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Dole settles civil suits related to listeria outbreak

Trustees seeking a full audit

$260K transferred one day before Springfield group’s emergency election.

The Union Club of Springfield has $951,732 less than it did at the end of 2011, according to recent documents obtained by the Springfield News-Sun, leading an accounting firm to recommend that the embattled local charity evaluate writing off the amount.

A balance sheet prepared by the Springfield office of Clark, Schaefer, Hackett and Co. also highlights a transfer of $260,479 from the club’s investment accounts to individual accounts on Feb. 18 — one day before an emergency election ordered by Ohio Attorney General Mike DeWine to replace the club’s ousted trustees.

With between 4,000 and 5,000 members, the Union Club, 139 W. High St., has been a Springfield institution for 80 years, awarding thousands annually in scholarships.

But the way in which the club raises money — charitable gaming — has led to a series of issues with the state.

The balance sheet, which recently was submitted to the state in lieu of a court-ordered audit, only strengthens the need for a forensic audit in particular, said the club’s new vice president.

“You can see there’s $900,000 missing,” Robert “Flash” Whitaker said Tuesday, “and that’s alarming to me. And it should be to every member down there.”

Club president Jerry Numbers, who also won office in February’s special election, said nothing in the Clark, Schaefer, Hackett report raised a red flag with him.

Nor, he said, is more than $950,000 missing.

“It’s not missing,” Numbers said. “They just misinterpreted that.”

Whitaker and two other new trustees, Harold Pounds and Larry Vince, filed a motion to intervene in late June in order to force the club to conduct an audit.

“I wanted an audit, but that’s not what we got,” Whitaker said.

According to state records, the tax-exempt Union Club operated the fifth-most lucrative charitable bingo operation in Ohio last year — a $665,132 profit on $3.1 million in gross revenue.

In February, DeWine forced the club’s trustees from office after finding violations of state law, including the operation of slot machines, which in turn violated an earlier settlement agreement. He also alleged that the former trustees breached their fiduciary duties.

As part of a new, 15-page settlement agreement, the club was ordered to conduct an independent audit by Aug. 6 or face a $150,000 fine.

The settlement also split the club into two organizations — one to oversee charitable giving and one to manage the social club — each with seven new trustees.

But, dated July 10, the Clark, Schaefer, Hackett report, made available to the News-Sun by club members, makes clear the company wasn’t hired to perform an audit.

“We were not engaged to, and did not, conduct an audit,” the report states, “the objective of which would be the expression of an opinion on the balance sheet as of Feb. 28, 2013.”

The report also notes that an investment account valued on Feb. 28 at nearly $109,000 doesn’t appear to have been recorded on the club’s books.

An official in DeWine’s office arranged for the club to submit only a balance sheet, confirmed Dan Tierney, DeWine’s spokesman.

But, it now might not satisfy the club’s obligation to the state.

“The balance sheet will be reviewed and either be accepted or result in a request for audit if the balance sheet raises red flags,” Tierney wrote Tuesday in an email.

Dan Harkins, the Springfield attorney representing Whitaker, Pounds and Vince, said the arrangement to accept a balance sheet “enabled old trustees to avoid accountability.”

The balance sheet reveals a drop in the club’s total assets from $4.6 million as reported to the IRS as of 2011 to $3.6 million as of Feb. 28.

“Before someone jumps to the conclusion that the amount should be written off,” Harkins said, “we need to find out what’s going on, or what did go on.”

“An audit is necessary to bring the antiseptic benefit of transparency,” he added. “Until there’s an audit, we don’t know.”

The report also indicates there could be tax implications for the organization that runs the social club, which currently is a taxable corporation.

Numbers, the charity’s president, believes the state likely will require an audit.

“Whatever they want,” he said.

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