SETTING THE RECORD STRAIGHT
JULY 12, 2014
Joe I am deeply disappointed in the turn of events that led up to where we are now. I have a great deal of respect for you as a craftsman, and I have considered you a friend in every sense of our association started at Weatherite. Your actions and allegations have threatened and changed our relationship and have even put a strain on the relationship between Noel and Maureen.
In your correspondence to David and me and in subsequent meetings (after your abrupt move out), you have made some allegations and outright false statements that require a response to set the record straight.
You did not give us, CDC, a 30 day notice, as our agreement calls for, nor did you even give us a seven day notice as stated in your e-mail dated 4/13/2014 at 10:46 PM. In fact, at the time and date of your e-mail (your first notice to us), you had already moved out of the office, taking all the furniture and equipment, computers, and phones, office staff, sales staff and installation crews with you. This move-out happened on the weekend without any notice to David, myself or the Corporation. Your actions in essence shut us down for 2½ weeks and has caused our business to lose a great deal of money. Not only was this vindictive move uncalled for, it was done deliberately to disrupt our business. This is evident by your taking of all the file cabinets, dumping the files into boxes and leaving them on the floor in total disregard for our business. This hostile attitude was further expressed when one or more of your employees stuffed paper towels down the toilet in the lady’s bathroom.
In your e-mail you stated that “you took everything that was yours and nothing belonging to CDC”. That is not a true statement! You took a company computer, two phones, our corporate ledger, our corporate seal and several smaller items not belonging to you.
In your e-mail you claim that the furniture was yours? “Was” is the operative word.
In our agreement CDC agreed to pay the rent and utilities. In exchange, SMCI would provide furniture and other equipment in lieu of paying its portion of these fixed operating expenses. As CDC has paid for this overhead for the past 13 months, CDC has a rightful claim to part ownership in that furniture and equipment. By moving the furniture and equipment out in the middle of the night without our consent, you effectively stole these items from CDC. However, I don’t think you thought of it that way as I don’t think you are a thief.
In your e-mail (referring to us) you said you would “bring proof of your underhanded dealings.” That is an outright lie, and we have proved that to you the following two weeks after your move out.
Your document “Reasons for Dissolution” is also filled with falsehoods and statements that are totally misleading and unjustified and border on slander. In this letter I will address each point.
Please Note that I am not doing this to take any legal action against you, but I cannot let your lies go unchallenged, as they affect the reputation and integrity of myself, David, and the Corporation, and also who I am as a person.
1) Your statement “I have to constantly beg for monies rightfully owed to me”
We agreed to pay SMCI a 16% lead fee. David was to receive a salary for administrative work. You and I were set up to be paid commissions on our personal sales. In addition, you, David, and I would receive a percentage of profits broken out to be 40% for you, 40% to me and 20% to David. You set up this percentage breakdown and all of the postings in Quickbooks were done according to this formula. The three of us were even paid on some of that money and we were all paid the same percentage of our balances.
We started out by paying the lead fee to SMCI as money was received. If we collected $1,000 we would pay SMCI $160, when we collected $10,000 we paid SMCI $1,600 and if we collected $20,000 we paid SMCI $3,200. You pushed us to pay out all of the 16% on each job even before the money was collected. We tried to accommodate you in this regard as you were supposed to spend most of that money you received to develop new leads. We did this by paying you (SMCI) on all of the money that came in until you were paid the full 16% up front. CDC did the payroll for your (SMCI’s) phone room and that amount was charged to the SMCI ledger. In November, CDC began paying you a salary of $550 per week for running production. That salary was charged as an admin cost which caused the overall admin expenses to increase.
By paying out the entire lead fee up front we asked for and were entitled to receive an accounting of those funds. But when David asked you where the funds were going, you told him that it was none of our business on how you spent that 16%. You then stopped spending money on other lead programs resulting in all subsequent leads coming from the phone room and Liners Direct.
But each week you kept demanding (not begging) more money and on several occasions you overdrew the SMCI account. This reckless action was done at my and David’s expense as we could not take money due us. Every time you requested more than your share of money, you would run into a big conflict with David. He was just doing his job as the controller, and now you are trying to make him out to be the bad guy and saying he and I are cheating you. This is not true and is an accusation that has to be rectified.
By the end of 2013, we had to drop the original 40%/40%/20% profit distribution as the admin cost was running over 12%. Nevertheless, we continued to pay SMCI the entire 16% up front, and ended up not having sufficient funds to pay the amount that you had set up as a percentage of profits. The reality of this cash flow crisis forced us to change the payout to a management override of 2%/2%/1% to be credited only after all the job costs, commission, and 12% admin cost were covered. By Corporate Resolution, we agreed to pay you and me 40% each and David 20% of the profit sharing when the corporation declared a profit sharing amount.
By March of 2014, CDC had paid SMCI over $90,000. In addition, you had been fully reimbursed for any and all money that you had invested into the corporation. You were also paid most of your commissions owed and you had been receiving a salary since November. None of the three of us had been paid the management overrides as most of the money coming in was going to SMCI. The only way we could pay SMCI the money that you were demanding was by not paying my commission in the amount of over $39,000. In other words, I was subsidizing the money going to you by withholding payment of my personal commissions. So when you claim you had to constantly beg for monies rightfully owed to you, that is an outright lie!
