You would be surprised how insular and myopic Officers and Trustees can be in the decision making process. With no input from the membership, stakeholders,local, state, and federal agencies (if funds were given by them to KRM), the KRM Board may be congratulating themselves on "saving" the museum as they know it. The only true reality is the note held by the bank.

That is an accurate assessment from what I have heard. The BOD, for the most part suffer from the myopic delusion that they took drastic action, saved the museum (despite the fact they are the ones who put the museum in danger) and now are uniquely positioned to continue to save the museum.

From the membership perspective, it was hard to get any support for an insurgent candidate to the BOD, because many members felt that BOD member X or BOD member Y was "a nice person." It was difficult to drive home the point that while BOD member X may be a nice person, it doesn't mean he should be entrusted with running the organization. Couple that mentality with the mentality of others who felt that if they spoke out, they would be taken off the conductor or engineer list, and could no longer come out to play train, and you get the mindset of a large chunk of the membership. Mr. Lathrop is correct in many ways, they are getting what they deserve.

Five days ago, I sent the new Chairman of the Board a copy of the UCC filing statement, questioning what exactly it meant, what was collateral for the loan, and just some questions about the loan iteslf. I have heard no response.

Now this is where I tend to get a little bit fuzzy. See if I (and please tell me if I'm way off base) were in that possition, said something, then was taken off the roster, to me that would be grounds for a whistle blower or a retaliation claim against the board. The way that I see it is if the board is eluding to, hinting at, beating around the bush, or implying to the membership that they will be removed from the roster for speaking up....well then, thats 25 different flavors of all messed up. Not only is it messed up that the members feel that way, but it's flat out wrong (IMO).

While wrong, courts typically will not insert themselves into membership disputes in private organizations such as churches, clubs and railroad museums. If a court gets involved, it will typically limit its inquiry as to whether said organization followed its bylaws, policies and procedures.

Just because it may be wrong to remove dissenting voices, does not necessarily make it illegal.

The bigger point I was attempting to make is that the membership in part is just as myopic as the BOD. If you adopt the attitude that you don't want to anger those in charge, for fear of being taken off the roster, and the museum goes belly up, there won't be a place to come down and "play train."

While I agree that it does not happen very often, the assumption that the courts will not insert themselves is not totally correct. This all changed in 2002 with Sabine Oxley. I know this because a friend of mine was just involved in a reprisal issue with a 501 (c)3 (not a railroad museum, so don't wait your time looking......)

He sudjested that paroose the following links as they might help of one was to try and make some of the members feel better about speaking out.

http://www.boardsource.org/clientfiles/ ... -oxley.pdf

http://www.nysscpa.org/cpajournal/2007/ ... ls/p58.htm

http://www.nonprofitrisk.org/library/ar ... 1005.shtml

http://www.hrsonline.org/about/governan ... policy.cfm




I agree with that 100%. From what I am reading and seeing it's not a matter of IF it goes belly up, but when.....unless there are some drastic changes made....and even then with as much money owed as they do, I'm not sure they will be able to come up with any sort of payment plan.

The courts are not wrong. They are doing exactly what they should be doing. The problem is what you are doing on these forums is not whistleblowing. You are just badmouthing on the forums. I don't know what else you're doing, but THIS isn't whistleblowing.

As for terminating the membership: you know how this works. You sell your house. The top offers: #1 and #2 are Muslims paying cash, and #3 is a white Christian who wants you to carry paper. You are allowed to take any offer for any reason. Except certain illegal reasons, like religion. The injured party has to show that you did something for a forbidden reason, and you get to rebut. "#3 is my brother in law" "#3 convinced me of tax advantages if I carry paper." Those will do it.

Same here. The museum expels. The member sues, claiming an illegal reason. The museum gets to rebut, claiming legitimate reasons, including "conduct unbecoming a member, specifically badmouthing our organization amongst the experts in our field and well within sight of our customers. Claims of whistleblowing are false, as he did not whistle-blow in any proper channel likely to solve the problems he claims." Now how do you reply?

