Wednesday, August 12, 2009 4:03 PM
Subject: A message from the Board of EARS

  

 

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TO OUR LOYAL SUPPORTERS AND FRIENDS,


We know you have been waiting for a statement from the Board of Directors concerning changes within EARS, particularly the termination of Jim and Carol North. 

While we have been extremely busy behind the scenes to uncover facts and reconstruct our business, we have been reluctant to make a public statement without proper substantiation of the facts.

We apologize for keeping you wondering and recognize the confusion these past ten weeks have caused our supporters, volunteers, and fosters and friends.  We now offer our statement:

On March 26, Jim North, EARS Executive Director, notified the Board of Directors that there were not sufficient funds in the EARS bank accounts to cover the employee payroll the following day.

When questioned about the financial status of EARS and asked why we had not been notified of the shortfall sooner, the Board was told by Jim that there were funds coming in to cover expenses and this was just a temporary liquidity management issue, and all other bills were paid in full.

The President of the Board wrote a personal check to EARS to cover payroll. The Treasurer asked for detailed reports outlining EARS expenses and even a cursory review of the information provided indicated that drastic cuts needed to be made immediately.
 
On May 9, the Executive Committee comprised of Mary Skaggs, Nancy Colby and Jaxzann Riggs, met to discuss salary expenses and the financial status of EARS.

The primary responsibility of the Executive Director has always been the procurement of funding and the management of financial matters for EARS.

 Unfortunately Jim had failed to make some of the very difficult decisions that needed to be made in order to keep EARS financially viable.

 The committee decided to reduce expenses by eliminating one position and modifying the Executive Directors compensation to be based upon revenue generating results.

On May 12, the Executive Committee met with Jim. He was notified that the board was eliminating two positions because we could no longer afford them.

The positions eliminated were Jim’s consultant position and Carol’s employee position.  Jim was told that the elimination of the positions would be effective May 15.

At that time, Jim was also offered a commission-only sales position to develop business partner relationships for EARS.  He declined to make a decision at that time.
 
On May 15, by the close of business that day, and upon learning that the EARS bank account was overdrawn, the offer for Jim to continue his relationship with EARS was reconsidered.  The board requested that all financial records and EARS property be returned to the EARS office immediately.
 
The Executive Committee quickly began to uncover excessive spending by the Executive Director and abuses of EARS funds for personal expenses, meals, mileage and purchases of unauthorized office and computer equipment, phones and software.

 It came to our attention that EARS had unpaid bills totaling over $15,000.  The bank accounts were overdrawn or near an overdraft condition, as verified by the banking institution.

 A police report was filed, an accounting firm was secured and legal advice was obtained, all at no cost to EARS. 

While the Executive Committee worked with authorities to unravel discrepancies, the staff remained loyal and hard working for our animals and we tried to continue business as normal as possible.

 In order for EARS to maintain the health-care of the animals, pay the debt left from unpaid bills and pay staff and building costs, personal donations were made to EARS by board member Jaxzann Riggs on May 17 in the amount of $5,000 and on May 21 in the amount of $15,000.
 
No doubt you’ve heard rumors and untruths concerning the termination of the North’s. 

We offer these facts:

·         Beginning in 2008, the Board repeatedly requested detailed financial information from Jim North concerning the expenses of EARS.  The requests were met with non-compliance and the typical promise that “the information would be available soon”.

 When the Board authorized the opening of PawZazz, it was made very clear to Jim that the Board expected separate financial statements and accounting for the two entities.

Month after month, the board was told that a break out of information was not currently available but it would be forthcoming. We have since discovered that separate accounting records did in fact exist, though there are still questions about their accuracy.
 
·          Unfortunately, The Board allowed Jim too much latitude, and not enough supervision.  While we had growing doubts concerning his reports to the board, we responded much too late, and did not begin to uncover the extent of excess spending until after his dismissal.
 
·         Expense reports for both Jim and Carol North contained expenses for meals and mileage (including mileage to and from the office on almost a daily basis) that would not have been authorized by the Board had the expenses been reported in a more transparent fashion. 

Examples of personal spending that would have been disallowed were the payment of Jim and Carol’s Direct TV bill, the cost of a pair of specialty shoes ($245) and meals purchased in Tennessee during the week of 5/22/08 (Jim North was never authorized to conduct EARS business of any sort in Tennessee), and groceries purchased for a holiday party at the North’s home.

While several Board members attended the holiday event, they were appalled to learn that EARS funds had apparently paid for the meal.  While the sum of these examples may not be large, they are indicative of a general attitude toward EARS spending by the North’s that is totally unacceptable.
 
 
·         Our Budget Committee made very specific recommendations in November 2008 to reduce both general operating and personnel expenses.  The Budget Committee recommendations were not instituted by Jim North.
 
