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VIOLATION DESCRIPTIONS: | SUPPORTING EVIDENCE:
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RCW 9.24.050
False report of corporation.
Every director, officer or agent of any corporation or joint stock association, and every person engaged in organizing or promoting any enterprise, who shall knowingly make or publish or concur in making or publishing any written prospectus, report, exhibit or statement of its affairs or pecuniary condition, containing any material statement that is false or exaggerated, is guilty of a class B felony and shall be punished by imprisonment in a state correctional facility for not more than ten years, or by a fine of not more than five thousand dollars.
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Count 1: False statement by the board in the June 2011 Newsletter:
"The labor is volunteer, so the only cost is for the materials, and some of them are donated." View document
Documents that refute this statement:
Valleyhi Cabana Project. View document
Count 2: False statement by the board at the meeting on February 16, 2012:
"the cabanas were refurbished and repaired with volunteer labor and private donations." View document
Documents that refute this statement:
Valleyhi Cabana Project. View document
Count 3: False statement by the board at the meeting on February 16, 2012:
"you do not necessesarily own valleyhi community club."
This is a one minute audio clip of director Danielle Hester explaining ownership rights at the meeting on February 16, 2012: Hear audio
Documents that refute this statement:
Article VIII of the fraudulent by-laws. View document
Count 4: False statement by the board at the meeting on February 16, 2012:
"those lots cannot be sold without water" View document
Documents that refute this statement:
Chelan County Deed and Sales History. View document
Count 5: False statement by the board at the meeting on June 10, 2012:
"it was $12000" View document
Documents that refute this statement:
Summary of Account Transactions May 31, 2011. View document
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RCW 24.03.030
Limitations.
A corporation subject to this chapter:
(1) Shall not have or issue shares of stock;
(2) Shall not make any disbursement of income to its members, directors or officers;
(3) Shall not loan money or credit to its officers or directors;
(4) May pay compensation in a reasonable amount to its members, directors or officers for services rendered;
(5) May confer benefits upon its members in conformity with its purposes; and
(6) Upon dissolution or final liquidation may make distributions to its members as permitted by this chapter, and no such payment, benefit or distribution shall be deemed to be a dividend or a distribution of income.
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Count 1: Disbursement of income to a member (Salvador Camargo).
Supporting documents:
June 2011 Newsletter. View document
Summary of Checking and Cash/Asset Accounts as of August 18, 2011.
View document
Attempts to eliminate this violation:
The Minutes of June 12, 2011. View document
Salvador Camargo offers to give the money back. View video clip
Another member (Treasurer's husband Jack Smith) offers to write a check
and give it
to the club so that there would be no "funding fouls".
View video clip
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RCW 24.03.135
Required documents in the form of a record - Inspection - Coping.
Each corporation shall keep at its registered office, its principal office in this state, or at its secretary's office if in this state, the following documents in the form of a record:
(1) Current articles and bylaws;
(2) A list of members, including names, addresses, and classes of membership, if any;
(3) Correct and adequate statements of accounts and finances;
(4) A list of officers' and directors' names and addresses;
(5) Minutes of the proceedings of the members, if any, the board, and any minutes which may be maintained by committees of the board.
The corporate records shall be open at any reasonable time to inspection by any member of more than three months standing or a representative of more than five percent of the membership.
Cost of inspecting or copying shall be borne by such member except for costs for copies of articles or bylaws. Any such member must have a purpose for inspection reasonably related to membership interests. Use or sale of members' lists by such member if obtained by inspection is prohibited.
The superior court of the corporation's or such member's residence may order inspection and may appoint independent inspectors. Such member shall pay inspection costs unless the court orders otherwise.
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Count 1: A reasonable request for an official document was made by a member (Craig Prpich) and was refused by the board for a false reason.
Count 2: Board meeting minutes are being withheld from the membership.
Supporting documents:
The minutes of January 17, 2013. View document
Count 3: A reasonable request for information was made by a member (Colleen Clark) and was refused by the board.
Supporting documents:
Letter to Colleen Clark April 20, 2013. View document
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RCW 64.38.035
Association meetings - Notice - Board of directors.
