Counter Claim in SF

We are fighting to protect the USCF members and the USCF from these people. This is what we are asking for:




You can download the entire filing here.

Sloan's case dismissed

An official offer to the USCF

KILLION LAW FIRM

JAMES L. KILLION *
SAMANTHA PEABODY ESTRELLO**

* BOARD CERTIFIED
PERSONAL INJURY TRIAL LAW
TEXAS BOARD OF LEGAL SPECIALIZATION
** ALSO LICENSED IN NEW MEXICO

2521 74TH STREET
LUBBOCK, TEXAS 79423
TELEPHONE: (806) 748-5500
TELECOPIER: (806) 748-5505

P.O. BOX 64670
LUBBOCK, TEXAS 79464-4670

August 26, 2008

Mr. Bill Hall
Executive Director and
Pro Se Counsel for USCF, Inc.
1190 Fred Ford Road
Crossville, Tennessee 38571‑0240

Re: Cause No. 5:08-cv-00169-C; in the United States District Court for the Northern District of Texas, Lubbock Division; Susan Polgar v. United States of America Chess Federation, Inc., et al

Dear Mr. Hall:

On behalf of Susan Polgar, I am authorized to extend to the United States of American Chess Federation, Inc., the following unqualified demand of settlement relative to the above referenced litigation. Susan Polgar will compromise, settle and relieve all claims she may have against the United States of America Chess Federation, Inc., only in consideration of the following:

(1) United States of America Chess Federation, Inc., will pay One Dollar ($1.00) to Susan Polgar;

(2) United States of America Chess Federation, Inc., will issue a written public apology to Susan Polgar and to the USCF membership relative to its participation in the events, acts and/or omissions as alleged by Susan Polgar in the above referenced litigation; and

(3) United States of America Chess Federation, Inc., will agree to the entry of an appropriate cease and desist order of the Court relative to any and all future acts of slander, slander per se, tortious interference with existing and future contracts, business disparagement, and tortious interference with any future business relationships of Susan Polgar.

In making this offer of compromise and settlement, Susan Polgar specifically retains and reserves any and all claims and causes of action she has or may have against all other persons, entities or parties including but not limited to those parties named in the above referenced litigation.

Susan Polgar makes this offer of compromise and settlement solely for the purpose of allowing USCF, Inc., and its membership, to avoid the burden and expense of protracted litigation and with the knowledge and understanding that the mission, spirit and assets of the USCF have been grievously compromised and subverted by the actions of members of its Board, its Administration and its attorneys acting in furtherance of their personal interests.

Your prompt written response will be greatly appreciated.

Sincerely,
James L. Killion

JLK/mhvcc: Ms. Susan Polgar

More facts about the USCF legal and financial mess

In a message dated 7/1/2008 9:01:13 A.M. Central Daylight Time, Chessoffice (Bill Goichberg) writes:

What "board act" do you have in mind?

- Hiding the investigation from the other 6 board members, refusing to step down from the subcommittee due to clear conflict of interest, then declining to allow our experts the opportunity to inspect the database to verify the data.

- Refusing to take action against contractors who blatantly violated the NDA, even after it was confirmed that the NDA was clearly violated multiple times.

- Leaking confidential and legal information to Jerry Hanken and others by one of the board members (Joel Channing and Randy Bauer are excluded). You even clearly stated that you're aware that Jerry Hanken received confidential information and he used this to negotiate with Sam Sloan.

- Voting 5-0 to authorize the attorney to interfere with our legal defense by contacting Chubb to try to cancel our insurance coverage which is highly unethical.

- Not stopping your attorney from trying to investigate the bogus claim that Paul and I abused my children. These outrageous, vicious, and damaging charges which were proven completely false were then sent to multiple high level individuals at Texas Tech as well as the local media by one of your supporters to try to get me fired from my job.

Please feel free to deny them ....

President Bill Goichberg was given the opportunity to deny these facts. There is absolutely no dispute by him.

More clear facts:

This was an admission by Brian Mottershead, the contractor who blatantly violated the NDA:

"...you were not a party to the discussions between me and USCF officials such as Bill Hall and Bill Goichberg before the information became public. After first encouraging me to pursue the investigation..."

