Chamber of secrets: controversy swirls around cash awards to New Hope business group officials at 2013 holiday party

It was a relatively warm, dry evening during an otherwise cold and stormy winter as Roger Green, then vice president of the New Hope Chamber of Commerce, sat at an event registration table in the Raven, greeting arriving guests at the business group’s annual holiday party.

“It’s 6:15 p.m., and name tags are being given out, and friends are coming up me to say ‘hi,’” recalls Green, now chamber president. “Drinks and hors d’oeuvres are being served, a singer is warming up, and the party is scheduled to start at 6:30.

“I am given this stack of checks to review,” continued Green. “I look at the first couple of checks, I know what they are, I know why they’re there, and I assume we are operating in an honorable system where people wouldn’t do anything like cut themselves checks without approval.

“The first check is to the restaurant for the party, and the second one was a check for the awards, by which it is meant the plaques and statues that were given out at the party,” Green continued.

“And then there were a couple of other checks, then the four checks to some individuals on the bottom. So I just sign them, because I know what the first two are, and we’re committed and the party’s going on.”

What Green didn’t know at the time was that “the co-chairs of Arts and Crafts authorized disbursements of $3,600 of cash awards. The two co-chairs (Connie Gering and Linda Rowe) and Sharon Flanagan each received a $1,000 award, and Linda Rowe was authorized to convert $600 into ‘crisp bills’ to be given to key Committee members,” according to a document Green later prepared in December, 2013 entitled “Financial Problems.” That document was purportedly shown to then-president Connie Gering, board member Brandon Wind, long-time chamber member and official Sharon Flanagan, and the chamber office manager, among others, in various forms in the weeks following the Holiday Party.

Confirmed Rowe in a statement, “The $600 was given to the six committee members at $100 each. The awards were given at the annual holiday party to the entire committee.”

Green says he found out that something was wrong with chamber finances some ten days following the Holiday Party on Dec. 14, when he received a call from Gering saying there was an immediate monetary shortfall that needed to be addressed.

Soon thereafter, Green and then-secretary Flanagan began “investigating all charges to determine what had gone wrong,” documents show.

Says Green, “Connie claimed that the chamber was out of money because Nick [Gialias] had been an inept treasurer, and therefore he should immediately be fired and taken off the board, and she should be able to fix it. Nick said ‘Connie has been in the books, she’s been using the debit card despite my repeated request not to, and for all these reasons, we can’t get a handle on this thing.’”

As Green continued probing, evidence quickly revealed that one of the award checks in question had been given to Flanagan.

Says Green, “I think most intense moment for me was when I found out they had cut themselves these checks. To me that was unimaginable behavior.”

“The other amazing moment was going through the budget and finding that the holiday party was never in the budget, and having Sharon Flanagan tell me ‘no, it was included in with the holiday event.’ And then going through the line item on the holiday event and noticing that there was nothing on the line item that looked like it could have been for the holiday party,” he continued.

Gering disagrees: “Included in the Arts and Crafts event budget was a projected $5,000 for “coordinating fees” to cover management expenses. A precedent was that the coordinator of Restaurant Week had always been paid, as had some of the people working on Friday Night Fireworks.

“As mentioned above, the event budget including these fees was approved by the Executive Board and was included in the Budget that was approved by the Board,” added Gering. “Because of the hard work done by committee members thereby bringing in the event under budget, checks totaling $3,600 were awarded to committee members, myself included. If there was a mistake, it was that these were noted as “Awards” and presented at the Holiday Party. “

Gering also disputes the assertion that the holiday party was not properly accounted for in the chamber budget, saying, “Each event committee of the Chamber develops a budget for that event. These budgets break down projected revenue and expense categories. So, for example, the Arts and Crafts budget breaks down anticipated expenses for things like advertising, supplies, rentals, etc.

“These budgets are then reviewed and approved by the Executive Board. The projected totals for revenue and expenses are then included as event line items in the Chamber’s annual budget, which is then reviewed and approved by the entire Board. All event budgets are sent to the Treasurer and are available for review by any Board member or Chamber member.”

