Many wonder whether a new board is enough to save the scandal-plagued watchdog group.
  • Many wonder whether a new board is enough to save the scandal-plagued watchdog group.
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Robert Fellmeth, the ethics expert and law professor at the University of San Diego, says he wants ailing Utility Consumers’ Action Network (UCAN) to survive. Fellmeth founded the once-iconic watchdog in 1983 and shortly put one of his students, Michael Shames, in charge. Now Fellmeth has returned to the board: “We’re trying to do a restart with an independent board that nobody can question,” he asserts.

But questions abound. Does the new board really want to save the watchdog? Beginning in early 2011 and well into 2012, the board majority wanted to dissolve UCAN. Three of the four people who tried valiantly to save the watchdog fear they will be bounced. The fourth person was brought in to run the organization, begged the board to help her clean up the mess, and finally resigned in frustration.

Charles Langley

David Peffer

Kim Malcolm

Michael Shames

Robert Fellmeth

The four who put their necks in a noose to save the watchdog are whistleblowers David Peffer and Charles Langley, board member Niel Lynch, and former executive director Kim Malcolm.

Peffer and Langley, who initially came forward with the information that led to the long-running United States attorney investigation of UCAN, have no assurances they will remain on the payroll. The current board is trying to rejigger the bylaws to oust Lynch, who, according to inside sources, was the one board member sympathetic to the whistleblowers’ revelations, while opposing dissolution. Malcolm now watches from the sidelines.

On March 4, 2011, Peffer informed the board of several irregularities, such as that UCAN was illegally avoiding independent audits and that a number of suspicious bank accounts existed with the name of the organization misspelled. Later, many other questionable activities surfaced.

On March 17, Shames warned the staff that if there were any more complaints, he would disband the organization with the board’s support. On March 25, four of the eight board members resigned and the chairman stepped down, remaining on the board for a brief time. “I think they felt that they did not have the time to look into the issues,” says Kendall Squires, who became chairman.

“For private reasons, I didn’t want to deal with this,” says Marc Lampe, an ethics professor at the University of San Diego who resigned. Lampe was close to Shames, who also taught ethics at the University of San Diego.

At that March 25 meeting, Paul Dostart, an adjunct professor at the University of San Diego School of Law, was appointed to investigate the allegations.

Before long, the majority of the board was agreeing with Shames that the best course was to dissolve. The whistleblowers saw that strategy as a way to jettison them. In early 2012, the board publicly stated its intention to go out of business — and also revealed that it was under federal investigation. Malcolm took over as executive director in May; the next month, Shames was off the payroll. By August, a disgusted Malcolm had resigned and agreed to become a consultant — but that lasted only until August 30.

As all this was happening, more questions surfaced. Investigators looked into class action lawsuits that Shames had parceled out to non-UCAN lawyers, including William Lerach, who later served time in prison. UCAN groups such as the Fraud Squad would come up with consumer complaints that became fodder for outside lawyers. But settlement money would not go back to UCAN. One employee called the Fraud Squad a “lawsuit generating machine” for Shames, who says that he did not make money on the suits.

On August 10, Malcolm wrote the board, “The problems are too numerous to consider them isolated instances.” Consultants have worked without contracts, she complained. The board had spent $700,000 on outside lawyers and consultants to address whistleblower complaints; some of the work was of little benefit and expenses could have been avoided. “UCAN engaged seven law firms that have charged UCAN $350-500 an hour,” she noted. Like most nonprofits, the watchdog could have used local lawyers at no charge or at discounted rates.

“UCAN engaged Mr. Dostart to investigate allegations against Michael Shames,” she wrote. Yet Dostart, his law partner, and Shames “are part of a close community of professionals at [the University of San Diego] School of Law.” At Dostart’s suggestion, UCAN hired Robert Ames, a bankruptcy specialist, as chief operating officer. “Subsequently Mr. Ames paid Mr. Dostart three times the $100,000 limit authorized by the UCAN board.” Dostart billed the watchdog $495 an hour for services that could have been done by junior employees for $15 or $20 an hour.