I immediately called the USCF ED 9-10 times long distance from another country when I found out about it last September. This was before any board member was aware of the details or facts and before any report came out. According to both the ED and President, the only 2 USCF officials who knew were themselves.

I left multiple messages on the ED’s voicemail as well as through his assistant. I left the number of my hotel room. There was a specific reason why I did this. I wanted to let him know that something was not right, inform him of my exact location, and have him test something to catch the perpetrator. It was crucial that we did this right at that time when the perpetrator did not suspect it. We were willing to cooperate immediately to clear everything up.

He never returned my calls while he admitted that he was in communication with the contractor(s) about this investigation. In fact, I never had a chance to speak to him until many weeks later.

Bill Goichberg also confirmed the statement by the contractor. This matter was completely hidden by Bill Goichberg and Bill Hall from the other 6 board members. I immediately asked back in last September to allow our experts the opportunity to examine the data which was used for this "political" investigation. And since Bill Goichberg clearly acted on his own with his own political motive (he went out of his way to smear my reputation back in December 2006, asked USCF members not to vote for Paul and I, and wanted both of us out of the board), I asked for him to recuse himself in this investigation and I also asked to have our experts the opportunity to examine the data.

He rejected both requests. He wanted to be involved to make sure that his vote would tip the balance. He got exactly what he wanted. Multiple lawyers examined the NDA and concluded that the contractor(s) clearly violated the NDA and suggested to terminate the contractor(s) immediately. Bill Goichberg fought against it and protected them. He refused to go after any of the people in his camp.

Then confidential and legal information was purposely leaked by some of the board members directly to Mr. Jerry Hanken and their insiders to harm the other side. This is just the tip of the iceberg. As I stated before, now that I have the written consent from Mr. Jerry Hanken to release all the facts, things will start to come out to show the exact conduct of some of the board majority and why the USCF is in this financial and legal mess.

Best wishes,
Susan Polgar

More unprofessional response

Hanon,

You can make all the claims you want about me and my supposed "untruths" but your son. You and I have had this discussion about what actually happened at the US Amatuer Team East, and you know for a fact it is true. You are an attorney - put up or shut up.

Randy Bauer

Mr. Russell's last response

Here is the final response by Mr. Hanon Russell:

Bill:

I appreciate your taking the time to reply. First, let me note that although a number of people have reacted to my initial message (and certainly more may in the following days and weeks), I have neither the time nor inclination (with one exception) to respond to each email and I will not do so. No one should mistake my choosing not to respond to any point that may have been raised as an admission, acceptance, waiver or anything else on my part. I shall deal with the one exception later in this message.

You raise an apparently valid point about the arrangement with the House of Staunton, to wit, it appears that we were offered the same "arrangement" and turned it down. Well, this is not exactly what happened, and the differences are critical and the reason why I have turned the matter over to our attorney.

I had been approached several years ago by Bill Hall to include some USCF Sales material in the mailings that the USCF made to new members. It was recognized then, as now, that the new member group did indeed purchase equipment, books and the like at a significantly higher rate than would normally be expected. I was offered the opportunity to have the back side of the introductory letter/card feature some products in return for splitting the cost of the printing. My recollection is that the cost to USCF Sales was a little less than $4,000 at the time. We elected to try it. It was not successful.

When the initial printing had been used up, Bill Hall contacted me and asked if I was ready to do it again. I declined, citing the minimal return for the dollars spent. He understood and that is the last I heard of it until Lev Alburt contacted me. He wanted to promote his books and asked what my position was. I told him I had no objection so long as USCF Sales was able to make the sales. Lev agreed and the flyer that was reviewed by the USCF and me and included in the new-member mailing specifically referenced USCF Sales - its address, toll-free 800 number, catalog numbers. Everything.

Apparently still seeking sponsors for the new-member mailing, the House of Staunton was contacted. I say "apparently" because I did not find out about the arrangement between the USCF and the House of Staunton until the beginning of April 2008. It is not insignificant that in stark contrast to the Alburt flyer, neither the USCF nor the House of Staunton ever informed me about what was going on. Not once, in spite of multiple contacts with both concerns. My understanding is that I did not find out about this arrangement for almost a year.

