s. I just re-upped my Registry membership, still clinging to the hope that what many feel can make the club cleaner, friendlier, more open, yes, truly transparent will still come along. Please believe me, it used to be a whole lot easier to support the club...or I wouldn't have volunteered all the hours and dollars to help host two Holidays 28 years apart. In my personal view, the club has become much different in the last 5 or 6 years, and amazingly, the cars it's all about haven't changed...but not many of the trustees have, either...if you get my drift.

Here's what I cling to;

1) Term limits can be a negotiated, voted upon and entered into Bylaws changes. Nothing says those who have been trustees have to leave the club or stop helping, but they really should be more open about what exactly they do to deserve to hang around forever. For instance, I proposed that Vic Skirmants could be the Tech honcho and Joe Johnson could be the IT honcho and neither had to be a voting trustee to hold those respected positions or miss a step with a grateful membership.

2) members who really care can attend a real trustees meeting, not just a Q&A. (A Q&A is a good start, but not enough insight to what Col.Dunn told me is "merely housekeeping, and who wants to sit in on that?") I do, sir.

3) real financial statements, real P&Ls. How bad can they be even right now? (a question open to speculation due to the secrecy surrounding the complete financial affairs of the club)If they opened up and showed some indiscretions in where money was spent, I doubt no more than an "Oops, I guess we better not do THAT again, sorry" would suffice.

4) available agendas before and minutes after a meeting posted in Members Only for those too far away or only mildly interested occasionally in what business is involved in running the club. We are well aware how real business is done, so the emails and phone calls that just may be how the 'more interesting' part of Registry management does it's thing...... will never be known.

The club needs to hit the "refresh" key and start again with the best of lessons learned and divestiture of the bad business practices, habits and mistakes.

Mic, your suppositions can be answered as "all of the above." If hindsight is 20/20, then we are seeing better as time goes by, but Mr. Heinrichs' legal demands may clear things up even better and it's too bad it seems that's what it will take. I've always said, it's all about appearances and presentation, so why has it become what it is and why didn't/couldn't the trustees find a way to avoid a lawsuit?

[admin]

Mic-
Send me your address, I have extra copies.
adam@unobtanium-inc.com

Good to see you there, sorry I was so wacky.

[356JAGER]

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[S.J.Szabo]

Here's an idea: let's think of some reasons why the Trustys are trying so hard to keep the lawsuit from making it to court.

Well, let's start with non-feasance (that is not doing what you're supposed to do):

For how many years did the Trustys miss filing tax returns on time or at all?

Is the record name of the club corporation currently correct?

Does the Club keep its books in a manner that is consistent with the accounting practices appropriate for its situation?

Does the club operate under a regular and timely budget?

Is there a reasonable framework of typical reimbursable expenses of the Trustys and Officers?

Is there any accountability for expenditures?

What else?

[Bill Sampson]

Here's an idea: let's think of some reasons why the Trustys are trying so hard to keep the lawsuit from making it to court.

Because sunlight is a powerful disinfectant

Well, let's start with non-feasance (that is not doing what you're supposed to do):

For how many years did the Trustys miss filing tax returns on time or at all?

2003-2004 is the only one I could locate with no apparent filing. A number of questions can and should be asked about the information included (or excluded) from returns, including questionable statements concerning where the bulk of the money is spent and the fact that 80+% of the money goes to entities controlled by an officer with no such disclosure on the 990. It's a question worth asking.

Is the record name of the club corporation currently correct?

356 Registry, Inc. is the corporate name. That entity was incorporated 8/19/1976. It ceased to exist as a result of failure to make necessary filings for the following periods: 11/20/1985 to 10/16/1987; 10/2/1995 to 6/18/2003 (that is not a typo); 6/19/2008 to 7/14/2008. The club claims in its magazine that the magazine is published by Porsche 356 Registry, Inc. The club has never lawfully used that name and there is presently no entity by that name.

Does the Club keep its books in a manner that is consistent with the accounting practices appropriate for its situation?

