Special FAQ - UCAN 2011-2013
Many long-time UCAN supporters know the organization experienced tremendous upheaval starting in 2011. When I agreed to become UCAN’s Executive Director almost a year ago, it was clear that UCAN would have to rebuild credibility: with members, the media and the general public. Over the last several months, people have asked repeatedly about recent events at UCAN and how those events will shape our future.
You have questions and you deserve answers.
November 6, 2013
For all the years I have supported UCAN, Michael Shames was its leader and his name was synonymous with UCAN. What happened?
Michael Shames co-founded UCAN and was its Executive Director for 28 years. He represented ratepayers effectively, but was subject to formal accusations of impropriety by UCAN staffers. On March 4, 2011, in a letter to the UCAN Board of Directors, staff attorney David Peffer made specific allegations against Mr. Shames.
- Letter from UCAN Attorney Peffer letter to UCAN Board, 3/4/11 - Peffer alleged: (1) Collection of unlawful bonuses by Shames; (2) Unlicensed practice of law; (3) Failure to conduct legally required audits; (4) Suspicious bank accounts.
The whistleblowers retained counsel and considered legal action against UCAN and its Board. Even though these events were proceeding UCAN still advocated for the public before the California Public Utilities Commission, for the balance of 2011 a significant amount of UCAN’s energies and finances were used to investigate the allegations against Michael Shames.
In February 2012 UCAN filed for court-supervised dissolution. UCAN’s Board approved this filing because of the ongoing legal wrangling which threatened UCAN’s financial viability. Through the dissolution a court-appointed “receiver” would examine outstanding claims on UCAN funds, and help to determine the disposition of any remaining assets, consistent with both their original intended purpose and the law.
- Dissolution Filing, 2/28/11
With the filing of UCAN’s court supervised dissolution action, the whistleblowers filed their own lawsuit against UCAN. The lawsuit alleged, among other things, that the UCAN Board of Directors failed to protect the charity. The whistleblowers’ lawsuit received extensive coverage in both the San Diego Reader and the UT San Diego. At roughly the same time, UCAN received a federal grand jury subpoena related to an investigation of Mr. Shames and the whistleblower allegations. To date no charges have been issued in that investigation, and UCAN ‘s attorney believes no charges are likely to result against UCAN from any criminal probe. UCAN has complied fully with investigators’ requests.
UT San Diego Articles
- Intrigue Surrounds Utility Group Spat, 2/29/12
- Energy Ratepayer Advocate UCAN to Dissolve 2/29/12
- UCAN Sued Two Employees 3/9/12
- Utility Action Group Disbanding Amid Probe 2/29/12
San Diego Reader Articles
- UCAN to Undergo Court Supervised Reorganization 2/28/12
- How Shames Threatened UCAN Staff with Mass Firings 3/1/12
- UCAN Directors to be Sued for Alleged Coverups 3/9/12
- Grand Jury Demands UCAN Financials 2/27/12
Ultimately UCAN, the whistleblowers, the receiver and the court reached a settlement that permitted UCAN to continue operations, but required the UCAN Board of Directors to replace 4 of the 5 then sitting Board members, and UCAN agreed to employ the Whistleblowers to the end of 2012. UCAN’s dissolution action was thus withdrawn. Mr. Shames was terminated from UCAN in June of 2012.
- Receiver’s Report Recommending Termination of Dissolution 5/25/12
- Order Regarding Terminating Receivership, 5/25/12
- Receiver’s Final Report Summary, 6/29/12
- Order Terminating Receiver, 6/29/12
- UCAN Peffer Settlement 6/12
UT San Diego Articles
- UCAN Settlement Would Allow Group to Go On 4/26/12
- Energy Ratepayer Advocate UCAN Exits Receivership 5/29/12
San Diego Reader Articles
- UCAN Likely to Get New Executive Director 5/23/12
- Four of Five UCAN Board Members Must Resign 5/31/12
On February 28, 2013 Michael Shames filed his lawsuit against UCAN, the whistleblower David Peffer and his attorney (Michael Aguirre) for a range of claims, including libel. UCAN’s response to this suit came in two parts:
- UCAN filed a cross-complaint against Shames for breach of fiduciary duties related to the bonuses that he had improperly collected.
- UCAN filed an Anti-SLAPP Special Motion. This motion claimed that Shames’ complaint was a “Strategic Lawsuit Against Public Participation,” an attempt by Shames to use the courts to intimidate UCAN from speaking out publicly on matters of public interest,
The Anti-SLAPP motion prevailed and so the main claims against UCAN and Aguirre were dismissed in 2013. In February 2014, the court ordered Michael Shames to pay UCAN, Peffer and Aguirre their attorneys fees for bringing the Anti-SLAPP motion. UCAN’s cross-complaint for the return of unauthorized bonuses is still pending.
- Shames suit, 12/27/12
- UCAN Counter-suit (“cross-complaint”), 4/29/13
- Anti-SLAPP Special Motion 8/30/13
- Dismissal of Shames suit against UCAN, 8/29/13
- Dismissal of Shames suit against Aguirre, 9/9/13
- Judge's order of 10/9/13 regarding continuing portions of Shames complaint
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