When I did discover what was taking place, I immediately confronted Bill Hall. His response was (1) USCF Sales had declined to be involved in this project and so the USCF was free to bring another firm into the arrangement; and (2) there really was no difference between what was going on with the House of Staunton and advertising by other companies in Chess Life. As far as the first point is concerned, had it been done properly, like the Alburt flyer, I would not only have had no objection, I would have welcomed it. However, it is difficult based on how this arrangement was carried out by both sides for me to believe that in fact everyone understood what was being done and what should and should not be disclosed.

In fact, USCF Sales has always offered chess sets from the House of Staunton. We would have been pleased to have the House of Staunton promote its products in the same manner as Alburt was promoting his books - by including a flyer promoting the sets and directing them to USCF Sales for purchase. Instead, the HOS material included (a full color flyer and a second "coupon" offering 10% off) had no mention of USCF Sales and encouraged the recipient to contact HOS directly. Sales by USCF Sales of HOS sets that may have been made as a result of this mailing were lost; we made none.

To take the position that a select, targeted mailing to a group known to spend a lot more easily in the first few months of a new membership is no different than advertising in Chess Life reflects either a complete unfamiliarity with marketing and sales or disingenuous spin. Or both. For God's sake, a new member is receiving the first contact from the U.S. Chess Federation and in it are flyers encouraging the member to buy fine chess sets, (the "official" USCF sets I believe is a term used more than once in the paperwork) directly from a vendor other than USCF Sales. Remember USCF Sales? We send you 12% off the top of every purchase. Even when we sell a HOS chess set. 12%. I am sorry if you cannot differentiate this from a paid ad in Chess Life. I see the difference very clearly. So do our attorneys.

Now for the "exception" to which I referred. A member of the Executive Board, Mr. Bauer, chose to respond to my initial message. You along with everyone else on the list received his message. I had put forth what I had thought was a legitimate concern, constructively questioning decisions I saw as bad for the USCF and bad for USCF Sales. Instead of replying in similar fashion, he chose to create untruths out of whole cloth, fashioning a personal attack against me and my son. One wonders what color the sky is in his world. Mr. Bauer's reputation for conducting himself in this disgraceful manner should not have come as a surprise to me, and I already know from private messages that it was not a surprise to others who saw what he wrote. However, that does not change the fact that these comments are beneath contempt.

Bill, I respect your different views on these matters but must also assert that I strongly disagree. As the HOS matter is currently being handled by our attorneys, and the Chess Life matter may soon be, I regret that I will not be responding any further to your or anyone else's remarks. Not even when Mr. Bauer again launches personal attacks...

Regards,
Hanon

Hanon W. Russell
USCF Sales.com
http://www.uscfsales.com/
ChessCafe.com
http://www.chesscafe.com/
Toll-free (orders only please) 1-800-388-5464 (KING)
General Offices: 203-783-9866
Fax: 203-783-9673
234 Depot Road
P.O. Box 5460
Milford, CT 06460 USA

My response to Mr. Russell

This was what I responded to Mr. (Hanon) Russell:

Hanon,

I do not know about other board members but Paul and I were not told about the House of Staunton deal. We first heard about the (legal) problems at the latest board meeting.

Susan Polgar

I have to add that this is not the first time where important matters were hidden from other board members, at least to Paul and me, until serious problems occurred. There were instances in the past where the current USCF President and the current the USCF Executive Director made decisions in various critical matters without disclosing them to the other board members. Significant decisions which involve legal matters were made without the knowledge of anyone else. Some of these decisions have created serious legal problems for this federation, and money is being unnecessarily wasted.

Unprofessional response by the USCF

Hanon:

As one who maintains a popular Internet website, I am surprised that you would suggest that the only viable method for maintaining a close connection with USCF members would be through a print magazine. The proposal suggested by Bill Goichberg would provide all the Chess Life content to all members - it would only vary the way they received it. As one who has printed lots of content from online Chess websites (including your own), I fail to see how this would lead to the negative consequences you claim.

As for your odd decision to mix a business issue with a USCF governance issue - needless to say, the USCF did not enter into an exclusive marketing agreement with you when you took over the books and equipment business. We accept advertising from lots of books and equipment vendors in Chess Life and elsewhere. That has been the case before and during the entirety of your contract.