NO

Does the club operate under a regular and timely budget?

NO

Is there a reasonable framework of typical reimbursable expenses of the Trustys and Officers?

An entity that would permit a 60 year old adult to claim that he was inexperienced in renting cars and that's why he ran up a $600 bill for a weekend clearly has no such reasonable framework.

Is there any accountability for expenditures?

I was informed by the treasurer in 2011 that the trustees and officers had to submit reimbursement requests but in my opinion there was almost no control. At that time I was aware of the club having lost about $17,000 in the last year for which they had reported (2008-2009) and it was my opinion that in light of that loss that more lavish than necessary trustee meeting expenses was a bad idea. American tradition dictates that when the company struggles its executives take $1 per year salaries and cut out perks. The trustees pretty clearly disagreed. Of course, in subsequent years, the losses were far greater and the simple expedient of reducing trustee expenses would not have eliminated those losses although the expenditures for one officer, the editor, continued to increase substantially. I leave it to the reader to decide if that is accountability. 2/3 of the voters thought so, apparently although about 90% of the eligible voters didn't give a damn one way or the other.

What else?

Everybody gets a slick magazine

[Losthillsguy]

Lurking, I don't want to miss anything good

[bbspdstr]

[quote="Losthillsguy" post=7342]Lurking, I don't want to miss anything good

Brian, there are more than a few of us who have vested interests (and some basic curiosity) in the future of a restuctured Registry, but it's the not missing anything bad that's been the major problem.

"Good" is a very relative term. Actually, not knowing much of anything in the way of solid ("good")information for years is the rub, leading to many assumptions and guesses based only on appearances and lack of access to much that could quell the negativity.

Recently, it was coincidental timing that allowed the audited financial statements posted by PCA in it's Panorama magazine to be compared to what was published in the Registry magazine as a financial statement...and actually, there was no comparison. One would think that with all the fuss over the last several years, those in charge of the Registry would take that type of positive, applicable example and go out of their way to show the members, all, that there is no real issue at any level, in any aspect of Registry governance ...and not test the durometer reading of the "don't BS a BSer" theory.

Now, the Registry is contemplating a "certified audit." I have never heard of a "certified" audit, but today on my way to a Mothers Day gathering, I saw a big truck with "Certified Mulch" emblazoned on it's flanks. I supposed someone who knows mulch looked in the truck and certified that yes, it was mulch ...... but I don't want to extend the analogy further.

Hey, let's not talk about the issues with the club, let's focus on the 356 cars....who knows what the best tires are, the best oil, the best ANYTHING other than the best way to lead the club and ALL it's current or potential members.....(and yes, my sarcasm was intentional.)

[MMW]

[quote="Unobtanium Inc" post=7308]Mic-
Send me your address, I have extra copies.
adam@unobtanium-inc.com

Good to see you there, sorry I was so wacky.

Thank you Adam. Don't worry about the wacky part. I've sent my address.

[S.J.Szabo]

How about if we touch on misfeasance (doing a legal act in an improper fashion).

One of the IRS's Prime Directives (4.76.16.7) says "A social club can not have any part of its net earnings inuring to a shareholder or member", yet the Publisher of the magazine (and the recipient of nearly all the Club's revenue) is also a Member and Officer, whose power within the Club also seems to contravene a regulation regarding the influence of outside contractors.

Add this to the more general "Conflict of Interest" issue and the conduct of the publishing enterprise seems, even to casual examination, to be very much a allowed (legal) activity conducted very improperly.

Thus, it is easy to see that any suggestions of scaling back the publishing activity so that some responsible portion of the Members' dues can be spent on activities that actually conform to IRS requirements, has met with great resistance from those who have a vested interest in publishing success.

The ironic part is that when all the dues are spent to publish the magazine, the members realize no benefit no matter how many are sold. Thus the Club is no better or stronger or more fun regardless of the number of magazines it prints, and the much vaunted "membership drive" is a pointless exercise in ego and prestige, both of which are "inimical to the best interests of the club".

