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National Arts Club President Aldon James Steps Aside

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ALDON JAMES
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GRAMERCY PARK -- O. Aldon James, the president of the National Arts Club, is stepping aside to take a "well earned vacation."

The club's board held an emergency meeting Monday night where they decided James, their president of 25 years, would take some time off. The club's vice president will succeed him as acting president.

"President Aldon James has requested that the board of governors spend the next couple of months looking into how we can improve our operational structure while he will be taking a well earned vacation," according to a statement released by the board Monday night. "In his absence Dianne Bernhard, first vice-president, will be acting President."

The club's spokesman did not immediately respond for comment.

The venerable club at 15 Gramercy Park South has been embroiled in controversy since DNAinfo first reported allegations that James was secretly using club apartments to hoard antiques, art and other junk he buys at flea market, and that he rented apartments to himself, his twin brother and a family friend at below-market rates.

But it has proved difficult for board members to quesion the club's management. Last month James sent an angry missive to board members disparaging three of them who attemped to voice concerns about various issues at the club.

The club returned to the spotlight after James' twin brother, John, left a reported $100,000 worth of jewelry in the back seat of a cab that was returned by driver Zubiru Jalloh. The club then forgot to invite Jalloh to an awards ceremony it staged in his honor.

Most recently, baby zebra finches turned up dead on the sidewalks around the elite arts enclave. Locals pointed fingers at James, who admitted to buying finches but denied releasing them. The investigation into the dead finches has hit a wall since no witnesses have come forward.

James' tenure has been rife with battles, including fights with tenants in the club's apartments over rent stabilization, rifts with Gramercy Park locals over access to the gated green space and challenges from members trying to pry open the club's operations.

The club also faced a Manhattan District attorney investigation that resulted in a 2003 guilty plea of his twin, John, for using the club's nonprofit tax status to buy jewelry he sold for personal profit.

John James served five years probation and three months in a psychiatric hospital, and agreed to pay more than $500,000 in restitution and fines.

The club also had to pay $150,000 in back taxes on transient rooms it rented out, and its dining room manager pleaded guilty to sales tax evasion, paying back more than $275,000.

Aldon James railed against alleged mismanagement of the club by his own predecessor when he came to power 25 years ago -- accusing the prior arts club president of keeping the club's finances a mystery to members and accusing her of racking up enormous travel expenses.

Now James' practices have attracted scrutiny -- including a $37,000 tab for club travel expenses, according to tax filings. Independent audits of the institution obtained by DNAinfo also reveal concerns by auditors that the club has been operating under lax fiscal oversight.

The 2010 draft independent audit report by O'Connor Davies Munns & Dobbins found several red flags in the club's financial behavior, including the practice of leaving blank checks unsecured and failing to sufficiently monitor the club's debit card, enabling one employee to use it to rack up $21,000 in personal expenses before the board became aware of the problem.

Experts said board members of nonprofit organizations chastised by an independent auditors should take heed.

"If an independent audit points out financial improprieties, there would be an affirmative duty of the board to create a compliance system," said Jill Manny, NYU Law Professor who heads that school's National Center on Philanthropy and the Law. Manny declined to speak specifically about the National Arts Club, but agreed to speak about the general law.

Gregg Fisher, founder of investment and tax management firm Gerstein Fisher, who sits on another nonprofit board, said insurance wasn't enough to shield board members in cases of mismanagement.

"A lot of boards have insurance to protect themselves, but there's still liability. They're still at risk," Fisher said, speaking generally about nonprofit law.

He added that if an independent auditor pointed out problems in management, board members "better explore it and keep good notes," because "this is a core function of the board, particularly where directors have been made aware of improprieties in the past."

The 2010 audit found that the club ignored its own stated financial procedures, including requiring two signatures on checks of more than $10,000. It also found that the board cut handwritten checks with little to no backup information about their destination.

"As in previous years, we again noted a high number of handwritten checks, some with no support or back up," the auditors wrote. "We highly recommend that this practice be discontinued and all checks be generated from accounts payable."

Auditors also decried the club's habit of leaving checkbooks unguarded, sometimes in an unlocked drawer, as the practice "creates the possibility that a blank check could be taken by an unauthorized individual and then executed and presented for payment."

The club's management promised auditors last year that they would correct the problem.
A spokesman for the club did not return repeated requests for comment.

One ex-board member, who recounted that the board did not look at the "nitty-gritty" financial details, explained that board members were uncomfortable with the limited financial information to which they were given access.

"I was worried when I was on the board, the board would get sued for malfeasance or misappropriation of funds," said the former member, who asked not to be named, for fear of retaliation.

But he said he and his former colleagues would brush away the concerns, because "The responsibility is spread out among a lot of people who think 'Why should I stick my neck out when Aldon will cut it off?' People get shunned if they speak out."

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