Fading Out

A SHIFT IN POWER 

Priority One has launched its new call center though without fanfare. This actually would have been the perfect opportunity for the President to declare future success, but as is typical with Charles R. Wiggington, Sr., missing the right opportunity seems to be just business as usual at the financially troubled credit union. 

President Wiggington's leadership limitations aside, in recent weeks we've noticed a pronounced change of his authority. We noticed subtle changes at the start of August, which became more and more markedly noticeable with each passing month. 

We've also observed that COO, Beatrice Walker's authority has conspicuously increased and that she's taken more and more control over sectors of the business once selfishly clung to by the President. 

The Board of Directors under leadership of Chair, Diedra Harris-Brooks, recently ordered the President not to interfere with Ms. Walker's plans. He was informed that Ms. Walker's plans as described to the Board, will  reverse the financial problems caused by the President's poor business decisions and will introduce effective streams of income which in turn, will produce desperately needed profit. Obviously, Ms. Walker has done more than just win the trust and support of the Board, she's convinced them that the President is incapable of resolving the problems he alone created; and that she considers him a potential deterrent to her plans for success. .She might actually be correct. 

However, Priority One's Board has proven to be both immensely inept and equally corrupt. Subsequently, can we trust any decision they make that is supposedly intended to improve business? The Board, unfortunately, is looking for a quick fix irrelevant of the source. And though the Directors oversee the direction of the credit union, under Diedra Harris-Brooks the direction is leading to decline. Can anyone point to another Board in the entire credit union industry who has behaved as irresponsibly or reprehensibly as has Priority One's Board? 

JUGGLING ACT

The following comment was published in response to our last post and concerns the credit union's Loan Loss Provision:

"Between June 30 and September 30 Wiggy had to move another $500,000 into the Provision for Loan Lose account. They would only do this if they project another 1/2 million dollar lose [loss] or if they charged off that much during the quarter and need to replenish the account. Either way, it's the wrong direction. Now I'm starting to wonder if they will even make it to 2/22."

Since mid-2008, when the effects of reduced business became more evident, the President with the help of the Board Chair has expended tremendous time and energy moving money around including transferring funds from general ledgers and reporting these as profit when no actual profit occurred. 

Another reader posted the following comment regarding warnings issued by CFO, Manny Gaitmaitan:

"The CFO has been warning Wiggington for many months that delinquencies are increasing too rapidly and the credit union is spending too much money. Wiggington got mad one of the first times the CFO warned him and later told the Bea and Rodger that the CFO is insubordinate and refuses to follow orders. Wiggington doesn't know the difference between insubordination and wisdom because he wants what he wants no matter who it hurts. Friday he had a meeting with the CFO and warning the CFO. The CFO left work early and didn't come in today. Priority is bleeding money and they are spending too much. They are supposedly a financial fitness center but they can't take care of their own business, how can anyone expect them to take care of member's money?"

Unfortunately, for the CFO, President Wiggington is a man devoid of understanding the nuances that work together to create new business, increase membership, produce profit, reduce losses, etc. He's also not a man who wishes to adhere to ethics and based on his behaviors, laws are something he feels do not apply to him. He shirks challenges, finding them insurmountable but receives immense gratification from constantly violating policies and laws. Subsequently, the CFO's refusal to violate mandated accounting policies are tantamount to insubordination and as a personal attack upon his person. 

Another reader posted the following comment concerning the President's rampant spending:

"Employees, members, and readers of this blog can't even imagine how much money the credit union is spending. Its like they know they're sinking but just don't care. I don't get it. Maybe they can provide a comment explaining why they spend the way they do and where they are getting all the money."

The President will never provide an explanation for his confused business practices. Over the past two years, he's implemented a salary freeze that only impacts non-exempt personnel, the sector of employees who earn the least amount of money. And he recently terminated four (4) employees because the credit union desperately needed to reduce spending. 

The President next hires a COO who being paid more than $100,000 per year plus benefits. He also purchased a $600,000 phone system and has now opened a new call center. Does anyone else get the impression that Charles R. Wiggington, Sr. is a man who has absolutely no comprehension of the difference between being cost-effective and wild, undisciplined spending? 

EVERY PENNY COUNTS

Who would ever have thought that eliminating the purchase of Styrofoam cups would not succeeded in resolving Priority One's financial problems? At the end of October 2009, the amount of losses decreased though the credit union remains embedded in the Red.

Have reduced losses serve as an indicator that the President has finally derived solutions that are succeeding to drive down losses? We doubt it. The credit union's business development efforts continue to falter and there is nothing we can point to- at least not for the moment, that hints at why losses have slowed down. Furthermore, we don't trust President Wiggington. 

