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Beleaguered Utility Consumers' Action Network, the watchdog nonprofit with myriad legal problems, today (Feb. 28) posted on its website an unsigned notice indicating that it "has initiated a Superior Court-supervised reorganization" that might permit the group to address "persistent legal challenges."

As the Reader has been reporting for months, the network's chief executive Michael Shames was receiving California Public Utilities Commission intervenor fees as a lawyer when he was not in the bar; he joined in a non-CPUC legal action although not a lawyer; he resisted but then rejoined the bar; the state bar has been looking into Shames's status; the big steel company Nucor arranged to finance a Peter Navarro China-bashing film by first running the money through Shames' group -- a maneuver that has never been explained.

There have been accounts with unusual spellings such as Utility Comsumers Action Network in which some thought money had been secreted, and, finally, the U.S. Attorney's office has issued a subpoena to the organization, demanding that it turn over numerous financial documents dating back to 2004. The utility network says it will cooperate with the government investigation.

The group's board will be sending a letter to its donors explaining the process. The network stated that among allegations against the organization have been: "embezzlement of UCAN funds, directly or through kickbacks...private bank accounts in which assets were being siphoned, failure to comply with state audit requirements, engaging in unlicensed legal activities and entering into illegal contracts."

The group hired law firms to look into these matters and claims that "no evidence confirming such allegations was provided by those lodging allegations, nor discovered by any of the professionals retained by UCAN's board."

The utility network has a number of whistleblowers making the complaints. They say that the lawyers hired by UCAN covered up the activities, rather than honestly investigated them.

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Comments

Don Bauder Feb. 28, 2012 @ 10:19 p.m.

UCAN CHANGES WORDING FROM "REORGANIZATION" TO "VOLUNTARY DISSOLUTION" As reported above, UCAN posted Feb. 28, in the lead, that it had initiated a "Superior Court-supervised reorganization." But later in the evening Feb. 28, UCAN changed the wording from "reorganization" to "voluntary dissolution." The document, posted by "anonymous," was obviously written by lawyers, and perhaps a room full of them. It is not clear to me why they admit in the second posting that UCAN is initiating a "dissolution." For months, there have been rumors that chief executive Michael Shames, with the board's concurrence, would dissolve UCAN, thereby setting up a mechanism to fire the whistleblowers who have been suspicious of what is going on there. According to dissidents, Shames himself threatened the staff more than once that he would do just such a thing. The story is that Shames then would set up his own organization to handle the pending general rate case. This means -- to me, anyway -- that dissidents should get to court with lawsuits against UCAN, and also should protest the attempt to dissolve. That is supposed to be done within 30 days of the filing. If possible, UCAN board members should be put under oath and grilled why they took this measure.

Normally, a California nonprofit that dissolves does so through the attorney general, secretary of state and franchise tax board. But there are provisions in California law permitting the dissolution through the court. According to whistleblowers, a lawyer working for UCAN has been "wining and dining" an official of the attorney general's office. Dissidents should demand to know the truth of those purported meetings, and whether or not the subject of UCAN's dissolution came up. Best, Don Bauder

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Burwell Feb. 28, 2012 @ 10:54 p.m.

It makes a lot of sense to dissolve UCAN and start a new public interest organization to fight SDG&E. As the driving force behind UCAN, Shames will take all the donors with him to the new organization. If the employees sue UCAN and win, donations would dry up as donors would not want to pay judgements. It does not appear at this point that UCAN is viable, given the likelihood of ruinous awsuits. Shames' liquidation plan puts the kibosh on potential lawsuits and allows him to operate under the umbrella of a new organization. The plan seems to be legal. This scenario falls apart if Shames is indicted by the Grand Jury for moral turpitude. I believe that he's done nothing wrong, and will be shocked if it turns out otherwise.

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Don Bauder Feb. 29, 2012 @ 8:14 a.m.

I'm not sure that Shames's liquidation plan puts the kibosh on lawsuits. In a dissolution through the Superior Court, people -- including the attorney general -- have 30 days to file objections. Those will be filed, certainly -- possibly not by the attorney general, whose office has been wined and dined. Hopefully, the whistleblowers can take depositions -- not only of Shames, but also of board members, on such critical questions as whether the activities were covered up by forensic accountants and lawyers hired by the board, as well as by the board itself. The whistleblowers have startling evidence on the matters that UCAN alluded to in its unsigned statement of last night (Feb. 28). I believe that you will be surprised by what comes out. Best, Don Bauder

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SurfPuppy619 Feb. 28, 2012 @ 11:28 p.m.

