Credit Cards - History & Usage

Updated: 6/30/07

The following is a summary of the "Credit Card Scandal" that has taken over the news in Spring '07.

HISTORY & BACKGROUND:

Three years ago, rumours were rampant concerning the issuance of Credit Cards to PCM employees. Directors on United Mutual were told various stories on their existence and other than a comment by the General Manager that the purpose of Credit Cards was "for emergencies only" the Directors were not provided any information or documentation of any Credit Card usage.

State changes to the Davis Stirling Act, prevented Home Owner Associations from with holding any such information and finally a 26 month period (1/1/5-2/30/7) of Billing Statements were made available to one of the residents after a 3 year wait. Analysis of this billing data created a major concern among the resident/owners when the charges were made public.

The use of Credit Cards and CC&R's are tied together. Noted legal opinions hold the CC&R's as one of the defining documents in controlling the card usage. The IRS has defined the expenses that are acceptable and to a reasonable person, the usage of these cards exceeds the boundaries that the Managing Agent or Boards should find acceptable. By viewing the file 4.a. below, one can make his/her own determination on what sounds acceptable.

Paragraph 13 below is a link to the OC Register article on the Credit Card usage by PCM. Mr. Johns the General Manager responded in an interview on the local TV Station and referred to the article as, "... loaded with lies, misrepresentation, and ugly spin." Mr. Johns failed to acknowledge that the article was based totally on the Billing Statements that were included on the OC Register website containing the article. It is difficult to argue with the facts, but when Mr. Johns is calls this "lies" he is talking about his own documentation.

What is disheartening is his statement that, and I will paraphrase, "If you take away the Credit Cards, we will use Expense Reimbursements to pay these expenses, AND, if you make the Management Company (PCM) pay for their employee expenses, PCM will just increase the Management Fee to cover the costs." No recognition on his part that this is a potential Wasteful Management Philosophy and for the Residents could be termed "Elder Abuse."

The data below contains various documents in chronological order of these billing charges:

Reference Data:

  1. CA Corporate Code 8216
  2. Martin L. Lee, Esq Comments on CC&R's (What controls the use of Credit Cards)
  3. Letter from Corporate Attorney to M Curtis (United & GRF do not have CC&Rs)
  4. Copy of Original Source Data: (various sortings of the manually entered billing records)
    1. Source data by Card (User Name & Date)
    2. Source data by Billing Period
    3. Source data by $ Amt
    4. Source data Sort & Total by Desc (Payee) for "Other"
    5. Source data Sort & Total by Name and Desc (Payee) for "Other"
    6. Source data Sort & Total by Food, User, Date (for Saturday and Sunday only)
  5. PCM Credit Card History (Power Point)
    1. PCM Credit Card History (PDF File of Power Point Presentation)
  6. "On The Border" Analysis (Highest Food Usage)
  7. Certified Letter to all Boards Requesting Audit 4/11/7
  8. Credit Card Update RV Mtg 4/19/7 (Power Point)
    1. Credit Card Update RV Mtg 4/19/7 (PDF File of Power Point)
  9. Letter to G Portlock, Pres. GRF (Requesting Additional Information)
  10. PCM Response to Request for Minutes Concerning Credit Cards
  11. Credit Card Update RV Mtg 5/3/7 (Power Point)
    1. Credit Card Update RV Mtg 5/3/7 (PDF File of Power Point)
  12. Credit Card Update RV Mtg 5/17/7 (Power Point)
    1. Credit Card Update RV Mtg 5/17/7 (PDF File of Power Point)
  13. Link to OC Article 6/27/7 on Credit Card Usage

 

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