Austin Poets Between a Pit and a Pendulum

     AUSTIN, Texas (CN) – It’s hard enough to be a poet without having a treasurer embezzle your money, but that’s what an Austin nonprofit says happened to it.
     Austin Poets International sued James L. Jacobs on July 30 in Travis County Court.
     Calling itself a “pillar of the local arts community,” Austin Poets says it had to file the lawsuit to preserve its existence as a nonprofit.
     Austin Poets has three major programs: its Austin International Poetry Festival, which began in 1992; an annual di-verse-city poetry anthology for adults; and a youth anthology competition.
     Austin has an active poetry scene, which includes the Austin Poetry Society and Austin Poetry Slam. Paid-up members of the Austin Poetry Society can compete in contests, meet with influential poets and receive poetry publications. The Austin Poetry Slam has weekly competitions and sometimes hosts national events.
     Austin Poets International says it hired Jacobs as treasurer because it needed “competent, enthusiastic professionals to join the organization’s governing body.”
     Jacobs took control of the records and finances and became the “only person with access and keys to API’s post office box, and securing access to API’s bank accounts, debit cards, and credit cards,” according to the complaint.
     The group says it began suffering financial problems after Jacobs took control of the books, though it had always been able to pay its bills and control its budget. But it found it was “suddenly facing budget shortfalls that threatened its ability to continue producing the annual poetry festival and its two publications,” according to the complaint.
     In March this year Jacobs offered to loan it money in exchange for a paid position as executive director, Austin Poets says. It says he offered to resign as treasurer for a monthly salary and commissions based on revenue.
     But in June, the poets say, they “that the cause of the precipitating financial difficulties was Defendant himself.”
     “As far back as December of 2013, and perhaps earlier, he had been forging checks drawn on API’s BBVA Compass Bank account. Defendant had also forged the signature of Lynn Wheeler-Brandstetter to open another Frost Bank account. … The account opened through this forgery was initially funded with API money, including a $1,440 check from Manor Independent School District for children from that district to participate in API’s annual poetry festival. Another deposit of $3,750 into that account [came] from the Texas Commission on the Arts via the Texas Comptroller. Defendant removed at least $3,098.65 over several different transactions, including cash withdrawals and transfers to his personal account,” the complaint states. (Partial bank account numbers omitted.)
     Austin Poets says Jacobs depleted two other of its bank accounts and there is another $20,750 in unaccounted liabilities attributed to him. It claims he also has equipment and property, including a laptop computer, that he bought using its money without authorization.
     The group says when it tried to take back control, Jacobs took other steps to hurt it.
     “(W) hen defendant learned that API had begun to discover the unauthorized transactions that had deprived API of thousands of dollars in funds and began closing accounts to prevent additional financial damages, defendant backdated a check from a now-closed BBVA Compass Bank account and attempted to deposit it into an account over which he had sole control – specifically, the Frost Bank account which he had opened with Lynn Wheeler-Brandstetter’s forged signature,” the complaint states.
     “When defendant learned that API had begun closing the bank accounts to stop the continued fraud, defendant began calling board members and leaving abusive voicemails. Finally, when he realized that most or all of his access to API funds was ending, he called an ’emergency executive committee meeting’ and accused Lynn Wheeler-Brandstetter and Mark Wendel of misconduct.”
     Austin Poets’ attorney Eleanor Ruffner provided Courthouse News with copies of Jacobs’ independent contractor and employment agreements with API, and a temporary restraining order granted against him.
     “Mr. Jacobs ensured that he was the one with sole access to the bank account and other records of API, which was one of the reasons the TRO was necessary – so that API could regain control over its own finances and review the banking records to see how much money is missing and where it went (which is currently unknown),” Ruffner said.
     “We hope that the financial impact of Mr. Jacobs’s actions will not result in the cessation of API’s activities in the community. It would be a shame if the Austin International Poetry Festival didn’t occur next April, but at this time we do have concerns that the future of API is in jeopardy.”
     Jacobs’ attorney Jeffrey Hersh wrote to Austin Poets’ executive committee on July 28 that the dispute is based on “lack of communication,” and accused its board members of breaches in fiduciary duties.
     “Lynn Wheeler-Brandstetter and Mark Wendel have essentially stonewalled James in the past month, refusing to respond to repeated phone calls, texts and emails,” Hersh wrote in the letter, attached to the complaint as an exhibit. “Board members have a fiduciary duty to communicate with the executive director timely and fully,” Hersh wrote.
     The letter continues: “About a month ago, James learned that he was stripped of signatory authority for API’s account at Compass Bank. Later the account was closed. More recently, API’s account at Frost Bank was closed. These acts were apparently taken by Lynn. James is not aware of any other bank account that API may currently have.
     “What is going on here? No nonprofit can function without a bank account. And no executive director can perform his duties without signatory authority for the nonprofit’s bank account. Not only is this an egregious breach of fiduciary duty by Lynn and those who have at least acquiesced in this action, but it breaches James’ employment agreement, which expressly states that he would have signatory authority.”
     Jacobs’ attorney also objects to the poets’ changing their website, “to shut down registration, a badly need source of revenue for API. To date, James has not received any explanation for this misconduct.”
     He claims that hurt Jacobs because his employment is based on a percentage of revenue. “James demands an explanation for the silence, and the various unexplained breaches. He would like assurances that board members will act within their authority,” Hersh wrote.
     Ruffner told Courthouse News that “Jacobs is not currently authorized to represent himself as a representative of API, and we do not expect that to change any time soon.”
     Jacobs did not respond to messages requesting comment.
     The Austin Poets seek actual and exemplary damages for breach of fiduciary duty, fraudulent inducement, defalcation and unjust enrichment, and imposition of a constructive trust.
     It also filed a motion to disqualify Hersh and his firm FisherBroyles from representing Jacobs due to a conflict of interest. It says Hersh has acted as its attorney in various matters in the past few years.
     A hearing on the restraining order has been set for Aug. 13.

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