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The coop’s Board of Directors has had the same for almost 20 years. At latest time they did not have a general meeting for 5 years. There is a meeting scheduled for next Thursday. It is the first meeting in 4 years this time. The house By-Laws say there must be a meeting once a year.
There was no list of nominees provided. We called management and said they would only tell us who the nominees are at the meeting. Right after the meeting was scheduled, a group of people asked to be nominated for the board. Management is preventing these people from being included on the ballot. The rules do not have a nominating procedure specified. All these people meet the rules of who is allowed to serve on the board.
In addition to not accepting nominees, management is also not providing a complete list of shareholders or their contact information to anyone. The building has a lot of tenants so we don’t know who owns many of these apartments. We can’t contact them to find out their opinion about the board or elections. Meanwhile, we know management has been in contact with many of them and is collecting proxies for their candidates.
We believe there is fraud on the board, including embezzlement/ misuse of funds. Management is profiting from this and wants to keep things as they are. How can we fix this situation? Do you have any advice for us? Do management’s actions violate any laws? If they do, what can we do about it?
In my building, a notice of the annual meeting is sent out within 30 days of the meeting, along with a proxy form where the recipient can name anyone to serve as his proxy and vote his shares. At the meeting, the managing agent runs the election, announcing the positions that are open, and that (generally) the existing board is running for reelection. At that time, the floor is opened to nominate other candidates, one other person must second a nomination, and the person is then added to the ballot as a write-in. A majority of the shares must be voted either in person or by proxy (sometimes more than 51%, depending on bylaws). Management then tally's up the votes and announces the new board.
Board minutes are supposed to be prepared after each meeting, and you should be able to review them at the management company offices if you request to do so. You should also receive annual audited financial statements for the coop corporation. If you can't get access to the minutes and don't receive financial statements, I guess you can make complaints to the Department of State or the attorney general.
I don't know if the board or management is required to provide a list of owners or not, how big is the building? Painstaking, but you can review the property records online (at least in NYC) and see who the owners are based on ownership records. Mortgages and other documents get recorded on sale. Or you can do phone number checks on the address (which may include renters or sublets too).
May be harder to deal with fraud, depends on what it is and if there is evidence that can be taken to some authority (district attorney, attorney general, etc.).
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In New York: You need to look up your by-law and see what the rules are to vote all those frauds out. In some coop they require about 75% or 2/3 of shareholders' signatures to kick the loggers off the board; then get control of the board by putting in GOOD people who really care about the coop--this is very hard to do--selflessness is rare--then amend the by-laws with strict language and get shareholders' votes to enact the new provisions so the next bag of loggers won't be able to change by-laws when they want for their own benefit. Generally speaking, the BCL (New York) laws are the wrong type of provisions for coops; we really are not profit generating businesses or a regular corporation by any means--coops should have their own devoted sections of laws. We need to petition this with legislators. Bottom line you have to read every page of you by-laws and BCL sections 600s to 700s; it seems you have not read your by-laws. And you have to sue them for breach of their fiduciary--your members been there so long they probably got every corner locked in working for them. If your shareholders are not frustrated or angry enough to act--I advise you to move and never buy a coop again. We have the same problem in our coop, and the sleeper shareholders are half to blame. I'm on the board fighting the loggers crooks, getting smack down by the self-dealing majority, doing my darn honest best for the coop and it's bone breaking hard to get voters to sign my proxy. They make it like they are doing me a big favor when it's the other way around! I don't have a life; my spare time is spent looking over the cheaters, fighting with the cheaters, defending myself against the cheaters, trying to out strategize the cheaters, trying to catch the cheaters in action, watching my back against cheater supporters who are getting their little piece of the pie while everything is falling apart. I have to stop writing now otherwise I won't be able to post this message due to profanity--!
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