WHO ARE THE CONCERNED ARTISTS AND MEMBERS OF THE NATIONAL ARTS CLUB?
We The Concerned Artists and Members of The National Arts Club are a rapidly growing group of NAC members composed, just like The NAC as a whole, of artists and lovers of the arts, that believe our club has lost its democratic structure and accountability during the years of the O.Aldon James' and his companion Steven U. Leitner's administration. This belief is manifested by serious questions regarding the Club's finances: its loss of millions of dollars in potential revenue from the Dining Room/catering operations within the clubhouse, the large-scale raid by Manhattan District Attorney Robert Morgenthau and seizure of club records, the resulting continuing full-scale investigation by the DA of the club' administration, the subsequent indictment and guilty plea of Dining Room Manager Joseph Frappaola to grand larceny charges, the twin brother of The National Arts Club's president, John James, being arrested and quickly pleading guilty to a felony charge of tax fraud for using The NAC's tax exempt status to avoid sales taxes owed on hundreds of thousands of dollars in fine jewelry sales, the restructuring of the Club Constitution to make it virtually impossible to elect club officers not approved by the James/Leitner administration, an election process that may violate New York State law and repeatedly violates accepted protocols of parlimentary procedure, and the years of extremely costly and questionable litigation promoted by Aldon James in the Club's name against members trying to reform James/Leitner policies.
These lawsuits have ranged from efforts against elderly and severely ill members the administration wished to evict from Club-owned apartments, to unrelenting efforts to keep its membership list totally secret from members wishing to communicate with members on club business not approved by O. Aldon James, to several against the Gramercy Park Trust for issues ranging from tree cutting policy to rat control procedures to the most recent involving purported racial discrimination incidents involving large groups of schoolchildren O. Aldon James escorted or arranged to enter into the privately-owned park, without first consulting the Trust, then having been turned away. Every previous lawsuit filed by Aldon James against the Trust in the name of The National Arts Club has been lost at a cost of hundreds of thousands of dollars to the club membership. Lawsuits designed to thwart members from exercising their rights under New York State law for not-for-profit corporations has cost the Club hundreds of thousands more. After much fanfare and media promotion of the racial discrimination suit by O. Aldon James over a two-year period, having involved himself and The NAC as a plaintiff, Mr. James quietly dropped out of the lawsuit in February 2003. The Concerned Artists has dedicated itself to restore accountability and a democratic structure to The National Arts Club and to reaffirm its purpose of being a club dedicated to the promotion of the arts. All these issues are presented in depth inside this web site.
BACKGROUND ON NATIONAL ARTS CLUB MANAGEMENT
ISSUES DURING THE JAMES ADMINISTRATION
O. Aldon James, Jr. has been president of the National Arts Club for 17 years, during which time the club's workings have become increasingly secretive, and increasingly hostile to artists and especially artist residents. Steven U. Leitner, the one Gramercy Park trustee not named in the racial discrimination lawsuit, is a real estate lawyer, close associate and companion of Mr. James, and had remained on the Board of Governors of the club all during the present administration until 2001. He was also the architect behind the club's successful effort to exempt itself from rent stabilization guidelines, and is in charge of apartment matters at the club. Leitner, despite his role as a trustee of the Gramercy Park trust, took an active role against the Gramercy Park Trust and organized a committee to plan the future of the park after the racial lawsuit. Mr. Leitner was elected to the Trust in 1990 after a bitter battle in which Mr. Leitner's actual residency in Gramercy Park was contested due the extensive periods of time he remained at his residence in Florida overseeing real estate interests there. Mr. Leitner retained famous divorce lawyer Raoul Felder as counsel. His legal bills were footed by The NAC. Besides Mr. James removing himself and NAC as plaintiffs from the racial discrimination suit in February 2003, all candidates sponsored by Mr. James for Trustee elections in March 2003 were trounced in the general Park Trust election supervised by the Honest Ballot Association. In fact, Mr. James pulled out of the lawsuit a short time after the electoral defeat of his candidates.
The arts club is a non-profit tax-exempt organization, whose constitution now states it is organized "to stimulate, foster and promote public interest in the arts and to further the education of the American people in the fine arts."
In contrast, the original constitution stated: "The objects of the National Arts Club, as stated in its certificate of incorporation, are -- to promote the mutual acquaintance of art lovers and art workers in the United States; to stimulate and guide toward practical and artistic expression the artistic sense of the American people; to maintain in the City of New York a Clubhouse with such accommodation and appurtenances as shall fit it for social purposes in connection with art; to provide proper exhibition facilities for such lines of art, especially applied and industrial art, as shall not be otherwise adequately provided for in the same city; and to encourage the publication and circulation of new suggestions and discussions relating to the fine arts."
During James' tenure, over the years the club constitution was amended in several other ways to plant control of the club squarely in James' and his associates' corner. During James' tenure, the club began refusing access to its membership list to its members, which prevents members from gathering enough signatures to nominate board candidates and present alternative candidates to Mr. James. Approximately 666 signatures -- out of approximately 2,000 members -- are now required to nominate candidates to the Board of Governors. This amount must include 2/3 of the resident members AND 2/3 of non-resident members, even if the latter lives in distant parts of the country or overseas. Yet, the inaccessibility of the mailing list makes such a requirement impossible to achieve. The club is only required to mail information about alternative nominees one week before the annual meeting, making an adequate and fair presentation of these candidates impossible. No alternative candidates have ever been nominated during James' tenure. All candidates are selected by a small Nominating Committee hand-picked by Mr. James. Certain core allies of Mr. James serve year after year on the Board while others are not nominated again after their 3-year terms expire. Certain people also suddenly turn up appointed members of the Board without ever undergoing a formal election process.
