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UCAN Dissolving Amid Investigation

David Peffer and Charles Langley, two UCAN employees, talk with Joanne Faryon about the complaints they filed against UCAN.

We're sorry. This audio clip is no longer available. A transcript has been made available.

San Diego's Utility Consumers Action Network — UCAN — is reeling from allegations of misconduct by board members resulting in a Grand Jury investigation.

San Diego's Utility Consumers Action Network — UCAN — is reeling from allegations of misconduct by board members resulting in a Grand Jury investigation.

Below is a news advisory just issued laying out the controversy. The highly unusual release — posted by "Anonymous" -- could be an attempt by UCAN directors, including Michael Shames, to get ahead of the scandal and an attempt to calm contributors. It says the organization is being restructured, a" Superior-court supervised voluntary dissolution."

UCAN News Release: UCAN Begins Reorganization Process

UCAN has initiated a Superior Court-supervised voluntary dissolution designed to allow the organization to continue to continue its core mission of ratepayer advocacy while addressing some persistent legal challenges.

In filing this Petition with the Court, UCAN seeks to resolve a number of issues and threatened lawsuits in a venue while preserving its assets which will allow resolution of the issues and emerging with new public interest entity to continue UCAN's tradition of watchdogging local utilities.

After a one-year process of reviewing available alternatives, the UCAN Board determined that this process offered the best means by which to resolve the outstanding legal issues. UCAN plans to continue its aggressive ratepayer advocacy at the CPUC through the process, as well as preserve its privacy and internet-advocacy projects (Privacy Rights Clearinghouse and New Media Rights).

UCAN will be sending a letter to its donors in the coming weeks to describe, in greater detail, the objectives of the Board and the process underway. In the interim, UCAN expects that UCAN staff members, represented by local counsel, will file highly critical lawsuits against the UCAN Board. In mid-2011, UCAN retained a number of attorneys and financial experts to assist in addressing these criticisms. After significant investigation, the experts determined that there was no little merit to any of the criticisms. However, these extensive efforts appear to have heightened, rather than reduced, their fervor for litigation. Thus, the UCAN Board has chosen to use the court system to resolve these matters expeditiously.

Among the allegations lodged against UCAN’s senior management by such third parties included (a) embezzlement of UCAN funds, directly, through kickbacks or via other routes, (b) private bank accounts in which assets were being siphoned, (c) failure to comply with state audit requirements, (d) engaging in unlicensed legal activities, and (e) entering into illegal contracts. However, no evidence confirming such allegations was provided by those lodging allegations, nor discovered by any of the professionals retained by UCAN’s board.

UCAN board engaged several San Diego County firms to assist it in evaluating multiple allegations leveled against UCAN by third parties. Those assisting the UCAN board include law firms: Dostart Clapp & Coveney LLP; Iredale and Yoo APC; among others. In addition, AKT LLP was retained by the UCAN board for forensic accounting, business consulting and auditing services.

UCAN also has confirmed the receipt of a federal Grand Jury subpoena on February 22nd. UCAN will cooperate fully with the investigation.

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