BULLYING

The rift that has developed between the President and CFO, Manny Gaitmaitan, has spread with COO, Beatrice Walker, beginning to publicly criticize the CFO and like the President, labeling him uncooperative. Also siding with the President and Ms. Walker, is AVP, Rodger Smock, who has stopped speaking to the CFO. Yes, this is probably a dynamic more common in an elementary school yard but one President Wiggington has purposely created in his effort to ostracize Mr. Gaitmaitan. According to the President and COO, Mr. Gaitmaitan constitutes insubordination and is impeding the President's efforts to reverse the credit union's financial problems. 

What the President views as efforts to resolve the credit union's financial problems is using deceptive financial reporting practices to create an impression of profits where none exist and reduce reported losses. Mr. Gaitmaitan refuses to follow the President's orders which has now resulted in him being branded and exiled from President Wiggington's inner sanctum. Through a combination of shaming and slander, the President may hope to either force the CFO into submission or driving him out of the credit union. We believe the President is trying to force the CFO's resignation. 

Over the past 2 weeks, the credit union has receiving a large number of faxes and telephone calls concerning the "available" CFO position. According to the President who again, can't seem to guard confidentiality, the credit union is seeking a new CFO because Mr. Gaitmaitan has decided to resign. 

CONSULTANTS

We recently received two emails regarding a recent visit to the South Pasadena branch by consultant, Loren Lillestrand of Lillestrand and Associates. 

On Thursday, November 19th, Mr. Lillestrand met with employees and spoke to them about attitude and perceptions towards their employer. Clearly, Mr. Lillestrand is trying to alter the current negative view employees have the executive sector and though we agree with some of what Mr. Lillestrand said, the fact is the consultant is not an employee of the credit union and in the end, his opinion is based on what he has been told by the President and his "friend", Beatrice Walker.

Ultimately, it is the management of any company that set the tone for the working environment. The President has chosen to slander employees and with the help of Human Resources, has at times created fraudulent evidence and charges used to seal the termination of targeted staff members. Mr. Lillestrand's advice places the burden of change upon employees while circumventing the executive sector's abuses which created the destructive dynamic which has developed at the credit union since Charles R. Wiggington, Sr. began his appointment to President. 

Mr. Lillestrand's efforts are clearly guided by an agenda created by the President and the COO. If Mr. Lilllestrand hopes to introduce change, he must address the cause of the problem which is President Charles R. Wiggington, Sr. Since it is the credit union that is paying him, don't expect Mr. Lillestrand to direct his efforts towards any members of the abherrent executive sector. What's more, there is no internal problem that can be resolved in a few visits to any company. 

During the credit union's last all-staff quarterly meeting in South Pasadena, employees were asked to provide suggestions on how to reduce spending. One suggestion asked that the executive sector voluntarily agree to reduce their salaries temporarily. AVP, Rodger Smock, and COO, Beatrice Walker, turned from where they sat at the front of the room and simultaneously stared at the employee making the suggestion. If the executive sector doesn't wish to hear suggestions, then don't ask for them!  

The decision by some executives to voluntarily and temporarily reduce their salaries is a phenomena that is occurring in many companies throughout the United States. It is a selfless effort to help their employers during difficult economic periods where a company may be experiencing financial losses. The decision not only helps a company reduce spending but may help avoid laying off staff. Not so at Priority One where the greedy executive sector is not about to adopt any change that reduces their salaries or benefits.  

The employee has now been targeted by AVP, Rodger Smock, and COO, Beatrice Walker, both of who have ordered her supervisor to scrutinize her work which they suddenly find subpar. Unfortunately, the prudent suggestion has offended the sensibilities of the executive sector who have placed her name on their "enemies list."

FINANCIALS FOR THE MONTH ENDING 10/31/09

The credit union's financials improved during the month of October 2009, though Priority One remains deeply embedded in the negative. 

Anticipate 2010 to end in the negative, again. Many of the President's so-called expense reduction measures were only implemented recently and so they will have little impact upon the credit union's economic state through the end of the year. 

The financial information shown below is an excerpt obtained from Priority One's Monthly Income Statement for the month ending October 31, 2009. We've annotated in red font those actuarials which we deem important and those we find questionable.

The references to education of senior management, Directors and Supervisors just doesn't make sense because none have participated in anything related to education. 

And why does the credit union report spending on Ambassadors when the only payment issued to ambassadors is a $25.00 as reimbursement each time they attend meetings. .

The annual meeting is conducted once a year in South Pasadena and always, in the month of May. Why then, does Priority One continue to report monthly spending on a meeting which took place 6 months ago? 