Your wish to only view our relationship as a partnership is specious, given your past willingness to withhold funds that were rightly owed to the USCF to renegotiate a contact you freely entered. As for your legal threats, all I can say is so be it. It would make a great story in court. Maybe you can get the contract history excluded, but juries eat that stuff up. I would also love to tell the story in court about your ..... (I removed this because I feel that the text is quite unprofessional and completely inappropriate).

Sometimes it is not better to start airing your laundry in public.

Randy Bauer

More USCF legal problems

Bill (Goichberg):

It has come to my attention that there is a proposal that would reduce the number of copies of Chess Life distributed to the membership. Although I appreciate the board's desire to cut expenses in these trying economic times, this idea is a bad one for several reasons.

Without the magazine arriving each month, any stimulus for members to become more active, participate in chess events, follow the goings-on in American chess, not to mention purchase chess books and equipment from their national federation, will slowly but surely erode. The identity of the USCF will be at risk, becoming only the custodian of a chess rating system, not the face for the history and culture of chess. A monthly publication encourages a sense of community, an affiliation with others which a bare bones organization can never hope to achieve.

It will also reinforce the perception, real or otherwise, that the weakened financial position of the USCF is only getting worse. This will hardly be a situation that will encourage more people to join or renew.

There are several ways to deal with declining revenues. Attempts may be made to cut expenses, increase revenues, or seek somehow to combine the two. It seems to me that the emphasis should be on increasing memberships, and therefore revenues. The real problem facing the USCF is that memberships are either declining or at best, remaining stagnant.

The decline or stagnation of core memberships should be the real concern, for regardless of any steps taken to cut expenses, such measures are bound to fail if the number of members continues to decline.

From the point of view of retail sales to USCF members, this is another discouraging development. We have already had to bring in legal counsel as a result of what I considered an egregious material breach of the agreement relating to a secret arrangement with the House of Staunton. For over a year, the USCF was paid by the House of Staunton to include promotional material to new members, including but not necessarily limited to discount coupons, which promoted and directed new members to patronize the House of Staunton.

Considering that the group of new members has historically and demographically been the highest spending group per capita for retail sales, this clandestine arrangement was particularly appalling. This strategy was short sighted, seeking quick gains in ad revenues and overlooking potential deep losses in sales revenues. This purchasing pattern of new members was known, or should have been known by the USCF when entering into this arrangement with the USCF, and it almost certainly was known by the House of Staunton.

When a letter from our attorney demanded that this cease and desist, not only did it continue (and my information is that it continues to this day), we did not even get the courtesy of a response. Nothing at all. Be advised that matter is still very much active, pending the results of legal research that is still ongoing.

Now it appears that one of the significant vehicles for USCF Sales to promote and market books and equipment is being reduced, perhaps even eventually eliminated. There seems to be no regard or even realization that this may have the effect of rendering the USCF brand worthless as USCF Sales tries to promote retail sales on behalf of the federation. USCF Sales relies on the ability to reach members with catalogs that are bound into Chess Life as well as monthly advertisements in Chess Life. Equally discouraging is the USCF's inability to understand and appreciate the value of Chess Life to the chess community.

To my knowledge, there is no member of the board, or any officer, who has any meaningful retail sales experience or marketing skills. Yet the board appears to take steps – intentionally or unintentionally, it hardly matters which – to undercut the efforts of USCF Sales to sell, promote and market on behalf of the USCF, while of course it simultaneously deplores the decreasing revenue sales generated and assumes that these actions should have no bearing on minimum guarantees or other indicia of performance. In fact, these actions have the effect of gutting some of the core provisions of an agreement that is already is under pressure.

As the discussions about what to do with Chess Life and memberships continue, I felt I should weigh in on the matter. It is distressing that after more than four years of handling the retail sales for the USCF the relationship seems more adversarial than one of partnership. I understand that there will be those who will genuinely disagree and there will be those who will want to simply "circle the wagons," rejecting any contrary views as they promote a personal agenda.

