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Proposal: CouchSurfing legal fund

I believe CouchSurfing and Casey Fenton have broken, and continue to break, the law. Among other things, I believe that member’s “donations” are being misused. I think this misuse is the clearest breach of the law.

As the membership continues to grow, the potential for abuse also continues to grow. I think this situation must be brought to a head as a matter of urgency.

My proposal is to start a CouchSurfing legal fund. A financial fund where individuals could choose to donate money. That money would be used to pursue legal action against crimes perpetrated by CouchSurfing International Inc and Casey Fenton.

I think a number of issues would need to be addressed prior to any donations being accepted.

  • The constitution of the organisation / fund
  • Who would direct the legal action (I propose Pickwick as a core figure, if he accepts)
  • How lawyers would be appointed to carry out the action
  • Specifically, what action would be taken

Pickwick has diligently researched the legal constitution CouchSurfing. I think this work has made the greatest progress towards the goals of OpenCouchSurfing. I believe this area of work should be financially supported on a larger scale.

To start the ball rolling, I, Callum Macdonald, pledge $100 to this fund. I’ll make the actual donation once the fund is in place.

I warmly invite you to share your opinion, and if you feel appropriate, make a financial pledge. (Dislcaimer, financial pledges will be entirely voluntarily, so any commitment you make here is not legally binding.)

19 Responses to “Proposal: CouchSurfing legal fund”

  • @Callum
    First off all, remember CS’s standard operating procedure nowadays is to shut down accounts upon “threat of lawsuit”.

    Secondly, remember that there are only two possible legal approaches:
    - An criminal prosecution (by a public prosecutor of some sort). This is something we couldn’t fund, nor induce.
    - A civil suit. For this, you’d need to have at least one member who can claim (personal) damages. You can’t “just sue”.

    I believe CS’s situation is much more related to option 1, which makes a legal fund pretty much useless. It’s a sit-and-wait situation if I’m correct.

    However, should some member of CS have valid cause to sue…

  • @tgoorden: Agreed. I’m not a lawyer, but members who have donated money might have grounds to sue, as might ex-volunteers who donated time. If these donations are being misused, there might be grounds for a civil case.

    Even if the only recourse is a criminal case, providing professional legal research into the background might well speed up the process.

    I’d prefer if my CS account wasn’t shut down. However, given the current organisational structure, it could happen at any time for any (or more likely no) reason. I’m not willing to submit to that threat.

  • Ok, it seems we need a legal expert then.

  • It would make more sense to get an overview of the costs involved with volunteering and get that money refunded. My costs have been more than 2000 US$ (laptop+flights) and I would happily give that money to BeVolunteer.

  • Callum, I’ll have to respectfully disagree with you here my friend. I think you’re overly in touch with your inner-vigilante. If CS has done something illegal, I think they’ll be found out and fined eventually.

    I appreciate this blog and am grateful for a chance to offer analysis and constructive criticism of CS as an org…but consider your idea to be simply destructive.

    I know that I’m in the minority as an OCS poster who supports CS, but (get this:)

    I *like* CouchSurfing. I think it’s fun and beneficial to the community who uses it. My kids cannot wait to turn 18 and go off traveling…which forms part of my motivation to help it persist…and hopefully transform, Pinocchio-like, into a *real* company…rather than a hug-along pukefest for CSC participants (“energy hugs”…could someone kindly gag me with an insulin syringe? Please cs leadership…develop some kind of critical self-awareness).

    Anyhow, I really do not want CS to go down the drain…but to thrive as a way to offer safe, low-cost travel and small-scale diplomacy to everyone who wants that. I really don’t agree with some of the management practices… which is why I post here and continue to volunteer for CS…so I can keep an eye on it and hope it’ll be there for my kids when they want to hit the road. thanks everyone for tolerating my voice here…it speaks well of you guys to give light to all views.

  • @Margaret
    I think most of actually agree with you that CS is a very valuable service and that we would just like to see a leadership transformation. There’s no need to feel isolated in that. See the goal on the main page:

    Participate in creating a Better and More Open CouchSurfing Organisation, one Freedom at a time.

