The Vanguard

Falls Cable Access...whatever happened?

Posted by Jefferson Davis on Aug. 1, 2008

Falls Cable Access

Posting update

The Vanguard never imagined with our first posting just 28 days ago that we would have had some 5,500 visits so far.

All we can say is, "Thank you."  The rankings of our postings in popularity are as follows:

1. "State Agency Cites Village Clerk's Office" - where the office has been incorrectly interpreting and disseminating state election law over the last 5 years.
2. "Happy 4th of July Menomonee Falls" - a celebration of our incredible heritage and history with links to our country's most sacred documents and songs.
3. "The Great Garbage Debate" - an in-depth look at what has really been going on with the landfill agreement for the last 14 years and the $17 million shortfall for the new library, police station and village hall that the taxpayers will have to pay for at 100% starting in 2016 or earlier if something is not done.
4. "Village President...not a bad gig if you can get it" - questionable professional, political and personal dealings between the Village President and businesses.
5. "Falls Fest...how did it come to this?" - late tax returns, losing money, large cutbacks in giving, favorable real estate deals with Village Trustees and Falls Fest directors who serve on both Boards.

We promise to try and keep our community informed without fear of those who don't want the "truth" to be known by citizens who have been told by the press and individuals for years what "they" wanted them to know instead of what should have been known by our community all along.

Whatever happened to Falls Cable Access?

A reader recently wondered why the local press never followed up on the new agreement between the Village, Time Warner Cable and Falls Cable Access and asked us to provide some updates.  Again, we apologize for the length of this posting.  But there is so much material that needs to be covered and updated.

The Vanguard  will attempt to provide an update from a number of perspectives:

1. Origin of Falls Cable Access.
2. Confusion created by Falls Cable Access in 2003-04.
3. Attorney hired by Falls Cable Access for failure to file federal tax returns.
4. Tactics of Falls Cable Access Director.
5. New funding agreement with Time Warner.
6. Effect of Supreme Court ruling.

A huge thank you to the volunteers who help with the operations of the cable channel, the taxpayers who pay their monthly cable access fee (tax) and Time Warner for providing the cable channel and for returning the some $275,000-$300,000 annually to the taxpayers of Menomonee Falls who initially made the payment to Time Warner as part of the agreement with the Village. 

This posting is a review of policy, accountability and oversight of Falls Cable Access and the Village Board not the volunteers or the programming.  So often as is the case with government, agreements are signed and plans are made with little or no follow up.  Citizens have the right to know what is going on with their government without the fear of being attacked or accused by those who take exception to the questions being raised about the use of their (the taxpayer's) money.

Origin of Falls Cable Access 

The Vanguard  has reviewed many documents regarding Falls Cable Access.  We invite the challenge to any of these documents and will gladly print those challenges if warranted.

Falls Cable Access apparently was created as a 501 (c) 3 private non-profit and independent corporation separate from the Menomonee Falls Village Government in 1991-1992 as part of an exclusive agreement with Time Warner Cable and the Village Board through Ordinance 102-27 (www.menomonee-falls.org) that would be up for review approximately every 10-15 years.  This agreement covered all subscribers to Time Warner for cable television and internet.  

The IRS, in an April 26, 1992 letter to Falls Cable Access, granted them a 501 (c) 3 private non-profit designation (EIN 39-1712550 www.guidestar.org) requiring them to file annual 990 Federal Tax Returns for any receipts, at the time, over $25,000 and would be exempt from any federal income tax.  With the exception of maybe one year (1992?), Falls Cable Access did not file any 990 Federal Tax Returns as was required by federal law and the IRS subject to $10,000 annual fines and or penalties for every year that tax returns were not filed.

Falls Cable Access, by agreement with Time Warner Cable and the Village, was required to provide "access" for all citizens to the local cable channel without any censorship or review of programming as explained in the Village Ordinances and Falls Cable Access Policies and Procedures.

Falls Cable Access also had a Board of Directors that was responsible for the accountability and oversight of the Cable Access Channel to the community and Village Board on a regular basis each year.

The operation of Falls Cable Access continued with very little notice and under the radar screen until the early/mid 2000's when questions started being raised by some Village Officials and the local newspaper about an enormous taxpayer's surplus account (approximately $550,000-$650,000) that had been accumulated by Falls Cable Access with very little, if any, oversight by the Falls Cable Access or Village Boards.