[admin]

I have to dis-agree with you here but I have real world experience to bolster my arguement. Since I use back issues of the Registry mag in all of my gift bags at dozens of events I see the effect the magazine has on people and it really does garner interest in joining the club. When people see a "real magazine" not a club rag printed on newsprint they get excited, on more than one occasion I have had people say things like, "this magazine itself is worth the price of joining"
So yes, having a really well done magazine not only is a benefit to members but also to recruiting new members.
The magazine, the size, and prestige of the club is also what got us official recognition from the Factory, and before you ask what benefit that has to members, well, the Factory now gives us money for holidays, which directly helps anyone who wants to go to a holiday and soak up the sun.

[S.J.Szabo]

While I don't doubt the accuracy of your observations, my disagreement over the conclusions drawn from them will be more apt in the RFE thread.

The issue I was discussing here on the legal thread, was how the mechanics of the publishing operation appears to be contrary to the letter and intent of the regulations governing the operation of a 501(c)(7) non-profit corporation.

However, the issue of the provisions of the Secret Contract is very well taken. While I have implicit trust in the competency of the Factory lawyers, the lack salient info about the nature of the agreement leaves one wondering if outside corporate "contribution" that inures benefit to the Members is consistent with IRS regs. This is still a research-in-progress. Not to mention the ensuing issue of whether the Club incurs a tax liability on the "contribution" and if it exists, is it reflected on the Club's returns. Experience has shown us that the Leadership's approach to filing responsibilities is less rigorous than one might wish.

Also appropriate for this thread is the obvious question of why, with revenues running around $370K, is the only contribution to the conduct of the sole activity that conforms to the letter and intent of applicable regulations from an outside entity. Is this not the purpose of the Club and the proper use of its revenues? I'm pretty certain the IRS thinks it is. But there is no money to support activities of "fellowship" because it is all spent on the fancy rag, an activity that does not promote, in any fashion, face-to-face "commingling" as expressly required of this sort of organization.

To some it would seem that there is now, and long has been, an apparent disconnect between the intent of the regulations for non-profit car clubs and the actual activities directed by the Club Leadership.

So I hope you will understand if some, concerned with the longevity and relevance of the Club in the future, believe that proper remediation of the Club's seemingly apparent miss-direction calls for something other than timid and gradual action.

[S.J.Szabo]

The redoubtable Captain Unobtanium (Da ta ta da-a-a-a-a) brought up an interesting point regarding the web site that deserves exploring.

Like many folks, I was initially disappointed at the decision to close the Forum to non-members for several reasons.

However, while I am pretty sure that it had no part in the Trusty's decision, subsequent research has led me to believe that the move might be necessary in light of strict IRS limitations on public access to Club facilities.

Food for thought.

[bbspdstr]

Let's not forget the "litigation update" title of this thread.

A note to that is the unfortunate fallout for me of friendships being lost during this episode in the Registry's history. Maybe those I thought were friends were of the Fair Weather variety, but it's still unfortunate that the word 'trustees' is no longer begun with a capitalized 'T' when I use that word to refer to Registry leadership.

It all comes down to bad communication. Who ARE those guys? What do they do? How do they do it, really? Why does someone care about answers to those questions....and the car club they represent.....so ardently that he will spend copious amounts of his own money to find out?

So why does it take a lawsuit to open communication, reluctantly, to say the least, when it should be, could be, so very simple? It's often said...."It's just a car club...and it's supposed to be FUN!"

What's REALLY going on?

I was slow on the up-take after joining the Registry due to fear of the appearance of "conflict of interest".....as I was a 356 professional before the formation of the club. I'm also not a "club person." I then began to accept that if so-and-so and so-and-so can be leaders in the club along with others who also make money through the club one way or another.....I'll support the group and get involved and not worry about a conflict...just let the enthusiast side of me do that interface.

Well, that's fine as long as someone who expects mutual respect asks no pointed-but-reasonable questions...so, again, who ARE those guys?

[356JAGER]

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