Richard Lesher

I few items that are eating at me regarding this whole mess SCV has put itself in. 1) It was never once mentioned in the rebuilding plan communicated by SCV leadership that getting the organization back on track with regulatory compliance was a priority let alone priority #1. All energies and resources toward that so called rebuilding effort have been wasted. 2) Why were economic resources expended towards retaining the instructional and design staff of the Corps as a higher priority than retaining CPA Firm services to execute the critical task of an independent financial audit which is the foundation of compliance. In response to the question about the requirement of Independent Audits. 1) The audits have always been required. I am the Board Member in 2006 that reestablished new CPA relationships that executed those audits. 2) At the end of my time on the Board of Directors the CPA firm would send a representative to the Board Meeting (around the end of the calendar year), and the representative would give a presentation and discuss the Independent Audited findings, and explain the financial report of the audited financial statements. Those meetings were open to anyone that wanted to attend in person. 3) The correspondence from the Attorney General left the door open for SCV to provide the exception why SCV no longer needs to provide an audit. It does not appear SCV has attempted to do this.

I posted the links. This is a great question. I am the loudest voice, and there are quite a few people directing me towards information who are happy to share information and hints of data, and use my voice. That said........ I literally downloaded these letters in PDF format from the State Attorney General's Office. I did provide the links for the sources. Through this source I also looked at Blue Devils and Mandarins, both of who appear to be entirely in the clear. AS WELL!!!!!!!!!!!!!!!! I also got my hands on Blue Devil most recent Audited Financial Statements. Of course I don't have those for SCV. So to your question, where did I get this information. I am embarrassed to say it has been public domain this entire time through the state of California. I came across it previously in the last few months, but I finally decided to click on the file links one by one and sift through EVERYTYING. See not all the file names are named in a manner that gives any hint of the contents of the file. So it's like finding a needle in a hay stack. So sometimes one has to look through every single straw of hay (or just use a magnet 🙂 That said, I can tell you now, I am benefiting from my 4 years as a Military Intelligence Analyst with the Army.

Hello again. Sorry, I work this weekend, so I can't be more active on this thread right now. I do have a new morsal for consumption. This is in response to my inquires back in January regarding SCV's bingo regulations compliance. At the time, I was not getting responses to my correspondence from the SCV Board of Directors. In fact I couldn't find any actual e-mail contacts for any of them. So I reached out via linked in, or anything else I could manage to scrounge up e-mails. I only got the attached response. Also around this time, SCV management was monitoring the SCV Alumni Facebook Forum, and every single posting had to be approved by an Admin. So what I did was pose the question to the Forum knowing it full well would be censored by the admins. I also posted in that question telling them I new they would censor it, and I was going to pose my question to Drum Corps Planet, and bid them a nice day. Yes, I was being a complete Troll, but I did approach them first before here. What happened next was I was contacted by an Attorney claiming to represent SCV. As it turns out I am told that this individual attorney is a personal friend of Jeremy Van Wert, and that he was an SCV Alumni from the Front Ensemble section (Pit). Now, what that attorney wanted from me was to met with them, and discuss how I came to conclude that Vanguard was out of compliance. Now, at that time I never said that. I was posing the QUESTION if they were. It was clear, they were flexing attorney muscles to intimidate me because you see, in my efforts to reach the Board of Directors it was an attorney that contacted me first it wasn't any of the Board. Now......... I theorize Jeremy and his attorney associate were acting independently from Amy Lipshy (Board President). I say this because I never responded back to the attorney. There was absolutly no way I was going to engage with an SCV attorney without my own sitting next to me. So I was waiting for my personal friend attorney to help guide me through this situation. What happened in the next few days is Jeremy's attorney reached out to me again with legal language (which I feel was a rather impatient time line for a lawyer given how my interactions are with attorneys are in my economic consulting side gig). I was still waiting for my attorney buddy to be able to discuss this with me. So I certainly wasn't going to replay back to them inside of a week (which is entirely reasonable). What happened next was the above e-mail from the Vanguard Board President Amy Lipshy. Her response allowed me to entirely disengage from Jeremy's attorney. For you see, all I ever did was pose the question. So I finally replied to Jeremy's attorney in a manner that Amy's response closed the matter (at that time), because I asked the question, and she responded in the official capacity of as representative of SCV to the question of regulatory compliance. Now.................... If you read her response, and take into consideration all of what is going on I interpret her message to mean that she is attempting to shut the door on the bingo question, and all possible regulatory questions I might have about other topics. so I understand "Vanguard complies with all rules and regulations" To mean this means everything I can think of or have not thought of at the time of that e-mail. Considering what is going on now, I would expect that above message to mean she is only specifically meaning in regards to the Bingo question, which now at this point is a pretty thing argument anyway, because that's probably in violation as well by virtue that there is no way they have any unsolicited donations in amounts large enough to cover down on Bingo payroll expenses, let alone get past the regulatory prohibition for delinquent nonprofit entities in California to distribute donations. *************** There is a lot going on here. Thank you if you read this whole thing.