Moreover, Dostart had told Peffer that the misspelled accounts were inadvertent errors, but there was no way to know that because UCAN did not have the records. It still does not have the bank records, Squires, the board chair, who is stepping down, acknowledges. Dostart also explained away other apparent UCAN transactions when there were no records to make such judgments, Malcolm told the board.

I asked Dostart to comment on Malcolm’s statements and heard nothing.

On August 30, Malcolm resigned as a consultant, stating, “I am no longer willing to put myself on the line for an agency that cannot withstand normal amounts of scrutiny [and] appears unable to comply with state and federal laws.” In early September, she listed the unaddressed problems once again to the board.

On November 19, Hallen Rosner, lawyer for Shames, complained that the board had harmed Shames’s reputation and never retracted some of its statements. Rosner studied under Fellmeth at the University of San Diego and upon graduation formed a firm with him.

One of Fellmeth’s former students has been named to the UCAN board; another is the new executive director. Both a University of San Diego law professor and a law school grad joined the board but left quickly. Says Squires, “Fellmeth is not taking over [UCAN], but I can understand how it looks that way.”

Fellmeth says he is not stacking the watchdog; it’s just that he has had many students. He blasts Shames’s critics but says of his former students, “When they screw up, like Michael Shames may have, they didn’t listen to me.” ■

Contact Don Bauder at 619-546-8529

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Comments

Founder Jan. 2, 2013 @ 2:46 p.m.

I'd like to see the entire Board (except for the few Whistleblowers) step down, in order to allow some NEW interested people to step forward and JUMP Start the UCAN with NEW BLOOD...

That is what is needed, enough of all that "He said" stuff that only helps SDG&E prosper...

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Don Bauder Jan. 2, 2013 @ 5:53 p.m.

Founder: The two whistleblowers are not on the board. They are on the staff. But you are right: they should not only stay, they should be given raises. Niel Lynch, the board member who sided with the whistleblowers, is fighting to remain; if the current board succeeds in booting him, it may be a disaster. I would like to see UCAN survive. But I would also like to see UCAN make real progress against SDGE's predations. When UCAN was founded in 1983, SDGE had among the highest rates in the nation. In all those years, UCAN has raked in all those intervenor fees (of which Shames was taking a 10% bonus off the top), and SDGE still has among the highest rates in the nation. Has the whole thing been a charade? Great question. Best, Don Bauder

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SurfPuppy619 Jan. 2, 2013 @ 5:52 p.m.

Take that picture of the pup down, what ru clowns thinking???...., that is abuse.

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Don Bauder Jan. 2, 2013 @ 5:55 p.m.

SP: I don't see the abuse of the dog, but maybe I am missing something. The abuse that concerns me is the way SDGE treats its ratepayers. Best, Don Bauder

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SurfPuppy619 Jan. 3, 2013 @ 10:56 a.m.

A PUPPY chained to a dog house with a CHAIN larger than the SIZE OF HIS LEGS is abuse.

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Don Bauder Jan. 3, 2013 @ 11:53 a.m.

SurfPup: If you say so... Best, Don Bauder

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SurfPuppy619 Jan. 3, 2013 @ 10:57 a.m.

I don't know what the pic is supposed to symbolize but it is offensive to those who work in animal rescue.

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Visduh Jan. 3, 2013 @ 8:05 p.m.

It could be photoshopped. Or it might be a staged shot, which seems most likely, that involved the dog for only a few seconds or minutes. The shot is obviously satiric.

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Don Bauder Jan. 4, 2013 @ 9:42 a.m.

Visduh: Yes, the shot is meant to be a spoof, obviously. Here's another thought: the chain may not be made of metal, but of cardboard. Best, Don Bauder

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Don Bauder Jan. 3, 2013 @ 11:55 a.m.

SurfPup: To my knowledge, you are the only one who has complained. Best, Don Bauder

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SurfPuppy619 Jan. 3, 2013 @ 1:25 p.m.

Maybe the average person is unaware that large chain should not be used on puppies, ever.

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Don Bauder Jan. 3, 2013 @ 3:11 p.m.

SurfPup: Everybody I have talked directly to about the column has talked about a possible coverup at UCAN, as well as the University of San Diego law school. Nobody has mentioned the photo of the dog. Best, Don Bauder

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Twister Jan. 6, 2013 @ 7:09 p.m.

