The biggest open secret in Rio Linda for many years has been “What is the Chamber of Commerce doing?” If they weren’t fundraising through fireworks sales or selling votes for the Honorary Mayor’s contest, they were mostly invisible. They didn’t hold many events. They didn’t promote commerce in the community. What was their reason for existing?
Now we know.
At the February 12 2020 meeting of the Rio Linda Elverta Chamber of Commerce, Vice-President Tabitha Worth disclosed that a financial audit has uncovered a serious deficit.
“Currently in the Chamber account, we currently have approximately $16,000 in our checking and our savings account. With money that is coming back to us, we will have just a little over $34,000 dollars.”RLE Chamber VP Tabitha Worth
This means that over $18,000 dollars of Rio Linda Elverta Chamber of Commerce fundraising profits were mishandled and diverted from Chamber coffers by board members, from around 2012 up to and into 2019. This was money generated from fireworks sales, the Honorary Mayor’s Race, member dues and other fundraisers held within the community.
A public statement from the Chamber reads:
We are saddened to report that previous board members of the Chamber misappropriated and mishandled funds without the authority to do so. In light of this discovery, the board members that were not involved with the misappropriation took immediate action.
This action included the required resignation of the Board members involved in the misappropriation and the appointment of new Board members.
The Chamber meeting minutes from February 12 2020 show three resignations.
(I cannot say here who was responsible. It’s not my place. I am not insinuating or implicating anyone in this article. Investigations to follow will make that determination. I am only providing facts as provided in the documentation provided and my interviews with sources who are close to the situation, but must remain anonymous for legal reasons.)
Reconstructing exactly where this $18,590 has been is not an easy task.
According to interviews with a source close to the situation, relevant, legible, accurate financials haven’t been kept for many years. No treasurer’s reports or financial statements have been disclosed to the board or membership for many years. The last time a 990M “Tax Return of Organization Exempt From Income Tax” was filed was in 2012.
In fact, in 2016, the Chamber lost it’s 503(c)6 non-profit status. That was the last time the fireworks stands were operated under the Chamber’s 503(c)6 non-profit status.
In 2017, TNT Fireworks ran the Chamber’s credit, which was declined because of the revocation of the non-profit status. According to a source, this was not communicated to the entire board; Select people received this information. The Chamber continued operating three fireworks stands in 2017 (Food Source, MarVal Plaza, and Elverta Market), but currently, it’s unclear what organization’s EIN was used to operate them. They continued to be promoted and advertised as Rio Linda Elverta Chamber of Commerce fireworks stands.
And they continued to hold Honorary Mayor’s races, and they continued to collect dues from the membership.
In 2018 the “RLE Cares” non-profit was created. The RLE Cares EIN was used to operate the fireworks stands which were still “Rio Linda Elverta Chamber of Commerce” branded. The Chamber ended up receiving no money from these fireworks stands.
In 2019, another non-profit was created; The “Rio Linda Elverta Community Foundation”. Again, the fireworks stands were operated under this new non-profit EIN number, and again the Chamber received no money from those fireworks sales.
The Future Farmers of America and the Rio Linda High School Swim Team organization members helped operate these stands. There were no sales records kept. No printouts. Nobody really knew how much each organization sold or how much was raised for the respective organizations. The only record was a check for a random, unverifiable amount that was given to these organizations afterward.
Because of the non-existent fireworks sales totals, there is no way of knowing how much profit was generated each year between 2012 and 2019. TNT keeps records of how much product was supplied but does not have and does not disclose revenue information for each group or booth.
The Rio Linda Elverta Country Faire collected roughly $10,000 from it’s booth at Archway Market last year.
At $10k per year, the total for three booths is +/- $30k per year, for eight years, totals out to $240,000, for which there are no records. No bank records, no sales records, no record of expenditures. Nothing.
And the Chamber began 2020 with $16,000 in the bank.
At the behest of a fresh group of new Chamber board members, in December of 2019, bank statements were finally released to the board. It was not disclosed how far back the bank statements went.
Once reviewed, it was discovered that a large amount of money was owed to the Chamber, due to unauthorized spending and unapproved purchases. Receipts were rarely if ever kept. Bank statements showed personal spending and purchases from Amazon, Paypal, and others.
After discovering the questionable activity and further review, the Chamber board had a meeting with a local County government official. It was suggested that the Chamber contact a non-profit focussed embezzlement and fraud attorney. The attorney recommended that those who were involved directly needed to resign, otherwise the entire board could be held liable for the embezzlement, regardless of knowledge, participation or complicity.
The attorney advised the new board to “Get back what (money) you can.”
In February 2020, the Chamber of Commerce received a cashier’s check in the amount of $18,590.73 from the RLE Community Foundation. There is a remaining balance that is owed to the Chamber, however, due to the lack of records or receipts kept during that time, it is unknown what that amount is, and doubtful it will ever be recovered.
The crushing blow here is that the other non-profit organizations now have the fireworks stands which used to belong to the Chamber. The Chamber has no fireworks stands, and no way to generate that huge chunk of fundraising revenue which carries them through the year.
The Chamber issued a statement, crafted by their attorney, and posted on their website in May of this year;
We are saddened to report that previous board members of the Chamber misappropriated and mishandled funds without the authority to do so. In light of this discovery, the board members that were not involved with the misappropriation took immediate action. This action included the required resignation of the Board members involved in the misappropriation and the appointment of new Board members.
The Board then sought recovery of these misappropriated funds and fortunately, over half of these funds were recovered.
The Board wants to be as transparent with our community as possible, which is why we are providing this statement. Due to this situation, we have implemented strict processes and procedures, to monitor financial activity, and to supervise all accounting decisions.
Accounting decisions are discussed at all meetings and voted on by the Board.
All financial statements are reviewed with monthly minutes for these meetings and financial reports will be prepared monthly and available to the public upon request.
We have appropriate checks and balances and safeguards now in place to avoid any mishaps in the future.
As mentioned, we want to be as transparent with our community as possible, and we want you all to know that we are taking the appropriate measures to ensure this situation does not occur again.
We understand the disappointment and frustration of the community during this time. However, slander towards the Chamber or their current board will not be tolerated nor accepted as the current board is not the cause of the issues and are only seeking to correct prior actions.
In light of this unfortunate event, we sincerely hope that our community will help us move forward and support our new and improved Chamber so that we may provide the best services to Rio Linda and Elverta as possible.
This new board is working to rebuild trust within the Rio Linda/Elverta business community and has taken several steps toward assuring that this kind of malfeasance doesn’t happen again. They’ve expanded the board to nine members to provide some internal oversight. They are presenting financial disclosures at each meeting, in public. They have moved meetings to 6pm so they are easier to attend. They have published the list of directors with phone numbers and email addresses on the website. They meet and discuss items of substance and consequence. They are walking the walk of transparency.
The Chamber has hired a tax attorney and will be filing 990M forms for 2013 through 2015. For 2016-2018, the Chamber will have to file standard tax returns and pay the taxes due, as there was no non-profit associated with the Chamber for those years.
Additionally, it will cost $1600 in fees to recover and renew the 501(c)6 that was pulled in 2016.
This entire, sad story is now in the hands of the Sacramento County District Attorney and the State of California Attorney General.
Correction: An earlier version of this story stated that the AquaKnights helped staff the fireworks stands in 2018/19. This has been corrected to show that the Rio Linda High School Swim Team was the organization.