The Gong Show Continues - Laguna Woods Not So Hidden Executive Incentives

8/8/2019 The Gong Show Continues - Laguna Woods Not So Hidden Executive Incentives

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A Publication of Residents Voice Sep 2010 Volume 3 Issue 5

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Four of eight Bell City Officials and Council

members arraigned before a judge after the

“Bell City Fiasco.” Bell City officials awardedthemselves high salaries and benefits which were

kept hidden from the public until two unrelenting

LA reporters brought them to light .

District Attorney, Cooley, stated that, “Being paid

excessive salaries is not a crime, but, Illegally ob-

taining those salaries is a crime.”

How did the city officials obtain their excessive

salaries? Prosecutors allege the subjects misap-propriated more than $5.5 million. Most of the

funds were kept hidden from the general public

and the only oversight was provided by the Coun-

cil itself.

On an equivalent scale we have been told that

PCM has awarded their staff $5.2 million dollars in

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Inside this issue:

The Voicehe Voicehe Voice

Residents Voice

Meetings

Thursday, October 28

Thursday November 18

CH #5 6:30 pm

Incentive Bonus monies and the only oversight that

was provided was by PCM. There never was a vote by

the Mutual Boards to specifically allocate monies for

this purpose.

LWV Resident/owners concur that, “Being paid exces-

sive salaries may not be a crime, but, Illegally obtain-

ing those salaries is a crime.”

Spending those monies without Board approval or

knowledge, can certainly be construed as misappro-

priation of funds.

Should the Bell City Residents have accepted the ac-

tion of the council who willingly reduced their salaries

from $100,000 to $8,000 a year after the exorbitant

salaries became public knowledge? The council was

willing to forget the past and live with a reasonable

(Continued on page 2)

It’s LEGAL!! 1

BONUS PLANS 2

Landscaping 3

Opinion 4

“But, It Was Legal, Your Honor!”




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salary, but, apparently this was not acceptable to

the city residents.

If hiding these excessive salaries and reverting to a

reasonable pay scale would justif y Bell City resi-

dents to overlook these excessive expenses

(according to the city council) shouldn’t LWV Own-

ers ignore the $5.2 million in Incentive Bonuses

and overlook restitution (according to PCM and the

candidates; Muennichow, Welch, Wellikson, Tso)?

While many LWV residents feel that way, and, un-

fortunately, so do a number of candidates for the

Third Mutual Board who publically state that their

primary ob jective is to “Sto p the Law Suit .” Rather

than getting elected with the intent on providing

OVERSIGHT, they want to get elected with the in-tent on IGNORING THE PAST. PCM says that it has

terminated the Incentive Bonus Plan. Should we ac-

cept that as full payment for the $5.2 million that

was spent by PCM f or unallocated bonuses?

“ Sto p the Law Suit !” Could 3 of the 4 candidates

who state that this is their primary objective, be in-

fluenced because they were on the Third Mutual

Board at the time the Incentive Bonus was being

implemented and, as Board Members, were respon-

sible for oversight, yet didn’t know of the plan? If

we were in that position, it is probable that we too

would like to “St op the Law Suit .”

started. A PCM paid Leisure World News ad was

describing this back in 1990 when residents

were upset that their assessments were going

up even more. (NOTE: Neither the word

“incentive” or phrase “incentive plan” are even

used in this PCM ad.)

Bonus Program – Started in the early 1990’s, itpaid department managers and employees

within the departments bonuses from a bonus

pool for outstanding ideas and savings. Boards

knew about this each year, and were informed

each year how big the “bonus pool” was. This is

the program they based their $32-Million in

community savings on (again, with assessments

going up each year). This program continues to-

day (2009). It is a successful program and com-

mon within industry.

Incentive Plan – Secretly started in 1996 and

never revealed to the boards until late 2006 af-

ter being accidentally discovered. PCM claims

they took 30% of certain savings each year and

awarded it to employees. There is no proof re-

garding the percentage skimmed or that monies

were distributed to any significant number of

employees. PCM established project budgets

each year, got the boards to approve the budg-

ets, managed the projects and “always” came in

under-budget, paid out supposedly 30% of the

savings for themselves, and returned the bal-

ance of the savings (70%?) to the boards. There

has never been any open accounting or audits of

these accounting transactions and details –

NEVER. PCM has admitted in written e-mails

their unapproved payouts averaged $450,000

per year and ranged from $200,000 to over$1Million over the years.

PCM and the Mutual Directors keep trying to con-

fuse the issue by saying Boards knew all along about

(Continued on page 3)

BONUS PLANS ?

There are three programs they are trying toconfuse members with these days…….

Employee Suggestion Program – Started in

1987, it paid employees spot awards and a per-

centage of savings. Boards knew about this

every year. It ended when the Bonus Program




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What requires more water with a potential for

exceeding our water allocation during our cur-

rent drought?