What Priority One most needs is an in-depth audit of all its financials. We believe the suspicious looking entries are just part of the President's way of shuffling around figures, to make the report more palatable to readers. . 

MONTHLY INCOME STATEMENT

OCTOBER 2009

Less Allowance for Loan Losses        

$ 2,600,000.00

Net Loans

$ 106,778, 903.74

Cash

$ 2,468,259. 31

Education Expense-Staff

$2970.28 Month-to-date

$14,278.16 Year-to-date

Education Expense - Senior Mgmt

$750.00 Month-to-date

5361.08 Year-to-date

Education Expense - Supvry Comm

Month-to-date

$515.20 

YTD

$9742.46 Year-to-date

Education Expense - Board Directors

YTD

$960.00 

Training Expense

Month-to-Date

$840.50

YTD

$13,628.27  

Ambassadors   

YTD

$4611.57 

Provision for Loan Losses             

Month-to-Date

$71,047.90 

YTD

$2,453.169.19 

NCUSIF Stabilization Expense

YTD

$1,111,125.75

Annual Meeting Expenses

Month-to-Date

$1058.40 

YTD

$67,181.54 

Board of Directors/Supervisors

Month-to-Date

$899.80

YTD

$11,214.56  

Mileage and Reimbursement

Month-to-Date

$3633.65

YTD

$35,515.70 

Net Income/Loss

Month-to-Date

-$133,503.84 

YTD

-$4,557,061.65 

The credit union's financials, even when tampered with, prove this is a credit union that has been thrust into a state of failure by Charles R., Wiggington, Sr. When faced with the challenge of forging resolutions for what he created, he instead indulges in launching verbal campaigns asserting Priority One's revitalized business, plotting scathing attacks against employees, and hammering out outrageous stories about all he's accomplished and tall tales about some invisible group of ninja-like employees who driven by jealousy, are out to toppled his empire. It's all delusions of grandeur and a deep-seeded need to play the victim as part of his gambit to deter attention from his failures and abominable personal behaviors. 

Wise men don't need advice. Fools won't take it.

-Benjamin Franklin-

Waiting to Be Rescued, Part II

SALVATION

During the past 10-days, Priority One Credit Union has been busily finalizing planning for installation of it's first call center which COO, Beatrice Walker, has dubbed an "all-stop center." 

According to President, Charles R. Wiggington, Sr. and AVP, Rodger Smock, the building of the call center is necessary and will resolve member service complaints which have increased substantially since Charles R. Wiggington,Sr. was appointed President on January 1, 2007. 

But will the call center succeed in resolving member service issues? Historically, President Wiggington's inspired services have all crashed. He has yet to introduce anything that succeeds. Last year, he spent $600,000 of credit union monies purchasing a phone system that has become a technical nightmare. The reason we often refer to the phone system as "his phone system" is that the President did not allow the system he selected to be reviewed by any other staff member. He selected the system and he obtained approval to buy the system. He also didn't conduct necessary inquiries that might have confirmed that it would satisfy the credit union's service needs. As a result of his blunder, the credit union is now forced to spend money on technicians who visit the South Pasadena branch, each and every month, to try and resolve the latest slew of technical problems being reported by Priority One. 

The cost of installing a call center will again offset President Wiggington's so-called efforts to "streamline" spending and rents yet another tear in his proclamation that he is "working smarter." The center is being built in a period when the credit union remains submerged in the RED. 

On the surface, it seems the credit union has not learned a thing from the long list of blunders committed by President Wiggington, but to be fair, let's look at what steps COO, Beatrice Walker, has taken to ensure that installation of the call center is exactly what Priority One needs.

First, the idea to create a call center had been discussed for years before Ms. Walker's arrival. Also, none of the products and services conceived by Ms. Walker were actually her idea. During her first week at the credit union, she called her associates in the credit union industry to ask what might she introduce that could create streams of income and which might serve to elevate her position at the credit union. Some of the ideas provided to her, are:

• Skip-a-Pay
• Courtesy Pay (overdraft protection)
• Priority Pay (payday type loan)
• A call center

Evidently, she suffers from the same lack of imagination as does President Wiggington. She also shares his proclivity for plagiarizing ideas and taking all credit for these. 

We've learned that she has planned visits to other credit unions where she'll have an opportunity to tour their call centers and ask questions needed to facilitate implementation of what surely will be touted as "her call center." 

We'll keep you informed as we receive more information about the credit union's latest expensive endeavor. 

Technical Problems

This week, the credit union became the recipient of unwanted member complaints which cited technical problems affecting Priority One's free home banking services. 