This chain of exchanges is pitifully ironic. Think about it--a story complaining about coverups covering up and kissing off a whistle-blower. Surfpuppy is right--even though the pic is probably a photo-shopped gag, such things can give fringe-types ideas that they might act upon, much like other copycats. It should be easy enough to simply explain the facts behind the pic. Have some blackbird pie, Don?

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Don Bauder Jan. 6, 2013 @ 10 p.m.

Twister: Like SurfPup, you are overreacting. I had nothing to do with the selection of that photo but strongly defend its use to help illustrate the column. Best, Don Bauder

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Twister Jan. 7, 2013 @ 10:11 p.m.

Don, I don't believe that Surfpup and Twister are out to get you; neither of us said anything about your being responsible for the pic. We are well aware that you're not responsible for the fotos, but digging in on an otherwise simple issue--izzat overreacting? The pic is possessed by a kind of creep-factor. But let it be . . .

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Don Bauder Jan. 8, 2013 @ 7:34 a.m.

SurfPup: That's a real heart-tugger. The acronym for the coalition is CUDS. Best, Don Bauder

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Don Bauder Jan. 8, 2013 @ 7:41 a.m.

SurfPup: Did the dogs have to listen to that music? Best, Don Bauder

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SurfPuppy619 Jan. 8, 2013 @ 8:54 a.m.

I hope not....the chains were bad enough.

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Don Bauder Jan. 8, 2013 @ 11:12 a.m.

SP: I still think those chains may be cardboard. Best, Don Bauder

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Don Bauder Jan. 8, 2013 @ 7:29 a.m.

Twister: I don't believe I said that anybody is out to get me. If so, who cares? As I have said many times, being a pin cushion or punching bag is part of my job description here. Best, Don Bauder

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Visduh Jan. 3, 2013 @ 8:09 p.m.

I'd suggest that anyone hoping for some counterbalance to SDGE look elsewhere from UCAN. The big picture is one of another operation set up for the benefit of the chosen few who are employed, that makes big noise and carries a very small stick or no stick at all.

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Don Bauder Jan. 3, 2013 @ 9:18 p.m.

Visduh: Good points. UCAN unnecessarily (but probably deliberately) drained the treasury fighting the whistleblowers' complaints, instead of facing them honestly as it became obvious that they were correct. UCAN drained the funds on a coverup, it appears. So UCAN is broke, and its reputation is justifiably shot. But San Diego needs some organization to fight the rapacious San Diego Gas & Electric. Perhaps Malcolm, Lynch, Peffer and Langley could start a new organization. Pity, because I would like to see UCAN survive. Maybe those four could take over UCAN and the present board could depart. Best, Don Bauder

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Visduh Jan. 4, 2013 @ 8:20 a.m.

I'm with you on that desire to see UCAN come back and carry on the fight. It's just that UCAN may never have been fulfilling its mission. Going through the motions is one thing, being effective is another. And it was a wonderful gravy train of income for Shameless personally, and that may have been the only thing is did well, i.e. pay him far too generously for the little that he really accomplished.

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Don Bauder Jan. 6, 2013 @ 10:03 p.m.

Visduh: The UCAN misadventure has motivated the state to look into California Public Utilities Commission (CPUC) intervenor fees. The state wants independent audits of those getting these fees. In the case of UCAN, I hope those audits go back a dozen years. Best, Don Bauder

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Twister Jan. 7, 2013 @ 10:19 p.m.

Yeah, sure. When chained puppies fly . . .

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Don Bauder Jan. 8, 2013 @ 7:16 a.m.

Twister: I understand your skepticism. Best, Don Bauder

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Twister Jan. 6, 2013 @ 7:28 p.m.

The bigger scandal is that such shameful activity by an NGO diminishes all of them with the same brush.

Starting another organization with a fully transparent set of books, charter, and published proceedings could not only perform the functions promised by the contaminated one, it could set a standard of performance for all NGO's.

But now we need a new monicker to replace UCAN, maybe a watchdog to match our chains--one that will watch ALL organizations that supposedly serve the public interest, including fiefdoms like the Port Authority and other districts as well as public utilities?

Shall we have a naming contest?

