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Lance Woodward XXX XXX XXX

September 12, 2012

The Honorable Eric T. Schneiderman Attorney General of the State of New York Charities Bureau l 20 Broadway, New York, NY 10271

Dear Mr. Schneiderman, I am writing to you concerning BROOKLYN UNITED FOR INNOVATIVE LOCAL DEVELOPMENT INC., (BUILD) a Not-for-Profit Corporation under the Section 402 of the Not-for-Profit Law. My most recent status with the organization was that of Chief Financial Officer, I have been with the organization since 2004. The organization is currently experiencing an operational crisis that I, and others, deem necessary to bring to your attention and request an investigation. There are a number of complaints listed below but they all ultimately point towards an underlying fundamental problem, namely that of one individual, JAMES E. CALDWELL, who has taken singular and unilateral control of the organization and has misallocated/misappropriated in excess of $120,945.51 from January 1, 2011 to August 31, 20121 and has become a liability to the organization. Back federal taxes in excess of $115,0002 are currently owed. The budget for the same period was approximately $650,000. JAMES E. CALDWELL has failed in his responsibilities and duties as both a director and officer of the corporation to operate in good faith and with the care an ordinarily prudent person would exercise under similar circumstances. The board of directors has never met in its eight years of existence formally to discuss matters of importance to the organization. All financial instruments have been under the control of JAMES E CALDWELL since 6/1/2011. Without any organizational internal controls, allocated funds are being misdirected towards community events
1 Appendix

D includes a summarization of the expenses that were not included in any budget line item from any Beneficiaries. These expenses include food, clothing, entertainment, transportation, member rent payments and other expenses that are shown in the accompanying Banco Popular and American Express Business Green Rewards Card statements (Appendices F & G).

Based upon estimates from Accountants Pat Boyd & Associates delivered to the organization in June 2012. The organization currently has a payment agreement with the IRS, yet has no additional funding coming in the immediate future to maintain the agreement


and items of personal gain including food, entertainment, gifts, etc,. Operational and contractual obligations of the organization are currently being neglected. Recently, the operations of the organization were thrown into peril. Within the past four months over twenty years of BUILD experience, the staff that has been fulfilling the contractual obligations, have left the organization under various circumstances. Five individuals were either wrongfully terminated 3or left under duress 4. We are seeking to have JAMES E. CALDWELL, removed from the organization and to restore the operational integrity of the organization as well as establish a board that is reflective of the needs of the organization, benefactors and the community. We would also like to seek proper restitution for the misallocated funds that are listed in Appendix D.

Although the board of directors has never met in the history of the organization, prior to June 2011, BUILD operated under the direction of Marie F. Louis and James E. Caldwell. Contractual obligations were being met, and although there were many ups and downs along the way, the organization was surviving and ready for growth on many occasions. In June 2011 the Chief Operating Officer Marie Louis was diagnosed with cancer and succumbed to the disease on December 23rd 2011. Marie F. Louis was the "brains" of the organization as was duly noted by NYC Council Member Letitia James at Marie Louis Louisma's memorial service and further substantiated in the attached Brooklyn United for Innovative Local Development Internal Assessment Report 2010, performed independently by ritchie/tye consulting, inc. (Attachment E) Where they stated – referring to Marie, "Lastly, although the Chief Operating Officer is a great asset for the organization, BUILD does not appear to have other staff with comparable skill sets. The organization's heavy dependence on one individual serves as a major challenge for BUILD and places the organization at risk should she decide to leave." Unfortunately she left BUILD and her ability to contribute towards the organizational well-being ceased around the same time as her diagnosis in June of 2011. From 7/1/2011 to 12/31/2011 James E. Caldwell held control of the organization with no board oversight.. In response to the loss of Marie Louis, in January of 2012, James E. Caldwell promoted Lance Woodward to the position of "Chief Financial Officer" although the responsibilities that Lance Woodward performed including the management, administration and evaluation of the fiscal and
3 According 4

to the By Laws of BUILD (Appendix A) Article IV, Section 6. 2

Health problems related to work and responses to improper organizational changes.