When you also include a 10% plant loss ratio for

new plants with limited water during our drought,

you must ask yourself if this is really justified. An

open area like this will take less than 5 minutes to

mow each week and as an already established area

it will look green and fresh 100% of the time, as op-

posed to many man hours trimming, replanting, and

watering after it has been re-landscaped.

If you drive around United and Third Mutual and

inspect the slopes, you will see many areas that

need immediate attention to either, resolve slopes

that have not been maintained, or, to repair slopes

that have been maintained.

This does not bode well for the effort of the Land-

scape Division when viewed by a potential buyer. It

is always better to have nice green grass and well

maintained slopes as opposed to winding walkways

with bushes and shrubs and slopes that look like

they are on their last drop of water.

A moratorium on new plants during this period of

water restriction would have saved costs for both

water and the loss of plants trying to grow with lim-

ited water at the very time they need excess water.

the Incentive Plan payouts, but, even PCM has

written that boards were not aware of them. Each

year, PCM should have gone to the board and re-

quested approval for a payout from savings. They

never did, and the boards had no knowledge. (The

prior comment was written by Mike Curtis, August

2, 2009. )

When discussing Incentive, Employee, Safety, Bo-

nus, etc, PLANS, it is critical to ensure that you are

talking about the same PLAN. There have been a

number of PLANS over the course of the past 20

years. All but one had been authorized by the Mu-

tual Boards. It is not uncommon for past Directors

to state that, “They were aware of the bonus

plan.” In most all cases, they would be alluding to

the Incentive Plan, but, in reality they were un-

wittingly speaking about one of the other plans.

Few Directors, in the early 2000’s, knew about the

various plans and only recently (2006) had they

become aware that the infamous INCENTIVE

PLAN even existed.

Anyone browsing PCM’s ledgers would not find an

account number called, “INCENTIVE BONUS, or

INCENTIVE PLAN,” however, there is an account

titled F.I.C.A.—INCENTIVE ACCRUAL..

LANDSCAPING?

L andscaping, or, Make Work? What is the justi-

fication for some of the re-landscaping effort

that is going on in United Mutual?

Does it cost less to water , trim and maintain

plants in a newly re-landscaped area, or, to wa-

ter and mow an already established grass area?

What is our cost justification for beautification?

What is more beautiful; a green area of grass

within our manors and common areas, or, wind-

ing paths with plant and bushes that mimic our

manor common areas?

Shrubs or Grass $$$$




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Standing’ with the Mutual (no outstanding debts to

the mutual).”

The Nominating Committee has the responsibility to

communicate with the candidates and it is up to

them to inform a candidate of his/her status.

If there is any reason for not endorsing a candidate,

the Nominating Committee should make that

known to the candidate.

By definition, the Nominating Committee is neutral

and is responsible to look only at qualifications and

must ignore political differences between the Nomi-

nating Committee and the candidates. Not endors-

ing a candidate would imply that the Nominating

Committee does not feel the candidate is qualified

and it is imperative that the candidate is informed

of the reason(s).

By having the PCM Towers Administrator notify the

candidate of the failure to endorse the candidate, itcould imply that PCM is in control of this Mutual

Committee function and that PCM is involved in

our elections when they should be completely neu-

tral and divorced from any influence on LWV Com-

mittees and Boards.

Is the Towers Mutual Board being dictated to by

PCM like some of our other Boards? An immediate

call was made to PCM on becoming aware of this

situation. The Towers Administrator responded by

saying, “I did nothing wrong.”

The Towers have been quietly going their own

direction with little or no visible outward

signs of contention or problems. The times are-a-

changing! The Towers Administrator, Ms Judie Zo-

erhof, rules the Towers with an “iron fist” and little

word gets out to the public on the inner happen-

ings.

After over 30 years as our Managing Agent, it is not

surprising that PCM would feel that they should

have a part interest in our elections. Close ties with

select Directors would certainly influence who PCMwould like to see elected to a Mutual Board.

As their control over our boards continues to in-

crease it is not surprising that the following scenario

could ensue.

A Towers Board candidate spoke before the Towers

Nominating Committee interview in July at which

time there was no reference to any objections that

would not allow their endorsement of the candi-

date. On September 24, the candidate received a

letter from the PCM Administrator, that his en-

dorsement was being dropped by the Nominating

Committee. No reason was given.

In contacting a Nominating Committee Member to

get clarification on this decision, the candidate was

told that the information was confidential and could

not be discussed.

This brings up several questions; What is PCM’s re-

sponsibility? Who should notify the candidate?

What justification for non-endorsement should be

made available to the candidate?

PCM has only one responsibility during an election

and that is, “To verify that the candidate is ‘In Good

Opinion

Residents Voice(949) [email protected]

What is PCM’s Role in LWV Elections?

The Gong Show Continues - Laguna Woods Not So Hidden Executive Incentives

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