DeWine ordered the election after finding the club continued to operate slot machines in violation of an earlier settlement with the state and had improperly used charitable money to operate its social club.
The state also ordered a independent audit of the club’s books after an initial report flagged several areas of concern, including more than $260,000 that was distributed to the three employees as deferred compensation for retirement.
In court documents filed earlier this month, Donahue claims she was not made aware when the club deposited money into an account in her name, but that her tax preparer should have been aware and failed to include that income on her 2013 taxes.
Donahue is suing Alex Anderson, who previously served as the Union Club’s financial advisor, Terri Anderson and Lairds Tax Service Inc.
Donahue said she hired Lairds to do her 2013 taxes, but received a letter from the IRS in December of 2014 informing her that she owed $32,844 in unpaid taxes, plus about $5,000 in penalties and interest.
She’s suing the defendants for professional negligence, breach of contract and other alleged misconduct and seeking damages in excess of $25,000.
She claims they failed to include dividends and capital gains earned on one or more of her accounts, filed late without her knowledge and failed to include the Union Club-established account, which they should have been aware of.
Donahue and her attorney did not return multiple calls for comment.
Alex Anderson said the lawsuit came out of the blue, but he declined to comment on pending litigation.
Dan Harkins, the local attorney representing several former Union Club trustees who have continued to question the club’s finances and push for a full forensic audit, said the lawsuit confirms that large payouts were made to Donahue, Barb Daily and Shirley Hamilton.
“You had some employees getting very large compensation payments from a nonprofit that no other employees received, and it only occurred because the old trustees were being pushed out,” Harkins said. “Our position is that Donahue, Hamilton and Dailey were not entitled to the money.”
Jerry Adams, a former club trustee who approved the money transfer, declined to comment on the lawsuit.
Although Harkins’ clients disagree with the payouts, he said the lawsuit is problematic for several reasons.
First, it claims Alex and Terri Anderson are accountants licensed to practice accounting in the state of Ohio, which they are not, Harkins said. According to the Accountancy Board of Ohio, neither holds a CPA or PA license. Tax preparers do not need to be certified public accountants.
It also states the defendants had been retained by both Donahue and the Union Club to prepare and file taxes at the time the money was transferred, early 2013.
However the nonprofit club’s tax filings show that while Anderson was listed as the tax preparer for the organization in 2011, he did not prepare or file for them in 2012 or 2013. The firm of Clark Schaeffer Hackett is listed for those years.
Harkins also questioned Donahue’s claim that she received no documentation that an account was opened in her name.
“An individual account for somebody cannot be opened without a social security number attached to it,” he said. “From my perspective, she had to sign a document to affect the transfer of that into her name.”
She also would have begun receiving monthly statements and would have been sent a 1099 tax form to pass along to her tax preparer, he said.
Jerry Numbers took over as the president of the Union Club’s charitable arm after the 2013 election and wasn’t involved in the transfer of money, but he also thinks the recipients would have been provided documentation of the accounts.
“She’s been receiving that money on a monthly basis. She had to be aware of it,” Numbers said.
The timing of the payouts did look fishy, Numbers said, but that money had been put away for the benefit of those long-time employees for years before the club’s shakeup.
Donahue’s lawsuit indicates she was told in 2006 that money was being put away for her retirement, but she never saw any documentation confirming that.
The club should have established qualified retirement accounts for all its employees, Numbers said, but never has as far as he knows.
“The bottom line is the taxpayer is always responsible for the accuracy of their return,” Harkins said.
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