The museum has the Business Judgment Rule on their side. The member has political speech on his side, as it is the type of speech most protected by the First Amendment. I think the member is at huge disadvantage, unless he is first to court with a lawsuit on the nut of his argument. If he's already sued, then the badmouthing simply is commentary on the case, which IS legal, and also highly protected.


The membership may not KNOW. That is why communication among members about such matters - that is, political speech - enjoys the highest amount of First Amendment protection possible. You should be able to do this all day. If they terminate your membership for asking for the member list, you'll win that case. By "you" I mean people they have no other reasonable reason to terminate, so work with friends.

A member has the right to obtain the member list to communicate with members. Even Wisconsin. (an RyPN poster got thwarted there, but not on the merits; IMO both parties obfuscated and he ran out of lawyer money. He simply gave up, it didn't decide the matter or set precedent. Unfortunately some museums think it did, and so are emboldened to refuse. Them you might have to drag to court.)

Now some courts and legislatures seek a compromise position, as the Wisconsin court did (ignoring their own statute), where the member has the right to use the member list, but not to see member addresses; so they tell the mailer to give his piece to a neutral third party mailing house, to whom the museum gives their list. At this point, Click2Mail makes this cheap and easy.

Me, in 20/20 hindsight I would have gone a different way than the Wisconsin guy. All the money he spent on lawyers I would have instead retained a reputable publicity firm to construct a reasonable and appealing message. So you don't come off like an angry foamer, which we see all too much of.

The thing is THIS right here IS how it goes down if you say something that goes "against the grain" whatsoever of a rail organization here in central Kentucky. There are plenty of good reasons why nothing rail preservation wise gets done in KY (except for the Bowling Green guys - who rock) but this is a primary one.

If you say anything that resembles an independent thought in a KY organization it's not so much you get "removed" from the play roster, it's more that an effort is made to hassle you until you quit showing up. I've been to enough BOD meetings around the area were the meeting was literally a board member saying "I don't like so and so, so how do we run them off." I've lost all interest in the groups around here whatsoever and now drive 2-4 hours to help groups in OH and TN that actually bother TO DO SOMETHING!

Send the L&N heavyweights down to the boys in Bowling Green and send the 152 down to TVRM for use on the Hook and Eye. At least they'll get taken care of there.

[quote="robertmacdowell"]

The courts are not wrong. They are doing exactly what they should be doing. The problem is what you are doing on these forums is not whistleblowing. You are just badmouthing on the forums. I don't know what else you're doing, but THIS isn't whistleblowing. "

I respectfully and vehemently disagree. There has been NO badmouthing as the term is generally understood. Only statements of fact, as uncomfortable to some as those facts may be..

Oops posted this in error, disregard.

PC

We got a lot of amateur lawyerin' goin' on here, so I'm going to limit my comments. Unless someone has a specific question or point they wish me to address, or the situation develops further, I will refrain from further commentary, as I feel we are getting waaaayyyy off base:

1. Whistle blowing: Unless the whole J.P. Morgan situation changes everything, running your business poorly and loosing money is not necessarily illegal, especially if it stems from incompetence. In this case, involving KRM, I am not whistle blowing, as I have not alleged any financial illegalities involving the BOD, the membership and otherwise. Giving insufficient information to the membership, aside, the problems facing KRM stem from non-illegal issues such as poor business judgment, lack of proper fundraising, collections management, membership development, etc. To repeat, I am not alleging any financial illegalities with KRM, its membership and board of directors.

2. Reprisals Against Members: My communication of the feeling of some members that they would face reprisals, was just that, a feeling, a sentiment. To my knowledge there have been no such reprisals. Heck, even I have not had my membership revoked, I still get mailings, and even e-mail communications from the museum sent to all members.

3. Forming a Successor Non-Profit: Unfortunately, since the "human factor" is a lot of what is wrong with KRM, I don't see how one could form a new organization, say "The Kentucky Railroad Museum, Inc." as a successor to the Kentucky Railway Museum, Inc., and wait for the end, without ending up with the same membership, volunteers, and even leadership. In the end, even if you could raise the $$ to pay off the bank debt, get rid of the BOD and those who caused the situation, like Mr. Lathrop said, you end up in much the same situation, same rusting and rotting equipment, same location, same dwindling ridership, same challenges. In other words, there are no easy answers.