In terms of approvals needed for actually spending budgeted funds, Gering states, “Once the event budget has been reviewed and approved per the above process, the event committee has the responsibility and authority to make purchases and commit funds within the total budget for that event; it does not have to take each expenditure back to the Board or Treasurer for approval since this would be onerous and inefficient; again, with the provision that the event committee is not going over budget. Chamber bylaws state ‘If a Committee budget has been approved, the committee Chair shall sign invoices to authorize actual disbursements.’”

Gering also said that then-treasurer Nick Gialias indicated the chamber’s budget was “on track” at both the October and November board meetings of 2013, right before the Holiday Party at the center of the controversy. Gering argues that this shows Gialias knew about the expenditure for the holiday party and that money spent on the event was not the direct cause of the chamber’s financial mess.

Responded Gialias, “That refers to the annual budget, and the items that were budgeted; this doesn’t include items that were not budgeted, nor approved, and just spent without any approval.”

Rowe said, “The awards are budgeted by the committee and approved by the board of directors at the May board of directors meeting and the 2013 A&C budget did allow for this.”

Rowe currently holds the position of secretary on the chamber’s board of directors. “The top three people were to be awarded $1000 each, which I did question,” she added.

“According to Sharon Flanagan, the co-chairs considered these expenses within their purview to authorize without further Board discussion,” reads a section of “Financial Problems.” Flanagan was a member of the 2013 Arts and Crafts committee of the chamber, and has held a variety of positions on the chamber board over the years, in addition to her role helping manage the annual festival.

The document goes on to say, “Chamber By-Laws permit expenditure up to the approved budget limit without line item approval from the Board or any Executive Officer. Sharon and Connie Gering both noted that there was a $3,500 line item for “Awards” in the approved Arts & Crafts Fair budget. Sharon asserted that the Chamber Board permitted these payments during discussions about Restaurant Week, when the Board “agreed to continue the discussion” about the appropriateness of paying volunteers at a later date. She further asserted that paying other groups for parties or dinners constituted an appropriate precedent for paying cash in this case,” continues the document.

“An alternate interpretation might consider that self-dealing disbursements are a different ethical class of spending than any other,” asserts another passage from “Financial Problems.”

“The Arts & Crafts Chairs never alerted the Board that the “Awards” line item referred to payments to themselves,” the document continues. “Connie took a strong stand against paying volunteers when asking the Board to reabsorb Restaurant Week at our July [2013] meeting. The Board supported Connie’s stand by voting to reabsorb Restaurant Week, expressly because “it was wrong” to pay volunteers. Finally, the co-chairs never asked the Board or Executive Committee to confirm their interpretation of their right to make these disbursements.”

Said Gialias, “Just because you put a vague budget item in your budget, it still needs to be expensed, and that was never done here.”

“All event budgets are supposed to be submitted to the treasurer for review. In this case, no event budget to my knowledge was sent for the holiday party.”

Further, says Gialias of the budgeting process, “These are estimates going in and they’re not very detailed. The purpose of having the treasurer approve them at the time they’re wanted is because you need a more detailed explanation of what those expenditures actually are when you fully realize them, and they need to be accompanied by invoices and receipts.”

In terms of the belief that a committee chair can sign invoices, Gialias says, “No, that’s wrong. The committee chair doesn’t do that, the treasurer does that.

“You have the ability to authorize, but you can’t cut the check for it, that has to be done by the treasurer.”

Gialias further contends, “The thing I take issue with is that committees can disburse their own funds by signing checks. That’s not true. The treasurer must sign the check, unless there’s a situation where the treasurer can’t sign the check, in which case he’ll appoint someone like the vice president and a co-signer on the account.” In fact, Gialias’ trip abroad in December, 2013 caused him to appoint then-vice president Green as signer of the fateful Holiday Party checks.