(1) A meeting of the association must be held at least once each year. Special meetings of the association may be called by the president, a majority of the board of directors, or by owners having ten percent of the votes in the association. Not less than fourteen nor more than sixty days in advance of any meeting, the secretary or other officers specified in the bylaws shall cause notice to be hand-delivered or sent prepaid by first-class United States mail to the mailing address of each owner or to any other mailing address designated in writing by the owner. The notice of any meeting shall state the time and place of the meeting and the business to be placed on the agenda by the board of directors for a vote by the owners, including the general nature of any proposed amendment to the articles of incorporation, bylaws, any budget or changes in the previously approved budget that result in a change in assessment obligation, and any proposal to remove a director.
(2) Except as provided in this subsection, all meetings of the board of directors shall be open for observation by all owners of record and their authorized agents. The board of directors shall keep minutes of all actions taken by the board, which shall be available to all owners. Upon the affirmative vote in open meeting to assemble in closed session, the board of directors may convene in closed executive session to consider personnel matters; consult with legal counsel or consider communications with legal counsel; and discuss likely or pending litigation, matters involving possible violations of the governing documents of the association, and matters involving the possible liability of an owner to the association. The motion shall state specifically the purpose for the closed session. Reference to the motion and the stated purpose for the closed session shall be included in the minutes. The board of directors shall restrict the consideration of matters during the closed portions of meetings only to those purposes specifically exempted and stated in the motion. No motion, or other action adopted, passed, or agreed to in closed session may become effective unless the board of directors, following the closed session, reconvenes in open meeting and votes in the open meeting on such motion, or other action which is reasonably identified. The requirements of this subsection shall not require the disclosure of information in violation of law or which is otherwise exempt from disclosure.
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Count 1: Unauthorized closed executive session. No record exists in any meeting minutes that a motion and affirmative vote in open meeting took place to authorize the board to assemble in closed session.
Count 2: Unauthorized closed executive session. No record exists in any meeting minutes that a motion and affirmative vote in open meeting took place to authorize the board to assemble in closed session.
Count 3: Unauthorized closed executive session. No record exists in any meeting minutes that a motion and affirmative vote in open meeting took place to authorize the board to assemble in closed session.
Supporting documents:
The minutes of October 18, 2012. View document
Count 4: Closed executive board meeting minutes are being withheld from the membership.
Supporting documents:
The minutes of January 17, 2013. View document
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RCW 24.03.120
Place and notice of directors' meetings.
Meetings of the board of directors, regular or special, may be held either within or without this state.
Regular meetings of the board of directors or of any committee designated by the board of directors may be held with or without notice as prescribed in the bylaws. Special meeting of the board of directors or any committee designated by the board of directors shall be held upon such notice as is prescribed in the bylaws. Attendance of a director or a committee member at a meeting shall constitute a waiver of notice of such meeting, except where a director or a committee member attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors or any committee designated by the board of directors need be specified in the notice or waiver of notice of such meeting unless required by the bylaws. If notice of regular or special meetings is provided by electronic transmission, it must satisfy the requirements of RCW 24.03.009.
Except as may be otherwise restricted by the articles of incorporation or bylaws, members of the board of directors or any committee designated by the board of directors may participate in a meeting of such board or committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time and participation by such means shall constitute presence in person at a meeting.
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The use of e-mail to make and approve motions does not constitute presence in person at a meeting.
Count 1: November 9,2011: A motion to purchase three file cabinets instead of two was made by Susan Raley, seconded by Danielle Hester, and the motion passed.
Count 2: November 21,2011: A motion that Valleyhi accept the donation of Lot 30 of Block 5 from Susan and Herman Raley was made by Danielle Hester, seconded by Don Thomas, and the motion passed.
Supporting documents:
The minutes of November 17, 2011. View document
Count 3: February 24, 2012: A motion to spend $300 to obtain a Valleyhi funded valleyhicommunityclub.org website for Valleyhi was made, seconded, and approved by e-mail.
Count 4: February 29, 2012: A motion to retract the motion to sell the section of property on Allen Lane (Lot 18) was made, seconded, and approved by e-mail.
