November 23, 2015
We are responding to Mr. Barbieri's E-mail of November 16th.
Mr. Barbieri seeks to demonize those who disagree with him, using unsupported allegations, name-calling and characterizations that suggest some conspiracy set upon bringing down the League. This is not the truth. This name-calling and recitation of half-truths are all designed to divert the reader from the real and substantial issues that we and other members are raising.
We have presented facts and Mr. Barbieri's response to these facts has been deafening silence, blanket denials and failure to contradict the specific facts which we have enumerated. He accuses us of libelous allegations, but it isn't libel, since our statements are true.
In previous communications, we pointed out that the Board, under Mr. Barbieri, frequently has been in violation of NYS Not-For-Profit Law Section 519(a) in that they have failed to provide a yearly certified audited or verified financial report to the members. The "Treasurer's Report," presented to the members does not comply with the law. We have received no response.
We have questioned why certain part-time student positions in the sculpture classes has been eliminated. We have asked whether there is an intention to eliminate other part-time students. We have not received any answers to either question, and Mr. Barbieri and the Board have not contested that these positions have been eliminated nor have they informed the membership why they have done this. Mr. Barbieri and his supporters have studiously avoided answering these questions in their communications to membership. These are only two examples of many.
Mr. Barbieri states in one of his emails that Extell is constructing its building "as of right". That's true, but only because the League sold them its air rights in 2005. If we hadn't, Extell's building would not be the tallest building in the Western Hemisphere and obstruct the League's light and air. Mr. Barbieri states that the 2014 contract's value, besides the compensation, is that it addresses safety issues that otherwise would have gone "unaddressed" - "indemnification, insurance coverage, and other protections." This brings up an interesting question. Why weren't these protections included in the 2005 contract when Mr. Barbieri was on the Board and part of the negotiations that brought about the air rights contract. What if Extell had never come back and asked for the Cantilever, then according to Mr. Barbieri's own words, we would have never gotten these protections. Isn't that a breach of fiduciary duty? Or, did Mr. Barbieri know something in 2005 that the rest of us didn't?
We like to have as many facts as possible, but some are uniquely within the possession of the Board - like how exactly the League's money is being spent. Facts are hard to come by when they have to be pried loose from the Board. Here's an example; in 2013 when the Cantilever transaction was being proposed to the membership, several people wanted to see the actual contract, not the distilled version presented by the Board. Members were then allowed into the office to read the dense 120 + page legal document and take notes by hand. Members protested that they were not lawyers or real estate professionals and that this procedure was onerous and did not allow for independent review.
The Board relented and provided copies to those requesting them only after Assemblymember Linda Rosenthal wrote them a strong letter demanding that copies be made available to members. The members were being asked to approve it, yet the Board never distributed copies of the contract to the entire membership.
When the contract was finally reviewed by outside independent professionals, they pointed out serious deficiencies in it, including Chadbourne & Parke, a prominent law firm, which issued a report pointing out serious safety concerns that had not been properly addressed.
Mr. Barbieri often uses the tactics of half-truths or incomplete facts, here is an example: Mr. Barbieri is correct in telling you that the Cantilever transaction netted the League $31.8 million. What he doesn't tell you is this. In September 2013, the Board under Mr. Barbieri's leadership approved a contract for the sale of the Cantilever rights for a price of $25 million. Mr. Barbieri then tried to ram the transaction through the process by proposing an illegal suspension of the provisions of By-law Amendment #31. This By-law requires that for any real estate transaction, two consecutive Boards, and the membership must approve it. Mr. Barbieri contended that time was of the essence and proposed that only one Board's approval should be sufficient (i.e. the September approval). He stated that if this transaction did not receive expedited approval the League would lose out. As one can now see, this was hog-wash. Members protested this violation of the By-law and Mr. Barbieri backed off. Ultimately, two consecutive Boards and the membership were required to vote on the transaction.
Further, in October during a discussion with membership about the transaction, members raised the issue of whether the negotiated price in the already Board approved contract was sufficient. The members asked what the Board had based this figure on and whether they had gotten an independent appraisal. Again, deafening silence. No appraisal had been done - this is gross negligence and a breach of fiduciary duty. After pushback by members who both favored and opposed the Cantilever transaction, the Board commissioned a belated appraisal. In the meantime, Mr. Barbieri signed a contract for $25.8 million. The appraisal report, dated November 11th, showed that the correct amount should have been an additional $5 million. (There is much contention that the appraiser used an incorrect method and that amount was too low, but we will not address this issue here.)
During these membership meetings, members also raised concerns about the lack of adequate safety protocols in the contract. Mr. Barbieri had already signed the contract and was insisting that time was of the essence. After receiving the appraisal and comments about safety, Mr. Barbieri became concerned that if the members learned about the appraisal amount the transaction would not be ratified in the membership vote. In January, 2014, Mr. Barbieri came back to membership with an announcement that an additional $6 million had been added to the transaction amount making it a total of $31.8 million.
