The legal battle between the Fulton County Economic Development Corp. and former officials Jeff Bray and Peter Sciocchetti should offer a valuable lesson to volunteer board members of nonprofit organizations: Pay close attention to what your paid staff is doing.
Bray, former executive vice president of the EDC, and Sciocchetti, former executive vice president of the Crossroads Incubator Corp., the EDC's real-estate arm, are accused of taking more than $3 million in bonuses that had not been authorized. Their boards fired them as a result.
Bray and Sciocchetti each is accused of taking about $1.5 million in bonuses. The CIC and EDC have sued in an effort to get the money back, along with punitive damages.
The lawsuit alleges that from 1999 through 2009, Bray and Sciocchetti "surreptitiously issued themselves, without the approval of CIC's Board of Directors, performance bonuses totaling $3,090,143.28 by Sciocchetti systematically signing Bray's bonus checks and Bray systematically signing Sciocchetti's bonus checks."
The lawsuit also says, "Under their respective employment agreements ... neither Bray nor Sciocchetti were entitled to these performance bonuses."
Earlier this month, Bray filed his answer to the CIC and EDC's complaint. In it, he denied he issued himself "excessive bonuses." He also denies any wrongdoing.
The filing states, "Plaintiffs reviewed and/or had access to all of their corporate books and records and knew, or should have known upon reasonable inspection of such books and records, that the payments at issue were made."
It further states, "Mr. Bray's actions were made on behalf of the plaintiffs; plaintiffs had knowledge of his actions; plaintiffs failed to timely repudiate Mr. Bray's actions; and Mr. Bray reasonably relied upon the plaintiffs' silence as approving of his actions."
Does silence translate to approval?
Sitting on the board of a nonprofit is a responsibility, not simply a status symbol. Those unwilling to monitor the actions of paid staff should not volunteer their service.