I am reminded of the one-liner that a camel is really a horse designed by committee. I fear the same is going on here with the redesign and restructure of the USCF, albeit by those who may mean well. Please re-think the proposed changes in Chess Life. If implemented, these changes will be essentially irrevocable. Consider hiring someone who has professional marketing and public relations experience with other organizations. Focus on reversing membership trends. I have been a member of the USCF for over 45 years and have actively supported it at all times. I very much want to see it continue and flourish.

Regards,
Hanon

Hanon W. Russell
USCF Sales.com
www.USCFSales.com
ChessCafe.com
www.ChessCafe.com
Toll-free (orders only please) 1-800-388-5464 (KING)
General Offices: 203-783-9866
Fax: 203-783-9673
234 Depot Road
P.O. Box 5460Milford, CT 06460 USA

Q & A

Question by dietchess:

"the more important question is why we have two differing accounts from Mr. Bauer and GM Polgar."

Mr. Bauer believes in his lawyer. I believe in the facts. I also believe in a fair process. I stand by my statements and I intend to pursue this matter. As I stated before, this matter will not end once the Sloan lawsuit is dismissed or concluded. The board majority will have a lot of answering to do to the USCF members. I am not going to play their games. Their actions and political games of some members of the board majority caused the federation to be in this horrible position.

Here is the summary of what I stated:

1- We asked the board not to include Bill Goichberg in the sub-committee at the last board meeting in Crossville. Things would have gone a lot smoother and faster if Bill was not in the sub-committee. The reason is clear. Since there are a lot of potential legal issues involved in a number of possible cases, we consider it a direct conflict of interest for Bill to have privileged information. He should not be privy to them. We told this to the entire board. In fact, we feel that a full investigation should have been made about this matter which affected many USCF members. The board ignored our request and went ahead to form a committee of five members (including Bill Goichberg) AFTER we left the last board meeting in Crossville. We still ask Bill Goichberg to step down from the sub-committee.

2- For the best interest of the USCF due to the serious legal situation, we recently asked Randy Bauer to step down from the sub-committee due to his clearly documented mistake with the NY Times which caused severe problems for multiple parties, including the USCF. Randy agreed to step down then changed his mind after the board majority convinced him to stay on.

3- We requested the same access to the USCF database as the contractors so that our own experts can examine the validity of the data as well as matching IPs of suspicious posters. Our repeated request was ignored. What are they hiding?

4- We pointed out a handful of suspicious handles and postings directly related to this case to the attorney and other board members. We asked them to investigate. This request, and others, have also been ignored or denied. Are they afraid that it will point to one of their political buddies?

5- There should also be an investigation regarding how non-board members can obtain confidential board information to spread out false rumors for various purposes. If the board majority gives us consent, we can prove the source of the leaks. Joel Channing and Randy Bauer did not leak out confidential info as far as I know.

6- We asked the board to authorize ALL (not some or what they want to pick and choose) correspondence in the confidential BINFO from August 2007 to be released to the public. This should include the correspondence of all seven board members, the ED, the attorneys, and all parties relating to this case. This will clearly show the misconduct of the some members of the board majority as well as pertinent information relating to this investigation. The board majority clearly wants to hide the facts from the USCF members.

7- We asked the board to grant us consent and immunity to release all information and board member correspondence and NDAs related to this case. We recommend that ALL confidentiality clauses be waived in order to make the case clear and in order to expedite its conclusion. We propose to show all USCF members any evidence we have of who leaked what to whom, who made what deals under the table and for what reasons, etc. We give consent to the board and their attorneys to publish all information they have about us relating to this case. Everyone can then decide who is clean and who is not.

8- We asked the board to investigate the leaks of confidential board information to Jerry Hanken who used my confidential evidence and info to negotiate with Sam Sloan while the lawsuits against multiple parties are ongoing. Did the board majority authorize this? Did the board majority authorize this? Did the board majority seek permission from the USCF attorney prior to this negotiation? If so, did he authorize this? Will the board majority publicly admit or deny that this negotiation took place? Obviously someone from the board majority leaked confidential information to Sam Sloan (directly or indirectly) because he is using some of this confidential information (which only board members and the USCF attorney would know) in his response to the motion to dismiss. The board refused to investigate their own wrong doing.

