Index No. 2004-7739
Appellate Case: 2005-3754
Beatriz Marinello, Tim Hanke, Stephen Shutt, Elizabeth
Shaughnessy, Randy Bauer, Bill Goichberg, Kenneth
M. Chadwell and United States Chess Federation,
STATE OF NEW YORK )
COUNTY OF QUEENS )
Sam Sloan, being duly sworn, deposes and says:
1. I do not know whether I will be allowed to put in a reply affidavit or not, but there are a number of false and misleading statements in the opposition papers so I feel that I have to try. I will just address the most important points. My failure to reply to anything else should not be deemed as an admission.
2. The answering affidavits say that the USCF is solvent. This is not true. The USCF is insolvent. Attached hereto is the most recent financial statement, dated May, 2004. It plainly shows that the USCF has a deficit net worth of 876,134. This financial statement is posted on the Internet at http://www.uschess.org/org/govern/auditedyearsended5-31-2004and2003
3. Please note next to it the year end statement for 2003. Then, the net worth deficit was much greater, $1,161,415. The reason for this great improvement in the financial condition is that during the previous one year Bill Goichberg was the Acting Executive Director, who agreed to serve without pay and without financial compensation of any kind including expenses. Bill Goichberg worked for 15 months as executive director without receiving one penny for anything.
4. Bill Goichberg is the biggest chess organizer in the World. He organizes the World Open which this year has a prize fund of $180,000. He also organizes the Chicago Open, the North American Open, the Foxwoods International and a host of other big chess tournaments, each of which has a prize fund of more than $100,000. He holds tournaments in all the big states, with just one exception. That one exception is New Jersey. The reason Bill Goichberg does not ever hold a chess tournament in New Jersey is that he has received threats from the big organizers there, especially Leroy Dubeck and "Honest Steve Doyle". Honest Steve Doyle got that moniker because in 1997 he lost $25,000 in receipts from entry fees and books and equipment sales belonging to the USCF. Since Steve Doyle is a man of impeccable reputation and would never steal, he became known as "Honest Steve Doyle".
5. Bill Goichberg holds major big money tournaments every year in Pennsylvania, Connecticut, Nevada, California, Illinois, Florida and several other states but never in New Jersey because of threats from Leroy Dubeck and Honest Steve Doyle. Goichberg knows of course that legally he cannot be stopped from holding chess tournaments in that state, but he feels that why should he bother as there are the 49 other states he can hold chess tournaments in.
6. Each of the tournaments that Bill Goichberg holds every year requires USCF membership. That means that every player must pay $47 in membership dues to the USCF. The amount involved is considerable as, for example, the World Open draws 1200 players per year. Goichberg sends this money to the USCF office in New Windsor. He also pays rating fees to the USCF and he advertises heavily in Chess Life Magazine. Bill Goichberg is by far the biggest source of income the USCF has.
7. Because Bill Goichberg is a big time operator, some of the other much smaller time operators are jealous and resentful. They rally around Leroy Dubeck and Honest Steve Doyle, both of whom are known for their hatred of Bill Goichberg. Leroy Dubeck is a wealthy man who is a former USCF President. Dubeck often gives himself credit for making Bobby Fischer World Chess Champion, but actually Sam Sloan had more to do with making Bobby Fischer World Chess Champion than Leroy Dubeck did. Dubeck was USCF President from 1969-1972. I did not really do much to make Bobby Fischer world chess champion, except that I was standing at Fischer's side when he won the World Chess Championship in Reykjavik, Iceland in September 1972. I looked around and I did not see Leroy Dubeck there. More recently I was one of the leaders in the fight to get Bobby Fischer out of jail. By contrast, our USCF Board majority, including especially Tim Hanke, led the fight to keep Bobby Fischer in jail.
