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The suit that whistleblowers within Utility Consumers' Action Network are filing this afternoon (March 9) charges that Robert Ames, chief operating officer, hired a professional document shredding company to destroy UCAN documents, supposedly in relation to the organization's move to a new building. "Ames filled several large, yard-waste size containers with documents, which were removed for destruction," says the suit. Also, Michael Shames, chief executive officer, took boxes of documents from the office and loaded them into his car. Ames claimed that he was disposing of "excess documents," but whistleblowers David Peffer and Charles Langley objected to the destruction of potential evidence, according to the suit. The suit is filed against the UCAN board, Shames and Ames.

The suit notes that in fiscal years 2006 and 2010, UCAN's gross revenue exceeded $2 million; according to state law, when revenues reach this threshold, there must be an independent audit, and there was none. Further, UCAN bylaws require an audit each year, notes the suit.

The suit points out that Shames told the board he would spend $500,000 to $700,000 on consultants last year; he spent $230,000 more than that, "driving UCAN to the point of near-insolvency," according to the suit.

The whistleblower suit stresses questionable UCAN activities reported regularly by the Reader since July of 2011 and picked up by other media beginning February 28 of this year, when UCAN said it would file for dissolution and would cooperate with a U.S. Attorney probe of its finances. In addition to those charges above, these include the bonus payments that Shames skimmed off intervenor fees awarded by the California Public Utilities Commission (CPUC), but were not known by board members; the money placed in misspelled accounts (Utility CoMsumers' Action Network) that did not show up on the UCAN books; Shames practicing law, and getting attorney fees from the CPUC, although he was an inactive member of the State Bar; the $1 million of steel company money that was intended to be moved through UCAN's account to Peter Navarro, who was making a movie about China's economic abuses, and $1 million plunked into a hedge fund that was connected to Navarro. UCAN is said to have lost $100,000 on this speculative investment.

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SurfPuppy619 March 9, 2012 @ 3:29 p.m.

Man is this turning into some weird issues. The destruction of documents is especially troubling. There is simply no reason to do such an act when they KNEW litigation was imminent. If this sees the inside of a court there are going to be some major problems related to this, and someone could end up in jail.


Don Bauder March 9, 2012 @ 6:38 p.m.

No doubt Ames and Shames will argue that the documents were only extras and the destruction came before the subpoena from the U.S. Attorney. However, the whistleblowers informed the board of disquieting irregularities before Ames every got there. Repeat: in March of last year, Shames told the staff that unless the complaints stopped, he would move to dissolve UCAN and knew he would get the board's support. Ames, who has devoted his lifetime to bankruptcy and related problems, showed up in April. Connect the dots. Best, Don Bauder


Twister March 9, 2012 @ 4:41 p.m.

Will the real Mr. Shams please stand erect?


Don Bauder March 9, 2012 @ 6:39 p.m.

It's spelled S-h-a-m-e-s....oh wait a minute. "Shams" was deliberate. Best, Don Bauder


Twister March 10, 2012 @ 3:02 p.m.

e-xCUSE ME! Speling errers are quit comon. C'mon, anybudy can make misteaks! 'Specially spellung ones.


BradleyFikes March 10, 2012 @ 11:04 a.m.

Here's some of Shames' defense, from an article at the North County Times by my colleague Eric Wolff http://j.mp/zaw3Zd

-- The bank accounts with the misspellings had been a mistake that appeared on all of the Morgan Stanley accounts going back years. The board knew about those accounts.

-- The hedge fund investment had been part of a diversification plan proposed and approved by the board. When the fund lost money in 2007, the money managers told Shames something was wrong in the markets. He sold all of the organization's equities. "When the market got hit hard in 2008, and most nonprofits lost major portions of their assets, UCAN was unscathed." The organization has $2.5 million in its bank accounts now, he said.

-- The CPA who did the organization's taxes had not understood that he had to report Shames' salary. Shames had signed those forms, though: "I am responsible," he said.

-- The California Public Utilities Commission does not require advocates to be active members of the State Bar.

-- On the destroyed documents: "Rubbish," Shames said. "We were moving offices, and we decided to get rid of nonhistorical documents from between 1983 and 1990."

-- On the attempt to drain the organization's accounts, Shames said, "Mission not accomplished." He pointed to the millions UCAN currently has.


Don Bauder March 10, 2012 @ 2:38 p.m.

Shames, Ames and UCAN have a perfect right to their hearing in court. I am sure they will come up with these kinds of explanations. Let me just discuss some points. He says the bank accounts with the misspellings were in Morgan Stanley. However, UCAN hired attorney Paul Dostart to check a number of things. In his June 8 report to the board, he noted that the accounts misspelled CoMsumers were not only in Morgan Stanley, they were in BNY Mellon and American Stock Transfer & Trust. The suit by the whistleblowers says that those accounts were also in an outfit now named PNC Global Investment Services. Dostart's report said, "We cannot locate inclusion of the balances in these three wrongly named accounts for which we were provided statements." Nor could Dostart find the Employer Identification Number (EIN) for the accounts.

As to to the hedge fund, the figure now being used is that UCAN lost $100,000 of its $1 million investment in that fund, which was tied closely to Navarro. I see that Shames does not give an explanation of one of the major points: the $1 million that Nucor, the steel company, intended to run through UCAN, and on to Navarro, for the making of a China-bashing film by Navarro. (Covered in my column of August 2011.)