Reminding folks who I am. Richard Lesher, CFA (Chartered Financial Analyst) and prior board member/treasurer of Vanguard and from 2006 to 2012. I'm also currently a commissioned officer in the US Army Reserves. So I guess that gives me some legit credentials to have certain opinions. I've recently been censored from the SCV Alumni Facebook forum (which is under control of SCV the organization with a director level employee still as an Admin). So I will now voice my serious concerns here for the whole Drum Corps community. As of 14-April-2023 Vanguard is Delinquent as a Charity in the State of California. https://rct.doj.ca.gov/verification/web/SearchResults.aspx https://rct.doj.ca.gov/verification/web/Details.aspx?result=42a872a8-e982-469d-9401-bfc112f97bf4 The problems started as far back as 2020 with Vanguard's failure to supply the State Department of Justice with audited financial statements. At this point the Attorney General is merely pointing out that Vanguard failed to provide Audited Financial Statements. A year passes, and Vanguard has still not provided Audited Financial Statements to the California Attorney General. Now the Attorney General is warning Vanguard of penalties to include up to having their status Revoked. Vanguard is no longer in good standing. We are now at September 9, 2021. This is a very important date folks as we all know this is basically the start of the drum corps season for the year 2022, and we all know what happened after that. Oh and the following month we have the Attorney General reminding Vanguard they still haven't provided Audited Financial Statements. Here an indication of a duplicate payment for registration (I guess they get "some credit" for trying), but a reminder they not in compliance without independently audited financial statements. ***************** What does this all mean? Being delinquent in the state of California with this Charity Registration means that: 1) Vanguard cannot solicit donations. They are, and they have been, and it's reported on their 990 filings (Grants, and such). 2) They have been delinquent since 15-MAR-2020, so all solicitation thereafter is in violation of the law. 3) I will bring up the Bingo Salaries again here and I will not take it down this time. a) Bingo employees cannot be paid with bingo income. b) OK, Bingo employees "are not" being paid with bingo revenue. c) Well, if Vanguard cannot solicit donations, and they cannot disperse donations then what are Bingo employees being paid with? i) where ever the funding came from it's an illegal source ii) even if the funding was from savings and investments, those funds originated from donations and bingo, neither of which can be dispersed while Vanguard is delinquent Remember, Vanguard operated as like nothing was wrong during the entire competitive year of 2022 and was in violation the entire time. Vanguard also took audition fees for 2023 and right on the heels of that terminated the season. So someone high up knew where they were going in terms of finances and decided to take money in anyway for services they new they couldn't provide. Jeremy Van Wert is not the singular cause of this gross mismanagement. OK, I'll be back later with more. These three letters from the California State Attorney General give me a lot of coverage and protection from defamation. So my future posts should be fun read for you all.

This is exactly how many non profit organizations run. SCV has burned it's bridges with a lot of competent folks who left it in frustration where they only go on to run other Corps and win rings there.

https://www.scvanguard.org/announcement-of-vmapa-executive-director-resignation/

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The idea has merit, but satisfactory execution is highly unlikely. What was the SCV Cadet corps is dependent on CA members, what was the SCV A-Corps has so much member talent coming from all over it makes logistical sense to be loser to tour locations (i.e. where are all the NASCAR teams HQ'd). But the execution of it will fall completely flat and deplete the organization of its economic means.

SCV will never get Silicon Valley Bingo Income anywhere else in the USA. They also own the building they are in, and surrounded by insane real estate prices. If they cash out of that situation that will be the end of them. SCV is able to keep 6X the bingo revenue they generate relative to the Blue Devils. If they didn't have insane fiscal mismanagement they'd be able to coast on Bingo all the way with just two Corps that run modest budgets, or one Corps with an insane budget.