  • The only result of donating money would be to get my account canceled, which in turn would cost me still hundreds or thousands of euro a year more now that I would have to pay for lodging when I travel. What kind of benefit do you think people would get out of your bizarre plan?

  • @Margaret: Likewise, I would like to respectfully disagree, I think most people on this site support CS! :)

    Personally, I value CS and the connections I make through the site. It’s because of these very reasons that I wish to see the legal issues resolved as a matter of urgency. I’d very much like to see CS grow and mature as a proper organisation. I’d like to see a legally solid organisation behind the site.

    The purpose of any legal action would be, in my opinion, to solidify CS. Not to destroy it. If criminal acts have been committed, they were committed by individuals, not the “organisation”. If those individuals are held responsible, the organisation will surely grow stronger.

  • I think this is just stupid. “Criminal acts” – oh my god. The moral credit from some people at CS may equal zero now, but a lawsuit? I don’t waste time (and money) anymore for CS corporation and at the time I did so, it was ok for me (and voluntary). So there is no personal reason to sue CS for me. I don’t even call it criminal.

    In my opinion, the idea, CS would grow and even become better by legal action, is nice but wrong. Cults tend to “fight until” death or leave burned grounds …

    If the state of New Hampshire (another not trustworthy and authoritarian institution) feels the urge to kick some asses at CS, I won’t care. But don’t expect me to help playing these kind of games.

  • @christopher

    you certainly reaffirm the perception that there is some sort of “bum” attitude within cs, which i consider to be the pinnacle of hypocrisy. given that you appear to be travelling the world preaching fairy tales, such resistance to reason would however fit the pattern i start seeing here.

  • zak0r what in the world are you talking about?

  • Midsch, i agree with you.. if CS reaps its own karma (which it might if it is not in alignment with nonprofit guidelines), then that is what happens.. but i have better things to do with my thoughts and energy and time, like.. create! support the positive!

    Callum: to focus any efforts of my own on destroying CS directly (since i think a real lawsuit would do this).. i just don’t see the point, nor do i see the urgency. (The urgency i DO see is in threats to member safety, but that is going to fall through the cracks until a major event occurs, the likelihood of which increases given the approach to security).

    Pickwick and others have done due diligence; CS itself has made some major errors which may induce serious repercussions; why create a lawsuit? Kaspar and others who can document to whatever degree that they gave up their valuable time and energy under false pretenses.. I suggest you simply request money for tickets and expenses that were based on false promises (breach of contract) directly from the board, as that would be fair?

  • p.s. To be crystal clear: I would like CS to survive and thrive, with respect and appreciation toward volunteers and for the voice of members, with transparency and in a sustainable way. To that end i am willing to offer constructive criticism and make known my own (hopefully helpful) perspective.. but again.. actively destructive approaches seem detrimental to me in the long term.

    Of course, to each his own approach.

  • My intention is not to destroy CS. I’m not suggesting a lawsuit with the intention of bankrupting the organisation.

    Let me repeat that so it’s absolutely clear. I don’t want to destroy CS.

    I think CS is being badly mismanaged, and I think legal pressure would significantly speed the process of correcting this mismanagement. Personally, I doubt this case will be a high priority in the state of New Hampshire. I expect additional legal pressure will both speed any criminal proceedings and will yield results in and of itself.

    If we all know member “donations” are being misspent, do we not have a responsibility to do something about it? It’s become clear that communication with the leadership is futile. I think it’s time to take the next step, which I believe is legal action.

  • Maybe this is a good time to say what I see as the current legal status quo (as a private opinion).

    There was a question initially whether Couchsurfing International Inc was, or was not, a charity. The filing in New Hampshire in November 2007 of the charity registration and annual reports from 2003 to 2006, including the Articles of Agreement (the incorporation document from 2003) made that clear: it was set up as a charity from the start. It just didn’t act like one and violated charity law. (Don’t confuse this with “501(c)(3)” which doesn’t MAKE you a charity, but can give you federal tax exempt status if you ARE one.)

