Sunday, September 09, 2012

ASCA: The John Leonard Lawsuit Threat Revisited One Year Later!

This post is important today because of the potential tax implications for coaches who wrote-off any donations to the American Swim Coaches of America (ASCA) on their taxes.

About a year ago I linked to a blogpost that Sarah Gjerstad had written about a political fight she was having with a person named George Block. Block happens to be an associate of John Leonard and consequently John Leonard got dragged into her fight.

This political fight played out on this blog with John Leonard  regarding accusations that ASCA's corporate status was not in order. In fact it was classified as terminated  inactive in the corporation home state.

Here is the to the blog post that started it all: [Link] - For brevity here is a snippet of the allegation Sarah made:

"... As I look closer at this, I learn that a more ubiquitous name in swimming is John Leonard. Many organizations fall under the American Swimming Coaches Association (ASCA), with John Leonard as Executive Director, and George Block as an officer.

ASCA is listed as a foreign corporation in Florida. Foreign, in corporation lingo, means not incorporated in the state. I originally had images of a corporation concealing their finances in Grand Cayman. It turns out John Leonard and George Block have an even better deal. Their annual reports to Florida state they are incorporated in Iowa. I checked the Iowa department of state. John Leonard registered in Iowa in 1968 but was terminated labeled inactive in 1992 for failure to file reports.  [i.e Leonard let his corporation status lapse for many years and it was declared dead]

ASCA is not a legitimate corporation so there is no government oversight into their finances. It is not registered as an assumed name in Bexar County, and it is unlikely to be registered in any county.

This is a fictitious entity.

I confirmed ASCA status on Iowa's website and verbally with the Iowa department of state. ASCA, SwimAmerica, WSA, and possibly several other business entities seem to be doing business fraudulently. ..."

John Leonard was livid over this post and sent poorly typed and numerous threats to both Sarah and myself that quickly degraded into cursing and lawsuit threats. When I was originally threatened I asked him what specifically was the error he felt I made. This just enraged him further See the full exchange here which includes a detailed a synopsis, his infamous emails, links, screenshots and quotes illustrating Sarah's evidence: [Link]

Here is a snippet of how he wanted to resolve this with us:

No, i told you what i want. Period.

No bullshit, no lengthy diatrides, [sic] no dancing. You are dead wrong, you slandered the ASCA and myself among others, and there are ZERO issues with ASCA or SwimAmerica and the IRS or State of Florida, or anyone other entity.

YOU PUBLISHED SLANDER. Get that through your head. We don't owe you explanations or answers. You owe US an apology and acknowledgement as i indicated previously. IF you don't, i will take this to court and you can tell the judge how you shouted foul first and THEN decided you didn't know what you were doing. Good luck with that.

by 6 PM today. No more communications from me to you.

John Leonard

Now, let's move forward to February, 2012. John Leonard finds himself in a video deposition
regarding a sex abuse lawsuit that USA Swimming is fighting. He is asked directly about Sarah  Gjerstad's allegation regarding sloppy corporate administration and he is forced, by virtue of being under oath, to admit that Sarah was correct all along.

Here is the transcript of his exchange regarding if ASCA as a legitimate corporation or non-profit:

Q. Okay. Let me show you a final set of documents that we'll mark as Exhibit 272.

(The document was marked Plaintiff's Exhibit Number 272 for identification.)

John Leonard: I have read this.

Q. Does this refresh your memory as to the exchange you had with Sarah? It's spelledG-j-e-r-s-t-a-d.

John Leonard: It does.

Question: Would you please turn to the third page of this exhibit. Line Item 3 states, quote, "The ASCA is a 501-C6 corporation originally incorporated in Iowa and now duly registered for many years" --

John Leonard: I'm sorry. I'm on the wrong page.

Q. Sure. It's my fault because I said third page. I meant fourth. Let's try this again. Would you please turn to Page 4 of this exhibit.

John Leonard: Yeah.

Q. The third line item, quote, "The ASCA is a 501-C6 corporation originally incorporated in Iowa and now duly registered for many years with the Florida Department of Corporations with all reports and status active and complete," end quote. Do you see that?

John Leonard: Yes.

Q. Was it an accurate statement?

John Leonard: At the time, yes.

Q. Was as of that time ASCA duly registered for many years with the Florida Department of Corporations?

John Leonard: Yes.

Q. At, I'm sorry. Earlier I thought we talked talk about the fact that you realized at some point in time that the non-profit status of ASCA as incorporated in Iowa was suspended. Is that accurate?

John Leonard: That's not what I said.

Q. What did you say earlier, sir?

John Leonard: I said that what I discovered through Ms. Gjerstad's comments was, Ms. Gjerstad had a complete misconnection of SwimAmerica, ASCA. She didn't know that something called the Council existed. Okay? And she had all this jumbled up in a complete mess. The thing she had correct -- and she is the only one who did -- was the fact that our original incorporation in Iowa had been suspended. And I did not know that until I went back stimulated by Ms. Gjerstad to discover that there was the problem, and then I went back through the State of Iowa to find out that notices had been sent to Mr. Helmick's office, and then we went ahead about correcting that problem.

[NOTE: It was not suspended, it was labeled inactive see the links above. If you read his answer he rambles through the first three sentences till he finally gives up the exact answer after being asked roughly three times or so. Sarah Gjerstad's accusations that John Leonard's corporate filings were not in order was absolutely correct.