Oh I understand how forums likes these work. I have to accept a degree of back and forth. That's the point. The major cause for that is unknowns from either point of view, and we are all without 2022 operating data. So what is very clear is SCV at the start of 2022 was in overwhelmingly the strongest economic position of all DCI member organizations and then went under at the end of it where no others, certainly not among their peer size corps did either. I want folks to call me out, I want folks to dig into the data and 990s and say I am full of it. I am being explicit for that very reason. They don't, not on any point of substance. Not yet anyway. I've about exhausted topics where I can pull my arguments from public information, and once I go beyond that then it turns into speculation (informed or otherwise) and topics of discussion where all parties viewing the conversation cannot validate the high points for themselves. SCV right now is on the rampage to shut down things being discusses that present the organization in a negative light, and specifically critical of the organizations leadership and management. So while they are censoring my factual and accurate discussion using 990 data they themselves made public on their website that still leaves our conversations around this topic of actual 2022 activity unknown. That's what this forum is for, just what happened in the days of the 2022 season. I don't know. I hear things, but I can't share it. What is public, or out in the open at least is that the entire Visual Staff was either fired or resigned in protest in the Spring of 2022. What was that about?

Rennick is going to be paid with funds from Bingo. Bingo staff is going to be paid with anything that is not Bingo. It's the chicken and the egg. Without Corps, there is a great reduction in non Bingo revenue that can be used the pay the Bingo staff that can raise the money to support the Corps. That's not to say Bingo cannot be run entirely by volunteers, but who's up for working for free so the executive management can make 6 figures.

Well they over paid for vehicles by about 2X relative to BD. Market losses would be minimal as the investment policy is very conservative, I know, I personally wrote it. Spending to build cannot come out of Bingo revenue, anything associated with the bingo hall has to come out of largely marching member fees, those are all very stable known cashflows. They still had an astronomical economic means relative to every single other DCI member organization.

POST REMOVED PENDING CONERSATION WITH SCV REPRESNATIVES. I will copy and paste it back when/if appropriate.

I've been on other boards of non profits and community entities. Basically, it's a job no one wants to do, and to do it correctly sucks the life out of you. Board members quickly default to auto pilot and entrusting organization employees at their word, and do not verify. As long as the bills are paid, and the organization's mission continues that's as far as the Board Members will take it. There are two overwhelming things I have observed that are astronomical risks to Youth Based Non Profits (like Drum Corps). 1) Sexual Predators 2) Financial Stability I feel the most important message I can get across to the Drum Corp community of leaders and board members is the above. SCV is not alone. They aren't. You all know this. They are the most visible at the moment and I'm providing additional entertainment. In regard to #1, this realization hit me like a freight train at the end of my Army Reserve Command assignment. See, I became a reserve soldier late in life so when I look at young soldiers I see myself in my marching years with SCV. When my command time ended a pair of young female soldiers came into my office (mind you, this is exactly why my office door remains open, and exactly why soldiers can only interact with their leaders with others present as well) and were gushing with gratitude from my leadership/mentorship and were wishing me well in my next assignment. It was all perfectly professional. But that's what it hit me. They would have felt that way toward just about anyone. I didn't do anything special. I only executed my duty in accordance with regulations and expectations. They were simply young and impressionable. I don't remember their names, but they will always remember mine. Someone in that position of leadership and trust is in a very powerful position to abuse, and non profits do not have the checks and balances in place the Military does (and the military is pretty bad at it based on media reports). In regard to #2. This is more straight forward, and in my experience and observation holds true in every scenario. It is a hobby of mine to follow collapsed companies, and then after the fact line up all their press releases with known financial transgressions and line them up together on a time line. Then the lies can be followed with what was actually happening at the time. So when Vanguard announced in September the cessation of the Vanguard Cadet corps in the same meeting they announced the retirement of the previous CFO the first thing I thought was "Ok crap, here we go..........." To my point of item #2. Wherever opportunity exists it will be taken advantage of. Now let me be clear. I am not saying that is happening here with SCV. As far as I know, controls are in place to make sure spending limits cannot drain bank accounts fast enough, nor can any funds be moved out of the investment accounts without the Board of Directors approval. I do get the impression there is no Board validation, I do not understand (I have a theory I will share in another post, and really stir things up) the Board's willingness to continue with it's current executive management team when two of the most critical measurements of competence have completely collapsed. 1) Financial stability 2) The mission of providing youth based performing arts programs. For example, it has recently been disclosed to the SCV Alumni at large that the SCV management team will present a Business Plan come April 1st for the promised result of getting the A Corps (at least) back on the competition field for 2024. Excuse me.............. but that means such a business plan only has 5 months to execute sufficient financial turn around from where they are now (which is actually unknown to the outside world, and even unknown to me) to be in a position to start coordinating a staff team, and start the audition process again. Remember, these are the same folks that in September stopped the SCV Cadet Corps, then continued to take audition money from kids for the A Corps several days before announcing the cessation of the A Corps as well. At the very least, this conveys to me there is no single leader with enough visibility over SCV's operations to see the entire picture let alone project a pathway toward recovery when they couldn't see the coming cliff. ********** To my main point I'm trying to get across to Drum Corps leaders and Board Members. You cannot take your eye off the ball, ever. It is imperative to your financial stability and the safety of our youth. Word of mouth trust is worthless. Employees need to prove it.

