This article is related to a post here from last week: Michael Cloud’s Invoice From May to December 2012. I have posted the invoices below (thanks to George Phillies).
From: Aaron Starr <[email protected]>
Date: Sun, Dec 8, 2013 at 10:30 AM
Subject: Mr. Cloud’s Various Invoices
To: [email protected], [email protected], [email protected], Tim Hagan <[email protected]>, [email protected], [email protected],[email protected], [email protected], [email protected], [email protected], [email protected], [email protected], Vicki Kirkland <[email protected]>, [email protected], [email protected], [email protected], [email protected], [email protected],[email protected], [email protected], Jim Lark <[email protected]>, [email protected], [email protected],[email protected], [email protected], [email protected]
Members of the LNC and LNC General Counsel Gary Sinawski,
In his role as counsel for the LNC, I am including on this email LNC General Counsel Gary Sinawski so that he is aware of these issues and can offer his legal advice.
I am aware that on December 6, 2013, Michael Cloud sent the LNC (but not the Audit Committee) a newly revised version of his detailed invoice of his work. I thank the member of the LNC who thought it appropriate that the Audit Committee also be provided with this information.
To give you some context, I believe the LNC ought to be provided with all other previous versions of Mr. Cloud’s invoices.
The first attachment (“Michael Cloud Invoices.pdf”) is comprised of the three invoices that were presented by Mr. Cloud for payment in late 2012, and Ms. Howell approved payment based on these invoices. Note the complete lack of details.
· The first invoice presented in October 2012 for $13,500 covering services rendered between May 15 and September 30, 2012 (which includes the period prior to July 15, 2012, when he first indicated to the LNC his intention to become a vendor). No details are provided of the work done. The invoice includes a promise by Mr. Cloud to provide “a completely itemized and documented bill for my fundraising and writing services during this time frame – with prices and royalties.” The check paying this invoice is dated October 25, 2012.
· The second invoice presented in October 2012 for $20,000 covering services rendered through October 31, 2012. No details are provided of the work done. The invoice includes the statement, “I will piece together an itemized and documented bill for all my fundraising and writing services during this time frame – with prices and royalties – before the end of this month.” The check paying this invoice is dated October 31, 2012.
· The third invoice presented in December 2012 for $5,400 covering services rendered through December 31, 2012. No details are provided of the work done. No promise was made to provide details of the work performed. The check paying this invoice is dated December 31, 2012.
The second attachment (“Michael Cloud Detailed Invoice Created 2013-07.pdf) is the invoice that was created in late July 2013 and which staff scanned and emailed to the Audit Committee on August 2, 2013. This detailed invoice purports to provide after-the-fact details to support what was already paid.
We make reference to this invoice on page 4 of the Audit Committee’s Second Interim report, where we wrote:
The Audit Committee noted that a July 29, 2013 email Mr. Kraus forwarded to us from Carla Howell made reference to an invoice Mr. Cloud turned in a week prior (“Everything else needed should be on the invoice Michael turned in a week Ago.”), so we then requested and received a copy of that invoice. This new invoice from Mr. Cloud included a detailed breakdown of the items produced by him, along with the money raised. This invoice was the first time a formula purportedly used for calculating Mr. Cloud’s compensation was provided to the committee, despite several prior requests.
We thought that we were close to wrapping up our work, but then an examination of the metadata of some of Mr. Cloud’s work product that Mr. Kraus provided to us revealed that some work product for which Mr. Cloud had been paid was recorded as having been authored by then Executive Director Howell. We realized that we could not rely on Staff assertions about the documents alone to substantiate what Mr. Cloud wrote, so we requested that we be forwarded emails showing that Mr. Cloud had indeed sent the 37 documents for which he had received payment.
During the extended time that staff compiled the supporting emails, they found it necessary to present the Audit Committee with a revised invoice that Mr. Cloud created on or about September 2, 2013 to provide after-the-fact details to support what was already paid. I have attached this invoice (“MC Invoice to LP 2012 9-2-13.doc”) for your review. The fact that a new revision of the invoice was created in September 2013 suggests that the evidence in the emails did not sufficiently line up with what was in the detailed invoice created in July 2013.
