Court documents filed today, including a declaration from a University of Washington accounting professor, suggest the Building Industry Association may have illegally skimmed millions of dollars from retro-rebate beneficiary accounts over the past several years, and ask for a court order requiring BIAW to retain an independent third party to prepare a “comprehensive trust accounting.”
Professor Stephen Sefcik is a distinguished professor of accounting in the UW School of Business, and currently serves as the Associate Dean of Undergradate Programs at the Michael G. Foster School of Business. He was retained by plaintiffs to review financial documents provided by the BIAW and its associated organizations, and to identify and estimate economic losses sustained due to mismanagement and other practices.
At this stage of my work, I have completed a sufficient financial analysis to support my general conclusions that a thorough independent accounting is necessary and that substantial interest has been skimmed from the Trust. However, due to the opacity of the Trust’s bookkeeping, a sigificant additional work would be necessary to precisely quantify values.
How much money are talking about? Between $600,000 and $1.3 million in skimmed interest over the past four to five years, plus an additional $3.6 million in principal and interest since 2003 due to an improperly calculated and paid “marketing assistance fee.” That’s a lot of money. And how did the BIAW accomplish this?
I have found that the Trust has allowed trust assets to be repeatedly placed in the interest-bearing accounts fo its for-profit affiliate, BIAW Member Services Corporation (“MSC). While in such accounts, trust funds were repeatedly commingled with assets of MSC.
Huh. How very Tim Eyman of them.
BIAW has long argued that its diversion of funds for political purposes is legal, an assertion contested by plaintiffs in this ongoing lawsuit, but skimmed (ie, stolen) funds are illegal no matter how you spend them. If a third party accounting confirms Prof. Sefcik’s findings, the BIAW may have a lot more to worry about than a mere civil suit.
Which brings us to SB 6035, a bill which would require increased oversight and transparency for the retro-rebate, and which only narrowly passed the Senate on a 25-24 vote. The bill is scheduled for a hearing in the House Committee on Commerce & Labor tomorrow morning, but despite known BIAW shenanigans, and recent revelations that retro has been overpaying participants by as much as $15 million a year since 1994 (due to a programming error), many Olympia observers don’t expect the House Democratic leadership to let it even come to the floor for a vote.
Why? Well, I guess you’d have to ask the House Democratic leadership.