Supposedly, the operations of Falls Cable Access were exclusively staffed by volunteers, who it was later found out to have been paid for their volunteerism, while costs were incurred for equipment, supplies, materials and misc. expenses. 

Confusion Created by Falls Cable Access    

Some Village Officials and the local newspaper in 2003-05, wanted an update on how the taxpayer's money was being spent by Falls Cable Access and a general overview of the operations as required by Village Ordinances.  What transpired after that was quite troubling and disturbing that something of this magnitude could have gone on as long (10 years or more) as it did without any apparent oversight or accountability by the Village Manager, Cable Access or Village Boards. 

Rather than making their records open and transparent to the public as is required by Federal and State Law and Village Ordinances, Falls Cable Access went into a defense mode until the Village Board voted unanimously in 2004 requiring Falls Cable Access and the Village Manager to make their financial records available to the public.

Time Warner Cable was required to charge the taxpayer/subscriber a monthly access fee/tax and was then required by agreement to return that money to the Village on a semi-annual basis.  The Village Board directly received 60% of these fees/taxes and Falls Cable Access directly received the remaining 40%.  Most of these fees/taxes were in the $1-$5 per month range that inconspicuously showed up on the taxpayer/subscriber monthly bill.

According to Village Hall documents released to the public, the taxpayers have paid over $2.5 million to Time Warner Cable in taxes/fees between 1991-2005 with Time Warner Cable returning $1,529,452 (recently about $175,000 annually) to the Village Board for the General Fund and $972,648 (recently about $115,000 annually) to Falls Cable Access.  The Vanguard  asked the Village Manager for the 2006-07 receipts and the office stated that they don't have those records when the checks from Time Warner in the past have been sent to the Village Manager's Office.

A number of interesting observations and comments were made at the time that clearly bring the matter into a proper perspective.

When various Village and Falls Cable Access Officials were confronted about the non-filing of tax returns and the whereabouts of the money at the time, the following is a small sample of their insight that was published in various news outlets and or emails:

• Former Village Manager Dick Farrenkopf, who was directly responsible for the oversight of Falls Cable Access, said, "I don't see anything here that concerns me."
• One Falls Cable Access Official said, "No harm, no foul.", when asked about the large amount of funds.
• Falls Cable Access Board Member Judge Hurt said, "I believe it has been over 8 years since I last attended a meeting or have been notified of a meeting."  Hurt later resigned as Municipal Judge for financial disciplinary reasons from a division of the Wisconsin Supreme Court in 2006-07.
• Trustee McDonald said, "The corporation was created outside the auspices of the municipality to keep it free of government interference."
• One Falls Cable Access Official said, "Falls Cable Access is a private, not-for-profit corporation, completely independent of the municipality."
• The Village Attorney was listed on the roster for Falls Cable Access Board but said, "I have had no dealings with them since becoming Village Attorney in 1999."
• One Falls Cable Access Official said, "All of a sudden the money is pouring in and we can't spend it fast enough." 
• The Village Attorney said in an email to a citizen from 9-27-04, "Based on the facts presently available to me and the applicable law, my conclusion is that the FCAC is not a legal arm or sub-unit of the the Village, and therefore not an "authority" under the statute I cited in the previous paragraph.  It is instead more like a contractor with the Village."
• Village Attorney stated in a 9-9-05 letter to the Attorney General's Office in response to a citizen's complaint that, "I have and continue to hold the belief that the FCAC is a corporate entity separate and apart from the Village.  The Village cannot legally control the corporation."  
• Falls Cable Access Official wanted to know in an April 8, 2005 communication to a citizen inquiry, "Do you turn all of your neighbors who try to do nice things in to the IRS?"
• One Falls Cable Access Official stated in an 8-6-04 email to a Village Official who was asking questions about the operations of Falls Cable Access at the time, "This is why people are after you.  As I struggle with 2 kids in college, overcome health problems and continue to slide into debt, it makes me sick that I have contributed more than $500,000 in services and 3,000 hours of services to this community." 
• One Falls Cable Access Official stated in an 8-11-04 email to the Village Board at the time, "If the Village Board attempts to take any of these funds and put them in the Village General Fund, I will immediately begin charging for my services at the standard going rate for television program production."
• Falls Cable Access website stated at the time, "Falls Cable Access is a private, not-for-profit corporation not subject to the open records request submitted by newspapers.  Any request for information must come from the Village of Menomonee Falls."  
• The current Village President said of Falls Cable Access, "The Village just forgot about it (Falls Cable Access)."
• One Falls Cable Access Official said something to the effect in a communication to a citizen about possible IRS fines and or penalties, "If there are any fines or penalties from the IRS, the taxpayers won't have to pay them.  Those responsible will pay the fines and or penalties."