We make reference to this September 2013 revised invoice on page 7 of the Second Interim report, where we wrote about the differences between the July and September reconstructed invoices:
A comparison revealed a number of differences between this new invoice and the one previously provided to us.
· Some items formerly attributed to Mr. Cloud on the previous invoice had been deemed not to have been written by him at all, and were either removed from the new invoice or amended to award only partial commission from a collaborative writing, or co-authorship, with Ms. Howell.
· New items were listed that were not on the previous invoice.
· One item was re-classified into a different type of work, which then impacted the amount of the calculated fee.
· The new invoice included items Mr. Cloud had previously agreed to do for free before he became a paid vendor. These were related to promotion for the 2012 national convention, and the new invoice suggests he was owed for these under the terms and payment rates of his post-convention vendor agreement, but suggests that Mr. Cloud simply chose not to bill for them and showed them as a “discount”.
Additionally, the metadata of this new invoice indicated that it had not been solely prepared by Mr. Cloud, as it was also edited by Ms. Howell.
After we shared with you the audio from the July 15, 2012 LNC meeting when Mr. Cloud indicated he was not yet a vendor, now we have a fourth attachment (“Michael Cloud Invoice May-Dec 2012.doc”): the invoice that Mr. Cloud revised yet again on or about December 6, 2013 to provide after-the-fact details to support what was already paid. The itemized details on this invoice are different in a few places from the two previous versions we received.
Rather than amending his invoice to reflect only the work that was produced subsequent to July 15, 2012, Mr. Cloud doubled down by extending his period of work to include even the promotion efforts for the 2012 convention, taking personal credit for substantially all of the convention revenues as though few would have bothered to attend the convention were it not for him.
Perhaps even Mr. Cloud has realized that the $38,800 he charged was not in line with his July 15, 2012 statement to the LNC that the question simply won’t arise as to “whether or not you’re getting value for your dollar.” Perhaps he hopes that the LNC ought to conclude that he deserves compensation for all the time he spent as a volunteer, rather than focusing only on the value provided during the time he was a vendor.
Like many other volunteers who worked for free to plan and promote our convention, Mr. Cloud deserves our thanks for the time he served as a volunteer. He also deserves to be fairly compensated in line with his promise to provide his “services at WalMart rates” for the copywriting work performed as a vendor. The LNC needs to determine when Mr. Cloud’s vendor relationship began and what amount of compensation is fair.
I request that Chairman Neale direct staff to include copies of this email and the attached invoices in the binders for the rescheduled LNC meeting in Dallas.
Respectfully submitted,
Aaron Starr, Chairman
Libertarian Party Audit Committee
Michael Cloud Detailed Invoice Created 2013-07
Michael Cloud Invoice May-Dec 2012
I’m here, but my ability to let you know what is going on is iffy. I need a hotspot or tether internet connection if the wifi is not working downtairs, and it probably won’t be. Joe is not here – he tried to go last week. If anyone else is planning to be here or can get here that can bring hotspot or tether please give me a call 415-690-6352. I’ll do the best I can with what I got.
I did buy a computer but that’s not going to help if I can’t get online.
I’m pretty sure that as a former member of the audit committee you would have been allowed in, and I could have used your help with the coverage, but I can’t say whether any of that is worth $600 to you.
I said it was already a done deal. Greyhound changed my ticket to a week later the following day.