4. My Reasons for Speaking Out: I spent a lot of my youth at KRM, being only 13 miles from my house. I fell in love with the history, the L&N, the equipment, and developed long lasting friendships with many of the older members. To see the museum fail to evolve, and in many ways, devolve into this mess has been heartbreaking. Many of the challenges KRM faced when I began volunteering in 1993 were ignored, and now the chickens have come home to roost. The problems with KRM are problems many organizations involved in historic railway preservation are facing. How we learn from KRM's mistakes, and the mistakes of others will be crucial in the long term survival of railway preservation as a viable activity.

The problems with KRM aren't just a "Kentucky thing" I can point to failing or failed organizations in just about every state of the union. Closed minded membership, myopic boards of directors, lack of fundraising, planning and organization are not limited to just one or two regions of the United States.

While some may think my posts are "badmouthing" (especially if you are on the BOD of KRM), they are not meant to be. Everything I state is based on my observation and documentation that is available. If anyone begs to disagree, then I invite you to drive down to New Haven and walk around the property (with permission) and see for yourself the condition of the museum and its "collection."

In the end, this whole exercise has been a good way for us to discuss many of the issues facing railway preservation, so that we can learn from the mistakes of others, and hopefully all be better because of it.

A few things. Start a Friends organization, which is a parallel (not subsidiary) organization, so that in any situation where one of you would be sued, the other would surely be an innocent party. Remember the "innocent party" concept with the LLCs, courts will not allow a foreclosure that harms an innocent party.

Have your Friends group raise some money and buy, lease or mortgage some of your assets. Or sign contracts which bind the groups to stick to your charitable missions and work together. For you that's just good business, but it would hobble a creditor who tried to step into your shoes.

Personally, are you upside-down on your mortgage? If someone sued you personally would they go after your house? No, because you're upside down and have no equity to take. Works for your nonprofit also. Gee, who would carry your note? Now you're thinking.

Think constantly about how a judge will look at the structures generally. Do they look exclusively like they are about asset protection? Or is there a sensible, non-asset-protection reason? A judge is likely to bust something that exists only to thwart a creditor. But in railroad museums it's pretty easy to justify multiple organizations, because of all the factions and politics!

This is not simple. Here is the only book on the subject that's worth a damn. http://www.amazon.com/gp/product/007143 ... &camp=1789 (I get like 3% if you buy.) I would do as much work as possible yourself, but pay the best to sanity-check your work. The best understand that many charities just don't have thousands of dollars, plus, they kinda like to see what other people come up with. I can give you some names when you're ready for that.


That only works if insurance covers the threat. It may cover titles, but not standard exceptions, nor flooding (ask KyRM) and it damn well doesn't cover your own inability to pay your mortgage. It doesn't cover bad seasons, bad reputation, nor legal fees of an unexpected lawsuit, nor Iodine-131 discovered in your topsoil. If you are writing insurance that covers all that, PM me because you'll have a customer tonight!

Insurance is a hammer. If all you have is a hammer... you won't get nailed but you can get screwed.


And the purpose of asset protection is to help them be loath! Or simply put assets out of reach, e.g. in a Friends organization.

Think about an excess verdict. Say you have $10,000,000 of coverage and liquidating you would net about $100,000 more. That is pointless and senseless, murdering a nonprofit to get a 1% larger settlement. Of course most plaintiff's don't. BUT SOME DO. Some want to destroy railroad museums, because they are unsightly, noisy, hit automobiles sometimes, or are just in the way. in these legal battles, the ENTIRE POINT is to break the organization. They'll angle their attacks so insurance doesn't help. Or they'll play the insurer's lawyer against you.

Sure, that's the smart and classy play for them generally. To take the high road, I mean. It passively proves their detractors wrong. In fact, the new wisdom is to be professional and also involved. ( Scoble/Israel, Naked Conversations, I get pennies if you buy anything I link).