programmatic obligations and responsibilities of the corporations as stated in Article IX, Section 13 of the Build Bylaws were more in line with the responsibilities of the Chief Operating Officer. In September of 2011, James E. Caldwell hired Daisy James for the position of Employer Services Coordinator. Her initial responsibilities included assisting in teaching a Customer Service Training Class course. Subsequently, she would become the principal trainer and most recently on 8/1/2012 he placed her as the Chief Operating Officer. From the time that she was hired she created many problems for the majority of the staff and and many of the members. When these issues were brought to James E. Caldwell's attention they were answered with hostility and no corrective actions were taken. His actions at that point divided the organization as it became apparent to the longterm employees that Daisy James had favor over everyone. Programmatically and financially Daisy James would cost the organization through her inability to keep proper records. Ultimately, over twenty years of BUILD experience left the organization as a result of her presence and James Caldwell's enabling of it. Two employees left under duress and two others were improperly terminated on 8/1/2012. Sometime in March 2012, Lance Woodward began to try and address the financial situation with James E. Caldwell. Namely that money was not being appropriated properly and taxes needed to be paid. A number of these type conversations would take place in the coming months. The response was James E. Caldwell not showing up to the main office for most of March, April, May, June & July and the subsequent organizational changes on or around 8/1/2012.

For the 2011 Calendar year BUILD was being funded by the Atlantic Yards Development Company, L.L.C. (AYDC) and the Consortium for Workers Education (CWE). Included in Appendix D is a copy of the contractual agreement between AYDC and BUILD covering the period April 1, 2011 to April 30, 2012. Although contracts from earlier periods are not included, the terms and conditions for the prior budget year between the two parties were similar. Included in Appendix E is the Master Invoice that is utilized for billing purposes between BUILD and CWE. It includes the contractually agreed upon annual expenditures for the period between 3

7/1/2011 and 6/30/2012. The terms and conditions agreed to by CWE and BUILD in the prior budget year were the same. Categories of expenses that were agreed upon between BUILD and AYDC, and BUILD and CWE are listed below in Charts 1 and 2 respectfully. Chart 3 list expenditures for categories of expenses that did not exist in either agreement, or any other agreement for that matter. From June 1, 2011 most all of the misallocated/misappropriated expenses listed in Chart 3 resulted from James E. Caldwell. The first two charts are reflective of annual information while the third covers the period between January 1, 2011 and August 31, 2012.

Contractually Agreed Upon Categorical Expenses
Chart 1. OTPS line item expenditures that were agreed to between AYDC and BUILD for the period of 4/1/2011 to 4/30/2012. From Attachment B.
Subscription to Outcomes Database System Professional Development Educational Materials Telecommunications Furniture & equipment Training Supplies Office Supplies Printing Postage Insurance Website Audit Transportation OTPS TOTAL 750per month $9000 $0 $0 $0 $0 $3564 $4800 $9000 $500 $7000 $2500 $5000 $0 $41364

400per month 750per month 500 7000 2500 5000

Chart 2. CATEGORY OF EXPENSES and annual allocations agreed upon between CWE and BUILD for the period of 6/1/2011 to 6/30/2012. From Attachment C.

49590 8505 4


996 5909 65000


Unapproved Categorical Expenses
The following items listed in Chart 3 are expenditures that were neither agreed upon in any contract or by the approval of the board of directors. All of the expenses were incurred by James E. Caldwell either by using the corporation's American Express Card or by using his signature only on the corporations checks. Chart 3. List of categorical expenditures not covered by any contractual agreement or budget for the period 1/1/2011 to 8/31/2012. 77PRECINTCOMMUNITYCOUNCIL $4454.17 TELECOMMUNICATIONS $5672.55 GIFTS $6976.40 OUTREACH/CLEANING $7055.00 RENT $7470.55 GRADUATIONS $8393.22 ENTERTAINMENT $9715.74 FOOD $11297.39 OTHER $21709.40 TRANSPORTATION $38201.09 TOTAL $120945.51 Below is a further summarization of the misallocated/misappropriated expenses listed in Chart 3. An itemized list of all misallocated/misappropriated expenses is included in Appendix D.