8. After 1972, because he could not succeed himself as USCF President under the rules in effect at that time, Leroy Dubeck ran for USCF Secretary. Goichberg fielded a candidate to oppose him. There was a hard and viciously fought election battle. When the votes were counted, the Goichberg Candidate had won by a narrow margin. Dubeck was very angry. "They Lied", he exclaimed. Dubeck has never run for election again under his own name. Instead, he selects a slate of candidates and gives them money to run. He also hires anonymous guys to write "hit letters" under fake names. These hit letters make outrageous accusations against the opponents. Both sides play dirty. It is not uncommon for the hit letters to accuse the opponents of being child molesters.
9. This year as every year for the past 30 years, there are two slates running, the Dubeck Slate and the Goichberg Slate. The Dubeck Slate consists of Hanke, Bauer, Shaughnessy and George John. The Goichberg slate consists of Goichberg, Shahade, Tanner and Channing. I am running too but I am not on any state. They are all terrified of what will happen if I actually get elected somehow, and with good reason. This means that they will spend a lot of time and money attacking me if they think I am winning, or they will ignore me if they think I have no chance. I have less money than any other candidate.
10. Goichberg is a chess master who was at one time close to International Master strength. He worked for the USCF during 1964-1966 and was responsible for setting up the USCF Rating System in its present form. Because he is the biggest chess organizer in the entire world, and because his business is closely intertwined with the USCF, he bought a home in Orange County close to the USCF Headquarters in New Windsor. He visits the USCF office almost every day, usually to bring in tournament results or to pay membership dues from persons who joined at one of his tournaments.
11. The USCF lost money every year for eight years in a row. The total losses came close to two million dollars. Most of that money was lost between 1999 and 2003. During the eight years, the USCF had six executive directors: Al Lawrence, George Filippone, Mike Cavallo, Gerard Dullea, George DeFeis, Frank Niro and Grant Perks. All of them lost money. In late 2003, Beatriz Marinello fired Grant Perks. Because of the loss of nearly two million dollars over eight years, the USCF had no money left to pay a salary for executive director.
12. At this point, Bill Goichberg made the USCF Executive Board an offer it could not refuse. He offered to work as Executive Director FOR FREE. More than that, he provided seed money to get the USCF going again by paying for ads in Chess Life Magazine for one year in advance.
13. In one year, Goichberg produced a surplus of $285,921. His next seven months in the current fiscal year were profitable as well. Then, Goichberg found out that he was about to be fired, not because he had done anything wrong, but because the Beatriz Marinello Gang as they are knows wanted to get their hot hands on the money Goichberg had brought in, money which had not existed before Goichbnerg took over as Executive Director.
14. Note that in the affidavit of Grant Perks filed by opposing counsel it states that Marinello and Hanke have checking signing authority over the LMA Account and the Employees Pension Plan Account. The LMA Account has $500,000 and the pension plan account has about $200,000. It is outrageous that Marinello and Hanke have check signing authority over either account. Never before in the history of the USCF has a board member had check signing authority over any account. In the past, the LMA Account was invested in the Oberweiss Fund, which is managed by James Oberweiss, who is also a chess enthusiast. Mr. Oberweiss has a billion dollars under management and his fund is listed on the New York Stock Exchange, so we know that he would not be interested in stealing a measly $700,000. Beatriz Marinello on the other hand has no job. Tim Hanke is a high school teacher of Latin. Neither of them are the kind of people that any prudent man would want to handle a large sum of money. Also, the employee pension plan is not supposed to be under board control at all. On Nov 18 2004 at 11:51 AM Tim Hanke posted the following on the newsgroup rec.games.chess.politics:
Beatriz Marinello is the head of the gang of thieves that have taken over USCF. Her henchman is a guy named Hanke, who drives around with all of USCF's money in a suitcase in the trunk of his car, apparently because he doesn't trust banks. Marinello and Hanke are like Bonnie & Clyde.
15. Now of course this was taken as a joke, but the fact is that in the history of the USCF no member of the board had been trusted with check writing authority. Indeed, even the executive directors have never had access to that kind of money. Al Lawrence, George Filippone, Mike Cavallo, Gerard Dullea, George DeFeis, Frank Niro, Grant Perks and Bill Goichberg were never in a position where they could write a check for $500,000, but now Hanke and Marinello can do that.
