3/27/2015

An Important Message from KICA Board Chair Dave Schoenholz

Posted In Amenities

On March 26, 2015 Leonard Long, co-chair of the Kiawah Boat Landing Preservation Committee, contacted KICA’s attorney, Marvin Infinger, to indicate that he MAY publicize existing public information about my involvement in substantial non-KICA litigation. His innuendo was that this litigation MAY reflect negatively on my character and ability to function as KICA board chair. He expressed POTENTIAL concern that I did not disclose this litigation in my personal statement when I ran for an uncontested board seat in 2012. Also on March 26, KICA received formal requests from Richard Murphy, committee co-chair, and Mary Lou Barter, committee member, demanding that KICA grant them access to the KICA membership email address list and assist them in publicizing their position on potential amenity improvements. The only common sense interpretation of these contemporaneous communications is that the committee has resorted to publishing personal attacks if KICA doesn’t accede to its demands.

If one is interested in seeing the information which Long threatens to disclose about me, do a Google search for David A Schoenholz HSBC. I’ll provide the detail. I was a senior executive in a large financial services firm. When the company dismissed its auditing firm, which had been Enron’s auditors, in 2002, the new auditors insisted on a different accounting treatment for credit card marketing agreements. This resulted in a modest restatement of prior year financial statements. The company was immediately sued by a large plaintiffs bar firm, alleging fraud. They continued to add allegations to their suit about improper or missing financial statement disclosures during the period March 2001 to October 2002. The suit was heard before a jury in Chicago Federal Court in May 2009. The jury found the company, me and two other senior executives, liable for improper disclosures. The trial judge issued an award to the plaintiffs in October 2013 for approximately $2.5 billion, including $1 billion of interest. The company posted the cash bond for this judgement and appealed. The federal appeals court heard the case in May 2014, but has not yet ruled. The company, I and the other individual defendants reject the jury’s finding due to perverse errors made by the trial judge. These errors were highlighted during the appeals process and we expect the trial verdict to be vacated.

When I was asked to run for an uncontested board seat in Fall 2011, I debated whether to disclose the litigation on my personal statement. No one likes to be sued and I was embarrassed. I felt the litigation had no merit, however, and was not relevant to my ability to volunteer for KICA. At that time it was not certain there would be a final judgement despite the jury findings, and the jury finding was already public information. I concluded not to reference this litigation and discussed this with then-Chair Craig Weaver. Each KICA member will have to evaluate this information and decide whether it is relevant to my board service or has any bearing on the current amenities discussion.

With differing opinions about amenities in the community, the membership has to decide who to believe and trust. Put aside my role for a moment. There have been numerous individuals on multiple KICA boards and committees that have decided to present the community an opportunity to vote for improvements. This decision has been based on community input and a thoughtful, objective analysis to do what they believe is best for the community as a whole. I contrast that to the committee. These individuals clearly have acted in their vested self-interest. The board’s actions have been centered upon what it feels is in the best long-term interest of all property owner members. The KICA membership has to decide if it feels the committee’s mean spirited attempts to embarrass me and my wife are the standard by which this community should operate. The committee has criticized the KICA board for a lack of decency by even considering using its property in the Rhett’s Bluff neighborhood. Is this their example of decency? Ironically Long’s threat comes a few weeks after he wrote me urging KICA to drop its proposal because he felt we were not acting ethically and asked “So Dave, in your heart what might our precious Lord and Savior think of all of this?” I truly hope our community chooses to adhere to a higher standard than evidenced by the committee. That is not to say there cannot be differing opinions. It is to say there is a right and wrong way to have the debate.

I have asked the KICA board to revisit their votes on the current amenity proposal with me recusing myself from the discussion. I have also offered my resignation to the board if they feel my personal litigation impairs my ability to serve.

Sincerely,

Dave Schoenholz
Chair, KICA Board