Tri-Valley Community Foundation was responsible for a $200,000 trust and a $55,000 annual contribution from GWF Energy for local nonprofits. But a few weeks ago, the foundation reported that there was no money to hand out.
According to Tri-Valley’s interim president, former Alameda County Superior Court Judge Ron Hyde, previous director David Rice spent hundreds of thousands of dollars held by the foundation.
“A great sum of money was misdirected by our former president, in directions that the board had no knowledge or consent,” Hyde said this week.
More than $3 million is missing from Tri-Valley accounts, Hyde said. That includes the $55,000 GWF set aside this year alone for high school scholarships and donations to Tracy charities.
Though Hoyt said it was not clear where all the money held by Tri-Valley went, GWF’s Riley Jones announced this week that his company would make sure that Tracy-area nonprofits and students get the money promised to them.
“GWF still feels obligated to stand behind that,” the spokesman said. “In the 21 years I’ve been associated with GWF, I’ve never, not once, heard them make a promise they didn’t keep.”
GWF has given local charities $55,000 annually through Tri-Valley for 10 years, since the energy company finished building a peaker plant outside Tracy that is soon to be upgraded to a full-time facility.
Recipients of that annual allocation are chosen by a council of Tracy residents.
Local businessman Shawn Kelly, the president of that committee, said GWF offered to make up for the loss “without hesitation.”
Gene Birk, the council’s treasurer, was moved by the news.
“It’s a miracle,” Birk said. “GWF has been so generous to the city and the community.”
Tracy Interfaith Ministries, which was founded in 1988 and serves hundreds of Tracy families each month, is one local charity that counts on contributions from the Tri-Valley-held fund. The chairwoman of the board, Renee Reece, called GWF’s decision an unexpected boon.
“It was just really a blessing to hear they were going to step up and make good the funding,” Reece said. “It was a surprise — we didn’t expect it.”
Reece said money from the grant had been used to keep renters from being evicted, to keep families’ utilities from being shut off, even to help the needy pay funeral expenses.
“We’re absolutely thrilled,” she said. “GWF has been so generous over the years with their grants, and it’s made such a big difference in what we’re been able to do.”
It’s still unknown, however, whether the $200,000 GWF initially put into an account for Tracy charities about 10 years ago will be repaid.
Hyde said that insurance claims were filed and that he hoped settlements could be worked out to “make everyone whole.”
“It breaks my heart — all the people that have lost their money,” he said. “The (rest of the) board feels just as bad as I do.”
Jones would not comment about action that could be taken if GWF’s donations were not fully returned.
“We’re concerned primarily right now about taking care of this year’s obligation,” Jones said.
Jones said GWF planned to continue its annual giving to Tracy-area charities, even though the company originally committed to do so only through 2012. He added that future donations would not go through Tri-Valley Community Foundation.
Missing money
Hoyt, who served about five years on the Tri-Valley board of directors before stepping in as interim president in early April, said he and the other board members were “totally blown away” when a forensic audit revealed the missing money.
“There was a lot of cash money that was paid out. There was money from one fund redirected to another fund,” the retired judge said. “Spent on what, we haven’t figured out yet.”
Hyde said that within two weeks of the discovery, the board fired Rice — who Hyde said had “control, authority and power” over the vanished money — and named Hyde interim president.
“Given the wide scope of what I consider misconduct, or conduct without board approval or knowledge, it seemed appropriate to put him on administrative leave,” Hyde said. “As we absorbed the totality of what he had done, it was clear there was a pattern, and we terminated him.”
All Rice left behind, Hyde said, was “a desk full of debts.”
On Tuesday, Hyde said he spent several hours with members of the Alameda County District Attorney’s office, discussing a possible investigation.
“It is clear that (Rice) took money from some people and literally gave it to other people,” Hyde said.
He added that some of the cash payments Rice was thought to have made created a situation where kickbacks could have occurred.
“I’m not suggesting there was,” Hyde said, “That’s what the district attorney is going to look into.”
Teresa Drenick, spokeswoman for the Alameda County District Attorney’s office, did not return a Thursday email seeking comment before press time. The Press was also unable to reach Rice for comment.
Hyde said the board had no idea what was going on until the audit that wrapped up this year.
A standard financial review of fiscal year 2009-10 raised a few flags, he explained, and an outside auditor who looked over the 2010-11 figures prompted more concern. That led to the forensic audit that blew the lid off the problems at Tri-Valley.
Hyde said that in his first week as president, he cut $600,000 in expenses.
“The deeper I got in, the darker the picture became, the less optimistic I became,” Hyde said. “I’m a very optimistic guy, but I’m also a realist.”
The situation for the foundation is dire enough that Hoyt anticipated it would be shut down.
“I just want people to remember the good things the foundation did and overlook the bad things that David Rice did,” he said.
• Editor's Note: This story was corrected from an earlier version.
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