16. New York Not-for-Profit Law clearly requires that when a Not-for-Profit Corporation sells a building to buy another building, the funds are to be placed in escrow so that the money will still be there and will not have been squandered when the time comes to pay for the new building. This is explained on page 4 of the brochure put out by the Attorney Generals Office which is included as an exhibit, and is also on the Internet website at http://www.oag.state.ny.us/charities/forms/sales.pdf
17. That clearly applies to the situation here because now they are saying that they are spending nearly $300,000 on the move to Crossville alone, so they obviously will not have money left to build the new building.
18. The opposition papers also state that a freeze on the bank account or putting the money into an escrow account as the law requires will make it impossible for the Board to build the building in Crossville they want to build. Here they contradict themselves. They have always said that they were given "free land" and then a bank in Crossville had agreed to loan them enough money with only the free land as security to enable them to build the building. So, the big selling point on the Crossville deal was that the USCF would get a new home in Crossville with no cash outlay. They repeat this claim in the opposition papers here. However, the fact that they now say that they need to move the money to Crossville to build the building there shows that the bank will not give them the money based on the value of the land alone.
19. Several times in the opposition papers they state that the delegates voted to move to Crossville in 2002 and reaffirmed that in 2003 and 2004. This is absolutely a lie. No such votes were taken.
20. I was present at the August 2002 delegates meeting which took place in Cherry Hill, New Jersey, the home town of Leroy Dubeck. The events of that day were astonishing. I was present as a delegate representing the Great State of New York. About one hundred delegates were there. At the beginning if the meeting after the certification of delegates and the preliminary applauses and awards, the time came for the first item on the agenda, when Honest Steve Doyle stood up and was immediately recognized by the chair, John McCrary. Honest Steve Doyle came to the podium and stated, "With the support of five former USCF Presidents, I hereby move that we sell the building in New Windsor and move to Miami."
21. I and several other delegates jumped up and immediately raised a point of order. I said that their were nearly one hundred items in the advance agenda, both old and new business, that needed to be debated and voted upon and the Doyle motion was clearly out of order because it was not even on the agenda. The Chairman asked for a ruling from the USCF Parliamentarian, Mike Nolan. Nolan ruled that as long as Doyle had the floor he could make any motion he wanted. I immediately realized that the fix was in. It had all been planned in advance. Doyle, McCrary and Nolan were all in on the plot. Frank Brady, a board member, expressed anger because obviously this had all been planned in advance and he had not been informed of it.
22. Frank Niro, USCF Executive Director, was called to present the plan. Niro explained that a developer wanted to build a strip mall in New Windsor. This developer had purchased all the land around the USCF office. Now, in order to build his strip mall he needed to buy one remaining piece, which was the USCF office. Therefore he had offered to pay $600,000 for the building, which was more than the building was worth.
23. Meanwhile, explained Niro, the World Chess Hall of Fame had offered us space in their building in Miami. So, we were being offered a great deal, both to sell the building we had for more than it was worth and to get into a much better location.,
24. I wound up voting for this plan because I had confidence in Frank Niro. I thought he was a good man. However, other delegates strenuously objected because they knew something I did not know, which was that the World Chess Hal of Fame was owned by Excaliber, a manufacturer of chess computers, and the reason they were offering us this space was so that our sales staff would sell their computers.
25. Because of the objections of other delegates, the wording of the motion was changed to read that we were to sell the building and move somewhere to be decided later. The motion was finally passed by a show of hands. No vote count was taken but the vote was close.
26. At no time in this debate was Crossville Tennessee mentioned. That name did not get involved until months later. Thus, the statement in paragraph 19 of the affirmation of Michael Matsler that the move to Crossville was approved by the delegates in August 2202 (typo in original) is false. The delegates approved a move, but not a move to Crossville. Also, it is not true that the delegates voted to move out of New York State because of the high cost of doing business in New York State. The cost of doing business in New York State was never mentioned and the motion that was passed made no mention of moving out of state or to any specific location either in or out of New York State.
