Feature: The many questions about the Kimmage defence fund
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Saturday, May 04, 2013

Feature: The many questions about the Kimmage defence fund

by Shane Stokes at 9:35 AM EST   comments
Categories: Pro Cycling
 
Those involved in current dispute speak at length, but what happens next?

Paul KimmageLast Saturday should have been a memorable day for Paul Kimmage. He was in studio with the well-known radio presenter Marian Finucane, was profiled on her weekly programme and spoke to her about his life as a cyclist and journalist.

The interview went well, he received valuable exposure on the national broadcaster RTE, and received acknowledgement of the important work he had done during his second career. For someone who hasn’t always felt his work has been appreciated, it was a fulfilling moment.

However, whatever feelings of satisfaction he had dissolved quickly when he received word of an unexpected problem.

“I was notified after walking out of the studio that Lesli had concerns about the money, where it was and what it was used for,” Kimmage told VeloNation this week, referring to the Cyclismas editor Lesli Cohen and the defence fund which was set up for him last autumn.

In short, it appeared that the money had been moved from the Pay Pal account linked to the ChipIn.com page for the fund without the knowledge of Cohen nor NYVelocity’s Andy Shen, who had also helped promote the fund. Cyclismas co-founder Aaron Brown had control of the account, and a concerned Kimmage wanted to know what was going on.

“I contacted Aaron straight away about this. I asked if the money had been used for his business. He said it hadn’t,” he said. “I asked him to provide me with a detailed statement showing the payments that had been made from the defence fund. He refused to give me that detailed statement, other than to say that there was $64,000 in it.

“I then asked him to transfer the $64,000 to a neutral account, and he has refused to do that. He said that he was involved in a legal dispute with Lesli, and that he was liable for the defence fund in relation to taxes.”

Brown sent Kimmage what appears to be a single page PayPal account screenshot. Bearing the name ‘Aaron Brown,’ it lists $64,821.75 as the total of the account. The range of the statement is from April 22nd to April 29th, with no transactions listed during those dates.

Kimmage was not satisfied and sought a detailed statement from Brown, showing a history of transactions and other information. His lawyer also said that this would be necessary, but those details were not provided.

With no guarantee that he would have access to funds, Kimmage felt he had only one course of action. “Basically I was left with no choice but to call my lawyer and say ‘that’s it, stop,” he said, referring to his criminal complaint against two top UCI names. “I couldn't do anything else.

“It could be that the money is still there. If so, that is great, but what if it is not? I am still going to have to pay the bills at the end of the day. So I told him to stop.”

Background to the fund:

The defence fund in question was originally set up after Kimmage was sued in January 2012 by former UCI President Hein Verbruggen and the current chief, Pat McQuaid. They claimed he defamed them in articles in the Sunday Times and L’Equipe, and wanted to drag him before the courts.

He was later served with a summons on September 19th, compelling him to attend a trial in Switzerland on December 12th 2012.

At the time the writer was unemployed and had no means to pay for the case. Cohen, Shen and the Twitter persona Digger Forum resolved to do something about that, setting up a fund to help him. The public responded in droves and a total of over $90,000 was raised.

Conscious perhaps of the high level of support for Kimmage but also taking a knock because of the Lance Armstrong/US Postal scandal and USADA’s reasoned decision, McQuaid announced in late October that he and Verbruggen were suspending their suit.

While the case wasn’t guaranteed to be at an end, Kimmage knew that there were funds in place to help him fight it if it was reactivated. However he didn’t want to leave things like like that.

On November 1st he and his Swiss lawyer Cédric Aguet lodged a criminal complaint and denunciation against the current and former UCI presidents, on the grounds of ‘slander/defamation, denigration and for strong suspicions of fraud.’

Conscious that his case was turning from defence to attack, he made clear at the time that refunds would be possible for anyone who didn’t agree with the course of action. “At the moment I haven’t touched a cent of it, although I have spent some money myself on this. Those who have donated will be given the choice whether they want to continue to donate to it to what is now an offence fund or whether they want to withdraw the money,” he told the Irish radio station 98FM at that point in time. “It is totally up to them what they want to do with it.

“If they are not happy with the course of events, they will be more than entitled to receive their money back. There is no problem with that at all. Ultimately, I said from the get-go that when the fund was set up, that in a scenario that I would win the case or the case was dropped, all the money would be refunded to the donors. And that is very much the case as we sit here today.”

Kimmage confirmed to VeloNation this week that he isn’t certain about the costs involved in that particular action, and was waiting to hear back from his lawyer. However he believes that as the criminal complaint would be taken up by the public prosecutor if accepted, that any associated costs would likely be minimal.