This scenario falls apart if Shames is indicted by the Grand Jury for moral turpitude == The US Attorney requesting documents is NEVER a good sign.

I have always looked at Shames as a crusader, and if it turns out different then I will be shocked and disappointed.

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Don Bauder Feb. 29, 2012 @ 8:20 a.m.

I had always believed that Shames was a crusader. I wrote reams of flattering copy about him beginning more than two decades ago when SCE was trying to take over SDGE. Then about five years ago I began hearing about turmoil within the organization, with Shames at the center. I still did not write anything, because I had no proof. Then I began getting the visual proof last year and wrote two columns plus several blog items on what was going on there. All I can say is that this is going to get very interesting. Best, Don Bauder

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Visduh Feb. 29, 2012 @ 7:45 a.m.

I'm already shocked that this organization has apparently not been fulfilling its mission for a number of years. Whatever intricate series of events led to this dissolution took quite some time, not just an overnight move. The particularly galling aspect is that whereas we ratepayers thought we had an effective advocacy organization working to counter Sempra rapacity, in fact we had a group riven with dissention headed by a guy whose role and activities were at best questionable. When did UCAN stop being effective? Or was it ever effective? It could have been functioning only as a source of a fat paycheck for Shames, which he then supplemented with his additional legal "work", that also put money in his pocket. The boards of directors of so many of these "do gooder" organizations fall down on the job far too often, and when they do the effect can be devastating.

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Don Bauder Feb. 29, 2012 @ 8:27 a.m.

What appears to have been a coverup was apparently launched some time before I began my series of revelations last year. As I have said, I believe the donors to UCAN should be plaintiffs in a civil suit, and should also protest the organization's move to dissolve. They have 30 days from the filing to register the protests. Among many things, they must demand to know how much money (if any) UCAN lost speculating on a hedge fund, and whether this activity was concealed through a mislabeled account. There are so many other things that must be thoroughly investigated -- both by the U.S. Attorney's office and in the civil suits that almost certainly will be filed. Best, Don Bauder

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MURPHYJUNK Feb. 29, 2012 @ 8:01 a.m.

Big money to be made under the guise of non profit.

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Don Bauder Feb. 29, 2012 @ 8:28 a.m.

Yes, that's true, and it it incumbent on a number of parties to find out if this was true in the case of UCAN, an organization that so many of us admired. Best, Don Bauder

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lulynn77 Feb. 29, 2012 @ 9:13 a.m.

Mr. Bauder, I am hopeful you will choose to investigate and report this story like in the old UT days rather than just repeat rumors that appear to be fed to you by those opposed to Mr. Shames. But it seems like you have already decided there is a "coverup" and "startling evidence" of wrongdoing. Let's see some actual factual reporting, not just innuendo. Who are these "whistleblowers"? Who's representing them? What is their agenda? What's in it for them? There is lots of meat here for a good reporter.

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Visduh Feb. 29, 2012 @ 9:23 a.m.

Yes, there is lots of meat here for a good reporter. Let's see what the Manchester Mill (formerly known as the U-T) does with this. I believe that paper has been silent on the turmoil at UCAN. Of course, does that paper have any "good reporters" remaining? And if they do, are any of them nervy enough to really dig out the facts on something like this? We shall see.

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Don Bauder Feb. 29, 2012 @ 10:42 a.m.

I don't believe that any other medium in San Diego has picked up on this UCAN story since I started writing about it last summer. I welcome competition on this story. Best, Don Bauder

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Don Bauder Feb. 29, 2012 @ 10:40 a.m.

I believe if you look at what I have already written, beginning last summer, you will find many things that are clearly evidence and few if any statements that are innuendo. Remember: I am at a disadvantage. The brass of UCAN will not speak to me. I urge you to look at FUTURE things that get posted -- perhaps today -- and decide for yourself whether they constitute evidence or innuendo. Best, Don Bauder

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lulynn77 Feb. 29, 2012 @ 11:55 a.m.