27. Also, this motion was not formally done. There was nothing in writing. They cannot produce the motion or its wording and have not done so until now. Thus, the detailed requirements of law, regardless of whether it is New York Law or Illinois Law or the law of any other state for selling a building regardless of whether it is profit or not-for-profit have not been met.
28. Eventually, it was found out that the entire presentation made to the delegates by Honest Steve Doyle and Frank Niro was a pack of lies. Niro had said that a buyer had offered to pay us $600,000. That buyer, if he ever existed, evaporated. No such buyer has ever been found, in spite of a diligent search. The deal to move to the World Chess Hall of Fame was also not what it was made out to be. Frank Niro had made it sound like we would be getting free rent. They were actually offering "below market" rent. However, the rent was still high, because they were in a high rent area. Also, as part of the deal, we were being required to build a new building on their land with our money and to pay them rent in perpetuity, plus we would be required to recommend and sell their chess computers. In short, the deal we were being offered was a bad deal and completely uninteresting to the USCF.
29. However, Don Schultz, who is now a board member but was not at that time, came up with an offer to provide us a home in Palm Beach Gardens, Florida. This deal was sponsored by Joel Channing, who is now a candidate for election. This seemed to be a wonderful deal. Everything was good about it. The USCF staff liked it too, because they all wanted to move to Florida. The board passed a resolution to move too Palm Beach Gardens.
30. What happened next nobody seems to know and I for one sure would like to find out. Frank Niro vanished for six weeks. We thought that he was in Palm Beach Gardens negotiating a deal, but it turns out that he never went there. He would call the office on his cell phone but not reveal where he was. We think he may have been sick, possibly in the hospital, but he never told us. John McCrary started acting strangely too. He never went to Palm Beach Gardens although he lives nearby in South Carolina. Then in 2003 suddenly to everybody's surprise the board voted to move to Crossville.
31. This news was greeted with derision. Nobody wanted to move to Crossville. The Palm Beach Gardens people were angry too because they thought they had a firm deal. Nobody had told them that the move to Palm Beach Gardens was being reconsidered.
32. The Crossville Deal was the brainchild of Harry Sabine, a chess organizer and player who is a former USCF Vice-President and who is an attorney in Crossville. He is also the notary public who notarized the signature of Grant Perks in the affidavit filed in this court. The big supporter on the board was Frank Camaratta, the USCF Treasurer, whose business is to sell fine hand crafted chess sets and who lives nearby in Alabama.
33. The opposition papers state that page 4 of Exhibit F, which is the minutes of the 2003 delegates meeting in Los Angeles, show that the 2003 delegates approved the move. These minutes are posted on the Internet at http://www.uschess.org/org/govern/minutes2003annualmeeting.html . NDM#40 . However, if you turn to page 4 of exhibit F you will find no such thing there. Which you will find is the words "Planning Budget for Crossville". This was a budget for a plan, not a budget for a move. This was treated as a routine matter. There was no debate or discussion of a move at that meeting and no votes were taken. Indeed, Tim Hanke had just been elected and he had campaigned against a move saying in his campaign papers that the idea of moving to Crossville was ridiculous.
34. A dramatic change in events took place at the meeting in Los Angeles. Frank Niro had notified the board that the surplus for the 2002-2003 fiscal year would be $300,000 which would be a cause for celebration after seven straight years of losses. The delegates assembled in eager anticipation of this good news. However, when the audited financial statements arrived in a package by Federal Express and were opened, they showed a loss of $324,000. Also, Frank Niro had disappeared. He never showed up in Los Angeles. He sent a note saying that he was resigning for health reasons. The delegates were literally left holding the bag. Frank Niro could not be found anywhere and it was months before he could even be located.
