The newly created Fulton County Center for Regional Growth says its wants to be more transparent, but it plans to operate as a private, nonprofit corporation not subject to open meeting laws or other state-required disclosures, officials said.
The center held its corporate organizational meeting last Thursday at the Holiday Inn in Johnstown, but gave no notice to the public about the meeting.
At the meeting, the center became the parent corporation of the Fulton County Economic Development Corporation and Crossroads Incubator Corporation.
Dusty Swanger, who is president of Fulton-Montgomery Community College, was named chairman of the center’s board of directors for one year.
Swanger said no notice was given because “we are not a public organization. We are a private, not-for-profit agency. We are not required to invite the press.”
Center officials said the new corporation as well as the EDC remain exempt from oversight by the state Authorities Budget Office. The ABO, meanwhile, has filed a lawsuit seeking to declare the EDC a public authority, and has given an informal opinion that the center may also be a public agency.
The legal issue with the EDC remains unresolved.
Swanger said the center’s board will invite the media to future meetings, but will ask them to leave when some economic development issues are discussed. He said some economic development issues are sensitive and should not be discussed publicly.
“I am comfortable where we are,” Swanger said in response to a question of transparency.
In a news release, center officials said the new corporate structure will bring the two separate subsidiaries, the EDC and the CIC, together under the control of one central board of directors. This, the release said, will “increase the transparency in the day-to-day operations of each.” A single Audit and Finance Committee will oversee all financial transactions of the three entities.
Under the new corporate structure, the center will assume almost all of the functions of the EDC, leaving that agency to administer a revolving loan fund. The CIC will continue to perform its main function, serving as a holding company for buildings and land used for economic development.
At Thursday’s meeting, members were appointed to serve staggered terms of one, two and three years on three different boards. In coming weeks, the center will engage in a membership drive and then the new members will elect a chairman and appoint directors whose one-year terms are to set expire at the end of December.
Under the old corporate structure, the EDC and the CIC operated independently of each other. Each had its own board, whose members did not communicate with one another frequently. The lack of communication, EDC officials allege, allowed former executive vice presidents Jeff Bray of the EDC and Peter Sciocchetti of the CIC to commit fraud, negligence, breach of contract, breach of fiduciary duties and conversion by “surreptitiously” by awarding themselves bonuses without board approval.
The two men awarded themselves about $900,000 each in the two-year period 2007-08. They also granted themselves bonuses of $104,000 for 2009. The two men were suspended by their boards in early June 2010, without pay, and later fired.
In response to the lawsuit, Bray denied he issued himself excessive bonuses and that the “performance bonuses” he and Sciocchetti received did not violate the agencies’ bylaws.
The EDC filed suit in February against Bray, Sciocchetti and the accounting firm Bonadio and Co. and its various entities, plus Dorfman-Robbie, an auditing firm now part of Bonadio, for negligence, malpractice, breach of contract and breach of fiduciary duty.
The EDC is seeking to recover $3.1 million in performance bonuses, plus $1 million from each man.