It's true that the CPUC does not require intervenors to be lawyers. However, Shames repeatedly said in his requests for intervenor fees that he was a lawyer who should get compensated at lawyers' rates. Shames was requesting lawyer rates of $300 to $330 per hour. Dostart agrees that Shames was not a lawyer, but tries to wiggle off the hook by saying that advocates and experts could get $125 to $390 an hour, so Shames's compensation would have fallen within those parameters. But the point is that he did not file as an advocate or expert; he filed as a lawyer, and he was not. Also, in 2004, Shames filed an amicus brief with the appellate court -- not before the CPUC. He clearly should have been a lawyer. Actually, Dostart goes on to say, "While it is fairly clear that non-attorneys may participate in [CPUC] proceedings in a representative or advocacy capacity, and may receive intervenor compensation for their work as advocate...it is not crystal clear whether a person who has been licensed as an attorney by the State Bar of California is eligible to hold inactive status while doing so." Dostart mentions in his report -- again, done for UCAN -- that under state law, only bar members can practice law, and someone falsely holding himself or herself out as an attorney while practicing law could go to county jail for a year. I covered this in my column of July 2011.

As to the document destruction: what do you expect UCAN to say? "Yes, we destroyed critical documents."??

Best, Don Bauder


SurfPuppy619 March 10, 2012 @ 3:48 p.m.

Don, we have been disagreeing on the attorney part for many posts now-Shames is and always will be an attorney. He is INACTIVE, or was, when he sought the fees. I don' think that would DQ him from being an expert-being on inactive status with the CA Bar.

The brief submitted to the appeals court is another matter. But that was just one instance.

Shames would have been very smart to just spend the $200 per year to keep his law license active and then all of this would be moot.


Don Bauder March 10, 2012 @ 9:21 p.m.

Of course, he would have been better off remaining in the bar. If you read the Dostart report, the California law is pretty clear: if you want to practice law, you have to be an ACTIVE bar member. The CPUC does not require an intervenor to be a lawyer. But Shames listed himself as a lawyer and asked for lawyer fees. Dostart concluded that Shames should have called himself an advocate instead of a lawyer. As it turned out, Shames rejoined the bar. Best, Don Bauder


Jimgee March 10, 2012 @ 2:24 p.m.

Re NC County Times article: Shames sounds credible to me. He has a long history of doing good things. Did he lose sight of the goal or suddenly go bad? I don't see any proof of it in this thread.


Don Bauder March 10, 2012 @ 2:43 p.m.

You might read my response to the NC Times article, which was posted after you posted this one (2:38 p.m. March 10). We can't prejudge anybody, particularly since the U.S. Attorney has subpoenaed documents for its investigation. But, personally, I have followed this since July, and I feel UCAN has a lot of explaining to do. It will not do the explaining to me. Best, Don Bauder


Visduh March 10, 2012 @ 7:37 p.m.

If this whole tangled web does NOT end up in court, it will be amazing. I think there are enough players in this situation to insure that Bahnee's winking at local corruption cannot keep it from being in criminal proceedings of some sort. The state agency (i.e. CPUC) involvement should result in the attorney general taking notice. There are plenty of federal matters also. Shames looks as if his avarice has been utterly SHAMELESS. In fact, I'd propose that we rename him that, "Michael Shameless." He continues to proclaim the innocence of all that has already been revealed, and doubtlessly will paint everything else in that way. Some of these sociopaths just don't know when to quit, and I'd say he's one of them.


Don Bauder March 10, 2012 @ 9:24 p.m.

You may remember that Shames favored deregulation before the disasters of the early 2000s. At that time, Ralph Nader called him something like Michael Shameless. Best, Don Bauder


Twister March 10, 2012 @ 10:51 p.m.

That DOES it! I didn't know this. If it looks like a Fifth Column, leans like a Fifth Column, and squeaks like a Fifth Column . . .


Don Bauder March 11, 2012 @ 8:40 a.m.

Fifth Column, huh, Twister? Do you mean Shames was clandestinely harming California or the whistleblowers were clandestinely harming UCAN? Actually, the whistleblowers were not acting clandestinely. They were pretty upfront with the UCAN board about their suspicions. Best, Don Bauder


Visduh March 11, 2012 @ 8:49 p.m.

That's news to me. Actually whenever I see that name in print, my weird mind alters the spelling into something like "Ashamed" or "Shamed" or "Shameful" or some other variation. It is a strange name, and one that a holder ought to change legally.


Don Bauder March 12, 2012 @ 7:43 a.m.

Shames is certainly a name that can set you up for criticism if you stumble. Best, Don Bauder


Twister March 11, 2012 @ 12:25 p.m.

What does favoring deregulation favor?


Don Bauder March 11, 2012 @ 5:59 p.m.

Favoring deregulation was a road to hell in California. Remember the governor who lost to the Terminator? It didn't help Shames, either, but that is not an issue in this dispute. Best, Don Bauder


SurfPuppy619 March 11, 2012 @ 8:19 p.m.

Steven Peace was the one who orchestrated deregulation. ENRON and it's employees and traders should all have gone to prison.


Don Bauder March 11, 2012 @ 9:40 p.m.

Right. Some Enron traders and executives, as well as those from some other energy companies, should have gone to the slammer for how they exploited the weaknesses in deregulation. Best, Don Bauder


Twister March 11, 2012 @ 6:13 p.m.

A Grayish memory stumbles the ex-terminator mumbles the shim-sham man crumbles and all their credibility tumbles . . .


Don Bauder March 11, 2012 @ 9:41 p.m.

Last line: Were they crooks or were they dumbbells? Best, Don Bauder


SurfPuppy619 March 12, 2012 @ 12:50 a.m.

I would like to take a barbell to the head of those ENRON traders.....


Don Bauder March 12, 2012 @ 7:40 a.m.

Well, at least we got the two top heads of Enron (one of whom died before justice was done); too bad the traders skated. Best, Don Bauder


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