Falls Cable Access had Strosahl & Co., a member of the Menomonee Falls Chamber of Commerce, look at their records in September of 2004 at the taxpayer's expense.  In their communication to Falls Cable Access at the time, Strosahl & Co., specifically stated, "We will not be conducting an audit or review of the financial statements of Menomonee Falls Cable Access Corporation, and therefore we will not express an opinion or any other form of assurance on them."  

A number of interesting disclosures were found as a result of the records being looked at in the report as well as in the local paper:

• Receipt deposits from Time Warner Cable have exceeded $25,000 every year since 1991 which would normally require the filing of a 990 Federal Tax Return on an annual basis which Falls Cable Access did not do with the exception of maybe one year.
• 35, $5 and $10 Service Charges between 1998 and 2004 to the Falls Cable Access bank account.
• 5, $3,200 consulting payments made to an individual on the Falls Cable Access Board without an agreement or contract in place and apparently no corresponding W-2 or 1099 Statements to that individual in 2003.  This member also runs their own private video production business of which the business and studio locations are unclear as to where they are.
• A $3,000 payment to an individual on the Falls Cable Access Board in January of 1995 and apparently no corresponding W-2 or 1099 Statements to that individual for unclear reasons.
• Numerous payments ($500 and up) to a member of the Falls Cable Access Board over the years for unclear reasons.
• Many, many "no documentation" entries for expenses to the corporation since inception including those of a member of the Falls Cable Access Board.
• Credit card payments to MBNA of nearly $10,000 for "office supplies". 
• A school district employee paid by the corporation over the years without any corresponding W-2 or 1099 Statements.
• Sequences of checks appear to be missing.

The Village Board unanimously approved in the fall of 2004 to have the Village's accounting firm, Reilly, Penner and Benton, LLP along with the Village Manager, look at the records of Falls Cable Access at the taxpayer's expense.

The accounting firm and certain members of the Village Board made some additional observations:

• Found that one member of the Falls Cable Access Board took in, according to them, some $9,000 in video sales.  It is not clear where the money went. 
• Found a paid contract of over $2,000 from the Village to a member of the Falls Cable Access Board for a "visual community profile" that was never produced and apparently was not reported for income tax purposes in 2001.  Another $4,000 was requested several years later for the video that was never completed and apparently has still not been completed as of 2008.
• The accounting firm stated that, "It would appear that the Corporation should have filed form 990 for each year of operation."
• The accounting firm found nearly $26,000 being paid to the Menomonee Falls School District for various individuals and or district employees for reasons that are unclear without any apparent corresponding W-2 or 1099 statements being issued.
• Questions remain about the use of the government studio and equipment for possibly private and or personal reasons. 

A majority of the Village Board were sympathetic to Falls Cable Access and decided not to do anything as a follow up to the issues and concerns that were raised leaving the matter as it had been for many years with the exception of some minimal window dressing changes.  

Of course when Falls Cable Access was confronted about all of these issues, they hire an attorney, presumably at the taxpayer's expense again, to threaten those citizens who pay the taxes and fees with a lawsuit which is so typical of some current and former "leaders" in Menomonee Falls that include the likes of Joe Greco, Sue Jeskewitz, Sharon Ellis and the Clerk's Office when they are confronted with the truth. 

Hopefully the good citizens of Menomonee Falls will continue to ask questions of their government and not be intimidated by these types of power plays. 

Attorney hired by Falls Cable Access for Tax Return Fiasco

Falls Cable Access quickly hired an attorney to help them out of the potential mess they found themselves in with the IRS because of neglect and not filing tax returns.

The attorney, which was the same attorney that wrote the original Articles of Incorporation for Falls Cable Access in 1991, somehow convinced the IRS in May of 2005 that Falls Cable Access is an "affiliate of a governmental unit" which is in total contrast of what the Village Manager, Village Attorney and some members of the Village Board believe.  Accordingly, Falls Cable Access is not required to file the annual 990 Federal Tax Return.

The taxpayers once again paid the legal fees for the oversight of Village Officials from the last 15 years.

