Passes & Canyons Blog

First let’s address the investigation into possible financial misdeeds at ABATE of Colorado:

At our District 10 meeting on Sunday, Metro Regional Representative Larry Montgomery confirmed that, at State of Colorado direction, the Denver Police fraud unit was brought in on the matter. To recap, the ABATE board discovered some financial irregularities, investigated, and ended up firing State Coordinator Terry Howard for a “failure to perform” her fiduciary duties. The situation was then reported to the state, as required by law governing 501(c)3 organizations. At the October D-10 meeting we were told that the state would decide what happens next.

The state decided that going to the fraud unit was what was next, and Larry said that unit did an investigation and has now turned their report over to the District Attorney to decide where it goes from here. There is no timetable as to when any decision will be made or any action taken.

Now let’s turn to the group’s financial woes, which are in fact a fight for life or death.

Bruce Downs, a long-time ABATE member, has been chosen the new state coordinator by the board, pending resolution of one minor issue regarding who can serve as state coordinator. Bruce spoke at length about the problems, how we got there, and how we hope to get out of them. I’ll try to cut it down to the basics.

A number of years ago ABATE was one of only a few organizations offering motorcycle rider training in Colorado. ABATE was bringing in more than $1 million a year in training revenue, and the organization became dependent on that cash flow. In recent years new competition has emerged and the landscape has shifted a good bit as well. However, no one at ABATE was sounding the alarm and things continued as before, even though the revenue picture was changing.

Update 11-25-14: I’ve been contacted by Ben Hochberg, who ran the training program for several years, and he assures me he was sounding an alert, but nobody listened. I’ll have more on this soon.

In January of 2013 a $40,000 loan was taken out and later that loan was replaced by another one. The terms of the second loan were onerous. Service on that loan is now costing ABATE $287 a day. Larry and Bruce both declined to name names or provide details, but said that a lack of organizational oversight permitted this bad deal to be made. Now the group has to get out from under this “deadly” (Larry’s word) burden.

Bruce told us that “ABATE is now being run by committee.” This means that one arm of the organization cannot commit the group to anything without the OK of the other, relevant arms, and the board makes all final decisions.

As part of that, he also said, ABATE will focus on its true mission, being a motorcycle rights organization, with rider training a secondary pursuit. Training classes are being cut and training bikes are being sold. Revenue from these bikes will be a significant part of making ends meet for the immediate future. Each district in the state will raffle off one bike, several will be placed with a consignment house for sale, and others will be listed on craigslist.

All paid staff members have already “fired themselves” and are performing essential duties on a volunteer basis. The printed Spokesman newsletter will be published online only next month and will cease publication after that. From then on, Bruce will issue an update every other week on what is happening and where matters stand, and the district reps will be expected to pass this along to their members.

Meanwhile all the districts in the state have been asked to send all their funds, minus $50 to keep their checking accounts open, to the state. District 10 voted on Sunday to do that. An appeal has been put out to members for donations and the Motorcycle Riders Foundation, the national equivalent of the state-organized ABATEs, passed along the appeal nationwide. Responses were immediate, ranging from a couple pledges of cash to “Your problem–too bad.”

If possible, ABATE would like to raise $40,000 from investors to purchase a certificate of deposit, which would be used to secure a loan on better terms so as to pay off the “deadly” loan. Those who put in money for the CD would be paid back with interest at the end of the CD’s term, seven or eight years. Bruce estimated the payments on the new loan would be around $500 per month, versus the current $287 per day. If the group defaulted on the new loan, the bank would take the CD and all the investors would lose their money.

Although Bruce expects it to take at least a year to get the organization fully sorted out and on a new, more sustainable path, whether or not it will survive to carry out these plans is currently the biggest issue. It should be decided within the next two month, he projects.

These were Bruce’s closing remarks:

“It’s time for the choir to start singing. This is not going to be Bruce’s organization; it can’t be one or two people. . . . I know everybody gives a lot of time; you’ve got to give more. I don’t know what else to say, right now we’re sink of swim. We’ve got maybe 30, 45 days, to figure it out. We’ve got to make ABATE a business like it should have been all along and we’re going to do that, if that’s what everybody wants to do. If everybody wants to sit back and say, ‘Ah Larry will do it or Bruce will do it,’ it ain’t gonna happen.”

Biker Quote for Today

You wouldn’t be riding a motorcycle if you weren’t an optimist.

Tags: ABATE fraud investigation

This entry was posted on Monday, November 24th, 2014 at 11:50 am and is filed under ABATE. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.