George,
What I remember, without going though all the emails (which I am not unwilling to do when I have more time) is that this was a verbal agreement, which Chair Neale confirmed as one he approved during a phone call with ED Howell sometime after the July 15 2012 LNC meeting. What I clearly remember is a phone call from Chair Neale where he was angry, told me the audit committee was out of control, that Brett and I should stop this, that nothing wrong had happened, that it was a payment based on commissions; and I yelled. Told him to stop and let me get a word in, and said something like, “since when are commissions invoiced by the salesperson (vendor)?” and “they aren’t commissions; they’re round to the nearest $1,000.00” It seemed to me, that was when the Chair’s attitude changed, and staff were ordered not to cover things up, and to start providing invoices, etc that Mr. Starr had previously requested. Ms. Howell was also, again if memory serves, required to provide a narrative/timeline of what had happened. Of course this was all in the late summer of 2013, more than a year after the vendor relationship had been established, and if Mr. Cloud was in error on July 15 2012, and accurate in his invoice from a week ago, then nearly a year-and-a-half after that relationship was entered into.
As far as I am aware, no prior-to-initial-work-being-performed written contract exists and any apparent commission rate was calculated after the fact, not prior to the relationship.
You’ll also note even dollar amounts, to the 1,000s in other unrelated financial records where Mr. Cloud worked on other campaigns and his remunerations were listed as “commissions.” Perhaps a commission can be something other than an agreed-upon percentage of sales/fund-raising revenues generated. If so, it’s a use of the word with which I am unfamiliar.
There are various documents which claim various payment agreements, but as far as I am aware, these were all created well after the various requests for payment had been paid.
Again, I’m writing here from memory. Could be some of the above was misremembered. I expect we should know more by Monday (or in the case of those in Dallas) by this time tomorrow.
Hope that helps,
Joe
Joe,
Where is the record, if not a formal written contract, of how much was supposed to be paid as the commission? Even if the little bits argument is valid, which I do not concede is the case, when thousands of dollars are going out the door the phone call should have been followed by an email, to make sure that there was not a serious misunderstanding of what had been approved.
George
Libertarian Girl: He is the Treasurer. He is responsible. I quote the Bylaws:
“The Treasurer shall receive, expend and account for the funds of the Party under the
supervision and direction of the Chair and the National Committee…The Treasurer is responsible for oversight of all financial functions, including, but not limited to receipts, disbursements, internal and external reporting.”
Wes Benedict recruited him as our Treasurer.
GP_ Apparently Wes Benedict’s recruitee for Treasurer failed to notice the issue, which surely falls under his remit
Me_dont start pointing fingers at Tim , seriously dont fucking do it, you know damn well he isnt complicit
George Phillies @ December 13, 2013 at 10:07 pm
It seemed to me that the argument was that a written contract with review was not needed because no one item o the subsequent invoice rose to the dollar amount requiring review, and that these were verbal, bit-by-bit kinds of deals; no committed long-term relationship.
The argument on the other side is, I believe, that once any vendor is paid over the dollar amount requiring review (I believe that is $7,500), then there should be a written contract.
So perhaps it is not as clear as it should be.
That said, I believe the intent of the policy IS perfectly clear. Namely, when it seems that a vendor relationship could exceed $7,500 (even on commissions for work that, theoretically, could produce zero revenues and thus zero commissions) a clear, advance, written contract with review is required. I spoke to one former LNC member who expressed frustration that these policies were put in place by that past LNC to prevent exactly this kind of lack of transparency about contracts that had occurred some years ago, from occurring again.
Problem is that when folks want to subvert the obvious intent of a policy, they can find a way to do so without “breaking the rules.” There seems to be a pattern of that — from running for the LNC when there was a policy that would have prevented that (the one for speakers), to the timing of how/when such policies are put in place, to the apparent conclusion that money set aside for X, means it can be used for WYZ and ABC and whatever, to a proclaimed ignorance about all these convoluted policies, to whatever — a culture I have characterized as “dishonest” meaning (from the Latin) being something other than “one-with-what-is-so.”
BTW, I’m no defender of following the rules. No one, especially Libertarians, should comply with unjust rules (especially those which eat at the root of the tree of Liberty itself).
But I hardly think that was the motivation for any of the various increasingly apparent misdeeds here!
In that case the number who have been paid and not repaid is a smaller number.