An investigation revealed that the cause of the problem was the recent installation of new telephone lines and wiring for the planned call center. We've learned that it never occurred to the technicians and consultants hired to install wiring that the new phone lines could disrupt the credit union's already technically trouble phone system. What's more, after learning about the problem, no one at the credit union, including President Wiggington, thought it prudent to post a message on the credit union's webpage. This could have reduced the number of complaints which bombarded the credit union's phone lines. We must ask again, is this an example of what President describes as "working smarter?"

Consultants = More Expense

During May's Annual Meeting, the President disclosed he was reducing spending, "streamling" and "working smarter." To date, he has contradicted himself numerous times and immersed the credit union in constant, uncontrolled spending. Aside from the creation of the credit union's first call center, the President has again contracted the services of the consulting firm of Lillestrand and Associates. The firm's founder and consultant, Loren Lillestrand, is slated to return to the South Pasadena branch to resume interviewing employees.  

A few months ago, Mr. Lillestrand met not-so-secretly with the President and COO, Beatrice Walker, at the home of AVP, Rodger Smock. A few days later, he arrived at the South Pasadena branch and during a three-day period, met with employees during which he administered personality tests to gauge employee personalities, interests, likes, dislikes and strengths. During his two and a half-hour meeting at Mr. Smock's home, the credit union paid Mr. Lillestrand $3,000. 

Either President Wiggington has a large stash of cash available to spend on strategies that no basis of research to guarantee their potential success or he's using the credit union's resources as his own piggy bank all at a cost to employees whose salaries have been subjected to an ongoing wage freeze. 

FORECASTING THE FUTURE 

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Since this blog's inception in January of this year, we've often received emails and comments which try to forecast Priority One's future. Here are some of the comments we've received:

"I do agree that P1 is destined for regulatory action, possibly within the 2/22/10 time frame. There is a minor problem since the NCUA doesn't really care much for liquidations. What credit union would want to merge with P1 and assume this sordid mess?"

In response to the comment, another reader wrote:

"P1 needs to have something that makes it attractive to another cu and it has nothing except a history of bad decisions by a bad president and an even worse board."

Priority One's future seems bleak though not because of the nation's economic climate but because of gross leadership. The President and the Board are both entirely unqualified to direct the credit union and though it's reasonable to assume the credit union may merge or worst still, be liquidated, President Wiggington is not without choices. One alternative available to him and the Board is closing branches. Closures would eliminate the amounts spent each month on leasing the buildings where branches are located. The exception to his his the LAPCD and Van Nuys branches, both of which are located within postal facilities and pay a monthly lease of $1.00. 

MEANINGLESS CUT-BACKS

Styrofoam cups have become the latest victim of President Wiggington's cutbacks. According to the President the credit union can no longer afford to provide these to employees. 

Several months ago, the President implemented a company-wide wage freeze for all non-exempt employee salaries though exempting executive staff salaries. 

• He next hired a COO who we've learned is being paid more than $100,000 per year.
• He also has spent money on expensive consultants.
• He's order spending on the construction of a call center.

To offset these expenses, he's announced the credit  union can no longer afford to purchase Styrofoam cups. Hum? So how much money will the credit union save each year, by eliminating Styrofoam cups? $1000, $3000, $10,000? 

This latest decision by the President proves again that he is implemented expense reductions where they will have little if any impact to the credit union's finances. The decision also indicates that Priority One is performing so badly it can no longer afford to purchase Styrofoam cups. And though the President insists the elimination of Styrofoam cups will serve to offset losses, he continues to insist that business is good and growing. Is he daft? Obviously, if business were good, he wouldn't find it necessary to cut what really must be one of the credit union's smaller expenses. And again, his decision circumvents executive salaries and benefits and again ensuring that the salaries they earn and lifestyles they enjoy, remain safely intact. 

PENDING TERMINATIONS

During a recent meeting with ambassadors, the majority of who are employees of the U.S. Postal Service, the President was asked if the credit union would be terminating more of the credit union's employees. He replied, “Well, we're making adjustments.” His answer, possibly an attempt at sounding non-committal and certainly neither a "yes" or :"no" was both inane and telling.  

At the end of October 2009, CFO, Manny Gaitmaitan, was asked to review all employee salaries and titles for the purpose of determining which employees will be marked for future termination. 

The President's and COO's current review of employee salaries and titles serves as yet another indicator that Priority One is not only struggling financially but that the President and COO don't foresee a resolution to the credit union's problems at any time in the near future.

Like the current review of salaries and titles, President's answer that "Well, we're making adjustments" suggests that more terminations are planned for the near future and that Priority One's financial problems may be far worse than even it's reports suggest.