Thursday, March 13, 2008

Edith Wharton Restoration: Living the 'Gilded' Life While Wallowing in Massive Debt.

The Mount's fiscal woes are not going to be resolved anytime soon, and certainly not until the organization can get a handle on its incredibly profligate spending habits.

It also needs to start complying with basic IRS reporting requirements governing tax-exempts.

For example, during The Mount's slow season, CEO Stephanie Copeland enjoys full and free use of a furnished luxury studio apartment in a mid-town Manhattan high-rise.

This contributes to the current fiscal drain on the organization at the rate of "about $2,439 per month", according to The Berkshire Eagle.

In summer, when Ms. Copeland spends most of her time in the Berkshires, the unit is sublet.

Photo: Stephanie Copeland, President and CEO , Edith Wharton Restoration, Inc. at The Mount in 2003. -- Credit: Lesley Ann Beck for Berkshires Week.

A source familiar with the organization claims Ms. Copeland is fund-raising in the city and alleges that her efforts there bring in 70% of the organization's donations.

Yet, The Mount subsidizes Ms. Copeland's personal use of this dwelling despite the organization's years of withering cash flow and financial hardship that recently culminated in it missing its February mortgage payment to Berkshire Bank (two separate loans actually, one at an interest rate of 7.0%, the other at a whopping 8.75%, both collateralized by real estate [p.25]).

With The Mount unable to pull in sufficient operating capital for so many years now, it would appear that Ms. Copeland's 'fund-raising' efforts in Manhattan do not warrant keeping the expensive outpost that doubles as her pied-à-terre in the City.

(And with the CEO in New York all the time, just who is reaching out to the hearts and wallets of Boston's arts and social glitterati?)

Further, The Mount sent its CEO and at least one other official on overseas 'tours' last year, all in the name of fund-raising, of course, but at a time when the organization was just months away from insolvency, if not already totally broke.

The first, in late June, a 12-day cruise to the Mediterranean, which according to The Mount's Winter 2007 Annual News & Financial Report [p.13], included accommodations "aboard a luxurious 114-guest yacht to retrace Wharton's 1888 journey through this ancient sea", plying the waves on the Corinthian II and traveling "in elegant style worthy of the Gilded Age."
(Tour itinerary)

The 114-guest luxury yacht, Corinthian II. Stephanie Copeland, CEO of The Mount, cruised aboard while 'fund-raising' for the tax-exempt organization.

(Elegant indeed, it's worthwhile remembering that at the time Edith Wharton took this very same frill-filled, spare-no-expense journey, she was already well-to-do having been born into a wealthy family, and thus had the means to spend money as she desired. She was not taking from a publicly-supported charity to support her lifestyle.)

Ms. Copeland was aboard, of course, supposedly 'fund-raising' whilst visiting "Sicily and the Aegean, including stops in Palermo, Syracuse, Santorini, and Rhodes", and all this co-sponsored with the Alumnae Associations of four Ivy-League colleges.

Back in the Berkshires, with time out during the summer to take in the cool breezes off the back porch at The Mount, and having only just caught her breath from her breathless sea adventure, Ms. Copeland then embarked on her second Edith Wharton excursion of the year.

This one commenced in October and lasted for 13 days.

She was accompanied this time by another official with the organization, and continued her 'fund-raising', this time throughout Morocco on the coast of North Africa.
(Tour itinerary)

The two Edith Wharton Restoration, Inc. executives apparently enjoyed "sumptuous lodging and fine dining", visiting "private homes, gardens, and palaces in the red and white cities of Rabat and Sale, medieval Fes, the Roman ruins of Volubilis, and Marrakech, and much more," according to the Annual Report.

A view of Rabat in Morocco. Stephanie Copeland, CEO of The Mount, accompanied by another organization official, visited the ancient city while 'fund-raising' for the 'not-for-profit'.

This jaunt, sun-bleach included, was "Sponsored by The Mount".

Perhaps the most revealing aspect to these executive vacations (working or not) is the insight they give into the managerial competence of Ms. Copeland, as well as to the individual herself.

She took not one, but two extended overseas jaunts at a time when her organization was metaphorically bleeding-to-death (which problem partly was due to her free-spending decisions as CEO).

Significant too, is that neither vacation was paid for by Ms. Copeland herself in spite of her $97,000 annual salary.

As mentioned above, The Mount co-sponsored the first, and entirely foot the bill for the second.

So at a time when fiscal austerity would have been the prudent course of action at Edith Wharton Restoration, Inc., with an overwhelming need for critical attention to be paid to the urgent task at hand of raising from as many as possible emergency sums to keep up with the organization's crushing debtload, Ms. Copeland was off retracing Edith Wharton's wanderlust.

Quite telling also was Ms. Copeland's seeming need to emulate Ms. Wharton's privileged 'life experience' by, of course, traveling first-class in sumptuous Gilded Age style. (Too bad Ms. Copeland didn't see fit also to emulate Ms. Wharton's habit of paying her own way.)

Wouldn't Ms. Copeland's fund-raising expertise and valuable time have been better utilized rustling up donors from amongst her society contacts in New York and Easthampton?

And if help weren't available there, what would've been wrong with casting for life lines amongst the swells on Beacon Hill, Back Bay, Chestnut Hill, Provincetown, Martha's Vineyard and Nantucket (all located, dare one be reminded, in The Mount's home state)?

Failing that, there are the literary-atuned in Philadelphia and Washington, D.C..

Ms. Copeland's time and the organization's dwindling resources would surely have been better spent reaching out within the wealthiest country on Earth, rather than sightseeing in the Mediterranean and in Moroccan shopping bazaars.

To make matters worse, and for reasons as yet unexplained by John Keegan, CPA, the organization's long-time auditor and tax preparer, of the Pittsfield firm, Lombardi, Clairmont & Keegan, The Mount has failed to report its CEO's (and other key employees') various 'perks' anywhere on its annual IRS Form 990 return even though the CEO's use, for example, of the NYC digs appears to meet the IRS definition of a 'taxable fringe benefit' for which Ms. Copeland may be liable for federal income tax (in which case the organization would also be responsible for handing over to IRS the applicable withholding tax).

There is also the small matter of the organization's $130,642 foreign currency transaction loss briefly noted on page 21 of the Fiscal 2007, Form 990.

What is the nature of this transaction, and just how does a literary arts institution/museum in western Massachusetts manage to sustain a foreign currency loss of any amount, let alone one of such magnitude?

Foreign currency transactions and the high risks associated with them are generally the province of billionaires like George Soros, and international goliaths the size of General Electric Company.

Until Edith Wharton Restoration, Inc. stops operating like a rigged Las Vegas slot-machine calibrated to go off only when its CEO puts in her token, there's little reason to believe this organization is going to survive -- and large creditors like publicly-traded Berkshire Bank ought to take heed, and stop the shenanigans.

That or be prepared to write off a whopping loss. <<<<

Related articles:
Edith Wharton to IRS: 'Mount This!' -- Failure to report 'fringe benefits' could leave CEO, Trustees at The Mount liable.
TAX CHEAT! How Alan Chartock conspired with WAMC to avoid paying IRS -- Failure to report CEO's taxable 'perks' could leave trustees liable.

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Anonymous Anonymous said...

I have wondered for years what the long term purpose of this organzation was. It a beautiful house and garden but after you visit it once there is really no reason, that I know of, to visit again. They seem to turn their nose up at any practical or ongoing intellectual use of the property to increase exposure and visitors.
If they can make it, good for them. Though they won't be getting my help.

Thursday, March 13, 2008 4:45:00 PM  
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