Somehow this attorney was able to convince the IRS that Falls Cable Access is part of the Village Government when the Village Manager and Village Attorney do not believe they are along with some of the Village Board Members stating publicly that they believe Falls Cable Access isn't part of the Village Government either.

The Vanguard has learned just this week that Falls Cable Access has for some mysterious reason finally filed their 990 Federal Tax Returns for 2005 and 2006 on November 1, 2007 which is way past the tax filing deadline of May 15, 2005 and May 15, 2006 respectively.

Why would Falls Cable Access spend the taxpayer's money to get a legal opinion from the IRS that specifically states they do not have to file 990 Federal Tax Returns and then turn right around and do it anyhow?

It would be interesting to see if Falls Cable Access paid any fines and or penalties to the IRS for not filing their required tax returns as to how much and by whom.

The tax returns (www.guidestar.org) do make some interesting disclosures that show Falls Cable Access had $630,000 of the taxpayer's cash on hand as of 2006.

They also showed that Falls Cable Access made over $21,000 in interest income for 2006 which would require them to file a 990T Federal Tax Return for non-business income.  The Vanguard did not see this form as being filed.

The Vanguard could not find one other cable access corporation in Wisconsin that didn't file a 990 Federal Tax Return.

Tactics of the Cable Access Director

Usually when so many oversights like this occur and so much neglect takes place in government, people are usually disciplined or relieved of their duties.

Not in Menomonee Falls.  Somehow those who are responsible for these oversights and this neglect are rewarded.  The Cable Access Board decided to finally make it official and actually legal to pay someone for the part-time operations of Falls Cable Access at $45,000 a year out of the taxpayer's pocket.

Citizens have asked for a number of records from Falls Cable Access only to be stonewalled by the Director and the Board over the last several years.  The Village was extremely cooperative with the request of records and provided them at no charge to the taxpayers from 2003-2005.

Wisconsin State Statute 19.35 provides detailed information for the right of citizens to obtain public records.

The Municipality (www.lwm-info.org), a statewide publication for municipalities, also provided in depth information in their January 2006 publication about the legal rights of citizens to obtain public records putting the cost at $.15 a page as reasonable and advises that copying fees should not exceed $.25 a page according to the Wisconsin Department of Justice.

Even the Federal Government doesn't charge for the first 100 pages of public record requests under the Freedom of Information Act (FOIA) and only $.20 per page after that.

Falls Cable Access, in a May 16, 2006 letter to a citizen requesting public records, required a fee of $1.50 per page for 58 pages or $87.00.  Why?  What is there to hide?  Needless to say the citizen left the request open until the matter could be resolved in a different way.  It would be interesting to see how the attorney for Falls Cable Access was able to convince the IRS that they are part of the Village Government when no one else believes they are as part of a Public Records Request.

The Vanguard has also learned  that the Cable Access Director has numerous complaints on file with the Menomonee Falls School District and the Menomonee Falls Recreation Department because of behavioral problems that have been brought to their attention as a result of participating in an adult sports league.  Suspension from the league is the next step for the Director if the behavior continues.  Fortunately the department is doing the right thing by stepping in to resolve the issues. 

Various members of The Vanguard have also witnessed and experienced boorish and unprofessional behavior of the Director at the taping of the Village Trustee Chamber Forum in 2008 when the Director tried to forcibly remove individuals and Village documents from the taping session which was not his responsibility.  Fortunately the high school principal stepped in to settle the matter so the taping could take place for the candidates without any further inappropriate threats from the Director.

Another experience with the Director involved the blocking of the full broadcast of citizen town hall sessions in the Spring of 2007 about village issues and government operations on the Cable Access Channel which is provided for by the 1st Amendment, Village Ordinances and the Policies and Procedures of Falls Cable Access.

The Director tried to come up with every imaginable excuse possible to make sure the sessions were not broadcast because of an obvious personality conflict that occurred with the producer of the programs.  The Director even had the sessions pre-screened by himself and the Cable Access Board which is strictly prohibited by the 1st Amendment, Village Ordinances and the Policies and Procedures of Falls Cable Access. 

The Director was part of a campaign in 2004 with former Village President Joe Greco and State Representative Sue Jeskewitz to "Save Menomonee Falls" as part of a website, presumably created by another Falls Cable Access representative, that had an African American mannequin as their mascot to "go after" certain Village Officials that didn't agree with them.

