Utility Watchdog in San Diego

FAQs

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.

The following series of FAQ’s addresses the most common questions we’re asked these days. In keeping with UCAN’s new commitments regarding transparency, these FAQ’s are backed up with links to a great deal of additional documentation for those who want more details. I firmly believe that, as a public service organization, UCAN has to be an example of the openness and transparency that we demand from our utilities and regulators. While I am absolutely committed to UCAN's transparency, please understand that because UCAN is involved in litigation, we may not be able to answer all questions you may have at the present time. I hope these FAQ’s answer your main concerns. My commitment is that we’ll revise and add to them until they do, so please let me know any additional questions, comments or concerns about what you read here by sending me an email at: This email address is being protected from spambots. You need JavaScript enabled to view it.

Donald Kelly
Executive Director
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. 

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.

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


San Diego Reader Articles

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.

UT San Diego Articles

San Diego Reader Articles

Since Mr. Shames left UCAN employment, UCAN’s new leadership still had some remaining issues to address, though. In particular, the Board consulted with the California Attorney General’s Office regarding past bonuses paid to Shames. As a result of information received from the Attorney General’s Office, UCAN dispatched a letter to Shames requesting return of $474,019 in past bonus payments. To date Mr. Shames has not paid any money back to UCAN and on April 29, 2013, UCAN sued him for $474,019. UCAN also seeks punitive damages.
Current Executive Director, Donald Kelly, was hired by the new UCAN Board and started on November 20, 2012. Whistleblowers Peffer and Langley continued with UCAN until April and June of 2013, respectively.

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:
  1. UCAN filed a cross-complaint against Shames for breach of fiduciary duties related to the bonuses that he had improperly collected.
  2. 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.

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