Q. So as of the time you wrote this, which was May 26, 2011, is it true that ASCA, American Swim Coaches Association, was a 501(c)6 corporation duly registered for many years?

[MR. SHEPPARD: God bless you. ... [Someone must have sneezed T.A]

Q. Is it true as of the time you wrote this document, May 26, 2011, that the American Swim Coaches Association was a 501(c)6 corporation duly registered for many years with the Florida Department of Corporations?

John Leonard:  Well, you probably know more about this in terms of legalities than I do. We filed all our reports as required by the State of Florida for many years. My understanding when I took the job was that's what we had to do, was file with the State of Florida. I knew nothing about this Iowa thing. The whole Iowa thing is, was beyond me. I did not know that's where we incorporated or we had any obligation to the State of Iowa at that point until Ms. Gjerstad pointed out that that was where we were originally incorporated, et cetera. And then I had to go back to the State of Iowa and have ourselves reinstated.

Q. Did you ever issue an apology to Ms. Gjerstad for threatening her with malicious slander?
John Leonard: No. Because she was essentially totally incorrect on every other aspect of what she had to say about us. 
Q. What was driving Ms. Gjerstad to look into the issue, if you know? 
John Leonard: You would have to ask Ms. Gjerstad.

So why is this blogpost important? - If the ASCA corporation filings were labeled terminated inactive isn't it a reasonable question to ask what the status of his non-profit is? I do have a copy of ASCA's Form 990 for 2009 and the IRS accepted it so they were definitely sold then but what about 2010 or moving through this current year? If I was sending in a donation along with a certification a check I would want to make sure his filings were in order but a bigger question is, does USA Swimming care?

In 2009 this non-profit grossed $840,086. The salaries paid out come in at $501,061 with John Leonard taking in $119,335 of that. Another $31,953 was paid out for occupancy which I assume is either rent or mortgage.  Another $66,646 going to office expenses and one must wonder why the American Swimming Coaches Association is spending 80%-plus of it's gross proceeds just to open it's doors. Wait till you see what they paid out in travel expenses

Here is a Link to their 2009 Form 990: [Link]


Anonymous said...

I've been doing a lot of research and it's unbelievable how many individuals and clubs have non-profit corporations and are delinguent with the State Attorney General.

The more information I find, the more disgusted I become.

Tony Austin said...

Ironically enough, I just read a article at IT World that discussed much the same thing thing. Get this, people were stealing the corporations much like identity thieves steal identities.

What they do is contact the state, say they had or a new BOD, get it all current and then apply for loans and such.

One Aviation "company" got a grant from the government for $140,000 and it was only when the IRS got involved much later that the real owner or owners realized what happened.

Ultimately, no only are most "non-profits" sketchy in nature, but they can be stolen by even sketchier people and really bamboozle the public.

Anonymous said...

My dealings with a corrupt attorney who has been involved with USA Swimming for years and years led me to find that he has a 501(c)(3) which is delinquent with the State Attorney General.

I finally realized that the sport of swimming will not improve - no amount of evidence will ever be sufficient - because these individuals are protecting themselves by protecting their friends.

I wonder who the master mind is behind all of these people forming non-profit public benefit corporations and then ingoring the requirements to remain in good standing?

Anonymous said...

Does USA Swimming care about John Leonard's filings? I doubt it!

I think the entire organization has questionable paperwork!

Tony Austin said...

It's my belief that all office politics, institutionalize corruption or unethical practices always start at the top. It's never an aberration down at the bottom because these people in the lower ranks get found out about quickly when people complain.

I would like to see the board of directors at USA Swimming do the right thing or get fired.

In no other sport would their past history be tolerated.

Sarah G said...

Regarding your comment, "In no other sport would their past history be tolerated."

I haven't looked into others, but I'd expect this to be rampant. You are correct about non-profits being taken over by other businesses. With volunteers there are a lot of people who don't have much reason to pay attention to the finances.

USA Swimming is co-located with the US Olympic Committee and perhaps another dozen non-profits. I wouldn't be surprised if others had problems. Generally people have no idea of how profitable sports can be. As I mentioned in my previous post, I'm curious about the finances of the 2012 Swim Trials, owned by the Omaha Sports Commission.

Does anyone else wonder how the U.S. can have the only Olympic committed that gets a share of the broadcast revenue and corporate sponsorship, yet the prizes to medal winners is a small fraction of dozens of other countries?

This ASCA stuff is beginning to seem insignificant to me; I'm only maintaining my interest because Leonard threatened to sue us.

Tony Austin said...

I look at ASCA as a no bid monopoly granted by USA swimming; (Who gave them that right?),that simply aggregates data and keeps a lion's share of the money they collect for themselves.

I also suspect that USA Swimming is in the straits that they are in because ASCA never thought of the end user, i.e. the kids, but rather just protecting the coaches.

Anonymous said...

"No idea of how profitable sports can be"

Sarah - you hit the nail on the head! Not too long ago, I was speaking to someone about this and they were shocked over how much money some of these people are making (not including the all expenses paid worldwide travel).

One age group meet can bring in tens of thousands of dollars.

Tony Austin said...

Speaking of travelling expenses in that Form 990 I linked to Leonard and his cohorts spend nearly $2,000 a week on travel expenses.

Really? Really?