The reason that I was so upset at the disappearance of the original business records was varied. First, the importance of the records was that it showed the intent and mindset of the Fund III committee and its investors at the time of Fund III. Second, it was very important to find out when who was involved and why the documents were destroyed. Third, the records were complete proof of what happened in Fund III from start to finish. Even having taken the inventory and pictures of the records, every last detail was not part of the inventory and we deserved to have all of it. Last, I wanted to consider if/what could be used to replace the documents which I struggled with since my thought was that the original business records were irreplaceable.
There were 4 documents that we used to subscribe every investor to Fund III: a subscription agreement. an investor questionnaire, a personal representative questionnaire (optional), and a receipt of the offering circular. The key to the documents was that on every investor questionnaire there were some specific questions that shed light on how the investor became an investor and who they relied on in the process.
The nature of some of the questions was:
1. Who did you rely on for your decision to invest in Fund III?
2. Can you afford to lose your entire investment?
3. Had you been given an opportunity to have all your questions answered?
Each portfolio company that was a part of Fund III had unique documents contained within the original business records. There were business plans, non-disclosure agreements, executive summaries, background checks, and the like. We had to vet each opportunity and document how much equity we were receiving or if we loaned funds, what were the terms. It would be nearly impossible to replicate any of those documents. No one else would necessarily have them years later for any reason.
Accounting, notes from meetings, calendars, etc… were all irreplaceable and gone.
When I was wrapping up the Fund administrator role in 2001, my last child was born and I was understandably exhausted. When I was told to gather the Fund III documents from my make-shift home office, I was given legal advice to inventory, photograph, and have someone sign for receiving them. I did exactly that. I still have the photos of the 22 boxes and the signed inventory of every document that was handed over. A trustee that would reconcile the winding up of Fund III was to receive the documents, I was told.
Before I released the documents, I copied a few investor documents that I thought I might need knowing that it might be impossible to get the documents back. Little did I know…. There had been a few investors that had given some indications that they might take legal action against Fund III and/or the Fund III committee. Legally, as committee members, we should have had a kind of immunity, but there were exceptions and I just wanted to defend myself, if I had to do so.
The integrity of the documents was simply an unbiased reflection of what actually happened. That is all I wanted. To this day, I have no idea if the documents were actually destroyed, by who and when. The “why” they were destroyed came in the form of a Motion to destroy the documents which I will go into more detail on the next blog.
Transformation
While I knew the documents were no longer available/missing/destroyed, I thought this had to be a turning point in the case. The original business records had to mean something. Testimony of events 5 years ago could not substitute for the actual signed documents of an investor at the time of subscription to the document. There was a place in the subscription document to tell who you relied on for information. There were over 50 risk factors and various statements talking about losing your entire investment. Fast forward five years and would the very documents that are designed to protect the understanding of all parties be diminished to unnecessary to conduct a federal prosecution where people could go to jail and/or suffer.
I wanted to believe one of two things – either that the documents weren’t really destroyed and given the vast resources of the Federal Government they would find the original documents or that the Government would understand the significance of the documents and the unfair position we would be in to defend ourselves and reconsider the charges. Either development felt like a step in the right direction, but once again….nothing that I could control.
Community
Robin became a part of my community that day. It was the way that she first looked at me when I answered the door and the smile that she flashed at me when she checked my computer to be sure that no one had tampered with it since she worked on Fund III. Robin was asked to produce information for the Government and was glad for her to do it and I think that she felt like she was helping me. Telling the truth was helping me and I wanted everyone related to the case to do that.
I have a feeling that Robin thought she knew me and she didn’t like what was going on. We didn’t discuss it and I may be flattering myself to think that I know how Robin felt. Robin either had to or wanted to comply with the Government’s request but as she spent more time printing reports, I saw her more and more annoyed that she was being required to do the work.
Your thoughts
How much do you have to rely on colleagues to help you and do you feel at risk in that relationship?
