New York Attorney General Letitia James is suing a Westchester swim club, accusing current and former officials of running a “membership fraud and asset diversion program.”
James attempts to dissolve the organization and distribute the remaining assets to its members.
In a legal filing filed Tuesday, James said officials overseeing the Rocky Ledge Swimming Association, a tax-exempt organization that operates the North White Plains-based pool, channeled deals to insiders and relatives of the top organization. Many of these transactions were booked on particularly favorable terms, she said.
Rachel Boettigheimer, until recently a director and chief executive at Rocky Ledge, is said to have opened a secret bank account at Wells Fargo in which she deposited receipts from the sale of temporary memberships to the public. But James said funds in the hidden account and another account were “hidden from members”.
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According to the lawsuit, Rocky Ledge’s directors notified members of the organization in September 2016 that they could not afford to pay their overdue property tax bill. However, the funds in those hidden accounts would have been enough to cover tax obligations, James said.
Still, the group’s then-president, Frank Pasqualini, used this grim picture of the organization’s financial situation to explain to members that “a sale was the only solution,” according to the lawsuit. A letter to members said the club’s “only viable offer to buy” was from MoB Enterprises, a company owned and operated by Pasqualini’s son Michael, the legal filing said.
Additionally, James said Pasqualini and the group’s treasurer, Mary Ann Zeolla, were “investors in MoB Enterprises and/or related companies owned by” Pasqualini’s son. According to the lawsuit, this was never disclosed to members.
In a brief conversation Wednesday, Frank Pasqualini said he was unaware of the lawsuit but suggested any allegation of fraud or impropriety was false.
“I wouldn’t take anything from a stranger. Rocky Ledge was our whole life,” he said. “If they do what they’re doing to Donald Trump, I’m sure they’re going to do a lot more to me.”
He added: “I don’t know where the money would have come from because there is no money here.”
He declined further comment on Thursday. Requests for comment to Böttigheimer, Zeolla, and the younger Pasqualini were not immediately answered.
Although the sale ultimately did not go through, James claims in his lawsuit that the proposed terms were very favorable to MoB. Rocky Ledge’s board of directors “did not appraise the property” to determine whether it was worth as little as MoB’s $750,000 purchase offer, nor did it solicit the sale to solicit competing bids , according to the lawsuit.
A broker estimated the club’s value at at least $2.3 million, significantly higher than the proposal.
Family benefits, Suit says
The lawsuit also accuses the organization of granting Michael Pasqualini an unusually generous use of its premises for the benefit of his private business. Nonprofit groups are required by law to use the organization’s assets to advance their mission, not to enrich individuals.
According to the lawsuit, Rocky Ledge allowed a company called Table 13 to operate its on-site snack bar for just $1,500 a year. Table 13 is registered to a Harrison address owned by Frank Pasqualini and Michael Pasqualini is listed as the company’s CEO.
An attachment attached to the lawsuit shows that the company of Michael Pasqualini Boettigheimer, one of three directors present at the vote approving the snack bar business, wrote a check for $1,000 four days after the vote.
Additionally, Michael Pasqualini was allegedly allowed to use the snack bar to run his outdoor catering business, among other things. This included running the snack bar during the lucrative Halloween Haunt, which welcomed thousands of visitors to the grounds each season.
“The diner has always been run solely for the benefit of members and not as a commercial operation,” the lawsuit says. “However, the new arrangement with Table 13, which allows him to earn revenue from special events and catering outside and only pay $1,500 to the club, is not in it [Rocky Ledge’s] best financial interest.”
The Attorney General’s lawsuit details multiple instances in which funds were allegedly transferred directly from Rocky Ledge to its directors without any valid explanation.
For example, in 2016, a check for nearly $2,000 was written to Frank Pasqualini with the description “for gaming devices.” However, a former board member testified to the attorney general that “no gaming equipment was purchased by Frank Pasqualini to replace the old ones,” according to the lawsuit.
In addition, the Attorney General said that on more than one occasion funds were transferred from the Wells Fargo account to Boettigheimer’s personal bank account.
In addition to dissolving the organization, James attempts to prevent Frank Pasqualini, Boettigheimer, and Zeolla from serving as directors or officers of a New York City charity in the future.