Wednesday, October 13, 2010
View John Turner's statement regarding Ash Hollow below.
WALLA WALLA -- A board member of Ash Hollow Winery says statements by Walla Walla County sheriff's candidate John Turner and his accounting firm regarding financial dealings with the winery are false or misleading and that documents exist to prove it.
Jay Tucker, who is a founding member of the company and until recently served a stint as board chairman, maintains Turner used a business credit card to spend winery funds irresponsibly, extravagantly and to pay for personal expenses while serving as the managing partner of the struggling business from 2004 to mid-2008.
Turner denies any wrongdoing or impropriety and said Tucker's claims are politically motivated. Turner insists he s trategically spent money to make money for the business and succeeded in accomplishing the company's goals.
He also maintains he believed personal expenses he charged on a company credit card were being deducted from an amount of money Ash Hollow owed him.
An investor with the company, Turner says he wants to sit down with the current board and straighten out any financial misunderstandings.
Tucker said in an interview Oct. 1 he has reluctantly decided to speak out about Turner. Tucker claims Turner threatened to sue him and two other people for slander, an assertion that Turner denies.
Tucker decided to come forward after Courtney Moore, a partner in Ash Hollow's accounting firm, wrote a letter to the editor that was published in the Union-Bulletin on Sept. 27. In the letter by Moore -- whose firm also is Turner's personal accountant -- he praises Turner as fair and honorable and responds to rumors that Turner was spending Ash Hollow's funds for personal expenses.
Some claims in the letter are not true, Tucker said, and Karla Patten, a board member until this week, backs him up. On Oct. 1, Tucker fired Moore's firm -- Zalaznik, Moore & Associates -- as accountant for Ash Hollow, citing conflict of interest.
Turner is running for sheriff against current sheriff's Capt. Bill White in this fall's general election. Several weeks ago, opponents of Turner began circulating Ash Hollow financial documents throughout the community. In a formal, written statement provided to the Union-Bulletin during a Sept. 29 interview, Turner says the documents contain an out-of-context and incomplete story of what occurred while he was managing partner of Ash Hollow and apparently are being circulated to help White win the election.
The statement is signed by Turner; Moore; Moore's partner and Turner's campaign treasurer, Debora Zalaznik; and Kristian Hedine, who is Turner's attorney and former Ash Hollow attorney. They signed the statement with a disclaimer that they aren't aware of any facts that would render the information untrue.
The Ash Hollow financial documents, which were mailed to the Union-Bulletin anonymously, purport to be lists and totals of expenses Turner made on a company credit card in 2005 and 2006.
Included are line items for hotels, meals, airfare and other charges amounting to tens of thousands of dollars. Turner acknowledged to two U-B reporters in the interview Sept. 29 that he incurred such expenses. The mandate of the company was "to make Ash Hollow a very high-end winery," Turner said, and to place its products in the best wine shops and restaurants in the country.
"Thus the term wining and dining," Turner said, adding that some of the meals costing several hundreds of dollars in places like Portland, Las Vegas and New York were attended by 12-20 top wine buyers and consumers.
The trips were successful and resulted in purchase orders for the company, Turner said.
Tucker -- who became a board member around the time Turner resigned as managing partner to become a counterterrorism investigator in Iraq -- agrees that some travel expenses are legitimate. But he said Turner's penchant for staying in expensive hotels, partaking in airport massages and allowing his wife to travel with him at Ash Hollow's expense amount to a misuse of funds.
"He was using them extravagantly," Tucker said. "You go to visit your distributors ... I don't think you have to go to the extent of spending thousands of dollars to impress people."
Tucker also said Turner frequently charged the firm when he ate at local restaurants and, in October 2006, used his company credit card to pay $684 to the Los Angeles Times for his mother's funeral notice and to donate $950 to Hospice the following year.
Tucker acknowledged that any vision of Ash Hollow becoming a world-class winery differed from his own desire for a smaller business, but agreed that Turner "was very good" at projecting a high-end image that pulled in investors. "He brought a lot of money in by doing that," Tucker said, but not as much as was needed to put the company on firm financial footing.
"To continue with that vision, he had to pull in a lot more money than he did," Tucker said.
The claims and counterclaims
Turner was employed by Ash Hollow to manage the business as a private contractor from around October 2004 through July 7, 2008. He contends that his agreed-upon annual salary of $80,000 was cut in half when he started the position.
