Lawsuit challenges UACF board members while resort undergoes facelift (11/17/02)

Lawsuit challenges UACF board members while resort undergoes facelift

by Andrew Nynka

Since the threat of Verkhovyna's sale to a non-Ukrainian buyer in the middle of last year unraveled and a Ukrainian buyer was found, much of the Ukrainian community in Glen Spey, N.Y., seemed to breathe a collective sigh of relief that the resort would remain in Ukrainian hands.

In early June 2001, the Ukrainian American Cultural Foundation moved quickly to secure over $1 million in order to purchase the resort from the Ukrainian Fraternal Association. In doing so, the newly formed foundation made it clear that it would place a large emphasis on contributions from the community in order to continue rebuilding and renovating the estate grounds and buildings.

Since then, however, questions regarding how donated funds have been used, as well as organizational details of the UACF, among other questions, have quietly surfaced from the community.

In response to those concerns, The Ukrainian Weekly has spent several months working to clarify the many questions surrounding Verkhovyna and the issue of how the UACF board is constituted. Making headway has been difficult, however. After The Weekly's attempts to provide space for both sides of the UACF to tell their stories were unsuccessful, we have decided to push ahead with what information we have gathered in order to provide our readers with what is now known in the hope that further details can emerge.

PARSIPPANY, N.J. - Executives at the Ukrainian American Cultural Foundation said an estimated $1 million worth of renovations and improvements are the highlight of their first year at the helm of the Verkhovyna resort. But that ownership has recently come under fire as members of the UACF's board of directors have been hit with a lawsuit that challenges their authority over the cultural foundation that owns the renamed Mountain View Resort Verkhovyna.

The lawsuit, according to one of the plaintiffs, lists four individuals who contend that members of the current UACF board of directors initiated a clandestine takeover of the UACF in contravention of the foundation's by-laws. Moreover, the plaintiffs claim that repeated efforts to resolve the situation outside of the court system have been ignored.

Members of the current UACF board of directors, including its chief executive officer, Stephen Kapczak, said, however, that the current board members were elected according to the rules of the organization.

"It is complete fraud," said Anton Filimonchuk regarding the circumstances of the election that put Mr. Kapczak at the head of the UACF. Mr. Filimonchuk is one of the most outspoken critics of the current board of directors and one of the five people listed on the lawsuit.

The UACF is officially managed by its board of directors, which meets annually to elect board members and officers of the foundation. According to the organization's by-laws, adopted on September 20, 2000, each member of the board has one vote in electing new members to the board. The UACF has also repeatedly said these are public meetings.

According to Mr. Kapczak, the UACF board of directors "legally and legitimately" elected him CEO during a May 20, 2001, meeting. He added that a videotape recording of that meeting would prove his case. Mr. Filimonchuk, a member of the prior board of directors, said no such meeting took place. The Weekly has yet to see a videotape of the May 20, 2001, meeting.

The issue grew more complicated when the previous president, Dr. Stephen Woroch, passed away on January 2. Detailed explanations of how Mr. Kapczak succeeded Dr. Woroch as the head of the organization have not clarified the matter. The specifics of the May 20, 2001, meeting provided to The Weekly separately by Mr. Filimonchuk and Mr. Kapczak, both vice-presidents under Dr. Woroch, as well as minutes recorded by both sides, continue to contradict each other.

However, statements made by Dr. Woroch's wife strongly support Mr. Filimonchuk's case. Oksana Wamchycka-Woroch said Mr. Kapczak's position at the helm of the foundation was not recognized by her husband and, she added, her husband had written Mr. Kapczak regarding the matter.

An October 13, 2001, letter sent by Dr. Woroch to Mr. Kapczak reads in part: "I, Stephen Woroch, D.D.S., having assumed the presidency of UACF upon the resignation of Mr. Eugene Tataryn on September 28, 2000, formally declare and advise you that I completely disassociate myself from the so-called self-appointed 'executives and board of directors' of UACF outlined in an undated letter on official UACF letterhead and signed by Steven Kapczak as president of UACF and Yuri Blanarovich as VP Operations."

Dr. Woroch's letter continued: "I did not resign my position as 'president' of UACF, nor was I formally removed from that position in accordance with UACF by-laws. I intend to remain as president of UACF until formal elections are held at an annual meeting of the board in accordance with the UACF by-laws." Since Dr. Woroch's election as head of the foundation came on December 26, 2000, the next annual board of directors meeting would have been on December 26, 2001. Ms. Wamchycka-Woroch maintains that no meeting prior to that date could have elected a new president of the foundation.

It is also important to note that the formal title used by the head of the UACF has changed since Mr. Kapczak took office. Since the foundation's incorporation on September 22, 1999, the head of the UACF has used the title of president. Although the UACF continues to have a president, Mr. Kapczak now uses the title of CEO and is recognized by board members as the head of the foundation.