Commenting on the state of chamber finances immediately after the Holiday Party, Gialias said, “We had gone from around $8,800 to $300 without me as a treasurer approving any expenses. I was shocked to see that, and that it all happened within a week.”

“Later, we discovered the cost of the holiday party, which I recall being $3,500, and I had a major problem with that because it’s way too much to spend for this kind of event at this kind of organization, where we really don’t have that kind of money,” he continued.

Gering sees different reasons for the chamber’s budgetary shortfall: “In January, Sharon [Flanagan] reported to the Board that what she found there was approximately a $10,000 deficit in our last fiscal year that was carried forward but wasn’t noticed because the revenue generated by the Arts and Craft Show provided the necessary operating cash. (Note last year, the A&C show netted the Chamber approx. $58,000; we were able to come in under budget on the expense side by approximately $4,794 due to the hard work of the committee members.”

Flanagan bolsters the view that debt from previous chamber administrations weighed heavily on chamber finances and contributed to the group’s near-insolvency in December in a memo to fellow board members obtained by the Free Press. “We weren’t doing well. Because of treasurers long past, we are playing catch up. But that doesn’t mean that there is a problem.”

“We have an accountant as treasurer who will make sure that we are compliant and back on track again, explained Flanagan. “Past chamber boards have taken on more expenses than we could sustain, given our income, and it finally caught up with us with the last chamber board.

“The money maker that drives the Chamber is the New Hope Arts & Crafts Festival, which is a healthy ongoing event, unless something is done that undercuts that,” continued Flanagan. “If someone else takes over, it will likely take 8 years to rebuild it, because that is what it has taken to build it from a $6000 profit to a $58,000 profit, and the quality will likely degrade, as it has for so many art festivals that are run by impersonal entities. And the chamber will get a small amount of the profits.”

In her memo to the board, Flanagan sees other reasons for the chamber’s precarious December financial situation: “Fireworks was in the black, the [holiday] tree was not. We have not received grants that we expected to receive, so that has hurt. Especially for the holidays.

“Having been included in this, as I should be, I just want to know what the problem is?” she asks.

Rowe said she believes that chamber treasurers for the past four years have been “well-intentioned” but “in over their heads,” saying she also “over the past two years, asked for an audit of the books to be done at the change of office.”

Said Gialias, “In a non-profit organization, I think it’s especially important that we’re transparent and everything sees the light of day. We have a very clear policy that all expenses run through the treasurer. This is important not only to make sure things are honest, but also helps to manage the cash flow of the organization that particular committees may or may not be aware of, and in this case, this was not done.

“I think we’ve had a very clear policy of that dating back to [chamber treasurers] Bill Scandone and Ryan Fuller, where all expenses have to be approved by the treasurer, whether it’s debit card, which we regulated very highly, or whether it’s a written check,” added Gialias.

In his opinion, the “$10,000 carryover debt” described by some others was not the main issue contributing to the chamber’s cash crunch in December of 2013. “Issues like that can be fixed and addressed,” he said.

“I’ve really worked very hard on making the chamber an organization that is solely focused on doing things to help the business community here, and I would like to see us continue on that path,” continued Gialias. “We have to make sure things like this don’t occur in the future.”

According to the “Financial Problems” document, “Linda and Connie deposited their checks shortly after the Holiday Party. They subsequently made full restitution of their $1,000 awards when notified by Roger (and, in Connie’s case, Brandon Wind) that the Board intended to pursue disciplinary action unless the money was returned. Upon learning that the Chamber was essentially out of funds, Sharon chose not to deposit her check, and it was subsequently destroyed.”

The notification by Green to Gering took place at a meeting attended by board member Brandon Wind, according to Green and two additional sources who requested anonymity due to the sensitivity of the situation. Wind would not comment.

Said Green of the meeting, “We told Connie that if she didn’t give the money back, we were going to take the case to the general membership.”