In the formal, written statement signed by Turner, Zalaznik, Moore and Hedine, they also assert that Ash Hollow owed and still owes Turner money due to the following circumstances:
"During the time John was employed by Ash Hollow, there were many months where John would not receive a pay check so that other responsibilities could be met. John also loaned the company money several times while he was the managing partner. Also at certain periods during this time, John's personal credit card was used for Ash Hollow business expenses. John was personally carrying these credit card payments, including the interest, for the benefit of Ash Hollow.
"At the request of the board of directors and in an attempt to help Ash Hollow lower its debt, John agreed to convert some of the money owed him into shares of Ash Hollow LLC. As managing partner, John was authorized and had the discretion to legally use the Ash Hollow business credit card or any other means in an ongoing effort to repay money owed him by Ash Hollow."
Moore's letter to the editor Sept. 27 contained much of the same information. In a column published in the Union-Bulletin the preceding day, Turner alluded to "misleading rumors" and "twisted facts" that were circulating about his part in "a local business."
Turner freely acknowledges he charged some personal expenses on an Ash Hollow credit card. But Zalaznik explained in an interview that a common bookkeeping practice for a small business to repay a debt to an owner is to identify personal expenses incurred on a business' monthly credit card bill and deduct them from any outstanding debt.
Aside from a loan of $25,000 that still is outstanding, Turner wouldn't reveal the amount he believes the company owed him. But he said to the best of his knowledge deductions offsetting Ash Hollow's debt to him were made in the manner Zalaznik described.
No such deductions were made, according to Tucker. And Turner's other statements are, at best, misleading, Tucker maintains.
Financial information provided by Tucker and reviewed by the Union-Bulletin shows that during Turner's approximate 44-month tenure, he initially was paid $3,333.33 a month, received a raise to $4,200 in late 2005 and made $4,500 starting in early 2007.
Despite the formal statement that there were many months Turner didn't receive a paycheck, Tucker said, "After reviewing the books, records show he was paid for every month of his employment."
Tucker acknowledged, however, that sometimes the payments were late a few days or longer at Turner's direction in order to meet other financial obligations of the winery.
"He was an owner," Tucker said. "If you're short of money, you don't get paid (on time)."
In reviewing the documents, the Union-Bulletin found there were 38 months in which paychecks were prepared for Turner, two months when checks were not and four months in which checks were prepared early. A few months Turner didn't receive full payments and many times, Turner says, his paychecks -- although prepared -- were held and not cashed for various reasons because money was needed for other company obligations. In months when there were delinquencies, makeup checks were prepared the following months, the records information shows.
During a 2 1/2-hour interview Oct. 6 in which Turner was given an opportunity to address Tucker's allegations, Turner said he couldn't dispute or confirm that he ultimately received full payment. But he stood by the formal statement that there were many months he didn't receive a paycheck, adding that the payments were not on time. Late payments were disruptive to his personal life, he said, adding, "I didn't ever receive the amount I (initially) was promised."
Zalaznik also maintains the statement is true despite the records. She said Turner told her his paycheck had to be held often before he could cash it. In addition, the salary records don't reflect any interim loans he made to the company and much additional information cannot be revealed because of various constraints. The financial transactions were very complicated, she added. "It's part of the big picture and the environment of Ash Hollow."
Hedine, who was the Turner campaign co-chairman before becoming a candidate for the county's part-time District Court judge position in this fall's election, told the Union-Bulletin he never heard Turner complain about not being paid on time.
But Hedine also stands by the statement he signed because he continues to have no solid information that would render it untrue.
"I can't sit here and say it's true or it's not true because I don't have any documents to say it's not true," Hedine said.
He added he doesn't see a need to obtain further information because he doesn't believe the issue is relevant. During the period he represented Ash Hollow from about 2003-2009, he said he never heard any board member or any member of the company complain about irresponsible spending by Turner. Hedine said he didn't hear any such allegations until about a month ago and wonders how Turner could have recently passed a federal background check if he was involved in wrongdoing.
"I've not seen anything to verify that any of the mudslinging is justified," Hedine said. "None of this was an issue when it was relevant."
Turner acknowledged in a U-B interview that one board member, Karla Patten of Olympia, did complain toward the end of his tenure he was spending too much money.
Turner said his arrangements with Ash Hollow to repay its debt to him is a complicated matter. He reiterated he loaned money to the company on several occasions and used his personal credit card for winery expenses. Initially he was to be repaid in cash, but eventually repayments included conversion of debt into shares of the company and deductions of personal expenses he incurred on the business' credit card, he said.