35. Frank Camaratta, who expected to be elected USCF President at that meeting having secured an agreement from John McCrary to step down, was left trying to explain this. Then, in a palace coup, Camaratta was suddenly cast aside and Beatriz Marinello who had just been elected to the board at the Los Angeles meeting was made president. Beatriz Marinello was a nice attractive lady who had come to several meetings but who had never spoken and nobody had thought of her as a potential president. Now, suddenly she was made president and both McCrary and Camaratta were thrown out as president and VP of Finance respectively. McCrary resigned from the board a few days later. Camaratta resigned a few months after that.
36. Beatrriz Marinello became USCF President on August 10, 2003. Her first meeting as President took place on August 11. She appointed Mike Nolan as Acting Executive Director and Chief Operating Officer. However, a few days later Nolan resigned. Later we found out the reason. Beatriz had given Mike Nolan a long list of USCF employees she wanted to be fired. Nolan felt that he had not become Executive Director just to obey orders from Beatriz and so he refused to obey the order and resigned instead. Then on August 20, 2003, Beatriz Marinello walked into the USCF headquarters in New Windsor and fired 17 staff members on the spot. The next day, Harold Winston, an attorney and Chairman of the By-Laws Committee, ruled that these firings were invalid because the USCF President lacks the authority to fire anyone. She only has the authority to preside over meetings of the board which will vote on issues of policy and hire the Executive Director. Because the 17 staff members had been fired and were already gone, an emergency meeting was held on August 22, 2003. The results of that meeting are posted on the Internet at http://www.uschess.org/org/govern/eb082203m.html
37. John McCrary resigned in protest to the firings of 17 staff members. The remaining board voted 4-2 to grant Beatriz Marinello emergency authority for two months. The resolution reads, "The Executive Board authorized the President of the USCF to make emergency personnel decisions for the next two months during the current financial emergency".
38. Although this emergency authority was supposed to extend for only two months, Beatriz continues to exercise this authority to this day. Harold Winston is still Chairman of the By-Laws Committee and still believes that Beatriz is acting without legal authority. However, Winston lacks the authority to do anything about it. That is why I have come to this court because this court and at the present time only this court has the authority to do anything about the repeated by-laws violations by Beatriz Marinello.
39. I feel that opposing counsels claims that this court lacks jurisdiction is silly and is made only to impress the clients because he knows that such an argument cannot fly in the courts. The USCF still had an office in New Windsor. It only had a PO Box in Crossville Tennessee. There is a skeleton staff said to be operating in an abandoned church in Crossville, but the address of that abandoned building has not been revealed. The fact that the USCF is insolvent and is in the process of moving out of state putting it beyond the reach of creditors and is insolvent is a clear grounds for an order of attachment and a freeze on the funds because if this court delays any longer the move will have been complete and then the New Your Courts really will lack jurisdiction to do anything about it.
40. The respondents really present only two defenses. They say that they were not served properly and that New York Not-For-Profit does not apply because the USCF is incorporated in Illinois. As to the first claim, they do not dispute the fact that the USCF office in New Windsor was served. That is enough to give this court jurisdiction, especially since three board members list the USCF office address as their personal address. As to their claim that they have not been served, they clearly have been served now because the Order to Show Cause before this court was served on all of the individual board members in accordance with CPLR and the exhibits attached to the Order to Show Cause include the original petition and all the other documents. Incidentally, Randy Bauer has once again returned to sender the package of court documents that was sent to him. He feels that he can beat the jurisdiction of this court merely by evading service of process. I hope that he will be proven wrong.
41. This court can and should exercise plenary jurisdiction over this case, especially in view of the emergency situation.
42. The claim by opposing counsel that New York Law does not apply is without legal basis. Opposing counsel fails to cite even one case in support of this contention. In fact, it is my understanding that a majority of all public corporations headquartered in New York are incorporated in Delaware or other states. It is well established that a corporation doing business in New York cannot evade the requirements of New York Law merely by incorporating in another state.
43. There are many other issues I need to address but I cannot do so as I was just served with the opposition papers and I have had to type this in great haste. I hope that this court will realize what the obvious points are.
WHEREFORE, the relief requested by the Order to Show Cause should be granted.
Samuel H. Sloan
Sworn to before me this 2nd
Day of May 2005
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