Jill Pyeatt @ December 13, 2013 at 12:12 pm wrote
“I take it that you’re not heading over to Dallas today, Joe?”
Nope. I spent about $325.00 and a wasted day trying to get there last week, and while a couple of people did offer to cover at least part of my expenses, I declined to avoid the appearance of any impropriety/influence.
I did ask USAirways/American to rebook me for this weekend, but apparently they felt that their flying me to Phoenix and back, even with the PDX to DFW segments going unused, without charging me extra to return home a few hours later, was full value for the money I paid.
I think that’s rather poor customer service, but I also do understand the words “nonrefundable” and “nontransferable.”
And it wasn’t worth paying an extra $600+, at least to me, to have the chance to say something when, IMO, odds were the Audit Committee issues would be in executive session, and Joe would be out in the hall.
“Is Paulie going?”
Ask Paulie. That said, I saw a post here that he thought he’d be able to use his bus ticket this weekend with no problem.
In retrospect what I should have done was accepted USAir’s offer last Friday to delay my trip (they sent an email offering that due to the forecast ice in Dallas). I should have moved that flight to later on Friday or even to Saturday morning. Then, once that flight was canceled due to weather (and once the meeting was canceled), I probably could have pushed it back to this weekend. Once I left SLC though, and given the meeting wasn’t canceled until after that door closed, I don’t think they owed me anything.
We seem to have four current or recent LNC members who might have received money from the LNC, though perhaps at one point in the past. Paulie has been open from the beginning that he has a petitioning company. He has also pushed for open bidding on petitioning contracts. Mr Cloud has been discussed at length. At one point, the Double the LNC scheme had a contract, which I believe was the LSLA issue mentioned above. I was referring to another issue which at one point involved the LSLA, namely booths at conventions.
I can’t imagine how people expect that 2014 will settle anything other than in the space until 2016.
The LNC has some very clear rules about contract approval. What do the contracts say that those commission rates are or were?
Stewart Flood @ December 13, 2013 at 11:58 am wrote:
“Yes, it is good that he (Aaron Starr) uncovered what Mr Cloud did. But don’t forget about the other scandal that this covers up!!!”
First, it didn’t take even a class in accounting 101 to “uncover” what Carla and Cloud did.
Second, I asked both Aaron and Brett about the $33,000 for Saratoga. If I remember correctly it was in the context of the concern that, in effect, an unsecured “loan” with zero interest had been given to Ms. Howell.
What I recall saying was, “How is this different. Didn’t you get the use of $33,000 without interest for some months? What did our outside auditors have to say?”
What I recall being told (and I don’t remember if it was Aaron, Brett or both) was that this issue was not of concern to the outside auditors because 1) the funds had been repaid in full, 2) that it was not uncommon for a board of directors to change its mind about a vendor relationship, especially following an election.
Then I asked about why interest would not be due for the use of the $33k for that time period. What I recall is being told 1) that would, given current interest rates, be quite small and 2) the offsetting argument could be made for being paid for whatever work had been done.
I don’t know more details than that because I didn’t ask/that seemed a reasonable explanation/I’m no Aaron Starr when it comes to digging into things.
That said, I don’t think the $33k to Brett/Aaron/LSLA/Saratoga which was repaid in full, is equivalent to the $38k for . . . what was not fully documented/what appears to be excessive for what was claimed to have been produced.
Maybe I was hypnotized by Aaron when I wasn’t looking though . . .
🙂
Stewart Flood @ December 13, 2013 at 9:07 am wrote:
“Mr Cloud should either resign, return the money, or do both. He clearly did not earn it ethically.”
What is unequivocally clear is that he did not properly document it; neither in the moment; nor as he promised (to send a detailed invoice) when asking for, and then receiving initial payments, nor in the attempt a week ago today; especially as regards claiming he deserved payment for funds earned over 18 months ago/earned at any time prior to the July 15 LNC meeting where he (apparently falsely) claimed he was not yet a vendor, and therefore had no conflict of interest.
