Where Facts And Controversy In The News Come Together In Truth

Tuesday, December 21, 2010

Did WV State Bar Foundation’s Director Convert State Bar Funds For Personal Use

Executive Director Thomas Tinder Reportedly Made Himself Personal Loans With State Bar Funds by, Jack Swint-Publisher

Other than the ridiculous impropriety of the interest free loans that Thomas R. Tinder made to himself from State Bar bank accounts, the question remains as to why he waited until the last day of June to repay the final $6,000 that he still owed and then immediately borrowed the same amount of money back on the very next day. ..WV State Bar Member

According to their website, Thomas R. Tinder is the executive director of the WV Bar Foundation, a philanthropic organization for the legal profession and justice system in West Virginia. It has several responsibilities and programs in which it is involved. It gives grants to organizations that provide legal services to low income citizens and that improve the administration of justice and it selects the Bar Foundation Fellows, who are outstanding lawyers and members of the judiciary.

The most important activity of the Bar Foundation is its duty to administer the Interest on Lawyer Trust Accounts (IOLTA) Program. Since its inception in 1990 by an Order of the Supreme Court of Appeals of West Virginia, our IOLTA program has generated more than $13 million to fund free civil legal services for low income men, women and children here in our state. .

The most important activity we discovered is that there are a multitude of problems within the Foundations Directors office that are being swept under the rug.

Thomas R. Tinder – Executive Director

Director Tinder’s executive leadership runs deep into WV’s legal system. Before taking over the Bar Foundation in 2007, he spent 18 years as an executive of the WV State Bar. Currently Tinder pays himself $85,000 a year for this part time job. Which, is more (3X) than the Foundation takes in each year in donations. He was originally paid $10,000 a year when the Foundation was still under the WV State Bar.

His position as director of the Foundation was reportedly nicknamed "Golden Parachute" by attorney Elliott G Hicks of Spilman Thomas & Battle PLLC in Charleston. This references Tinder's ability to not only draw his state pension from the bar, but the additional $85,000 a year with the Foundation. Tinder also currently serves as the President of the National Conference of Bar Foundations.

Now, it appears on the surface, that during the ending years of his tenure with the WVSB from 2004 to 2007, he may have allowed himself some special perks of the job by converting state funds and bank accounts to float himself personal no interest loans totaling up to at least $21,000. When it appeared he didn’t have the necessary funds in his account to repay the money on time, he used a “check kiting” scheme to try and cover up the trail. How did Tinder allegedly justify these loans to himself from state accounts? “It was a benefit for the employees because they weren't paid enough.”
In fact, an investigation into this practice of diverting funds from state bank accounts to personal use may be more widespread than just with Tinder. While director of the WVSB, he may have allowed state bar employees to do so as well.

Reports we obtained show that Tinder converted the following monies from state bank accounts to his own personal use:

On July 1, 2004, he obtained a loan of $10,000. He made one re-payment of $4,000 on or about January 6, 2005 and another on June 30, 2005 of $6,000.

Then, one day later, on or about July 1, 2005, he obtained another $6,000 loan. On the surface, that repayment appears suspicious. Why write a check for payment one day, and then re-borrow the money within a twenty-four hour period. Did he not have sufficient funds in his personal account to cover the check that he issued to the bar for repayment on June 30, 2005? Tinder did repay the July 1st loan on or about January 10, 2006.

If Tinder did issue a $6,000 check to the bar without sufficient funds in his own bank account, and then covering it with another check from the bar for the same amount the next day is in the category of crime called “check kiting.”

His last interest free loan was on or about December 5, 2006. He took $5,000 and made a payment of $3,500 on or about January 17, 2007 and the final one on or about June 29, 2007 for $1,500. That payment was at the same time he took over as Executive Director of the State Bar Foundation according to a June 28, 2007 story in the State Journal.

It appears odd that Tinder arranged these loans and repayments before the end of each fiscal year and then advanced funds to himself again in following years until he could finally repay the borrowed amount in full. Could it be that this unusual repayment and re-borrowing schedule always coincided with the end of the State Bar's fiscal year in an attempt to prevent the loans from appearing on annual bar financial statements?