Of course Trustees Jeskewitz, Steliga, McDonald, Ellis and the current Village President were part of this campaign with their email addresses showing up on the communication from Greco and Jeskewitz. 

The website accepted rumors and presented the African American in what appears to be a slave position with a sign hanging from his neck and a collection box at his feet.  The African American was prominently and proudly displayed on the website and out in front of a hair salon for one of the group's supporters on Appleton Avenue.  The current Village President also had the African American's sign in front of his business on Main Street.  How cruel and inhumane.  One would think that Menomonee Falls had moved beyond this type of behavior decades ago.

These tactics will continue unless the public is made aware of them and requires that something be done.

Falls Cable Access paid about $150,000 for improvements to the studio at the high school in 2006-2007 apparently without any competitive bids.  Falls Cable Access stated in the Village's Report in 2004 that their policy was to bid out every purchase over $20,000. 

For damage control purposes, Falls Cable Access contacted the newspaper for coverage and nominated themselves for an award(s) in August of 2006 with the Wisconsin Association of Public Education and Government Access Channels.

The WAPC stated at the time that there were 38 members statewide in the organization.  The award(s) are given by members of the WAPC from across the state.  A member must nominate themselves to be considered for an award. 

New Agreement with Time Warner Cable

The Village Board recently renewed the agreement with Time Warner Cable in 2006-07.

The new agreement calls for 100% of the taxpayer's money (about $275,000-$300,000 a year) in cable fees to go to the Village and nothing to Falls Cable Access.  Falls Cable Access will have to submit a budget to the Village Manager just like everyone else has to each year to justify their expenses.  Time Warner was even willing to pay for Capital Budget purchases as part of the new agreement above and beyond the $275,000-$300,000.  It is unclear if the Village ever took advantage of their generous offer or just simply made the taxpayers pay for those purchases.

The Vanguard contacted the City of Milwaukee and Waukesha County to see how their funding arrangements are with their 501 (c) 3 non-profit vendors for excess monies at the end of their fiscal years.

Both the City and County require these vendors to use the leftover monies for the following year's expenses or it is returned.  It can not be carried over or held in a slush fund.

According to the 2006 tax return of Falls Cable Access, they have $630,000 of the taxpayer's money on hand and it should be returned to the taxpayers or the Village.

The Village Manager will not comment on what kind of policy he would like the Village Board to adopt regarding the excess monies of Falls Cable Access.

The taxpayers also paid somewhere between $20,000-$25,000 in legal and consulting fees in 2005-2007 for the renewal of this agreement that called for more oversight and accountability by the Village Board of Falls Cable Access on a semi-annual basis.  To date, it appears that none of these recommendations have been implemented by the Village Manager or the Village Board. 

Effect of Wisconsin Supreme Court Ruling

The Wisconsin Supreme Court (www.wicourts.gov)  ruled on July 11, 2008, involving a similar situation with the City of Beaver Dam Economic Development Corporation, that requires them to publicly post their agendas, publicly publish their minutes, make their meetings and financial records available to the public because the Corporation is funded with taxpayer's money.

The Vanguard is aware that the Attorney General's Office has been in contact with the Village Attorney regarding Falls Cable Access for some time now and was waiting for this ruling before making any decisions about Falls Cable Access.  It will be interesting to see what the AG's Office will do with this ruling and what the effect will be on Falls Cable Access.  For years, Falls Cable Access has maintained that their records don't have to be made public and if they are it will come at an exorbitant cost.

What do you think?

Please let us know what you think should be done with Falls Cable Access by considering the following questions.

Question 1

Should Falls Cable Access return the $630,000 taxpayer's surplus account to the Village and or the taxpayers?

_____yes

_____no

Question 2

Should the operations of the Cable Access Channel be competitively bid out like other Village operations are?

_____yes

_____no

Question 3

Should Falls Cable Access annually file 990 Federal Tax Returns as is required by federal law?

_____yes

____no

Question 4

Should citizen programming be allowed on the Cable Access Channel without any censorship or pre-screening which is allowed by Village Ordinance and the Policies and Procedures of Falls Cable Access?

_____yes

_____no

Question 5

Should Falls Cable Access make their records available to the public as is required by law at minimal or no cost?

_____yes

_____no

Question 6

Should Falls Cable Access disclose if they have paid any fines and or penalties to the IRS for not filing their tax returns and if so, by whom and how much?

_____yes

_____no 

Next week..."Sir, please put your hands above your head and spread your legs now."  You won't believe this one.