I wish those who opposed his election to the LNC on the basis of the conflict regarding his paid speaking role at the convention had raised those concerns in the moment with the delegates, rather than, apparently, attempting to discredit him at the first LNC meeting after that convention. Had they raised those concerns in the moment, the will of the delegates would have been more clearly evident. Their claims that they failed to notice he was seeking an LNC at-large seat during the convention were, at best, absurd; matched only by the impropriety of his doing so, given he knew of the convention policy requiring those speaking at the convention to promise to to run for positions on the LNC.
A pox on all your houses, is about what I’m left with there as well.
Now that I think about it, being on the audit committee was about like trying to conduct a fair, transparent and dispassionate audit of, say, both sides in the Civil War going into what they each hope, the 2014 Convention, will be their ultimate victory.
Nicholas Sarwark @December 13, 2013 at 8:48 am wrote:
[Generally one LNC member should not be paid for doing work equivalent in time and effort to work others, in the past, have done for free. Doing so results in, IMO, a huge disincentive for volunteer work by other members of the board.]
“Quoted for truth.”
Thanks. Sometimes I think my PhD must have been in “pointing out the obvious.”
Stewart Flood @ December 13, 2013 at 7:41 am wrote:
“So you’re finally joining the Libertarian Curmudgeon Caucus?”
Only if it comes with a better cloak, key and other secret handshakes, passwords and the like.
And by “better” I refer to my past memberships in the Order of DeMolay, and Order of the Arrow.
Far as I can tell, I was never good enough for the Starr Chamber.
🙂
Joe
Let’s see…a storm on Friday the 6th, which forces the meeting to move to Friday the 13th? Gotta love it!!!
Someone needs to be there.
I take it that you’re not heading over to Dallas today, Joe? Is Paulie going? Will there be someone to give us reports of what’s going on?
But don’t write off Mr Starr’s involvement as totally innocent. He needed something to cover up his involvement in the earlier scandal from 2012 in which the LSLA was used in an attempt by a board member to be paid IN ADVANCE for a project as a CONTRACTOR for which there was NO CONTRACT, there was no CLEARLY DEFINED SPECIFICATION (other than a marketing piece written by the board member that was “secret” and not permitted to be seen by certain other board members, including myself), and no delivery goal other than his statement that it would be done in “nine weeks.”
Mr Starr didn’t start that scam, but he helped defend it and he was involved in the financial transactions. Neither he or Mr Pojunis should have been placed on the audit committee. It was NECESSARY for Mr Starr to find something.
Yes, it is good that he uncovered what Mr Cloud did. But don’t forget about the other scandal that this covers up!!!
And remember, the LSLA was being used. It (speaking in general terms) is not the bad guy.
And that’s why I started donating back money I was paid as a contractor after I was elected to the LNC back in 2006.
I didn’t walk into the convention planning on becoming a board member, so when it happened the first thing I did was ask the national treasurer if it was a conflict. He felt that it wasn’t, as long as it was disclosed (which of course it was), but you’re right: be a board member or a vendor. And if you’re a board member you are EXPECTED to help with fundraising. That’s one of the primary jobs of a board of directors.
Mr Cloud should either resign, return the money, or do both. He clearly did not earn it ethically.
Quoted for truth.
Be a board member or be a consultant/contractor/vendor. Trying to wear both hats is inappropriate and I hope the LNC and the membership don’t allow it to happen again.
So you’re finally joining the Libertarian Curmudgeon Caucus?
Welcome aboard!
Funds should not be paid to any vendor in the absence of a detailed invoice.
Funds paid should not be mischaracterized as a “commission” when they are not. A commission is a percentage paid on revenues generated, not a flat fee, and generally not, if ever, a round number (especially to the nearest $1,000.00).
When funds are paid with the promise of a detailed invoice being provided, additional funds should not be paid until that promise if fulfilled.
Invoices should not be created after the fact to try to justify what was paid.