So, it is thanks to Mr. Caraballo, and to the other members who protested the initial contract that we received the additional $6 million dollars for the cantilever. Instead of demonizing Mr. Caraballo and these other members, Mr. Barbieri should be thanking them.
Mr. Barbieri always proclaims that ASL Unite, the 250 plaintiffs in the litigation, (which is not just a few rabble-rousers or a small group of conspirators, as Mr. Barbieri would have it) and ASL 2025 are all part of some great big entity or ongoing conspiracy. They are not. There are plaintiffs in the legal action who were not members of ASL Unite. There are members, supporters and candidates of ASL 2025 who are not plaintiffs in the action or members of ASL Unite. But Mr. Barbieri is not concerned with the facts when it interferes with the narrative he wants to spin.
Mr. Barbieri also complains and harps about the amount of money spent on legal fees to defend the procedures employed to approve the transaction. As noted, Mr. Barbieri was already playing fast and loose with the By-laws in October 2013. When the membership vote was scheduled for January 2014, members who felt there was a need for more information about the repercussions of this transaction and a fuller review of the safety provisions, sought by Special Meeting, to postpone the vote for three months (contrary to Mr. Barbieri's false assertion that this was an attempt to "prevent the members from voting"). A reasonable adjournment of that membership vote was so that a more measured and considered review of the transaction could be done by independent professionals, also known as due diligence. Mr. Barbieri then tried to stampede the membership by saying that the deal would be lost if they didn't vote immediately. Interestingly, Extell did not begin construction of the structure until more than a year after the vote, and in Department of Building filings, Extell continues to make changes in its design as the building is being erected. So, who really is responsible for those inordinate legal fees? It is Mr. Barbieri and the Board.
We look to the language of the Constitution and By-laws. Amendments 30 & 31 were meant to make it very difficult to sell the League's real estate, and the plain language of the two amendments is on our side. All members of the League in good standing were entitled to vote. After the vote, Mr. Barbieri and the Board interpreted the By-laws to mean that only "active" members were entitled to vote. Their actions prior to the vote, which included sending materials about the transaction to both active and inactive members, is evidence that they agreed with our interpretation. Mr. Barbieri and the Board's re-interpretation is wrong, and this re-interpretation didn't come until after the vote. The disagreement over this interpretation is a part of this litigation.
Most importantly, the litigation focuses on misstatements by Mr. Barbieri, the Board and the Administrators that, in words or substance, said that "not voting is the equivalent of a no vote." This was something the Board put out that was demonstrably false, and in fact, members, whether active or inactive, who did not vote were not counted as no votes. This misrepresentation which was clearly the Board's fault induced certain members not to vote. This is also part of the litigation. It should be noted that the Supreme Court which ruled on these issues never fully determined whether these misrepresentations were deliberately false, it just ruled that the statements made no difference in the ultimate outcome. The plaintiffs disagree and hence the reason for the current appeal. If the Board and Mr. Barbieri had not acted in such a deceptive and cavalier manner, there would have been no litigation.
And are these alleged legal fees of $800,000 justified? Like any other commodity, legal representation can be shopped for and negotiated. Did the Board do any such comparison shopping and if not, why not? Maybe it was because one of Mr. Barbieri's long-time friends, Peter Brittel is a member of the firm that represented the Art Students League - see Mr. Brittel's testimonial to his long friendship and association with Mr. Barbieri. http://mpmplanning.com/references/
In any event, an analysis of the legal fees by other attorneys, some of whom are League members, indicate that they seem inordinate in view of the work that was actually done at the Supreme Court level, (a few court appearances and conferences, three days of hearings and argument, several sets of papers, and preparation for all of these items.) Attorneys who are litigators have said that full trials have cost less than the three quarter of a million dollars spent here.
Who was watching the store, reviewing the legal bills and keeping control of the costs? We don't know - negligence or breach of fiduciary responsibility? Mr. Barbieri is saying there are no facts. In this case we agree and therefore ask the Board to release copies of all legal bills, time sheets and back-up documents to show how this money was spent on this litigation.
And Mr. Barbieri, please don't tell us that you can't because it's all attorney client privileged or attorney work product or confidential or secret. We know differently. It isn't. Routine entries showing "court appearances" or "telephone call to client", or "preparation of motion papers are not privileged or confidential. As to any portion of the bills that show discussions of specific topics or strategies, they can be redacted. As to any particular entry which needs to be fully redacted - it can be listed on a separate log and that log and entry can be reviewed. Spare us any more half-true explanations. It is time for some transparency. This is a good time for it to begin. Sincerely,
ASL 2025 - The Reform Team
Marne Rizika, President
Susan Brauser, Vice President
Richard Caraballo, Vice President
Roberto Franzone, Board Member
Salvatore Forte, Board Member