But Tucker maintains Ash Hollow didn't repay Turner through any deductions. "There are no entries in the journal to offset these (personal) expenses," he said, adding that two Ash Hollow board members at the time -- including Patten, who left the board this week -- have told him Turner wasn't given authorization to use the company credit card for those purposes. Furthermore, commingling of personal and company assets is prohibited by the LLC agreement, Tucker pointed out.
"(Turner) did not have the right to do that. John Turner was the managing member and he had the obligation and responsibility of the LLC to not commingle the assets."
Tucker claims Turner was repaid directly for the several "cash flow" loans Turner made to the company and was reimbursed by check for all company expenses he placed on his personal credit card -- including 33 percent interest.
Tucker agrees the $25,000 loan Turner made to Ash Hollow in 2006 is still on the books. But Tucker believes Turner's excessive and personal spending during his employment with the winery exceeds that amount. Tucker said the company surely owes Turner nothing in addition because the other obligations were repaid directly.
Turner disputes Tucker's claims regarding the financial dealings, and called them false and ludicrous. However, Patten backs up Tucker's claims. In a phone interview this week, she said Ash Hollow owes Turner nothing except, perhaps, the $25,000 loan. And, "The accounting is still ongoing relating to those matters," she said.
Patten added that Turner never was authorized to use a company credit card for personal expenses. "If he's saying that, I would request he shows (authorization) in writing. I'm unaware of that," she said.
"He intermingled his personal expenses with business expenses and that complicated the situation. That wasn't approved by anyone and we're still trying to sort that out."
Turner, on the other hand, maintains he was given authority to use a company credit card for personal expenses. It was given during a conversation with board members, he said, adding that, as managing partner, he had the authority anyway.
Turner showed the Union-Bulletin copies of two e-mails he said he sent to board members late last year in which he sought clarification of his financial status with the company, including information regarding the loan and shares he owns.
In one e-mail dated Dec. 30, 2009, Turner wrote that he and his wife, Jacqui, wanted to address a capital call, and had requested pertinent information several times with no response. "It is not our intent to make this into a hoopla; we just truly don't know where we stand with Ash Hollow after all the shuffling of shares and decisions to not honor past agreements & contracts," the e-mail from Turner says.
He said in an interview he still doesn't have the data he requested: "To this day, they have refused to comply with the LLC agreement and with what I think is a reasonable request by an owner."
Turner said his background and experience are in law enforcement and police law, and he is knowledgeable about public finances and budgets. If elected sheriff, he will comply with the county's budgetary constraints, he said. But he acknowledged he wasn't trained in financial matters of running a winery and -- although it was not his main duty -- should have made sure proper bookkeeping was being employed, if it wasn't.
"I should have done better," he said, but added he didn't do anything illegal, immoral or deceitful.
"I never took money from Ash Hollow that I was not entitled to," Turner said.
And several times during the interview he said he wants to meet with board members and work out any disputes.
"If they think I owe them money, let's sit down and talk about it," he said.
"If there's a bookkeeping error and if it needs to be rectified, let's address that."
Tucker said an accounting may be completed in the future. But now is not the time. "The issue is about honesty and character" in a candidate for county sheriff, Tucker said.
On other matters, Turner said the Ash Hollow board had agreed from the beginning his wife could accompany him on trips and paying for airport massages was necessary to treat his neck and back spasms caused by frequent flying. He also denied that loan transactions with the company amount to "commingling" of funds.
The Union-Bulletin contacted several Ash Hollow members who declined to comment. Both Turner and Tucker said most people who can back up their claims are afraid to speak publicly. Turner said his supporters don't want to be dragged into the dispute, and Tucker maintains that Turner has warned of legal repercussions if slanderous remarks are made.
Tucker added he and other board members just wanted to move on with Ash Hollow business after Turner left. But Tucker was compelled to speak out after the company's financial dealings were addressed publicly by Turner and Moore, Tucker said.
"If John Turner had not brought Ash Hollow into this campaign and come to me and threatened me and two others with a slander lawsuit to keep us quiet, I would not be saying this today," Tucker said.
Turner steadfastly denies he threatened to sue anyone. "I've never said that, nor is that my intention," he said.
He also contends he has acted honorably and any financial disagreement regarding Ash Hollow should be settled by an "accounting of what I'm owed and what I owe," rather than in a public forum prior to votes being cast in the sheriff's election.
"(Tucker) is trying to spin (what happened at Ash Hollow) into something it's not for a political purpose," Turner said.U-B reporter Vicki Hillhouse contributed to this report. Terry McConn can be reached at firstname.lastname@example.org or 526-8319. Andy Porter can be reached at email@example.com or 526-8318.