Gering did not address the alleged meeting in her statement, but in the past has said she stepped down from the chamber presidency last winter to more fully be able to attend to her duties as newly-elected New Hope Borough Council member.

Green, slated to take over as president of the chamber in April, assumed the position some three months early. “By February we were on our way to a better place financially,” he said.

Grover E. Stults took over as treasurer of the New Hope Chamber of Commerce on April 1, 2014. A Certified Public Accountant by trade, with a reputation for candor, he recalled his first remarks to the chamber leadership: “I’m the new sheriff around here.”

“I want documentation of expenses; I want to see an invoice; and I want to see an invoice from the chairman saying we received the items that we were billed for,” he recalls saying.

“I have full access to everything, and I’m here to say I want to make sure it goes to the betterment of the business community of New Hope,” he continued.

“We’re not handing out debit cards like tissue paper. We have them, and we’re not handing them out,” Stults remembers saying, along with a phone call to the chamber’s bank: “I don’t care where they are, Mr. Banker, cancel them right now. This is a non-profit organization that needs to have controls, and until I figure out what’s going on, cancel the cards.”

In terms of the current state of chamber finances, Stults said, “We’re solvent, we’re back on our feet, and Roger and the board are cooperating with my suggestions.”

“We’re making changes,” he added.

One change that would be welcomed by many chamber members interviewed for this article would be smaller allotments for meetings, member events and parties involving expenditures for food and other refreshments. One chamber official estimated that expense as representing nearly 40% of membership dues collected.

Said prior treasurer Gialias, “It’s way too much. I could see 4%.”

Said Green of the controversy, “The chamber serves at the will of, and in support of, the businesses in New Hope. That requires a standard of us, it requires that we operate in sunlight at all times, it requires that we have a stable financial footing, it requires that we have dialogue with our members, and it requires that we act with a vision of what we can do to support our members.

“The view used to be that the chamber runs events that bring people to town. In pursuit of that, they would buy products and services online to get them cheaper than through businesses in town that sell the same thing  — we don’t do that anymore,” said Green.

“They figured that once they created events, that was the end of the story, so we would have food trucks at the Arts and Crafts Festival that competed with people who sold the same thing in town, and who were not allowed to put food trucks there. That won’t happen anymore.

“The view of the chamber that I inherited was that it was basically an events company centered around the Arts and Crafts Festival and Fireworks, which bring people to town, but that’s the end of our responsibility,” he added.

“So we’re overhauling the events so that they not only strengthen the image of the town, but also bring and keep people here to enjoy everything that the town has to offer.

“Secondly, the chamber is not a club, it’s a service organization, and it needs to reach out to other organizations that are important to the businesses of New Hope,” Green said. “We started working jointly with the Lambertville Chamber of Commerce and more closely with the borough manager here in New Hope. We have an expanded view of who we are and what we’re doing, and we’re putting in place the financial controls necessary to do that and to be able to provide a transparent look at the financials of the chamber, because if we’re going to ask for people’s trust and money, we need to do that,” he added.

“This Chamber has done many good things for New Hope,” said Green. “New Hope Celebrates was spawned in the Chamber. The Arts & Crafts Show has become a tremendous success, abetted by the efforts of a dedicated group of volunteers seeking nothing for themselves but to help our community. The Chamber-sponsored Fireworks have improved the regional reputation of New Hope, and, I expect, will return next year with a program designed to support our merchants better,” continued Green.

“Nonetheless, the business community of New Hope has operated with varying degrees of distrust and skepticism toward the chamber for years, and unfortunately I think that these episodes show that was not inappropriate.

“And while I was not a direct participant, I am the president of the organization, and I want to apologize to the members because I feel they were not treated appropriately, and they were not given the transparency they deserve nor, frankly, the focus on what makes their businesses do best,” he said.

“Accountability and transparency are the only ways to run a business,” added Green. “We will make sure that every single penny is accounted for, and we’ll make sure every voice is heard. I believe we’re doing the things necessary to earn your trust and rebuild the chamber.”