At present he and Aguet are appealing that particular action, with the prosecutor originally turning down the complaint.

The bigger concern is the dormant McQuaid/Verbruggen case. If that is reactivated, he would be once again exposed if the defence fund is not available. Legal fees could quickly mount up in that situation; the early part of the defence cost approximately $21,000, which was paid to Aguet in December.

Kimmage admits he is worried that the current limbo could prompt McQuaid and Verbruggen to relaunch their action.

“It is a concern, yes,” he said. “As things stand, I have no guarantees the money is there and would be provided if needed.”

Crumbling of a partnership:

In the months since the USADA reasoned decision, the UCI has dropped the Independent Commission it had pledged would be allowed complete its audit of the governing body, and which it had claimed would completely clear its name. McQuaid has continued to push for what he hopes will be a successful re-election in September and his third term as UCI president.

He was recently nominated by Cycling Ireland, that country’s national federation, but then saw this nomination rescinded and the matter put to the members of the same federation, who will vote on the issue in an EGM on June 15th.

Paul KimmageAt the same time, Kimmage has worked on rebuilding his career after losing his job with the Sunday Times in January 2012. He has been working on Gerard Vroomen’s iPad magazine 2r. He was also planning projects with Brown and Cyclismas, including a personal website, a series of long interviews that he would carry out with big names in the sport which would run on Cyclismas and also, potentially, a Tour de France magazine-type analysis show that would run on a long-running website each day of the race.

In recent months Kimmage met Brown on several occasions, both in Girona where the Canadian now lives, and also in Ireland when the latter travelled over in late April to attend a talk Kimmage and fellow Irish journalist David Walsh gave to a large crowd.

On that trip Brown and his family were shown around by Kimmage, and also looked after in other ways. “I couldn’t put them up in my home as my son was having his 21st, but I paid for their stay in a hotel in Dublin Airport,” Kimmage said.

At the time, he was okay about doing that. “Really, everything was fine and dandy between myself and Aaron until I got that email from Lesli on Saturday.”

For Cohen, her questions had started several days earlier. “It became apparent that something was amiss when some of our staff and vendors notified me that they weren't getting paid,” she told VeloNation. “When I raised the issue with Aaron, he refused to discuss it with me or provide an accounting of the Cyclismas finances. Since the beginning of our venture, Aaron has consistently asserted that we were equal partners, so I could not understand why he would refuse one partner to review the books the other partner was keeping. As a result of this, I had to do some digging on my own.”

At the same time, she said she was facing a different headache. Cyclismas had a PayPal fund which was originally set up to take in cash from t-shirt sales and other such activities, but which had been used since last autumn to receive the donations from the Kimmage defence fund.

Cohen states that Brown handled all of the finances, and that he told her when the donations went over a certain threshold, that a social security number was needed to verify the account and render it capable of receiving additional amounts.

She states that she provided her social security number to Brown because, as he explained it, his own Canadian tax number was linked to a different PayPal account used for a café he was running at the time.

Cohen says that things seemed fine until the US Internal Revenue Service came knocking at her door. “I received a 1099 form from PayPal in early February showing I had 96,169.09 dollars of tax liability. I contacted Aaron and I said when you set this up with my social security number, you should have sorted it out as a charitable contribution.

“He said that he had dealt with it before, and he would take care of it. I forgot about it, then when it came time to file taxes, I realised I didn’t have the corrected 1099 form without that on it.”

Cohen states that she was highly stressed to realise that she was facing a large tax bill as the issue had not been sorted out. With Brown refusing to give her full details of the Cyclismas finances or access to them, and then this tax issue cropping up, she said she sought her own means to gain access to the PayPal account.

Once logged in, she said she was stunned by what she saw. “It was then I discovered that the PayPal account which held the Kimmage Fund had been emptied and the funds had been transferred into an account named Siroque Holdings, an account I understand to be under Aaron’s exclusive control.”

Brown has since changed the password on that Cyclismas account, locking everyone but him out, but a printout carried out by Cohen prior to that change showed numerous transactions. The first payment last winter to Siroque Holdings was made on December 27th when $9,741 was issued; a payment of $9,450 followed on January 12th, then a stream of others followed earlier this year.

These were sums of $7,300 [Jan 15], $5,179 [Jan 15], $2,950 [Jan 21], $1,712 [Jan27], $4,975 [Feb 8], 6,000 euro [Feb 15], 500 euro [Feb 15], $4,750 [Feb 18] and $4,500 [Mar 4]. The last dated payment on the list is to ‘Bank Account’ on March 4th, when $449.75 was transferred. This reduced the balance to zero.