Count 5: February 29, 2012: A motion to elect Jose Blazquez to the vacant President's position to serve as our interim board President was made, seconded, and approved by e-mail.
Count 6: March 4, 2012: A motion to split the cost of the mailing from the trustees to the membership responding to the petitioners' claims five ways was made, seconded, and approved by e-mail.
Count 7: March 7, 2012: A motion that Valleyhi Community Club, Inc. secures a credit card from Cashmere Valley Bank with a $500.00 limit was made, seconded, and approved by e-mail.
Supporting documents:
The minutes of March 15, 2012. View document
Count 8: March 14, 2012: A motion to have the attorney file three liens on Valleyhi's behalf was made, seconded, and approved.
Count 9: March 15, 2012: A motion that the proposed changes to the By Laws are forwarded to the attorney so that he can review them and provide feedback to the board was made, seconded and approved.
Supporting documents:
The minutes of April 19, 2012. View document
Count 10: May 10, 2012: A motion to send the public notice to Kiesz for review was made, seconded and approved.
Supporting documents:
The minutes of May 17, 2012. View document
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RCW 24.03.085
Voting.
(1) The right of the members, or any class or classes of members, to vote may be limited, enlarged or denied to the extent specified in the articles of incorporation or the bylaws. Unless so limited, enlarged or denied, each member, regardless of class, shall be entitled to one vote on each matter submitted to a vote of members.
(2) A member may vote in person or, if so authorized by the articles of incorporation or the bylaws, may vote by mail, by electronic transmission, or by proxy in the form of a record executed by the member or a duly authorized attorney-in-fact. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy.
(3) If specifically permitted by the articles of incorporation or bylaws, whenever proposals or directors or officers are to be elected by members, the vote may be taken by mail or by electronic transmission if the name of each candidate and the text of each proposal to be voted upon are set forth in a record accompanying or contained in the notice of meeting. If the bylaws provide, an election may be conducted by electronic transmission if the corporation has designated an address, location, or system to which the ballot may be electronically transmitted and the ballot is electronically transmitted to the designated address, location, or system, in an executed electronically transmitted record. Members voting by mail or electronic transmission are present for all purposes of quorum, count of votes, and percentages of total voting power present.
(4) The articles of incorporation or the bylaws may provide that in all elections for directors every member entitled to vote shall have the right to cumulate his [or her] vote and to give one candidate a number of votes equal to his [or her] vote multiplied by the number of directors to be elected, or by distributing such votes on the same principle among any number of such candidates.
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Denial of voting rights is not authorized by the articles of incorporation or the by-laws.
Count 1: June 2013 Notice of Special Meeting. View document
Supporting documents:
Articles of Incorporation. View document
By-laws. View document
Voting by mail is not authorized by the articles of incorporation or the by-laws.
Count 2: June 2011 Mail-in Ballot. View document
Supporting documents:
Articles of Incorporation. View document
By-laws. View document
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RCW 24.03.115
Committees.
If the articles of incorporation or the bylaws so provide, the board of directors, by resolution adopted by a majority of the directors in office, may designate and appoint one or more committees each of which shall consist of two or more directors, which committees, to the extent provided in such resolution, in the articles of incorporation or in the bylaws of the corporation, shall have and exercise the authority of the board of directors in the management of the corporation: PROVIDED, That no such committee shall have the authority of the board of directors in reference to amending, altering, or repealing the bylaws; electing, appointing, or removing any member of any such committee or any director or officer of the corporation; amending the articles of incorporation; adopting a plan of merger or adopting a plan of consolidation with another corporation; authorizing the sale, lease, or exchange of all or substantially all of the property and assets of the corporation not in the ordinary course of business; authorizing the voluntary dissolution of the corporation or revoking proceedings therefor; adopting a plan for the distribution of the assets of the corporation; or amending, altering, or repealing any resolution of the board of directors which by its terms provides that it shall not be amended, altered, or repealed by such committee. The designation and appointment of any such committee and the delegation thereto of authority shall not operate to relieve the board of directors, or any individual director of any responsibility imposed upon it or him or her by law.
