BY RICK WILDMANOn Jan. 14, 2009, four members of the “Reform Slate” replaced the former officers of Promote La Jolla. The newly constituted board soon unanimously agreed to settle the lawsuit between the board and two board members who had sought board membership and PLJ documents. PLJ’s books and records, reportedly including all the known PLJ contracts, were opened to everyone. A new sense of common purpose and unity arose.
In March I first discovered that First Republic Bank claimed that PLJ owed the bank $64,811 on a line of credit. The line of credit had not previously appeared on any PLJ financial statements. Our prior auditor’s reports did not include it. No record of any agreement to borrow appeared in any PLJ files.
On April 1, 2009, Jason Shidler of First Republic Bank provided me copies of the PLJ corporate resolution and guarantee for a $150,000 Line of Credit. It was signed on March 30, 2005, by PLJ officers Deborah Marengo and Reza Ghasemi, without either prior public notice or PLJ board approval.
The corporate resolution contained only a blank space where the date of the PLJ resolution to borrow, “as required by law and the PLJ Bylaws” should have been. The April 14, 2005, PLJ minutes stated that the Promote La Jolla Foundation,” a separate corporation, incorporated by Deborah Marengo and Tiffany Sherer on April 24, 2003, had obtained a loan.
There is no record that the board of PLJ ever approved the line of credit. No PLJ loan application was ever produced. The bank also provided PLJ with “Foundation” loan guarantee documents signed by Marengo and Ghasemi.
None of the current PLJ officers has ever had any affiliation with the “Foundation.” The “Foundation” has not released any of its books or records to PLJ or to the public. Although it unsuccessfully sought $1.1 million in city funds in late 2008, the Foundation is now a suspended corporation named the La Jolla Destination Marketing Alliance. It has virtually no assets.
On April 16, Jason Shidler proposed that PLJ offer the bank a payment plan. The plan was approved by the PLJ board of directors that day. However, the bank refused to accept payment. On April 24, following her nomination by Marengo, Sherer resigned her $80,000 per-year part-time job as PLJ executive director to become CEO of the San Diego BID Council, effective May 1.
On June 5 the bank seized a $69,322.45 Coastal Access and Parking Certificate of Deposit held by PLJ and applied $65,323.14 to the Letter of Credit. On June 15, 2009, I returned uncashed the cashier’s check for the balance of $3,999.01 to the bank and demanded reconstitution of the certificate of deposit.
On June 30, 2009, the San Diego City Auditor concluded the Fraud Hotline Investigation of PLJ. The report concluded that under Marengo’s presidency between Jan. 1, 2007, and December 12, 2008, PLJ submitted duplicate and prohibited expenditures for reimbursement of $46,747, and demanded reimbursement.
For instance, Sherer’s duplicate payroll reimbursement requests were submitted to and paid by both the city and the county. The city also claimed that it was entitled to recoup the $65,323 from the CD monies seized by the bank. The city auditor also recommended that the city attorney recoup the total of $112,070.
Deborah Marengo has agreed to negotiate a settlement for repayment of the seized CD funds with First Republic Bank.
As if this were not enough, on July 8, 2009, the San Diego Convention and Visitors Bureau faxed PLJ an unpaid invoice for $37,982 dated Dec. 4, 2007. At my request ConVis provided me with a copy of a previously undisclosed contract dated Dec. 5, 2006. It was signed by Tiffany Sherer and Deborah Marengo on behalf of PLJ.
I have been unable to find any record in the PLJ minutes that this $160,000 ConVis contract that turned into a $500,000 ad campaign was ever approved by the PLJ Board. Ms. Marengo advised me that the ConVis invoice was a mistake and that the payment had been waived by ConVis. ConVis advised me that they expected full payment. Once again PLJ was left “holding the bag” for Foundation activities.
Ms. Marengo has assured me that PLJ Board member Terry Underwood has kindly taken the laboring oar in attempting to resolve this matter.
So now, the 2009 PLJ officers and board are facing inherited, previously undisclosed claims of $150,052, with no apparent means to pay them back.
It now appears that concerns raised by Nancy Warwick in the public records request of the now-settled lawsuit were well founded.
Until these matters are resolved PLJ will not have a business improvement district contract with the City of San Diego. The city is still willing to help PLJ, but these financial issues must and will be resolved - one way or the other.
The current PLJ officers and Maryam Bakhsh have devoted hundreds of hours to keep PLJ afloat while trying to resolve PLJ’s inherited financial problems. The city auditor and the city attorney have made the city’s position very clear. Now is the time for the persons who created the PLJ financial wreck to step up to the plate and repair the damage.
Rick Wildman is president of Promote La Jolla.