I've read what you've written on this story to date and it reads like you are an undiscriminating mouthpiece for the "whistleblowers" and the fact is none of it has panned out to date. You are now adding the CPUC and SDGE to the conspiracy theory. Seriously?? Facts? Evidence? Or yet more innuendo from the whistleblowers? You were a great investigative reporter at the UT; please don't let your legacy be to be used by those with their own dubious agendas. We need you to be an investigative reporter. Best wishes.

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Don Bauder March 3, 2012 @ 8:10 a.m.

Re CPUC and SDGE: yes, seriously, and not original with me. For some time, skeptics have suspected that UCAN and SDGE are doing a dance with CPUC's Machiavellian, surreptitious approval. SDGE asks for far more than it believes it can get in a rate case. UCAN protests. The gain is shaved somewhat, and SDGE winds up with far more than it would normally get. CPUC and SDGE are playing footsie on SDGE's attempt to get customers to pay for the uninsured costs of the 2007 fires, as well as future fires. Since SDGE was found negligent in the 2007 fires, these costs should be borne by shareholders, not ratepayers. In fact, in my opinion, even if SDGE had NOT been found negligent, the shareholders should have at least picked up most of the tab. The CPUC is supposed to protect California ratepayers. Under its current management, it does no such thing. It protects shareholders. Best, Don Bauder

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mshames Feb. 29, 2012 @ 9:21 a.m.

To those who are interested in this matter, I recommend strongly that you not believe everything (or even much of) that you read about this topic.....perhaps not even these words.

But here's what I can say with a fair amount of confidence: UCAN is going to continue to fulfill its mission. I'm not going anywhere. SDG&E has no basis to be celebratory. And the other side of the stories that Don has been publishing will be coming out over the coming year. It will reveal a story that is dramatically different than the saucy novella he has scribed.

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Don Bauder Feb. 29, 2012 @ 10:48 a.m.

The Reader would like you and UCAN's board to come clean. You personally attacked me last summer but then refused to give your point of view in a subsequent column and several blog items. The UCAN board clammed up. I would certainly think that UCAN owes its thousands of donors an explanation that is more revelatory than the weasel-worded, unsigned statement posted on your website last night (Feb. 28) that posed many questions but gave few answers. Best, Don Bauder

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Don Bauder Feb. 29, 2012 @ 10:54 a.m.

Further, you state that UCAN is going to fulfill its mission. But UCAN stated last evening that it is initiating a Superior Court-supervised DISSOLUTION (my emphasis). You can begin by explaining how UCAN can dissolve and continue fulfilling its mission.

Finally, you state that SDGE has reason to celebrate. I have never said that SDGE would celebrate the demise of UCAN. Quite the opposite: hopefully, a major topic that should come up is whether or not UCAN and SDGE have had a symbiotic relationship (along the CPUC) that has contributed to the company getting its large rate increases. Best, Don Bauder

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mshames Feb. 29, 2012 @ 11:06 a.m.

Don, I can assure you that answers to each of the questions you posed will be forthcoming. In fact, our website statement even says: "UCAN will be sending a letter to its donors in the coming weeks to describe, in greater detail, the objectives of the Board and the process underway". Unfortunately, these answers will be coming based upon our timeline, not yours. And I offer the following with respect and personal fondness; as your own readers have noticed, your point of view on this matter is so one-sided and contorted that you no longer serve as a vehicle for objective reportage. So when I am freed up to sit down with the media and talk about these events, it won't be with you.

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Visduh Feb. 29, 2012 @ 11:17 a.m.

How convenient for you, Mike. If you had spoken frankly to Don previously, when he asked for your side of the story, he might have been able to fathom some of the things happening at UCAN. Now you allude to the "other side" of the story that you've never shared. The FIRST reporter you should talk to is Don Bauder, not some cub reporter from the U-T or empty suit/skirt from a TV station.

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JustWondering Feb. 29, 2012 @ 12:06 p.m.

"So when I [Michael Shames] am freed up to sit down with the media and talk about these events, it won't be with you [Don Bauder]."

Don I never realized you were/are so formidable that a public figure like Michael Shames would coward at the thought of an interview with you. Too bad, I would love to read that piece on UCAN.

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Don Bauder Feb. 29, 2012 @ 12:24 p.m.

