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The Humane Society is beating the media bushes, trying to make it appear that MtA and other animal welfare organizations have caused HSI to be in the financial distress they're in, and "bringing legal actions" that require the Humane Society to spend more time and money defending themselves rather than "taking care of the animals". 
Neither the Attorney General nor mtA (and supportive groups) wanted to go forward with last Friday's (July 2nd) court hearing.  We expressed the same to HSI last Thursday; but HSI was determined to get mtA removed from the case and prevent us from raising the following issues.  It should be clear that it was the Humane Society who made all parties waste time in court last week when, instead, we could have been discussing proposed short-term cash assistance to HSI (see our latest court filing).

(1)  Mrs. Crume intended for her bequest to provide a perpetual stream of income to the Humane Society as a supplement to its other resources; she specifically limited the use of those trust dollars for expenses directly related to the care and relief of animals in HSI's custody (shelter, food, medical, euthanasia).  She never intended for that bequest to be a bail-out fund; to pay for a P.R. consultant or more than $100,000 in severance pay to former executives; . . . [we could go on];  or to be pledged as collateral for a bank loan to the beneficiary.  
Whereas the humane society was the only organization back in 1921 that provided the type of services that she wanted her estate to benefit, nowadays there numerous other organizations that can fulfill Mrs. Crume's intent.  Under the cy pres doctrine, the court would appoint substitute beneficiary(ies) to receive the Trust income if HSI goes under.  The Trust principal must be preserved to continue to provide the perpetual income stream to future beneficiaries, whether the future beneficiaries are HSI or other animal welfare organizations.  Move to ACT and the others in this suit ARE NOT TRYING TO TAKE DOWN HSI; WE SIMPLY WANT TO MAKE SURE THAT,  IF HSI GOES DOWN, IT DOESN'T TAKE THE TRUST DOWN WITH IT.
(2)  The Humane Society is the party seeking judicial approval of their "strategic plan" to borrow ANOTHER $1,700,000;  this time by pledging assets of a PUBLIC CHARITABLE TRUST as collateral for their loan.  [This is the THIRD trust that HSI is seeking to raid, having already depleting its own Charitable Trust - - see below]   Thus, the Humane Society is the one that is initiating judicial action; we are simply opposing the collateralization of a public charitable trust,  plus . . .
(3) We are seeking removal of the Humane Society as trustee of that Trust because :

  • It is also the sole income beneficiary of that same trust [conflict of interest];

  • The Humane Society, as trustee, has failed to account for $3,000,000 worth of Trust assets for more than 30 years [a breach of fiduciary duty], 

  • It is allowing itself -- as the sole beneficiary of the same trust -- to put Trust assets at risk by collateralization [self-dealing, which is a breach of fiduciary duty], and 

  • Is structuring a loan that creates an incestual conflict of interest with not only the beneficiary, but also with the other co-trustee:   National City Bank is the proposed lending institution that will receive as collateral Trust assets if HSI defaults on the loan, AND National City employs the new Treasurer of the beneficiary, HSI   [which series of conflicts of interest is yet another breach of fiduciary duty]. 

These various breaches of trust (no small matters themselves) are reasons supporting removal of HSI as trustee of a $6.4million public charitable trust of which it is beneficiary.  Moreover, in addition to these breaches of trust, it is inept at handling its own finances - - since 1999 it has run through more than $12 million PLUS hundreds of thousands of dollars per year in donations from its community; HSI depleted its own charitable trust, which was worth $4 million just 2.5 years ago; it has borrowed against the Stokes testamentary trust "to its limits;" and now wants to come after the Crume Trust in order to bail itself out -- which further fuels the argument for its removal as trustee. 
Even if removed as trustee, the Humane Society STILL WOULD BE THE INCOME BENEFICIARY of the Trust (so long as it stays in business).  HSI officials claim they are still running between $50,000 to $100,000 per month in the red.  How were they going to pay for the loan?  We have not seen their "strategic plan" and what their projections are based on.
MtA attorney, Roni Jarnagin, has offered numerous proposals to and through the Attorney General's office, several of which have been well-received.  If one reviews the court docket - our latest filing is in fact a proposal (HSI sell their real estate to the trust). This offers a very palatable, short-term solution to provide cash infusion to HSI, while protecting the Trust assets. It buys all of us time to consider other alternatives to this loan transaction.   
Mta had proposed that plan to HSI one week ago; however, they wanted to push forward with last Friday's (July 2nd) hearing rather than meet to discuss and begin implementation of that proposal.  A week later, they still won't accept this short-term fix, for reasons unknown to us and to the Attorney General's office.

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