·         Board Member Jaxzann Riggs gave Jim North a personal check in November 2008 to pay the taxes on the EARS DeSoto county property.  In May 2009, the Executive Committee became aware that the check was not used to pay the taxes when the land was listed in the newspaper on the Desoto County delinquent tax roll.

 Jim did not disclose that he had diverted funds earmarked specifically for taxes to other expenses at the December, January, February, March or April Board meetings. His financial reports to the Board made no mention of either EARS inability to cover $15,000 worth of past due debts or the property taxes that the Board assumed had been paid. A second check had to be written by Jaxzann Riggs to bring the taxes current.
 
·         Prior to their termination and while receiving approximately $7,410.00 combined income from EARS on a monthly basis, the North’s formed a new corporation with a name that was similar to that used by our retail sister company PawZazz. The formation of the company was never mentioned to the EARS Board.
 
The Board had full confidence in Jim’s reporting and our relationship with him.  We are greatly disappointed that the trust we put in him was misplaced and abused.  This will not happen in the future.  The Board has put procedures in place and will continue to monitor the daily activities and all finances of both EARS and PawZazz for Pets.

 
In the 10 weeks since our first discovery of the financial mismanagement of EARS by Jim North, as well as Carol North, and their subsequent termination, we have made great strides for the animals in our care:


·         Dr. and Dixie Lott are donating their time and knowledge and providing expert healthcare at only the cost of medication. In spite of the turmoil surrounding the past 2.5 months, EARS has adopted 108 animals year-to-date and we are currently caring for 80 in our foster homes. In the last several weeks, as we have begun to regain control of our operation, our adoption rates have increased dramatically.
 
·         Our dedicated staff members, Michelle Adams and Petra Sheehan-Kurpeski, have taken on additional responsibilities and are performing above and beyond all expectations.
 
·         A new group of volunteers and fosters have joined our existing volunteers and fosters to get everything done and to provide for our animals.
 
·         Our Board has taken on an active roll in the day to day operation to insure our commitment to the community and to our animals is met within the guidelines of our organization, with all of our time and funding donated to animals, with no expense incurred by EARS.
 
·         The staff, volunteers, fosters and Board all work without any type of expense reimbursement, which was not the case with Jim and Carol North.  The elimination of their positions has saved EARS an average of nearly $2,000.00 per month in expenses plus their salaries of approximately $7410.00.
 
·         PawZazz for Pets, our retail adoption facility now under the expert management of Chey Soares, has done more business, created more friends and adopted more cats in the past 10 weeks than ever before.  It continues to grow in leaps and bounds.
 
·         The newsletter, previously done by salaried Carol North is now being written by a wonderful volunteer, Roy Van Horn.  You will be able to view the newsletter on the EARS web site and you’ll see the first printed issue on October 1.  Roy’s suggestion that the newsletter be made available to those who might enjoy it online will result in a substantial savings to EARS. We are thankful for his management of this most important communication tool.
 
·         We currently have three employees: Michelle Adams and Petra Sheehan-Kurpeski, who are paid by EARS and Chey Soares who is paid by PawZazz for Pets.  In addition to taking on extra responsibilities when Jim and Carol were terminated, our employees work hours far in excess of their salary and joyfully participate in all of our events, donating time and energy for the benefit of our animals.
 
·         The day to day operation of EARS is being overseen by the Executive Committee members, Mary Skaggs and Nancy Colby, with support from the remainder of the Board, with absolutely no reimbursement or expense.
 
·         Jaxzann Riggs continues to personally donate funds to EARS, to the sum of $8,000.00.  She has also given EARS an interest free loan in the sum of $40,000.00. 

Jaxzann has also very generously purchased the DeSoto county land back from EARS in order to give us operating cash and to insure EARS succeeds. 

We could not build our sanctuary there, but the land was an asset.  The Board voted unanimously on August 3 to allow Jaxzann to purchase it so it could remain in the hand of an EARS supporter for future evaluation and consideration after the market value increases. 

In the meantime, the purchase insures that EARS can remain financially viable during reorganization.
 
The Board, the staff and our volunteers are working around the clock to restore the community’s confidence in us, to develop new relationships and to put this all behind us. 

While we have a lot of work ahead of us, we look brightly to the future.

Our animals are happy and healthy and EARS remains strong.   It is our goal to always operate in a completely transparent fashion and to be responsible stewards of funds donated for the care of our animals.

 If you would like to personally review the documentation that supports this statement, an Executive Committee member will be available to meet with you.

.It is our hope that after you have read this statement and understand the facts, you will consider helping us even more than you have in the past.

We understand why you may have been hesitant to donate to us while we were in turmoil but we can assure you now, that we are headed solidly in an honest and steady direction towards a new and improved EARS Animals Rescue Sanctuary
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We need you now!
We need your support, both financially and as volunteers and fosters.
Please let us know you’re still with EARS, you still believe in EARS and you will support us.
 
Thank you.
Very sincerely,
 
The Board of Directors
EARS Animal Rescue Sanctuary