Bar accountant at the time, (Grigoraci) along with an independent auditor (Galloway) did finally flag his obtaining money from state bank accounts for his personal use. They reportedly approached Tinder, who then stated he had permission from the board. It is not confirmed if the Board of Governors was ever apprised of the acts. Also, one report states that the only written mention on record is when Tinder himself wrote the loan policy into the personnel manual and board meeting minutes. (Tinder himself writes the minutes for the governors board meetings)
We also learned that at least two employees at the Office of Disciplinary Counsel had loans outstanding when the practice was discovered. “Borrowing or not, no matter how you candy-coat what he was doing, it was just plain wrong. You can’t use state bar bank accounts for your own personal use.”

Allegedly, past bar Presidents Rob Fisher and Steve Knopp found out and were outraged by what Tinder was doing.

Dwane L. Tinsley, who followed Knopp as president, reportedly saw some of the mess unfold after everything had already happened and focused on solving the problems and helping the new executive director, Anita Casey, move forward, rather than focusing on the extent of Tinder's screw-ups. Tinsley currently serves as a special attorney general appointed to the case involving the Federal investigation of former WV Governor Joe Manchin’s administration.

“It was only later, during the Sandra Chapman’s term that the magnitude of Tinder's transgressions came into focus. Chapman did not want any controversy during her term so she worked with Foundation president John Tinney to keep a lid on it.” According to members we spoke to in regards to the current Bar President’s stance as to whether she knew of the allegations, “The current president, Letitia Chafin is fearless, and she would have no hesitation to take whatever action is right and proper.”

She reportedly has bigger responsibilities with regard to cleaning up the IOLTA mess carried over from the Tinder Administration and solving the desperate bar housing crisis since the split-off of the WV Bar Foundation from the Bar in which the Foundation now owns both adjacent properties where the State Bar and the Disciplinary Committee are located. In fact, it is Tinder who actually wants to sell-back the association both properties.

From what we learned from several attorney's is that, what steams the bar membership the most is the fact that they have paid for their building several times over and yet the Foundation now wants to sell it to them at full market value. Members who were around when the foundation was created (sometime around 1988) knew that the foundation was supposed to hold title for the bar. The bar paid rent in the amount of the loan payments on the building. When it was paid for, it was assumed that the bar would have a permanent facility and the rent payments would cease.
The Foundation is reported to be asking $450,000 to sell both properties back to the WV State Bar.

State Bar Foundation Grant Program

Under the direction of Tinder, and since 2004, the Foundation grant programs main objective has been “to improve the administration of justice and the provision of legal services to WV’s citizens.” The total amount of grant monies dispersed over the past 6 years is only $63,936. There have been approx 18 recipients of grants in this same time period.

These include grants to Legal Aid of WV (3 grants totaling $16,800 for a Survey and Statewide Technology Network ), Child Law Services ($1,000 for Child Abuse Prevention), WALS Foundation ($1,000 for Mock Trials), Charleston Catholic HS ($1,000 Health Care Directives), WV Public Broadcasting ($2,000 Closed Captioning), Wheeling Jesuit University ($2,000 Constitution Day), Junior Achievement ($1,500 Student Legal Studies), WV Supreme Court ($5,000 Student Law Adventure),

The Resource (2 grants totaling $13,823 IOLTA Comparability Rule), WV State Bar ($1,063 Delivery of IOLTA materials), WVU College of Law ($4,000 International Law), We The People ($5,000 Constitution Student Debate), Harrison County Child Advocacy ($2,739 Child Abuse Forensic Interviews) and WV Association of Counties ($3,500 Co. Courthouse Document).

Foundation Finances

According to the below linked 2009 West Virginia Bar Foundation tax return, signed by its executive director Thomas R. Tinder on January 15, 2010, it details the following financial records. (Also see below linked 2008, 2007 & 2006 Tax Reports.)

Page 7 of the 2009 report shows that the executive director Thomas receives total annual compensation of $85,000. None of the board members are compensated. Additional expenses include payroll taxes of $5,649 (attributable to the paid executive director's salary). In prior years, Mr. Tinder was paid $10,000 "deferred compensation" to shepherd the foundation.

Travel and conference expenses for the year are $4,984 and $1,309 respectively. Note: In 2008 those figures were $2,281 and $402. In 2007 those figures were $1,658 and $176.

