UMCA "Fraud Is A Felony"
As most of you know, I've had some issues lately with the UMCA. I think it has been mismanaged and now, I think there has also been some financial hanky-panky going on. The latest issue of ULTACYCLING just came out and it had the UMCA's financial statements for the past three years. Also, check out
Seana Hogan's site. She posted the Managing Director's contract along with her notes and the notes of an attorney.
Put 2 and 2 together and you can see discrepancies, so I posted this to the Ultracycling listserv:
I just got Ultracycling in the mail and I also had a chance to peruse
Seana Hogan's website (http://www.ultracycling.us/newsletter03.html).
Thanks Seana! If her information is correct, then the UMCA financial
statements are wrong. I'm an MBA, not an accountant, so a CPA could
probably spell this out better, but I'll take a stab at it.
John Hughes receives two full page ads in every issue of Ultracycling as
part of his compensation. In this post-Enron, post-Worldcom era,
everybody should recognize that 2 full pages of advertisement has value
and that value should be reported as income to John Hughes and as an
expense to the UMCA. Since the UMCA is on a cash basis, I think they
only have to report the amount that JH actually uses (while an accrual
basis would require writing off the whole amount whether he used it or
not). The total annual value of this perk is a maximum of $1350. Not
much unless you consider that to be almost 10% of his old cash salary.
Does he sell his space to advertisers when he's not using it?
Next. John Hughes has a license to use the UMCA brand for Jerseys,
windbreakers, etc. while the contract doesn't specify what this is
worth, it does have value and the IRS would probably want to know what
the value is and therefore it should be listed in the financial
statements or at least addressed in the written explanation that
accompanies the statements. Any accountants want to take a stab at
valuing the brand? I'm guessing that the IRS would assign some
percentage to the actual jersey and commemoratives sales. I, like
Seana, am shocked that money spent on UMCA jerseys does not go to the
UMCA.
Finally. Back issues of ULTRACYCLING...This has value and should be
reported, John makes money off of the back issues and this should be
reported as compensation to him, after all the printing costs are listed
as an expense to the UMCA. Again, I'm shocked that money spent on back
issues of Ultracycling does not benefit the UMCA. Are there any checks
in place to make sure JH isn't purchasing more than is necessary? Is the
UMCA paying the shipping on these magazines(if so, talk about pure, no
risk profit)?
Individually, it might not seem like a lot. he might not make a lot on
the advertising, or the jerseys, or the back issues, but add it up and
there is a big gaping hole in the UMCA financial statements, maybe not
WORLDCOM big, but big enough to make me wonder...if the financial
statements don't show a measly $1300 bump to his salary, what else don't
we know? What other things are hidden? What other ethical lapses are
there?
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