So now you are getting into juicy stuff here. See, the problem with that is SCV's current CFO discloses she was a forensic accountant in her LinkedIn profile. Worse yet, prior to her taking the position of CFO of SCV she was SCV's Board President for two years. Prior to her becoming the Board President she was the SCV Board Treasurer for 4 years, and the year prior to that she was an at large Director. All these can be validated by looking at the 990 of organization officers and duties. Now prior the CFO prior to her was also a Board member since 2013 (he came on to the Board as I left), and he spend 2 years as Treasurer prior to becoming CFO. Further what really pisses me off is when I was Board Treasurer all SCV had was an outsourced bookkeeper, an operations manager, and myself looking over the finances. After I left they took on a Finance Manager, and after he left they then made the position a Chief Financial Officer position. See where I am going with this, as the financial positions elevated in so called competency that was inversely correlated with financial performance. Drum Corps is not a financial derivatives trading desk. We all just need a competent bookkeeper to track expenses and revenues in a manner that allows leadership to forecast where business is going. The most complicated financial analysis one has to do for a Drum Corps is decide how to set up it's operational borrowing. One year we tried to do a fuel futures contract hedge, but those contracts even on a single basis are so large that it dwarfs our fuel needs. So it needs to be executed in coordination with other corps to buy in on the contract. So now we were herding cats trying to get everyone who has no money to submit funds to buy the contract. It never happened, we never got enough buy in quick enough to make the hedge work.

I understand that, but it probably hurt Blue Devils the most, and helped the little corps more so. Plus, sometimes a Corps would just have that ONE THING everyone wants, and corps that were good at that product selection now lose out. Then corps, that were better at pushing product at every opportunity also probably lose out. If a corps is good at souvies then they miss out, if they are not then it's probably neutral (but at least not a loss). It's a hard game.

Souvies was really never a money maker. The van, trailer, drop shipping product to the location of the Corps. Keeping the van fueled, the souvie staff fed, it really never panned out financially unless the Corp was winning (which it really wasn't in my day on the Board). Not saying it can't be profitable, but it's hard, and a Corps better not be left with season/show specific product at the end of Finals.

Well, the finances were not really OK at the end of 2019. A lot of bad decisions were timed for a perfect storm then followed by COVID. See, Charles Frost left SCV in 2019, also at that time, SCV had it's largest operating deficient in its history (look at the 990s folks) to that date. So at that exact moment in time things were not looking good, but they had a substantial investment reserve already built up. It was noting that was going to break them. Then the worst organizational departure happened. The person that discovered the bingo thefts back in 2005 who went onto become the Bingo Manager through 2019 and helped the revenues grow from $2M to nearly $6M also retired (she's in her 70's now folks, it's time). I don't know if the larger audience is aware, but at the end of 2019 SCV hired a new Executive Director that was a complete disaster. He didn't last a year before he was pushed out. He wanted to close down the A Corps, and make a community theater. So exit stage left. Had there been a 2020 competitive season it would have been a disaster for SCV. The spring was when they were trying to get rid of that guy (BTW, I warned them, the guy never managed a non profit budget more than $500K) COVID saved the competing reputation at the time, but it didn't help Bingo. See, the Bingo savior is now gone, COVID is in full swing, and the Executive Director that was just let go had ceased all Bingo operations refusing to even try and start up limited Bingo games within COVID health guidelines. So 2019, ends with the greatest operating deficit, loss of our 2018 championship Executive Director, and loss of our savior bingo manager. Brings on a disastrous new Exec Dir, and then finds the world in COVID with a new bingo manager, and new management team that do not convey financial acumen.

Well, the arrest was published in the local newspaper San Jose Mercury News. https://rec.arts.marching.drumcorps.narkive.com/gbcqistZ/scv-news-volunteer-accused-of-embezzling-from-bingo-losses-estimated-50-000

I'm 50 years old now, last time I dealt with this I was in my mid 30's. Back in 2005 two very critical individuals to SCV resigned from the organization that cause outside eyes to look inward. Rick Valenzuela who went onto lead the Phantom Regiment and take them to a Championship, and Myron Roseander who was a long time foundation of SCV show design. It is during that time at the conclusion of the 2005 season that I pushed back on the Board of Directors calling out the possibility of operational fraud, thefts, and errors across all levels that cannot be measured. SCV did not have any reliable bookkeeping or accounting practices that would allow it to even remotely track its business operations. The following month, the then Treasurer found hard evidence of bingo thefts, the local police were involved, I was vindicated i my assessment and soon managed to get officially elected to the Board of Directors in 2006. From there, Bingo income improved at an astronomical rate faster than we ever could have imagined over the next decade. That's what I am referring to when I mention Bingo thefts. 2005.