Excluding the IOLTA pass-through and rent from the state bar, the total fund-raising of the bar foundation for the year is listed as $42,798, consisting of $12,800 from dues and $29,998 from donations (page 9, lines 1a and 1b). In 2008 the total fund-raising income was $38,304 (2008 form 990, page 1, lines 3 and 9c), and in 2007 foundation fund-raising totaled $23,768 (2007 form 990, page 1, lines 3 and 9c).

Gross rents received from the bar totaled $114,064 (Page 9, item 6). Net rental income is listed as $63,020. The difference is probably accounted for by the fact that the state bar building is already paid for and the ODC building loan is still outstanding and requires ongoing loan payments.

Similar to prior years, this year's return does not make a clear differentiation between the "pass-through" income/donations of IOLTA (to legal services) and money actually raised by fund-raising from the membership. Based on the format of prior years, the IOLTA revenue component was approx. $423,538 (Page 9, item 1f). Prior years were significantly higher ($694,181 in 2008 and $827,552 in 2007), which reflects the detrimental economic impact of reduced interest on IOLTA trust accounts.

Regardless of how itemized on the 990s, to clarify the outflow of cash, on September 9, 2009, Tom Tinder submitted a list of the above noted foundation grants since 2004 which average only $12,787 per year.

In Closing…

We are sure that there is a large contingent of very reputable lawyers who would like to see this just go away. If Tinder did use state bar bank accounts to make himself personal loans (particularly as state bar executive director) and arranged these transactions in a time fashion that would cloak his actions from the state bar members and or the board of governors, then it should be exposed and possibly prosecuted. At minimum, a disciplinary counsel should possibly be notified and requested to investigate.
Even with approval from the board, you cant convert money from the state bar bank account to your own personal use.

Other questions need to be asked and answered into the actions and motives that Thomas R. Tinder has made over the past decade.

All Bar members should be concerned with the above ethical issues and the fact that Tinder's compensation package is nearly 3 times the total amount of membership donations and almost ten times the amount that he received for performing the same services in the year prior to his employment as executive director of the foundation. A casual review of Internal Revenue Code Section 4958 may raise other issues that should be considered.

Tinder appears to try and rationalize the creation of a paid position for himself to the financial detriment of both the bar and the foundation. The total incoming money to the Foundation does not even match a single year of his salary. So, basically lawyers are donating to the foundation thinking that they are doing philanthropic work, while the real truth is that their money is spent to pay a portion of his salary.

Other questions need to be asked and answered such as how the records show that Tinder took full retirement benefits from the state bar simultaneous with his commencement in the bar foundation position that he created for himself. Could it be that he separated the Foundation from the Bar so that he could collect both checks (the Bar retirement check and the Foundation paycheck) at the same time?

Is it reasonable to conclude that while Tinder was still executive director of the State Bar, he may have initiated individual discussions between himself and most, if not all, foundation board members prior to the actual creation of the executive director position?

If those discussions occurred, did Tinder reveal that he intended to pay for his new position with money removed from the state bar budget? Was Tinders failed attempt to replace his open position as State Bar Director with his wife, an effort to keep his hands in state bar business?

Our sources for this story stated that nobody else knew about the new position of executive director of the Foundation nor were there any postings or interviews for others to apply. Tinder started as executive director of the Bar Foundation the day after he ceased to be executive director of the State Bar.

While executive director of the WV State Bar, he was entrusted by the State Bar’s Board of Governors to be fiscally responsible for their budget. He not only diverted money from that budget to make himself personal loans, he also allegedly transferred $75,000 from the state bar association budget to the foundation to pay himself as the new director.

Tinder and his supporters will most likely say that this story is nothing more then a smear campaign or just “Tinder Bashing.” Bottom line, facts are facts.

Note: Thomas R. Tinder also currently serves as the President of the National Conference of Bar Foundations.

End Of Story….

Jack Swint – Publisher
WV News (304) 319-4011


2009 Foundation Tax Forms

2008 Foundation Tax Forms

2007 Foundation Tax Forms

2006 Foundation Tax Forms

2005 Foundation Tax Forms
2004 Foundation Tax Forms

State Journal Story On Thomas Tinder
Story On Appointment Of Dwayne Tinsley To Investigate Manchin
Attny Elliott G. Hicks Association With State Bar.
National Conference Of Bar Foundations.
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