JW, you should go to the Reader search box and enter bauder + shames. You will find two columns and a number of brief blog items that I began posting on this matter last summer. Best, Don Bauder

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Don Bauder Feb. 29, 2012 @ 12:21 p.m.

You have been telling me in emails that you thought I was biased and one-sided for more than six months, as you refused to answer any questions. Now you are stating it publicly. Congratulations. Best, Don Bauder

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Twister Feb. 29, 2012 @ 4:04 p.m.

Dear Mr. Shames:

I am, or at least once was, a supporter. But to clarify my present (it could change, and I hope it will) position is that I have closely read both your and Bauder's remarks carefully. I have found no significant errors in Bauder's writings, and no illegitimate questions.

In your statements I have found little of substance with respect to alternative facts, but much that seems like evasion. I see vagueness where there should be substance.

It is this, not any one-sidedness on Bauder's part, that causes me pause. I hope you will speak directly to the merits of the issues raised, and I hope you will come out, legitimately, without spin, on top. I will, if necessary, press Bauder for retractions of any unwarranted assumptions he has made, provided you have made a good-faith effort to respond fully and in a timely way.

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Twister March 2, 2012 @ 7:59 p.m.

Well, I suppose Mr. Shames is too busy to respond right now, but I will continue to wait . . . if a little impatiently . . .

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Don Bauder March 3, 2012 @ 8:14 a.m.

Shames has already said he won't talk with me, Twister. So forget that "good-faith effort to respond." Best, Don Bauder

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Twister March 3, 2012 @ 5:44 p.m.

That's alright, but when he shoots his mouth off in print/pixel, he should be man enough to respond to relevant comments. I don't care about opinions or feelings; I just want facts, not window-dressing.

Denial always ends up being more costly than apology and shaping up the ship.

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JustWondering Feb. 29, 2012 @ 12:01 p.m.

WOW! I'm Just Wondering who has the bigger ego in the Bauder vs Shames bout. Although I did LAUGH OUT LOUD when I read Shames' comment posted at 11:06 a.m., Feb 29, 2012. There's no doubt in my mind Mr. Shames words will be parsed VERY CAREFULLY, with as many loopholes as legally and humanly possible in any statement released by UCAN.

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Don Bauder Feb. 29, 2012 @ 12:27 p.m.

Of course UCAN statements will be parsed carefully. Shames is a lawyer (one who left the bar and then came back, wagging his tail between his legs). The chief operating officer, Bob Ames, is a long-time San Diego attorney mainly specializing in bankruptcies, dissolutions and the like. Kendall Squires, who heads the board, is a lawyer. Best, Don Bauder

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Don Bauder Feb. 29, 2012 @ 1:24 p.m.

I have found it interesting since last summer when I began writing about it, SP. Best, Don Bauder

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psyflyjohn Feb. 29, 2012 @ 2:09 p.m.

Wow! My two favorite people in San Diego are at each others throats. I sincerely hope that this gets settled amicably. I also hope that some corporation, like SDGE is not behind this !

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Don Bauder Feb. 29, 2012 @ 3:31 p.m.

With the US Attorney's office subpoenaing financial records going back to 2004, and then UCAN immediately announcing it would file for dissolution, an amicable settlement of this matter seems like a remote hope, I am afraid. Note: a seemingly successful coverup is not the same as an amicable settlement. For many months, UCAN has been spending a bundle on attorneys and forensic accountants. A big question is whether the organization can survive these financial outlays. Those kinds of problems may be one factor behind the filing for a court-supervised dissolution. Best, Don Bauder

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Twister Feb. 29, 2012 @ 3:52 p.m.

I still want to know what's really going on.

Is UCAN a front for a fifth column that is actually a diversionary force on behalf of the utilities it pretends to "watchdog?" It is a lapdog or a bulldog?

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Don Bauder Feb. 29, 2012 @ 5:52 p.m.

You are addressing the key question, Twister. Is there a symbiotic relationship between UCAN and SDGE? The theory is that SDGE goes into rate cases asking for far more than they expect -- say, 10%. UCAN puts up its arguments and SDGE gets 8% -- also far more than they expected and certainly far more than they deserved. Then UCAN gets the fat intervenor fees and everybody is happy, except customers, who get screwed. This concept will be examined carefully in coming weeks. Best, Don Bauder

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Twister Feb. 29, 2012 @ 7:14 p.m.