    That means that a lot of things were public information from incorporation in 2003, and it was wrong of Casey (who was sole director, and therefore solely responsible, until at least January 2007) to keep it secret, including those Articles of Agreement, the full corporate bye-laws (which I believe were only made later anyway), and financial statements (the complete ones, not the truncated ones published on the web site).

    It also means that solicitations for donations were not automatically unlawful. Therefore as far as I’m concerned, claiming money back, or claiming compensation for donated time, is off the menu. The same applies fore claiming reimbursement for expenses, unless it can be shown clearly that there was an understanding to that effect at the time. I mentioned the possibility of a class action law suit initially, when the charity status was unclear, to increase pressure for making it a charity. That is now obsolete.

    A civil law suit would require a cause of action. This could be: a contract, a breach of contract, and resulting damages. In Anglo-Saxon law only those users who paid for verification will have a contract that entitles them to the use of the web site. But it wouldn’t entitle them to being hosted by other users. So it’s doubtful what damages could possibly be proven in case of being thrown out without good reason. Another cause of action might be that a charity has a public service obligation and can’t refuse to serve individuals arbitrarily. Again the question of proving damages remains. (However, I believe that a charity, or a partner to a contract, has no right to refuse services because of any legal action. For that freedom Casey Fenton would need to run Couchsurfing as a private hobby or business, like Hospitality Club.)

    If charity money has been spent unlawfully, it either has to be paid back by those who received it, or those responsible (ultimately the board of directors) might, in grave cases, be liable to make good the damages out of their own pockets. But unlawful spending doesn’t give donors a right to demand their donations back. If you are simply unhappy with the way donated money is spent, you stop donating, see if you can donate for specific purposes only, or campaign for political changes in the organisation.

    Violations of public law do not require legal action to be taken by an individual. The relevant authorities will prosecute according to the underlying law, and in most cases will do so if and when they recognise a public interest, meaning they are not going to spend thousands of tax money to go after a rounding error in the books which short changes the charity a penny. The file of Couchsurfing International Inc is currently “queued for review” with the Director of Charitable Trusts in the New Hampshire Department of Justice. That means they need time to get round to it: There are just five people regulating over 7,000 charities in New Hampshire. However, the registration filed in November 2007 was already processed separately, and we are now on the state’s official list of charities. I believe that the review will take all allegations seriously, but legal charity supervision, in the USA and elsewhere, has its limits and can only prevent the most extreme excesses. This organisation will not emerge from this (or any other legal) process as pure as freshly fallen snow.

    So I don’t really see what else could be done with any money. So far it cost me 50 or so pages of colour laser print, and EUR8 postage to send them to the Attorney General. As I didn’t spend anything else during the evening I was doing that, I probably ended up saving. ;-}

    What can be done is to hold the organisation to its duties as a charity as actively as possible. That would start with demanding all the information that is public by law. I wonder how many people have really bothered to request the bye-laws or the annual accounts after I first stated in December 2007 that they were public information. If the management has a clear indication that people don’t really care, it’s not difficult to see why they might think that people don’t really care. So my advice would be: continue to ask questions. The annual report for 2007 is due by mid April, just over six weeks from now. The included financial statements should be scrutinised. If things are unclear, clarification should be sought. We now know that this really is a charity. It’s not owned by anyone privately, and its assets are under public supervision. We have a right to know.

    Just to make this complete, the remaining concerns which I have communicated to the Department of Justice, and which I expect to be reviewed in due course, are mainly:

    1. Casey Fenton may have, under penalties of perjury, stated the material falsehood that there were several members of the board of directors from 2003 to 2006, to disguise the fact that he was in fact sole director, in violation of New Hampshire statute.

    2. He may have done so to disguise the fact that he entered into an employment contract with himself during that time when the board of directors was not lawfully composed, and may therefore not have had power to bind the corporation.