Asked about this, Brown accepts that funds were moved, but claims that it was done for a valid reason. “The money has been transferred to a new PayPal account as originally it was located in a PayPal account that conducted other business, which triggered the challenge with a tax liability,” he told VeloNation.

It is worth noting that Cohen states she received the 1099 form in early February, several weeks after the first withdrawal was carried out. By the time she says she first realised there was a tax issue and told Brown of that problem, $36,332 had already been transferred to Siroque Holdings.

This movement of money is a point upon which the two are in complete disagreement. “Lesli and I had conversations about moving the funds, as we were experiencing issues with performing Cyclismas business while the funds were present,” Brown states. “When the tax liability was presented, Lesli was made aware of the movement. I am not sure why Andy [Shen] was not notified.”

However Cohen is adamant that the first she knew about funds being moved was when she logged into the PayPal account in recent days.

“I totally dispute the suggestion that we discussed moving the funds. We never discussed that…that’s not true,” she states. “The only funds that I knew were coming out of the Kimmage account were the ones to pay Paul’s attorney.”

Were wages paid out of the fund?

According to Cohen’s estimations, there was only $286.14 in the account prior to the Kimmage fund donations starting to flood in. From that point, the vast bulk of the money entering the account was donations to the fund, money that was intended for Kimmage’s defence alone.

The PayPal records show that payments from that account appear to have been made to Cyclismas staff on several occasions. These include transfers to Justin Pickens on February 16th and 20th. On his own PayPal statement, the sums are listed as coming from ‘Cyclismas International’ and correspond exactly with the amounts exiting the PayPal account used for the fund.

In addition to that, payments were made to David Smith on February 14th and to Cohen herself on February 27th. Both say that they had no idea that the money was being paid out of the PayPal account hosting the fund.

Pickens states that he experienced big delays in payments from Brown and that the last payment he got was on April 24th, which settled most of the remainder of his bill for March (less 78 euro). He said he has not been paid since, putting him in a very difficult situation after moving to Girona from Canada to work alongside Brown there.

Pickens provides an additional detail which, if true, is troubling. He told VeloNation that last Saturday, after Brown and Kimmage had a heated exchange via phone in relation to the current situation, he was made aware of the situation by the former.

“You're in the middle of this buddy, because I paid you out of the Kimmage fund…” he says Brown told him. Pickens said he was shocked, and also demoralised by what happened. “This was extremely discouraging coming from someone who I saw as a friend and who called me family.”

VeloNation contacted Brown yesterday with two questions relating to this. The replies are as follows:

Q: Did you pay money to Justin or anyone else from that account?

Aaron Brown: Monies were paid out of the Cyclismas account to operate the business. Any further discussions on this are now in the realm of the business dissolution action and cannot be discussed.

Q: Did you tell Justin in recent days that he had been paid from the fund?

AB: I have not spoken to Justin for over 8 days. There were no such comments made.


Pickens confirms the conversation took place last Saturday, one week ago, and insists his representation of that is fully accurate.

He also states that over 70 videos he had edited and worked on for Cyclimas were deleted from the website’s Vimeo account two days ago. While he has many of the original output files, he states that uploading those again will take a considerable amount of time and effort.

Next steps:

At this point in time the divorce between Brown and the other Cyclismas staff is several days old, and that rupture has become clear to all on Twitter via comments made from both sides.

Cohen moved to dissolve the partnership earlier this week, and has filed a summons and complaint with the Superior court of Worcester county.

Aside from seeking acceptance that the partnership has been terminated, demanding an accounting of the assets and financial activities and seeking damages, she is also hoping that the action will prompt Brown to provide verifiable guarantees that the defence fund is complete and also to make it available to the journalist if he should need them.

Brown appears to blame this same legal action for his non-provision of additional details to Kimmage. “Paul has received documentation showing the funds are present. He has asked for additional detail beyond what was provided,” he said. “Prior to forwarding this information, Lesli Cohen initiated legal proceedings related to the Cyclismas.com venture in Massachusetts court which prevented further communication, as this is now a legal issue, unfortunately. I was willing to provide additional documentation, prior to the legal matters being filed.”

On May 2nd her attorney Jim Donnelly wrote to Brown via email with a proposal to rectify the fund situation. “You will immediately place the remaining balance of the Defense Fund in a jointly controlled escrow account from which funds will only be withdrawn with mutual consent of you, Mr. Kimmage and Ms. Cohen,” he requested.

He also stated that under the proposed agreement, the three named would seek professional advice about what taxes would potentially need to be paid, and that the expenses of that plus any taxes due would come out of the fund.