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Don Bauder Jan. 6, 2013 @ 10:06 p.m.

Twister: California's AG's office already has a division that is supposed to monitor nonprofits and purported nonprofits. Supposedly, it is investigating UCAN, but many think this is just a butt-covering operation. Best, Don Bauder

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Twister Jan. 7, 2013 @ 10:15 p.m.

How much butt has the AG division actually kicked? If none, maybe the window-dressing should be taken down and the slackers fired?

If true, this could be the bigger scandal.

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Don Bauder Jan. 8, 2013 @ 7:25 a.m.

Twister: Yes, we should look into the AG's monitoring of nonprofits. Is it effective? Actually, we might find that it is more effective than many other agencies in Sacramento. I haven't given up hope that the AG will do an honest probe of UCAN. Best, Don Bauder

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Don Bauder Jan. 8, 2013 @ 7:22 a.m.

Twister: In its early days, UCAN claimed it would be transparent, that its members (donors) would have a say in its activities, etc. etc. As it collapsed, it was saying it really had no members, although it had been boasting that it had more than 30,000. Best, Don Bauder

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Twister Jan. 9, 2013 @ 7:55 p.m.

Time was, a member had the right to vote and run for office, and free elections would be held. The control freaks found ways around this, and ultimately "members" ended up being MINO'S, members in name only. No voting, no petitioning, and so on . . .

Virtually all major organizations, including, for example, the museums in Balboa Park, have only MINO's. I am an ex-member of those institutions. They will not (any longer) get a dime of my vast fortune when I die. Citizenship requires a certain stubbornness.

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MURPHYJUNK Jan. 8, 2013 @ 8:16 a.m.

Has ucan accomplished much in its history?

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Don Bauder Jan. 8, 2013 @ 9:08 a.m.

Murphyjunk: When UCAN started, SDGE had among the highest rates in the nation. Three decades later, it still does. Shames did a good job fighting some SDGE abuses, but was strangely detached on others, such as the utility's attempt to get ratepayers to pick up the tab for uninsured 2007 fire damage. Through his bonuses, he raked in a bundle of money on intervenor fees. In his years, UCAN paid consultants -- often his friends -- extraordinary remuneration. UCAN would come up with scams, then Shames would farm out the class action lawsuits to other attorneys; UCAN would not get what it deserved from settlements. These questions are just a few in addition to the many I have raised since July of 2011, when I began writing about this. Best, Don Bauder

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Twister Jan. 9, 2013 @ 8 p.m.

Demagoguery requires at least a kernel of truth, something like bait covering a hook.

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Don Bauder Jan. 9, 2013 @ 9:25 p.m.

Twister: Profound thought, that, no matter whom it was aimed at. Some day you will make Bartlett's with that perspicacious truth. Best, Don Bauder

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Twister Jan. 11, 2013 @ 10:59 p.m.

I prefer to stick to issues and avoid personalities; therefore my comment wasn't "aimed" at any particular person, but the principle underlying the behavior. The subject under discussion, in many of its facets, seems to fit the category, but I do not have enough facts to call anyone names.

A quote that does merit Bartlett's, however, is that of R. M. Gilmore: "The suspension of judgment is the highest exercise in intellectual discipline."

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Don Bauder Jan. 12, 2013 @ 7:23 a.m.

Twister: Profound quote, indeed. But who was R.M. Gilmore? Best, Don Bauder

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Twister Jan. 12, 2013 @ 10:48 a.m.

A San Diegan. A citizen of the world. An exceptional individual devoid of egocentrism who didn't give a damn about credit, fame, publicity, and all the puffery that claims that "You are what your publicity says you are." The late curator of marine mammals at the Natural History Museum. If you ever took a whale-watching trip with the SDNHM before he died (stepping onto the whale-watching boat, with his boots on), you knew him.

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Don Bauder Jan. 14, 2013 @ 7:37 a.m.

Twister: I have never met anyone devoid of egocentrism, but if Gilmore qualified, I won't argue, because I never knew the man. Best, Don Bauder

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Twister Jan. 15, 2013 @ 9:59 p.m.

Yeah, I won't argue the point to the point of perfection either, but then I'm always approximate. One of our imperfections is that we expect perfection in the face of its utter absence.

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