    3. He may also have done so to disguise the fact that this employment contract was in violation of “conflict of interest” principles, as he was the only person involved for both parties.

    4. He may also have done it to disguise the fact that as sole director he was automatically presiding over the board, and in that capacity was not allowed to be an employee at the same time.

    5. As Casey Fenton’s employment contract may be nil and void, he may have to repay ~$70,000 in salaries received so far.

    6. Casey Fenton still is an employee of the company and president of its board of directors at the same time, in violation of New Hampshire statute.

    7. Matthew Whatley is named as the corporation’s Chief Financial Officer, and there is an agreement with him over fees for financial and legal services. He also stated publicly that he has been acting as lawyer for both Couchsurfing International Inc and Casey Fenton personally as clients. This may be a conflict of interests, and it may be unlawful, and in breach of professional ethics, for him to continue to act in all or more than one of these capacities.

    8. Some documents filed with the Attorney General of New Hampshire in November 2007 (for instance the corporation’s bye-laws, and its “conflict of interest” policy) are ambiguous or misleading as to their date. This may be to disguise their true date.

    9. For some time now there should have been substantial amounts of cash in the bank, for instance more than $70,000 at the end of September 2007. However, the figures for “earned interest” seem fairly low. This may be due to the fact that the funds were not kept in the bank, but taken in cash by private individuals, effectively making it a loan of charity assets to private individuals, which violates New Hampshire statute.

    10. The financial statements published on the web site are still different from the ones filed with the Attorney General and the US tax authorities.

    11. The registration with the Attorney General (due October 2003), and the annual reports from 2003 to 2006 (due mid April of the next year), all filed in November 2007, were all late, in violation of New Hampshire statute.

  • Pickwick, thanks for the detailed update. It’s encouraging to know that you’re on top of this.

    I still believe that a legal fund can be beneficial. I do believe that relevant legal experts would be able to speed the process. I’m not sure exactly how that would work, but I do think it’s possible.

    However, unless anyone else believes the idea to be plausible, it obviously won’t happen any time soon. :)

  • I’m with you in that belief, Callum; Pickwick, notwithstanding your estimate that the NH Director of Charitable trusts will not spend tax dollars lightly unless there has been a major breach of public trust, don’t you think that the prominence of CS in the (international) media will incite them to scrutinise the organisation more than usual? Also, would you think it useful if all critics individually file complaints about CS (numbers count, at least where I come from)? Third, wouldn’t you think that a decent report by a forensic accountant would put some weight in?

    These are all things we could do; if they have some chance of success, and if there are more people than just Callum and myself who are willing to participate, I would be happy making a donation as well.

  • Niels, yes, I think that the investigators might be willing to look a little closer if they are made aware of the international scope of the organisation by receiving more than just my complaint. I considered suggesting this and didn’t as I felt sorry for them already because of their work load, and because a campaign to get piles of mail to someone can backfire through sheer annoyance. But a few more won’t hurt.

    Department of Justice
    Division of Charitable Trusts
    33 Capitol Street
    Concord, NH 03301
    Tel +1 603 271 3658
    Fax +1 603 271 2110

    First of all, I would love to see the accounts to be audited independently, something else that was promised and never happened. And a forensic accountant would be wonderful to have IF we had access to the actual books. All we can do with the condensed insight we get from looking at Form 990 is to check plausibility and ask questions. I’m sure there will be questions and discussions about the 2007 figures, once we have them in about six weeks time: We will see, for instance, if there is enough earned interest to reflect the amount of cash that should be in the bank. And we’ll see the expenses in Thailand for the month of December. We can ask questions in the groups, through the Contact Us Questions form, and by message to officers and directors of the corporation, and if the questions are reasonable, we have a right to know.

    If that discussion doesn’t show an awareness of public duty on the side of those responsible, and a willingness to be cooperative, and as a result there is a serious suspicion of irregularities, then I think we should lobby for the organisation to be audited by the charity regulators and/or tax authorities (if the scheduled review won’t already lead to this).

  • As already stated, thank you for keeping on top of this :)

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