9- Who authorized the board majority and their attorney to investigate completely false charges against my husband and me which relate to my divorce / custody case? It has absolutely nothing to do with this investigation. I find their conducts appalling. How did this even come up for discussion? This is my personal business and it has nothing to do with the USCF. Is this what board members are elected to do? Did the board majority use USCF money for this? Will the board majority publicly admit or deny that they tried to involve my personal situation into their political game?

10- I have reasons to believe that the board majority also tried to interfere with my legal case. We fully cooperated with the attorneys assigned by the insurance company and there was no problem. I strongly believe that board majority authorize a discussion / conversation with the insurance company to purposely try to persuade the insurance company to drop the coverage for Paul and me. Is this legal or ethical? Obviously, it did not work in spit of their wish. If it is not true, will the board majority publicly deny this? So far, they refused to deny it.

As of the evidence, after I faxed it to the USCF attorney, I received an email confirmation immediately that it was received. I was under the impression that it was enough as it is quite conclusive to show serious flaws with the conclusion of the Mottershead report. The board majority said more than a month later that it was not enough. However, they also clearly asked me to ONLY communicate through their attorney but their attorney never once asked for additional proof.

If the board majority strongly believes in their case, let them pursue it. If they have nothing then apologize and move on. But they are doing neither while the federation continues to suffer.

I will not come back to the USCF forum until it can be run properly. Paul and I were two of the most frequent posters there until it became a nasty and vicious political forum. I also cannot approve spending over $50K for various expenses relating to the USCF forum while the USCF finances are in horrendous shape. If Mr. Bauer feels that the 10 points I made are false, I would challenge Mr. Bauer to publicly deny my allegations and state his facts on all 10 issues.

Best wishes,
Susan Polgar

Some of the key issues

Here are some very serious issues which can potentially lead to many problems for the USCF:

1. Who leaked confidential board information to their circle of friends? Only 5 board members (Goichberg, Berry, Bauer, Hough and Channing), the ED and the attorney(s) for the board majority know the information. I am confident that Joel Channing and Randy Bauer did not do it. Then who did? Why did the board majority refuse to investigate? What are they hiding?

2. Did the board majority authorize a discussion / conversation with the insurance company to purposely try to persuade the insurance company to drop the coverage for Paul and me? Is this legal or ethical? Will the board majority publicly admit or deny this?

3. Who leaked confidential board information to Jerry Hanken and who authorized Jerry Hanken to negotiate with Sam Sloan while the lawsuits against multiple parties are ongoing? Did the board majority authorize this? Did the board majority seek permission from the USCF attorney prior to this negotiation? If so, did he authorize this? Will the board majority publicly admit or deny that this negotiation took place? Obviously someone from the board majority leaked confidential information to Sam Sloan because he is using some of this confidential information in his response to the motion to dismiss.

4. Who authorized the board majority and their attorney to investigate false charges against my husband and me which relate to my divorce / custody case? How did this even come up for discussion? This is my personal business and it has nothing to do with the USCF. Is this what board members are elected to do? Did the board majority use USCF money for this? Will the board majority publicly admit or deny that they tried to involve my personal situation into their political game?

5. Why did the board majority refuse to allow our experts to examine the USCF data? We asked for this since September 2007. We requested the same access to the USCF database as the contractors so that our own experts can examine the validity of the data as well as matching IPs of suspicious posters. Our repeated request was ignored. What are they hiding?

6. We pointed out a handful of suspicious handles and postings directly related to this case to the attorney and other board members. We asked them to investigate. This request, and others, have also been ignored or denied. Why? Isn't the USCF interested to find out the truth or is this just a political game?

7. We requested to have a thorough independent review of how this federation spends money. We need to know why we wasted money to revamp the website TWICE and how the contracts came about. Were there fair and open biddings? I never saw any advertisement in Chess Life or other publications. I would like to know who approved this and who we can hold accountable for the financial blunders. This request was also ignored. Isn't saving the USCF an important task?

I will continue to point out the facts and the members can make up their own minds. I am very confident that once everything is opened up, all USCF members can then determine who did what and what games were played. I stand by my earlier statements about complete transparency from all seven board members, the ED, USCF contractors, attorneys and related parties.

Best wishes,
Susan Polgar