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Count 1: A Water Committee exists which is not supported by the articles of incorporation or the bylaws.
Count 2: A Cleanup Committee exists which is not supported by the articles of incorporation or the bylaws.
Supporting documents:
Order of Business for 19 April 2012 Meeting. View document
Articles of Incorporation. View document
By-laws. View document
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RCW 24.03.065
Members - Member committees.
(1) A corporation may have one or more classes of members or may have no members. If the corporation has one or more classes of members, the designation of the class or classes, the manner of election or appointment and the qualifications and rights of the members of each class must be set forth in the articles of incorporation or the bylaws. Unless otherwise specified in the articles of incorporation or the bylaws, an individual, domestic or foreign profit or nonprofit corporation, a general or limited partnership, an association or other entity may be a member of a corporation. If the corporation has no members, that fact must be set forth in the articles of incorporation or the bylaws. A corporation may issue certificates evidencing membership therein.
(2) A corporation may have one or more member committees. The creation, makeup, authority, and operating procedures of any member committee or committees must be addressed in the corporation's articles of incorporation or bylaws.
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Count 1: Formation of a member (by-law) committee which is not supported by the articles of incorporation or the bylaws.
Supporting documents:
Order of Business for 19 April 2012 Meeting. View document
Articles of Incorporation. View document
By-laws. View document
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RCW 24.03.070
Bylaws.
The initial bylaws of a corporation shall be adopted by its board of directors. The power to alter, amend or repeal the bylaws or adopt new bylaws shall be vested in the board of directors unless otherwise provided in the articles of incorporation or the bylaws. The bylaws may contain any provisions for the regulation and management of the affairs of a corporation not inconsistent with law or the articles of incorporation. The board may adopt emergency bylaws in the manner provided by RCW 23B.02.070.
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Count 1: Formation of bylaws by the board of directors in violation of the articles of incorporation.
Supporting documents:
The Minutes of October 18, 2012. View document
Article VIII of the Articles of Incorporation "The authority to make by-laws
for the corporation is vested in the members of the corporation."
View document
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RCW 64.38.045
Financial and other records - Property of association - Copies - Examination - Annual financial statement - Accounts.
(1) The association or its managing agent shall keep financial and other records sufficiently detailed to enable the association to fully declare to each owner the true statement of its financial status. All financial and other records of the association, including but not limited to checks, bank records, and invoices, in whatever form they are kept, are the property of the association. Each association managing agent shall turn over all original books and records to the association immediately upon termination of the management relationship with the association, or upon such other demand as is made by the board of directors. An association managing agent is entitled to keep copies of association records. All records which the managing agent has turned over to the association shall be made reasonably available for the examination and copying by the managing agent.
(2) All records of the association, including the names and addresses of owners and other occupants of the lots, shall be available for examination by all owners, holders of mortgages on the lots, and their respective authorized agents on reasonable advance notice during normal working hours at the offices of the association or its managing agent. The association shall not release the unlisted telephone number of any owner. The association may impose and collect a reasonable charge for copies and any reasonable costs incurred by the association in providing access to records.
(3) At least annually, the association shall prepare, or cause to be prepared, a financial statement of the association. The financial statements of associations with annual assessments of fifty thousand dollars or more shall be audited at least annually by an independent certified public accountant, but the audit may be waived if sixty-seven percent of the votes cast by owners, in person or by proxy, at a meeting of the association at which a quorum is present, vote each year to waive the audit.
(4) The funds of the association shall be kept in accounts in the name of the association and shall not be commingled with the funds of any other association, nor with the funds of any manager of the association or any other person responsible for the custody of such funds.