Despite board members' terms being limited to three years, Mr. James has managed to stay president of the club for 17 years through a loophole in the revised constitution. In contrast, the original constitution limited board terms to five years, including the president. At the 2002 annual meeting and general club election which was presided over for the most part by Mr. James' personal attorney Andrew Fisher, hundreds of absentee proxy votes were declared by Mr. James in favor of all administration candidates and issues in favor of O. Aldon James without any form of documentation or proof. As long as Mr. James serves on the Board, he qualifies to run for president. And since he controls the elections process and he or his attorney sets the procedures of annual meetings and the vote counting, he will continue to be president.
Club annual financial reports according to established accounting methods are not mailed to members, unlike other institutions in the non-profit world who issue lengthy, detailed reports annually. In contrast, the original constitution required an annual "detailed statement of the financial condition of the club . . . and such statement shall be printed and a copy forwarded to each member within sixty days after the expiration of the fiscal year . . ."
Several years ago, because James and Leitner argued that the club was an educational institution rather than a social organization, the club succeeded in exempting itself from rent stabilization guidelines on its apartments. Educational institutions, unlike other non-profit organizations, do not fall within New York City's rent stabilization rules. Mr. James and Mr. Leitner then forced out several elderly and cancer-stricken artist members who had protested the exemption from rent stabilization as well as the club's new secrecy surrounding the membership list and finances. The club was fined $3000 in a contempt of court proceeding for subsequently attempting to retaliate against protesting members by trying to expel them from the club. Recently, a similar effort seems to have been launched with the declaration of a "tribunal" to "investigate" certain members who the James/Leitner administration considers a threat.
Since O. Aldon James's tenure, in every instance artists with families have been denied suitable apartments for their families and ultimately left. As of the time of the filing of the racial discrimination lawsuit against the Gramercy Park Trust, there were no Black or Latino residents, particularly artists, at the club. No children resided at the club. The club has no visible process for allocating apartments, and warehouses possibly up to 20 vacant apartments despite the shortage of affordable housing for artists in New York City and the club' purported commitment to the arts. There is the appearance that apartments go to friends and associates of Mr. James. There are numerous reports that apartments far below market rates are allocated to known allies of Mr. James who are wealthy and/or have no artistic pursuits. A number of governors on the Board enjoy apartments there as well, also reported as being below-market. It is quite difficult to know the exact level of rents collected per apartment or the exact number of vacant apartments. No financial report has been presented to the membership by the administration for years regarding the amount of income or its disposition from the 45 club-owned apartments and other leased Club facilities, nor their usage status. Based on average rentals in the Gramercy Park area, this revenue should be well over $1 million annually. A study made by local newspaper Town & Village, using older tax returns filed by NAC, estimated the actual revenue from these apartments to NAC as less than 50% of the going neighborhood rate.
In the mid 1990's, after a series of bitter court battles costing The NAC hundreds of thousands of dollars waged by the James/Leitner administration to prevent independent inspection of the club's books, a fully independent auditor MR Weiser & Company gained access by court order and the intervention of the Attorney General of New York to a portion of The NAC's accounting records. The right to this audit was fought for by a number of NAC members increasingly concerned by erratic financial reporting from the administration and by the memory from the early years of his administration of an unsolved embezzlement of club funds reported by the NY Times after Mr. James notified the Board many weeks after the time it was first discovered. The specific amount lost was unclear. The Board was informed that a former bookkeeper was believed suspect. Her whereabouts were reported no longer known; and because it was said her husband had diplomatic immunity, no prosecution was attempted by The NAC. The administration produced an unsigned, undated letter from the NAC's bank informing the Board it was willing to make restitution to the club for clearing forged checks in which the original name of The NAC as payee was rewritten using colored liquid paper appropriate to the check color. A check from the bank for $25,000, payable to Board member Dan Schiffman, was produced and Mr. James informed the Board that Mr. Schiffman would in turn transfer these funds back to The NAC. Despite continual non-cooperation from the administration with records reluctantly provided piecemeal by Mr. James, the "Weiser Report" found considerable questions concerning the high legal expenditures of the James/Leitner administration, the peculiar lack of any reported income from the entire Dining Room/catering operation within its premises, and the lack of information concerning donations made to The National Arts Club, officially a charitable institution.
In 2001 the New York State Liquor Authority found The NAC to be in violation of the terms of its liquor license and it was fined $5000. In January 2002, New York City District Attorney Robert Morgenthau ordered a large-scale raid and records seizure of the club by 25 to 30 agents. Mr. James and his administration continue to be the subject of an ongoing investigation by the DA in regards to possible grand larceny and tax evasion. In December 2002 as a result of this continuing investigation, the NAC Dining Room manager Joseph Frappaolo pleaded guilty to grand larceny charges stemming from the withholding of over $160,000 in tax receipts from the Dining Room operation.
In July 2003, John James, the twin brother of The National Arts Club's president Aldon James, was arrested and quickly pleaded guilty to a felony charge of tax fraud for using The NAC's tax exempt status to avoid sales taxes owed on hundreds of thousands of dollars in fine jewelry sales, thereby avoiding prison time. However, he had to spend a minimum of 90 days at a Connecticut psychiatric facility, serve five years' probation, and pay restitution and fines of of $529,213, plus a $60,000 fine.