Staff should not be involved in editing/creating/changing a vendor’s invoice, at least not in an after-the-fact effort to justify the prior payments.
LNC members who claim not to be vendors, who claim no conflict of interest, should not then bill for work done prior to that claim.
Generally one LNC member should not be paid for doing work equivalent in time and effort to work others, in the past, have done for free. Doing so results in, IMO, a huge disincentive for volunteer work by other members of the board.
The members of the audit committee should not be tasked with doing, in effect, the job of the ED, chair, treasurer, or LNC itself. The members of the audit committee should not step into those roles even when tasked to do so, IMO. The audit committee should not conduct, in effect, a parallel audit to that done by the outside auditing firm.
There’s more, but the issues here really don’t seem that complex, nor the appropriate consequences so indiscernible, to justify this going on, and on, and on. IMO the reason for that is a political battle among the parties involved, in an apparent strategy to position themselves for the 2014 convention, which is, IMO, doing clear and present damage to the LP, and is apparently . . . nihilistic and unstoppable.
(Lest anyone accuse me of that; I will not attend the 2014 convention (I have conflicting family priorities with both dad and two of my daughters); have no desire to seek any position on the LNC, am not out to “make Tim Hagan look bad” because I lost to him (and Aaron) in 2012. I’m just disgusted by the entire thing. Side with the “Re-elect No One” sentiments. But am clearly just becoming an ever more easily pissed-off, typical, stereotypically angry old disillusioned, resigned and cynical curmudgeon.)
Anybody on staff or the board who is or was involved in any way should be shitcanned immediately.
The corporation has clear rules on large payments being backed by contracts vetted by the chair and general counsel. I have not yet heard that a contract was located. Apparently Wes Benedict’s recruitee for Treasurer failed to notice the issue, which surely falls under his remit.
Seems like clear misconduct, he should resign or be removed for cause
Ive been caught up with my dads death and Im not gonna read or research this issue right now,my first thought is , just like the supposed bombshell of Starr mishandling money which turned up as wishful thinking for some so too will this. The sides are too divided and Libs are too smart for anyone to seriously perpetuate a fraud.I could be wrong , proably am but this is my off the cuff assessment
The only thing you can discuss in executive session is any potential legal action. Since the party in question is a member of the committee, the only way you can even go into executive session is if he recuses himself from the session, or resigns from the LNC.
This needs to be handled the way it would in the board room of a corporation. We can’t play around with this like its a game.
These rewritten invoices and the unfulfilled requirements for documentation when the original invoices were generated should — I say should — leave the committee with only one action that would be in line with their fiduciary responsibilities of a corporation chartered in the District of Columbia. You can guess what I mean by that. It isn’t difficult.
I agree he was mainly talking about the issues with Carla’s move, too, but I’m not sure it needs to be private. As an employer, I would never discuss a personnel issue publicly, but Ms. Howell is paid by people who have donated money and that makes everything a lot different.
Shane’s point was more about the issues with Carla’s move, as I understood it.
I think the fact that an At-Large rep was given (or promised) $38,800 by our Executive Director without proper documentation and approval should be public.
The LNC is not discussing this in the open. These are all unauthorized leaks as far as I know. Granted, some members of LNC are discussing it but as far as I can remember I haven’t said anything that was not already forwarded publicly before that.
I hope the LNC isn’t violating a confidentiality agreement with a contractor by discussing all of this in the open. Like HR matters, this should have been handled in closed session — on the other hand, the contractor is an LNC member — something they should have avoided.
Openly discussing Howell’s reimbursements as an employee is definitely inappropriate.
Just sayin’.
I have successfully posted the rest of the invoices.
It is kinda vague but didn’t a Penna. delegate named Rich Swartz stand up at a convention in the early 1990s, when Emerling/Cloud was the keynoter, and shout some remarks about Emerling/Cloud being a crook and warning the Party to have nothing to do with him?
On the other hand, there is H.L.Hunt’s admonition that if the country is worth saving, then it is worth saving at a profit.