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Count 1: No record exists for an audit or a vote to waive the audit for 2011
Count 2: No record exists for an audit or a vote to waive the audit for 2012
Count 3: No record exists for an audit or a vote to waive the audit for 2013
Count 4: No record exists for an audit or a vote to waive the audit for 2014
Count 5: No record exists for an audit or a vote to waive the audit for 2015
Count 6: No record exists for an audit or a vote to waive the audit for 2016
Count 7: No record exists for an audit or a vote to waive the audit for 2017
Suporting documents:
Financial statement March 13, 2013. (indicates income over $50,000 which
requires annual audit) View document
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Valleyhi Community Club By-Law
Article II Section 3:
Each lot owner or purchaser shall have one membership for each lot owned or purchased. The interest of each lot owner shall be equal regardless of the size or location of the lot. The purchaser under a contract of purchase shall be deemed to be an owner for membership purposes. If any lot is held by two or more persons, the several owners of such interest shall be entitled to collectively cast one vote. If the several owners cannot agree to such vote they shall not be entitled to vote for such lot. The vote for a membership owned by a single marital community may be cast by either spouse without presentation of authority from the other, but if both are present, it shall be cast by the wife.
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Count 1: Director Susan Raley cast 5 votes on March 31, 2012 while owning only 4 lots.
Suporting documents:
Chelan County Deed and Sales History. View document
Witnesses: 3 Members.
Count 2: A non member (Julian Gwynne) has been listed as a member and given membership privledges. He does not own a lot in Valleyhi and is not married to a member. He is the boyfriend of director Danielle Hester.
Suporting documents:
The Minutes of the Annual Meeting of June 10, 2012. View document
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Valleyhi Community Club By-Law
Article II Section 4:
No membership shall be forfeited nor any member be expelled except for the non-payment of dues, then only subject to the discretion of the trustees upon a majority vote of the trustees, and no member may withdraw except upon the transfer of title to, or upon contraction for the sale of, the lot to which that membership in appurtenant. No compensation shall be paid by the corporation upon the transfer of membership and no member whose membership is transferred shall be entitled to share or participate in any of the property or assets of the corporation.
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Count 1: A proxy form for a member (Ronny Ray) was destroyed at the special meeting of the membership on March 31, 2012 by another member (Andrew Disher) without the required majority vote of the trustees.
Witnesses: 2 Members.
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Valleyhi Community Club By-Law
Article X Section 4:
In addition to other assessments or fees provided for in these By- Laws, the trustees shall annually levy assessments for purposes of operating and maintaining the water supply system, which assessments may include a provision for depreciation, and for meeting other costs and expenses as may accrue and as are associated with the system. In absence of actual levy, the amount set in the preceding year shall be the amount of the assessment. The assessment shall become due and payable to the trustees thirty (30) days after notice of such assessment shall have been mailed to each club member at such members last known address. Money's so received from the assessment shall be deposited in a separate account provided for the operation of the system. Upon expiration of thirty (30) days from the date of mailing, such assessment shall become a vested lien against the property against which the assessment is made, This lien must be rendered into a judgment within two (2) years from the date the lien arises or such lien will cease to exist. If any portion of any assessments that are not necessary for current expenses but are allocated for depreciation or reserve, may be placed into interest bearing accounts, and held to be used for capital expenditures or replacements, or may, upon approval of a majority vote, be used to reduce the assessment in future years on a pro-rata basis.
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Count 1: Money's received for water assessments are not being placed in a seperate account.
Suporting documents:
The Minutes of the Annual Meeting of June 10, 2012. View document
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Valleyhi Community Club By-Law
Article III Section 1:
The annual meeting of the corporation shall be held at the property site referred to as Valley Hi Addition upon the grounds, or at such other place as the trustees may elect, on the second Sunday of June each year, at 2:00 p.m. Notice thereof shall be given by the secretary, in writing, postage prepaid, by US mail, to the address of each member appearing on the books of the corporation, the mailing date thereof to be not less than 10, nor more than 50 days prior to the meeting. At such meeting the members shall elect trustees as herein provided and transact such other business as may properly come before them.
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Count 1: The 2013 annual meeting was conducted on the fourth Sunday in June rather than the second Sunday in June.
Suporting documents:
The May 2013 Valleyhi Newsletter. View document
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Valleyhi Community Club By-Law
Article III Section 3:
At all annual and special meetings of the membership of the corporation, 51% of the lot owners present in person or by written proxy, shall constitute a quorum for the transaction of any business appropriate to a member's meeting.
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Count 1: June 2013 Notice of Special Meeting. View document
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