I completely disagree. Look, if this thing goes down ugly -- there will be many moments when suddenly you can intervene and do a lot of good, if only you had another organization already incorporated and 501c3'd. I've always had to pay extra to get an LLC rushed... well IRS won't rush 501c3's. I should form LLCs in advance and stick them on the shelf. You need to do the same with a 501c3. I wouldn't even bother with "successor organization" or "supporting organization" status, just propose to be a railroad museum and be fairly broad. Most rail museums incorporate and write bylaws before they know what they'll be. It's normal.

It doesn't have to be exactly the same. You can do a lot of structural repair in the bylaws that makes it impossible to do some of the bad things. Bylaws which govern debt, scrapping, deaccession, suspension or replacement of bylaws, etc. Bylaws are a blank slate. You want to keep the people from mortgaging to the hilt, require member approval of loans. You want to keep the "businessmen" off the board, require active-volunteer status, or simply bar people who have been in one org. from being in the other. (that could make sense in a Friends group to assure independent mind.)

Unfortunately you are the one suited for this job.

Yes, of course, the default condition is for the museum to decay back to the same people, property, stuff, management and problems - UNLESS you do something fundamentally different. Some groups have had complete breaks from their pattern, and it pays to look at how they did it. The catalyst can come from inside or outside. For instance, the formation of a new group. I'm a big fan of "Friends" groups, independent, arms length and yet mutually accountable, you hold each other to mission. In this case the group could focus more on the "museum" side of things which seems to be underplayed currently.

As far as the bank debt, if the bank forecloses, they can file Chapter 11. But the flood is a reasonable reason for their cash flow problems. Based on what I see, the receiver may just talk sense into the bank and force them to wait for the FEMA money. This thing could blow over. Won't fix the museum but could get them out of hock. If the bank insists, well, they'll get pennies on the dollar, and still, a rescue organization could make a difference. It's funny, a lot of people freak out about bankruptcy. Because they don't understand (here it is again) Asset Protection. Here it doesn't tell you how to change things to protect assets; it's too late. It tells you what IS protected, so you don't destroy assets that are protected (like your 401K) or irrelevant to a bankruptcy (the bank would rather have less money than railroad cars.)


Yeah, I've seen them all over. A million dollar budget changes nothing but it does leave me wondering why there aren't carbarns, since their amortized annual cost would be negligible compared to total budget.

As for "Bad People", horsepuckey. There's no "demon seed" present in your board that is absent in my board. They're all good people trying to do their best. The Difference is that some groups do things which are effective, and other groups do things which are not.

Those things can be identified and taught.

When they are actually performed, the board works and the organization works. There's more than one way to get this done.

WHere it is not being done, you see badmouthing. Because people are unhappy and feel powerless and see no hope. Boy, does that end quick when hope rises. Holy cow.

BADMOUTH:
"To criticize severely" (M-W)
"to criticize (someone or something) in a very unpleasant manner" (Cambridge)
"to criticize someone or something" (MacMillan)

As an update, it has been brought to my attention that today, Weiss, the independent financial services rating company, has downgraded the rating of Town & County Bank of Bardstown, KY from D- to an E+. Based on their ratings criteria, this is "very weak."

The relevance here, is that Town & Country holds KRM's outstanding debt of over $600,000.00, of which KRM has pledged all of its assets currently owned and subsequently acquired as collateral.

This development shall be interesting.

Is KRM's collection an asset under collateral? I question the legitimacy of that.

Museums (at large) fought pretty hard for the accounting rule that says your collection does not need to be valuated at all. (how do you valuate the Statue of Liberty? You don't.)

To "quiet title" is to end an ownership or lien dispute by definitively deciding the actual owner. All other claims on the property are annihilated. Judges do this. This quiets all argument over who owns it. (I'm explaining the term of art to non-lawyers>)

Go to court to quiet title. Argue that it was improper for KyRM to place the collection in collateral in the first place. Argue that it would be pointless in any case, as the liquidation value of the historic railroad equipment is negligible compared to its historic value. Ask the judge to exclude it from collateral, fix ownership to KyRM and make it ineligible to be used as collateral. That would take the collection off the table.

I don't see anyone arguing against that except the bank, and from the sound of their troubles they may not have the resources to raise a spirited defense.

I would guess that their real estate and track would be their most attractive asset to a lender.

ETA