My name is Richard Lesher, and I was on the board of directors for SCV from 2006 through 2012, and was Treasurer for all but my first year. By profession, I hold the Chartered Financial Analyst (CFA) designation, and my financial career spans more than 20 years in banking, corporate finance, and institutional investment management. As well, I possess an MBA with a concentration in finance. At the beginning of 2016 I was asked to come back to SCV in a consultative capacity after Jeff Fiedler left, and help with business operations of SCV and give the Board of Directors a business report of SCV so they could understand what was going on. So effectively, I have intimate operational knowledge of SCV's business model that goes back to the late 90's (looking at data during my Board time), and through the first two months of 2016, plus what I am able to hash together from 990's thereafter. My tenure included being at the tip of the spear that called out the bingo thefts, and creating an era of financial transparency and unincumbered financial growth as we saw revenues nearly double from just under $2,000,000 to just under $4,000,000, and they continued to rise after I left, and 2019 ended to an all-time financial record for SCV with reported revenues of $5,959,825 per IRS Form 990. I made a career change at the end of my tenure on the SCV Board of Directors, joined the US Army Reserves, and I am now a Logistical Officer in the USAR, and commanded a Quartermaster Company whose military mission is to drive around with dozens of trucks and provide the capability to cook for half of a combat Division (any idea where that might come in handy for Drum Corps?). You can find me on LinkedIn. I also marched SCV between both the A Corps and the Cadet Corps from 1988-1992. I am here because SCV management has literally censored and banned topics of discussion critical, yet factual of their management and leadership. So, if I cannot speak to the Alumni of SCV more intimately I will share our dirty laundry here. Unfortunately, for the readers here, I literally will not point out anything not already illuded to in the 100+ page thread about SCV's 2023 season. I’m not the only one among Drum Corps Fans that can read a 990. I am however, the guy that signed the checks for 6 years, a 20+ year financial professional with the credentials to back my opinions. OK, here we go: ***** Make no mistake, SCV’s fortunes are not a function of COVID. Per SCV’s own disclosure you can find their latest 990 ending Fiscal Year 31-October-2021 https://www.scvanguard.org/policies-and-financials/ Scroll all the way down to the bottom on the above link. I can’t find any 990’s for anyone else that recent. The IRS hasn’t posted them. Yet SCV has posted them as I presume when they filed with the IRS. My point is, this latest 990 is the one that shows SCV’s financial position at the beginning of what became the 2022 competitive season. I will focus on economic means. 990 ending Fiscal Year 31-October-2021 Part X Balance Sheet Line 1 – Cash $929,172 Line 2 – Savings and Temporary Cash Investments $379,259 Line 11 – Investments – publicly traded securities $1,817,806 Total Financial Liquidity $3,126,237 At the beginning of what was the 2022 season SCV could have moved some money around and wrote a check for over $3,000,000. But there are liabilities as well, so I’ll be responsible about my assessment. Line 26 – Total Liabilities $1,221,103 If we true up all liabilities and start 2022 with a clean slate, SCV can still write a check for $1,905,134. There is absolutely no other DCI member organization with that much economic strength at the beginning of 2022. I took great pride in being part of the foundation that created that stability. Before the season even starts SCV has nearly $2,000,000 in liquid financial means (not just total assets) net of liabilities. Now let’s consider what they would have probably earned during the course of the operating year of 2022. Part I line 9 is typically $1,200,000 which is comprised mostly of member fees, auditions, and all other revenue that is not Bingo Gaming Revenue. Part VIII line 9c - Bingo Gaming Net Income prior to the 2022 season was $2,353,335 for year end 2021. It was disclosed in conversation by the SCV executive management that in 2022 Bingo was the worst it has ever been. So, let’s call Net Bingo Income in 2022 $1,000,000. SCV, at worst had over $4,000,000 available to them over the course of 2022 before taking on any additional debt. At the conclusion of 2022 it is disclosed partially by executive management that SCV is carrying operating debt from the competitive season (which is going to be due immediately) they can’t pay, and now both the A Corps and the Cadet Corps are being mothballed. What happened? I’m beside myself.