Whistleblowers, Aguirre Sue Utility Watchdog

Whistleblowers, Aguirre Sue Utility Watchdog

File photo Sam Hodgson

Mike Aguirre.

 

When the Utility Consumers’ Action Network began the process of dissolving, its executive director described the effort as a ruse to elicit a lawsuit from former city attorney Mike Aguirre.

If so, it worked. Aguirre, who represents two UCAN whistleblowers, filed suit Friday, alleging that the organization’s board and top leaders had breached their fiduciary duty by failing to take internal complaints about UCAN’s financial management seriously. (Read the lawsuit here.)

We broke down the bulk of the complaints against UCAN when the organization filed to dissolve:

UCAN filed its intent to dissolve in San Diego Superior Court, saying in papers that it faced an “imminent threat to its ability to carry on,” due in part to legal threats by members of its own staff. Still, it insisted the organization would remain viable, despite the major crisis it clearly faces.

The move comes a week after an FBI agent subpoenaed UCAN’s internal records and nearly a year after two employees alleged that UCAN had embezzled money, awarded illegal bonuses, set up suspicious bank accounts and failed to properly audit its books. The organization says it has investigated those complaints and found them unsubstantiated.

What The Plaintiffs Seek: Audits of UCAN’s books and all of executive director Michael Shames’ payments and bonuses. Damages, restitution and attorneys fees. (No amounts were specified.) And they want declarations that UCAN’s members can elect the organization’s board and decide whether the group should dissolve.

Why They Sued: Aguirre explained it this way in a press release: “Every red flag for financial mismanagement and fraud has been raised as the result of internal inquiries by UCAN’s employees. But instead of investigating with a public audit as required by the organization’s charter, UCAN’s Board has met secretly with Michael Shames to conduct an orchestrated cover-up.”

What Shames Says: He said he hadn’t seen the suit yet but believed it was likely rehashing allegations that UCAN had already investigated and found unsubstantiated. “I will be looking for tangible evidence, documents, something, to support their allegations and not a continuation of the insinuations we’ve seen thus far,” he said.

One Substantiated Issue The Suit Alleges: That UCAN didn’t properly audit its books in 2006 as required by state law. Shames acknowledged today that the organization should’ve conducted an audit that year by a certified public accountant. He said an accounting firm was in the process now of auditing its books for last year and 2006.

Rob Davis is a senior reporter at voiceofsandiego.org. You can contact him directly at rob.davis@voiceofsandiego.org or 619.325.0529.

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Rob Davis

Rob Davis

Rob Davis is a former senior reporter for Voice of San Diego. He is currently a freelance writer in San Diego. He can be reached at robdaviswrites@gmail.com or 619.259.0529.

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6 comments
Judith OBoyle
Judith OBoyle subscriber

Mike Aguirre always makes me happy because he is an agressive whistle-blower. Shames and the UCAN Board went too far -- bonuses for Shames and lack of oversight by the non-profit board. We do need a utility watchdog group. I rather liked the model of the PIRG (Public Interest Research Groups) started in the 1970s under the non-paid leadership/guideance of Ralph Nadar. If there wasn't a Mike Aguirre, love him or hate him, San Diego would be much more heaped in scandal than it is today and that in itself is hard to believe -- Enron-by-the Sea.

Judi
Judi

Mike Aguirre always makes me happy because he is an agressive whistle-blower. Shames and the UCAN Board went too far -- bonuses for Shames and lack of oversight by the non-profit board. We do need a utility watchdog group. I rather liked the model of the PIRG (Public Interest Research Groups) started in the 1970s under the non-paid leadership/guideance of Ralph Nadar. If there wasn't a Mike Aguirre, love him or hate him, San Diego would be much more heaped in scandal than it is today and that in itself is hard to believe -- Enron-by-the Sea.

Mandy Barre
Mandy Barre subscriber

You can place the blame on Shames all you want- there was a board who did not properly scrutinize their own financials. I fail to see in this lawsuit how Aguirre gets 'damages' of any kind. I do not like UCAN ever since Shames supported a dump on drinking water coming from the San Luis Rey River...but a non-profit board sets policy and is fiscally responsible...point the finger there first.

Mandy Bear
Mandy Bear

You can place the blame on Shames all you want- there was a board who did not properly scrutinize their own financials. I fail to see in this lawsuit how Aguirre gets 'damages' of any kind. I do not like UCAN ever since Shames supported a dump on drinking water coming from the San Luis Rey River...but a non-profit board sets policy and is fiscally responsible...point the finger there first.

john eisenhart
john eisenhart subscriber

His salary seems pretty good. He seemed to be a good person. Why the bonuses?Typical situation where the watchdog gets greedy. Those bonuses should have been put back into the institution not Michael's pocket. It may turn out what transpired was legal but ethically it stinks, therefore what he says and does in the future will always be in question from this day forward. The first thing to protect for a non-profit watchdog group is integrity. With Michael as leader they lack that.

mr architect
mr architect

His salary seems pretty good. He seemed to be a good person. Why the bonuses?Typical situation where the watchdog gets greedy. Those bonuses should have been put back into the institution not Michael's pocket. It may turn out what transpired was legal but ethically it stinks, therefore what he says and does in the future will always be in question from this day forward. The first thing to protect for a non-profit watchdog group is integrity. With Michael as leader they lack that.