This is the way subdivision maps and reviews were (and probably still are) handled. You come in with the worst possible subdivision map, asking for an insane density and grading everything into oblivion. The "reviewers" make a show of objecting, and the developers put up a faux-fight, scaring the hell out of the community. The developers save a bundle on grading costs by not filling the canyons, and the suckers go home happy that they have once again gotten a half a loaf when they've really given the developers more than they really wanted. Upon retirement the "reviewers" get a corner office in the corporate HQ and a fat check with almost nothing to do, plus their city or county retirement.

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Visduh March 1, 2012 @ 7:59 a.m.

Twister, yours is a perfect summation of what often happens with those proposals, especially for developments. A few years back here in Vista we had a proposal to shoehorn 314 apartments onto a small parcel that's in a ravine right next to State 78. Our city "clowncil" looked it over and OK'd the deal, even though there were no traffic mitigation steps proposed, and the place was just packed full of buildings. I always figured the developer was hoping for approval of about 200 units, and would have expected to be required to pay for one or two traffic signals. Nope! They rubber stamped the deal with nary an objection. So, ya' nevah know.

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Don Bauder March 1, 2012 @ 8:55 a.m.

Hardly surprising, Visduh. What we don't know -- but what you may know -- is how much money passed under the table, perhaps landing in the Cayman Islands. Or how many councilmembers or bureaucrats took jobs with the developer. Best, Don Bauder

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Visduh March 1, 2012 @ 12:20 p.m.

I've generally attributed many of these poor moves in Vista to stupidity, not corruption. But then, what better cover than appearing to be just plain dumb can you find to cover up being on the take? Most of the time when businesses are victimized by embezzlers, the perps are people who seemed too dumb to know how to steal. Few if any of our clowncil have ever had much of a career that could have been aided by developers. But, then again, you just don't know.

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Twister March 1, 2012 @ 10:12 p.m.

It takes surprisingly little to "buy off" a bureaucrat. Sometimes it's nothing but "fellowship." The old saw, "It ain't who you know, it's . . . well, you know . . . "

Just knowing if you buss enough butt in the industry it will look good on your "resume" (unpublished, of course) and increase your chances of getting a job after retirement is, for some scum all that it takes.

Honest people in the bureaucracies go up against a solid steel ceiling, and get closeted or "iced."

Then there are the crazed ideologues--all they need to know is what party you belong to.

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Don Bauder March 2, 2012 @ 11:36 p.m.

It's that old enigma for a journalist looking at a smelly deal: is he a knave or a fool? Best, Don Bauder

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Twister March 4, 2012 @ 1:18 p.m.

Fools are short-wave knaves. That is, their knavery creates blowback before they can escape.

The Knaves of Knavery elude the boomerang by sidestepping or shoving some fool into his previous spot to take the brunt of the return blow(s). These are not fools in the sense of lacking intelligence--nay, they often have genius IQ's, too frequently with companion genes for sadism.

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Don Bauder March 1, 2012 @ 8:53 a.m.

Twister, you have things pegged perfectly. Of course that is what happens. In the process, there are a number of winks that are communicated silently. Best, Don Bauder

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Twister March 1, 2012 @ 10:11 p.m.

It's ALWAYS silent. And you don't have to wink.

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Don Bauder March 2, 2012 @ 11:38 p.m.

True. No winks and nods necessary. I have found in both working and writing about companies that the people who rise to the top know full well the monkey business that is going on, and make sure it continues while lauding the company's integrity and devoted service to the public. Best, Don Bauder

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Twister March 3, 2012 @ 6:08 a.m.

Whaddya call that stuff that floats to the top of organizations, especially when it's full of fat from a luxury diet?

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Don Bauder March 3, 2012 @ 6:56 p.m.

I don's know what you call it, but it happens. Best, Don Bauder

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laplayaheritage March 3, 2012 @ 9:23 a.m.

http://www.kpbs.org/news/2012/feb/29/ucan-dissolving-amid-investigation/

Video interview with "David Peffer and Charles Langley, two UCAN employees, talk with Joanne Faryon about the complaints they filed against UCAN."

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Don Bauder March 3, 2012 @ 6:56 p.m.

Yes, that is an excellent interview. Best, Don Bauder

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