77th Precinct Community Council — $4454.17: James E. Caldwell is also the
President of the 77th Precinct Community Council. The resources of that organization have also been very limited for at least the last year. To make up for that organization's short fall, James E. Caldwell has been using BUILD's financial resources to cover. Loans to the council totaling $1350 were given on 6/13/2011 and 7/28/2011. On 9/12/2011, a check for $500 was given to the council to purchase food/refreshments and plaques for the Council's monthly meeting. Next, on

February 9, 2012 a check for $360 was used to purchase stuffed animals for James E. Caldwell to hand out at his February 13,2012 Council Meeting. Most recently, on August 7, 2012, the Council participated in National Night Out Against Crime. At least $2835 was spent from the BUILD checking account covering labor expenses, entertainment and transportation.

Telecommunications — $5672.55: Neither budget included allocations for
telecommunications. Expenses listed are for cell phones.

Gifts — $6976.40: Items in this category include $3038.75 in donations to groups and
individuals, $1299.26 for flowers, $1500 for plaques and and $968.46 for clothing. The latest clothing purchase took place on 8/9/2012 and was for $576.97 at Macy's for BUILD employee Daisy James.

Outreach/Cleaning — $7055.00: These are labor expenses, where individuals were paid
to clean the bathroom, make phone calls or any number of tasks that should have been the responsibility of BUILD employees. Routine maintenance is already provided by the AYDC.

Rent — $7470.55: James E. Caldwell paid the apartment rents for five individuals, including
members and nonmembers, alike on the following dates 3/22/11, 7/05/11, 10/07/11, 1/13/11, 2/16/12, 3/6/12.

Graduations — $8393.22: Graduations include labor, site rental and entertainment
expenses. Graduation expenses related to food and transportation are not included here but are listed in their appropriate categories. Neither contract had provisions for graduations/parties.

Entertainment — $9715.74: Items in this category include (2) season tickets for the
Brooklyn Nets Basketball team, a local cruise, Hotel Room and liquor. None of these purchases were approved by the board.

Food — $11,297.39: Items in this category include food for events such as graduations.
Almost all restaurant purchases were for his personal interests. Below is a breakdown of food purchases by establishment and total spent at each for the period 1/1/2011 to 8/31/2012. Peaches Restaurant BJSWholesale Club Grub Stake Restaurant The Smoke Joint AubonPain Metro King Applebees McDonalds Cataldo's Restaurant $72.60 $106.33 $119.53 $186.30 $229.32 $240.05 $286.62 $352.68 $659.40


Juniors Costco Others Pathmark Duncans Quality Fish Met Food

$765.10 $965.93 $1121.67 $1361.12 $1523.25 $3321.17

Other — $21,709.40: Please refer to appendix D. Transportation — $38,201.09: Neither AYDC or CWE agreed to any transportation
expenses. Both budgets explicitly state there is no funding for transportation. The majority of the transportation expenses are for Metro Cards that were given to members and U Hauls related to moving supplies and equipment for events. In addition, there are a number of expenses related to parking, parking violations and a personal car payment made on 8/12/2011.

JAMES E. CALDWELL has become a liability to the BUILD organization. He has failed to exercise his fiduciary responsibility to the organization and has instead placed himself before the organization. The result has been the misallocation/misappropriation of over $120,000 of BUILD funds and the inability of the organization to perform its contractual obligations. In addition to requesting that JAMES E CALDWELL be removed from the organization we would also like to seek restitution for the expenses listed in Appendix D.


Lance K. Woodward