Ms. Wamchycka-Woroch also dismissed speculation that an early meeting was called due to Dr. Woroch's poor health. "He was coming to the meetings even after Kapczak took over. They were ruthless towards him. All the service he gave the community and for them to just cast him aside like that is awful," Ms. Wamchycka-Woroch said. Ms. Wamchycka-Woroch is not currently associated with the UACF, nor is she listed as a plaintiff on the lawsuit against current members of the UACF board of directors.

Mr. Kapczak said the lawsuit is nothing more than a group of individuals - some who left the UACF when the resort's future looked uncertain - now trying to get back in. He stressed that members of the current board of directors have invested large sums of money to buy and rebuild the resort.

He said that a new, refinanced mortgage and reconstruction on the resort's main guest house, Ardmore Mansion, were the reasons Mr. Filimonchuk, his wife and the two other plaintiffs wanted to be part of the organization. "They feel left out," Mr. Kapczak added, "and now that the place is coming together they want back in."

But the Rev. Nestor Kowal of the Ukrainian Orthodox Church of the U.S.A. said he sees it differently. The Rev. Kowal, a member of the board of directors under Dr. Woroch, said he has a different interest in the UACF and is not concerned with the foundation's internal politics.

"I want to get my land so that I can put a rectory up there," the Rev. Kowal said, referring to the Orthodox Church adjacent to the Verkhovyna property. An additional .87 acres of land - promised to the parish by the Ukrainian Fraternal Association - would allow the pastor to build a permanent residence for the local Orthodox parish.

The Rev. Kowal, who along with Stephan Palylyk is part of the four-person lawsuit, added that he did not recall a meeting of the board of directors on May 20, 2001. "One day, I was no longer on the board," said the Rev. Kowal, while maintaining that he has no gripe with the UACF.

Mr. Kapczak countered that there is nothing binding the UACF to fulfill a pledge made by Verkhovyna's previous owner, the Ukrainian Fraternal Association, to donate the land to the Orthodox Church. He added that he would not do so until the lawsuit is resolved.

The dispute between Mr. Kapczak and Mr. Filimonchuk also has brought out other issues. Mr. Filimonchuk questioned who actually owns the resort, referring to a lease between the UACF and the Industrial Development Agency of Sullivan County (IDA). By sitting under the umbrella of the Sullivan County IDA, the foundation is protected from a tax increase - which, Mr. Kapczak said, is extremely important when you consider that the improvements made to the estate would dramatically increase the foundation's property taxes.

Mr. Kapczak added that, although technically the resort is now owned by the IDA, UACF executives retain the right to exit the lease at any point during the 17-year term with a $5 penalty to the foundation.

Mr. Filimonchuk also questioned how donations made to the UACF in 2001 have been used. Current executives of the foundation responded that a detailed breakdown of any donations made to the UACF during 2001 would be on paper and made public by the beginning of 2003.

The UACF's current board of directors now awaits the chance to defend its legitimacy at a hearing scheduled for January 7, 2003, in the Sullivan County Courthouse.

The strongest visible community support for Verkhovyna and its new owner came after the UACF took control of the estate in August when many residents volunteered to clean up after a summer camp that had leased the grounds from the foundation had thoroughly trashed much of the complex, leaving an estimated $180,000 worth of damages.

To date, Mr. Kapczak said there has been no movement in the legal action with David Willner, the head of the organization that leased the resort from June to August 2001, when the damage is said to have occurred.

Since that time, Mr. Kapczak said, the foundation has spent $304,000 to rebuild the guest house, bring all past violations to code and upgrade facilities. He said the UACF has resumed hosting summer camps and a largely successful annual Ukrainian festival, adding that the foundation is actively interested in attracting new business.

According to the UACF website, the Ukrainian American Cultural Foundation is a charitable not-for-profit foundation and is exempt from federal income tax under section 501(A) of the Internal Revenue code as an organization described under section 501(c)(3).

Current UACF officers include: Mr. Kapczak, CEO; Iwan Nazarkewycz, president; Oleh Kolodiy, vice-president of activities; Oleh Dekajlo, legal counsel; Walter Klokiw, auditor; Christine Smetaniuk, treasurer; Zenon Holubec, community liaison; Andrew Rakowsky, vice-president of activities; Wasyl Kinach, technical support; and Jerry Sus, technical support.

The UACF board of directors includes: Mr. Kapczak, Mr. Nazarkewycz, Mr. Kolodiy, Mr. Dekajlo, Sonya Blanarovich, Mr. Holubec, Olena Kolodiy and Alison Kapczak.

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