2) Your words THE BIG DECEPTION: Yes David did transfer money from the corporate checking account into the corporate savings account. As the controller, he is perfectly within his rights to do so. He did this at a time when we had over $70,000 in our checking account and it was prudent to set aside money as a safety net. And YES he did not want to tell you about it because every time we had a balance in the checking account you would demand more money and try to intimidate David into issuing you a check for more than you had coming. This caused a big conflict with you and David. Each time that happened, David would ask me about it so that all three of us were in on the discussion, especially since it would mean that by paying you, David and I could not take any of the money that was owed to us.
Some of the discussions David and I had, that you refer to as “behind your back” were about paying you monies that you did not have coming. We discussed whether you really had a serious financial need or were just being greedy. It is unfortunate that your daughter overheard a part of that private conversation and misinterpreted it. We also had several meetings with you about the same subject.
Every time you saw a positive balance in the checking account you demanded more money and would ignore the fact that most of the amount was needed to cover ongoing expenses. You, David and I were supposed to each take the same percentage from our management override account and you and I were supposed to take equal percentage amounts from our commission accounts. So when you demanded to be paid from those accounts, we should have all taken the same percentage out of our respective accounts.
On many occasions we paid out money to you, even though paying you meant that David and I would have to forgo taking the money owed to us. We did this because we felt that you had the greater financial need, as David’s wife works and I have a SS income and we both live a little more conservative than you do, and have fewer financial demands from our families.
Despite our agreement to forgo our commissions and overrides until we had a enough money, you were paid money out of these accounts to cover your request, even though there was not enough money for David and I to draw our share. After all these compromises we made for you, in your “Reasons for Dissolution”, you had the audacity to accuse David and I of stealing from you. You have also told people that I had a secret bank account that I was putting the money in. THIS IS ANOTHER BLATANT LIE. Joe, I just don’t understand how you could have that kind of mistrust, when David and I were making sacrifices in order to give you the money you ask for.
One thing that seemed to set you off was the Miller Job and the fact that your daughter Christina said she had called that client. Even if she did, she never made the appointment nor did she ever issue the appointment to me. I have on my I-phone the message I received from Jim Miller and will show it to you if you like. That call came to me at 11:50 am on April 1, 2014. I wrote the order the next day on April 2nd. I did not receive any appointment from anyone in the phone room. And as I have already told you, I did not record it as a Cowfeather lead but instead classified it as a self-generated lead as that is what it was. So SMCI received 16% less the 10% owed to me for self-generation of the lead.
There are many other statements and misrepresentations that you state in your letter but frankly I am tired of addressing each point as I have already given you documentation to show you are WRONG on all of those issues.
We have also reached a settlement with you on all issues and we have paid you all the money that you had demanded in a very threatening way. We did not agree to that settlement because of your threats, but rather because we felt it was a fair amount to pay out for any and all equity you felt you had coming from CDC. However, you are still responsible for ½ of Bob Capron’s debt of $4,737.90 as “you and I ” did personally guarantee the advances that resulted in that debt owed CDC. You are also accountable for the loss of revenue that CDC suffered as a direct result of your abrupt move-out. And you also need to address how you will pay CDC for its share of the equity in the furniture that you took. I did not deduct any of these amounts from your settlement because I felt you were under a lot of stress and really needed that settlement money. So once again we put your needs ahead of our own.
After paying your settlement, I was still owed $19,629.65 from CDC in commissions and management overrides and David was owed $1,664.61 from CDC in management overrides. We could not draw any of this money because we paid you $10,000.
We could have and would have arrived at the same settlement with you had we just sat down and talked it through. Why you felt that you had to move out in the middle of the night and concoct a lot of falsehood, threats, and outright lies is beyond me. I personally, CDC and David have always been upfront and straight with you. We have paid you money, by not taking monies owed to us.
However the CDC Corporation does not have the same compassion that David and I have had for you, and at this time you owe CDC an estimated amount of $13,368.95. This amount includes the following:
An estimate of $3,000 for the equity in the furniture you took out of the office.
Half of Bob Capron's debt or $2,368.95.
An estimate of $8,000 in lost revenue for 2 1/2 weeks, that you caused when you abruptly removed all the furniture and equipment, phones, office staff, sales staff and installation crews from the corporate offices. CDC can justify you taking office staff as they were mostly your family paid through SMCI and were not CDC employee’s. But to proselyte the salespeople and install crews that were employees of the Corporation cannot be justified or tolerated.
At first, I thought that the way you had handled this seemed very vindictive and juvenile and your actions have cost CDC a lot of MONEY. After some thought and conversations with you, I have concluded that you have constantly been under a lot of financial stress which has caused you to become depressed and paranoid and conjure up all sorts of falsehoods in your mind.
So where do we go from here? That is up to you. I have written this letter because I could not let your allegations go unanswered as they affect David’s and my personal reputation and integrity and that affects our family’s and our standing and reputation in our trade industry.
I understand that you have let several people read your “REASONS for DISSOLUTION”. To set the record straight I think your first step should be that you send a letter to CDC retracting all of your allegations and that we have worked out all of our differences.
I did feel that the present set-up that we had could have work if we wanted it to. As long as you were willing to meet me halfway and be willing to compromise, I was willing to work with you, remembering “compromise is the cornerstone to diplomacy.”
BUT YOU HAVE TOLD ME AND MADE IT CLEAR THAT YOU DID NOT WANT TO CONTINUE THAT AGREEMENT AND THE AGREEMENT ENDED WITH THE COMPLETION OF THE OAKLAND JOB.
Sincerely,
DINO Gilli, General Manager
Custom Development of California
P.S. David got the new bill for our insurance and it is based on our actual record. And as David and I predicted, it comes out to 42% of the payroll and that is exactly what I told you it would be.