Former Ethics Committee and Board Member of the IMA Speaks Out "What Now"?

Larry Phillips Former IMA Board Member

Larry Phillips Former IMA Board Member

Guest Blogger and Former Member of the Internet Merchants Association

By: Larry Philips

This blog is addressed to the many members of the IMA.

First, I want to thank Scott Pooler for giving me the opportunity to reach out to the members of the IMA.

Second, I want you to know that my heart is with you.  I wish I could do more to help you cope with the issues that you are currently dealing with.  But as you know, I was one of the six or more people who were summarily dismissed from the organization Monday morning for expressing my outrage at the actions of the three remaining members of the Board of Directors (BOD).

Next, I want you to know that I would have preferred to keep this type of information in-house, but the fact that my membership was revoked leaves me no alternative.

Last, I want to make sure you know that I will not quote any internal posts, or documentation.  I will do nothing wrong in this blog.  I will simply provide you fact, along with some opinion.

Any legal action about what I write here will just be another example of the bullying and manipulation that is being conducted by the current Board.  And it will be an inappropriate use of the funds within your treasury.

So with that in mind, what should you do?

Actually, the more operative question is what CAN you do?  The truth is… not a lot.

The existing BOD has ironclad control.  They are changing bylaws as the need arises. They are firmly entrenched, with a purpose of stifling the ability for any member to do anything other than fall in lockstep behind the leader.

There are SOME things you can do to make it more difficult for the current board to get their way and possibly wrest control away from them.

First – Challenge Steve Grossberg – President of the IMA.

The Grossberg Communications Stifling Tactic (GCST) #1 is to state that something is illegal.  Or that everything must be done in compliance with the current by-laws or Florida Corporate law.  When he does that, ask for the specific bylaw or Florida statute.  While he’s correct in that you do need to stay in compliance, GCST1 assumes that you will just accept his word, and drop the issue.  Don’t do that.
While he will sometimes be able to do quote a statute or law, oft times, you will receive no response, because he can’t back up his words with the applicable statute.  Or he will respond by saying something like, “this statute is vague, but my interpretation is….”.  See for yourself how he reacts to those types of challenges.  Frankly, it may have a positive impact on suppressing GCST1, because if he knows he is going to be challenged, he may think twice before he says anything about the law.  However, be prepared for no response at all.

Second – Demand Change!

GCST2 is quote the bylaws.  But we have just seen how the BOD can change the bylaws on the fly.  It took them 15 minutes on Sunday night to change the rules associated with conducting a special meeting.

The current BOD can act just as quickly to change the bylaws requiring the election of all new Board members.

They can do this if they want.  But they won’t.  Because they can’t.  Because if they do, they will lose control.

The Current BOD can act quickly to change the bylaws to appoint an independent committee to review the bylaws, and make appropriate changes, to be voted on by the membership.

They can do this if they want.  But they won’t.  Because they can’t.  Because if they do, they will lose control.

Third – demand accountability.

Ask for the cost of expenditures like attorneys fees.  Find out how they are spending your money.  You are entitled to a full and complete accounting.

Fourth – Contact the Internal Revenue Service.

There are several things you want from them.

IRS Form 1024. This document is available to you under the Freedom of Information Act (FOIA).  The IRS requires the organization to maintain this on file, so you can ask the BOD first, but you will probably be stonewalled.   This document contains very important information, such as what happens to monies, properties and assets should the organization be dissolved, as well as the *original* by-laws at the time the Form 1024 was signed.  The IRS is supposed to be notified of all changes.  The current BOD may be in violation if they have not done that.

Ask questions at the IRS.  Ask if one of the IRS’s requirements for awarding and maintaining a 501(c) designation, is for the organization to have a separately elected  body of members, independent of the elected officers/directors, whose purpose is to oversee and ensure compliance by the elected officers/directors, of all duties and responsibilities.  This will force the check and balance to be implemented that I fought so hard for, and was the cause of my resignation from the BOD. The current concept of a Board of Advisors is flawed.  They would simply be an Advisory group.  The Board will be able to accept or reject that advice, based on whether it complies with their agenda.

Next, ask if it is acceptable that the organization’s address of record is the personal residence of a member.  These activities may provide clear evidence of malfeasance by the BOD.

Other thoughts.

I strongly suggest that you use the online vote strictly as a barometer of the feelings of the members, which the current Board clearly does not care about.  Attempting to make this vote hold up will only result in a tangled and costly litigation, as there are many twists and turns.  Take me for example, I registered and voted on Sunday night, when I was still a member.  But as of the next morning, I was no longer a member.  So should my vote count or not?  Don’t waste your money by giving it to lawyers.

Finally, you have several days left to decide whether to accept their refund offer or stay within the organization.  My refund was $21.  I would assume that most of you will have the same size refund, so this is not a financial decision.  It’s a personal decision that you should each weigh carefully.  Whether you are willing to accept the current leadership should be a strong factor in that decision.  Another factor to be weighed is should the organization continue to exist?  Is the cost of allowing that to happen worth it?

The cost is allowing this Board to do what they want.  They will choose new Board members without your participation.  They will change the bylaws without your participation.  They will make all moderation decisions without your input.  The benefit is keeping together some of the group that acted synergistically to improve each other’s businesses.

In closing…

For those of you that were salivating, waiting for me to say something that could be used against me in a court of law, sorry if I disappointed you.  Your time would be better spent following some of the above suggestions.  To all of those people who have expressed their gratitude and support, I thank you from the bottom of my heart.  I truly miss you, and hope I will be able to continue our relationship in other ways and in other places.

Good luck.

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0 Responses to Former Ethics Committee and Board Member of the IMA Speaks Out "What Now"?

  1. Debbie Levitt July 9, 2008 at 9:34 am #

    Beautiful post, Larry, and excellently said! 🙂 I completely agree.

  2. Henrietta July 9, 2008 at 11:32 am #

    Having set up and run a non-profit organization and served on the board of several others my questions would be:

    It looks like one member got a total refund of dues paid. If all expelled members are not treated equally does that not violate the particularity or special treatment clause?

    Why would a group of successful businessmen and women join an organization in which they are unable to elect their board members?

    Is there no quorum requirement to conduct business? Three out of seven is not a quorum.

    Who wrote bylaws allowing the Board of Directors to change them at will? This is neither standard, nor, as members are discovering, desirable. Bylaws are normally only able to be amended after a vote of the majority of the membership. This may violate state law.

    What a mess. Thank you Larry for an illuminating post.

  3. Kim - former IMA member July 9, 2008 at 12:10 pm #


    I could not agree with you more! I also miss the group, and feel as if I lost a member of my own family. It has been a rough week for many of us.

    I have been asked by several if it were me would I stay in the organization. My standard reply is:

    Do you find value in the group? If so stay. If the rudeness, and nastiness, outweigh the benefits then leave.
    But, either way, don’t make it personal, because if you do you’ll be destined to live through what some of us are living through currently.

  4. Angela July 9, 2008 at 6:23 pm #

    Excellent post, Larry and very sound advice. The sooner that IMA members stop allowing Steve Grossberg to bluff them with his non-answers, the sooner IMA will become a site for the professional merchants where they can actually get some sound direction to help their businesses grow. Until then, it would be more cost effective to join to read raving and ranting since it is free.

  5. Tom July 9, 2008 at 8:29 pm #

    Great post Larry! Here is a link to the imaorg site on photobucket including 1st quarter financials.

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