After that, the remainder of the fund would be retained in the escrow account until such time as Verbruggen and McQuaid either definitely ended their action, or decided to proceed; if the latter happened, that money would be used to defend Kimmage.

Cohen told VeloNation today that her attorney has not had a reply on the escrow proposal, nor indeed had any communication from Brown. However the latter has told VeloNation that he feels an escrow setup is problematic as it would involve moving money out of PayPal. He said that process would both incur charges and also make it difficult to issue refunds to donors.

In recent days, Brown has suggested to several people on Twitter that he would begin initiating refunds. He told @SimonHiggins_60 via his UCI Overlord account that ‘there will be a statement coming shortly outlining a website being set up and refunds commencing.’

He also indicated the same to VeloNation on Wednesday. “As it stands now, I am discussing the options with the lawyers and the accountants,” he said via email. “As Paul has ended his defence of the lawsuit due to this sad state of affairs, there will most likely be a website set up to communicate with the donors to begin to issue a prorated refund based on the dollars already spent to defend Paul.

“If Paul is stopping his action, then the funds should be returned to the donors, and this will be activated as soon as possible.”

However it was pointed out to Brown that Kimmage has not in fact decided to end his defence. The journalist has indicated that he had told his lawyer to suspend his separate criminal complaint, but he would need to defend himself if Verbruggen and McQuaid restart their case against him.

VeloNation asked him three questions relating to this yesterday, and received replies today. They are:

Q: Can you say, officially, that the money will not be refunded until such time as Verbruggen and McQuaid confirm officially that their action is over?

AB: No money will be refunded until the action is officially ended by Verbruggen and McQuaid. There will be a website established with all the information requested by all parties. Keep in mind as this is now embroiled in a legal battle, there is a detailed review of the donations, monies, and actions to ensure accuracy for all parties.

Q: You have raised questions with the escrow account, having suggested in an earlier message that you were considering something like that. Can you let me know what you propose in terms of giving Paul [Kimmage] guarantees that the money is available to him if he needs it for his defence against McQuaid and Verbruggen?

AB: There will be discussions between legal representation on the best course moving forward.

Q: You have legal issues with Lesli Cohen. Would you consider transferring the money to Andy Shen or someone else and letting them hold it? As things stand Paul [Kimmage] has no guarantee that the money is there (other than a one screen printout showing a figure of approx. $65,000), and no guarantee that the money would be released.

AB: If and when the legal issues/tax issues/ are finalised, having a third party unrelated to Cyclismas, NYVelocity, and Paul Kimmage to administer the fund as a trustee is an option. However, this option will no doubt incur significant costs to the fund.


NYVelocity’s Shen has given his own thoughts on the situation. “I didn’t want to have anything to do with the money,” he said, talking about when the fund was set up. “Lesli and Aaron stepped in and they set it up. From that point onwards, I really didn’t have any knowledge of what account they used or anything else.

“I don’t even know what is going on. I don’t know if the money is gone or if it has been put somewhere else for safekeeping. I don’t actually know what has happened. What we would like to see is for Aaron to transfer it over to Paul’s lawyer, for Paul to control it.”

While he believes the fund achieved its initial goal of prompting McQuaid and Verbruggen to suspend their action, he is aware that if it is restarted Kimmage will be back at square one again.

“I am not happy that if Paul doesn’t have access to it, that the UCI just has to reactive the case and he is back where he was. I am very disappointed that there is a dispute. I hope they will resolve it and let Paul be in control of the money.”

Dave Smith, one of the Cyclismas employees affected by the current dispute, said that it is important to underline that Brown is no longer part of the company. “Cyclismas is not Aaron,” he said. “It was us who suspected, dug around and then raised the alarm. He is legally out of the picture now and has no role in it.”

Brown insists that he has done nothing wrong and states that the funds are in place and will be released if needed. He blames the current legal case for complicating things in relation to that that fund, and suggests that things would otherwise be closer to being rectified.

As for Kimmage, he told VeloNation that he is completely demoralised by what has occurred, and admits that he has questioned his future involvement in the sport.

“I never had control of this money. It has always been completely out of my hands, and I’m just really, really disappointed that something that was supposed to be good has turned out not so good. It is just really, really disappointing. Really, really tough.”

Asked what he would say to those who donated money to the fund and who may be frustrated by it being in limbo at present, he believes it is for someone else to explain the current circumstances to them.

“I don’t know what to say to them,” he said. “Let Aaron make a statement to them about the situation. He has refused to allow me to see a full [PayPal] statement. He has refused to transfer money to a neutral account.

“It was great that people donated. I loved what they did for me. What else can I say?”

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