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A Legacy of Greed


[photo of Vern Perrott]Vera Perrott, circa 1920

Money, great gobs of it, and a gaggle of bankers and lawyers trolling in its wake; a family divided within itself, yet united against perceived enemies outside; allegations of chicanery and skulduggery leveled against the sacrosanct Humboldt Area Foundation, with even the revelation that among its "grants" was an $85,000 personal loan to its executive director; and a woman of Pioneer stock who danced in the redwoods and whose legacy has been both bane and beneficence: These are among the elements of Humboldt County's longest-running soap opera.

The only things missing that would turn it into a classic whodunit are sex and murder most dire and even they turn up on the periphery at least.

Vera Perrott Vietor is the tragedienne of this drama, descendant of a family that homesteaded in Loleta in 1861. She was a Perrott and the Perrotts mixed blood with the Van Duzers, an equally distinguished family of the North Coast. The Perrotts owned thousands of acres of redwoods and other timber lands, stretching from Klamath south to Weott.

Trees, however, were more than a source of wealth to Vera. She had, after all, the genes of tree-hugging ancestors. Her Aunt Laura, for example Laura Perrott Mahan was a founding member of the Save the Redwoods League. And in 1923, as the story is told by one of Vera's nephews, this Aunt Laura and her husband discovered Pacific Lumber, that modern-day villain of environmentalists, cutting virgin old-growth redwoods in what is now Rockefeller Grove at Dyerville. While husband and a lawyer went off to Eureka for a court injunction, Aunt Laura herself stood in the line of fall of a tree being cut in order to halt the loggers. My goodness shades of Horatius at the bridge!

photo of Aunt Laura]Vera's aunt Laura

Small wonder, then, that Vera Perrott would eventually settle with her husband, Lynn Vietor, in a grove of redwoods on a hill off Indianola Road in Bayside. Vera, born on the family ranch in Loleta, went to high school in Fortuna and to the University of California at Berkeley. She was into drama and avante garde dance there, and after she graduated in 1924, she came back to Eureka to teach school until her marriage three years later. Lynn Vietor went to Eureka schools and graduated from Stanford University with an engineering degree. He joined his father, William Vietor, in running the Acme Foundry and Eureka Boiler Works, taking it over on his father's death.

The Vietors lived at first in a modest home on Eureka's F Street, while they scoured the countyside in Trinidad, Loleta and Bayside for the site to build their dream home.

As luck would have it, they were able to land John Yeon (pronounced YAHN) as an architect. A native of Oregon, where he was regarded as a treasure and whose inspired gift of design had won him national acclaim, Yeon didn't just take on anything that came his way. He asked the Vietors to pick three possible sites, and he was sold at once on the Vietors' 14-acre redwood hill in Bayside.

Yeon had once said: "I have always had an inordinate passion for landscapes. I have spent a lot of my life trying to save them."

Teamed up with that dedicated nature-lover Vera Perrott Vietor, it was obviously a match made in heaven. The home he built for the Vietors is often described as Humboldt County's first Modern house. It was wrapped in large expanses of glass, bringing the wilds into the living room practically and affording spectacular views of Humboldt Bay in the distance. It was a house that, as Yeon himself phrased it, provided "comfort for the soul as well as for the body." It was a home that flowed into itself, with few intervening walls. It had but two bedrooms, but a spacious living area. Except for foundation and chimney, it was entirely of wood clear pine for the master bedroom and library, oak for the floors, redwood for the rest.

The house was finished about the time of Pearl Harbor in 1941, and Lynn and Vera Vietor were to enjoy it for barely another 30 years.

Robert William (Bill) Perrott, one of the five siblings surviving their aunt and uncle, remembers: "Aunt Vera was always taking us birding. She gave all us kids bird books. But you didn't wander around the woods and step on plants, you know!"

Bill Perrott, who lives in Sisters, Ore., has a solid knowledge of John Yeon, one of Oregon's favorite sons. Speaking of the Vietor house, (which was once featured in House and Garden, among other national magazines), Perrott says: "Yeon sculpted the whole area like a work of art. There was a lawn, shaped into the woods, and a dogwood tree that kind of laid out over the lawn, and right outside the guest bedroom was an imported oak tree, and it's gone. That hill was shaped just the way he wanted it, so when they (the Vietors' successor owners) built the parking lot, it really goofed things up."

Tragedy struck the Vietors a double whammy in 1972. First Lynn died, on April 13; he'd gone into a Eureka hospital for a prostate operation and died either on the operating table or soon after, according to family legend. Less than 10 weeks later, Vera died of emphysema a heavy smoker, her addiction to Lucky Strikes had finally caught up with her.

During that short interim, however, on May 3, she executed her last will and testament. It was undoubtedly the most controversial act of her life, and it prompts speculation on whether or not she'd have gone through with it if she could possibly have known the courtroom battles it was to engender. The irony is that Vera had a healthy disrespect for lawyers, and is said to have described them, lumping them together with bankers and politicians, as "vultures."


[photo of family, 1912] Vera with her mother, father, and younger brother, Henry, circa 1912.

To three members of her husband's family she left $10,000 each and to the fourth $15,000. Another $10,000 was bequeathed to Dolly Coffelt, who lived then and lives today just down the hill from the Vietor residence, at the corner of Indianola and Myrtle Avenue "in appreciation of her kindness and invaluable help to me for more than 20 years." Dolly Coffelt, who just this month observed her 91st birthday, will be heard from shortly, as will her daughter, Sharon Jackson, a McKinleyville resident.

To her brother, Henry W. Perrott, and his wife, Blanche, Vera left $50,000. She left the same amount to each of their five children: Robert William (Bill) Perrott, John Richard Perrott, Sally Perrott Hammack, Henry Albert Perrott and Carol Ann Perrott (or Carol Perrott Armstrong as she is known now).

Vera's will also established a $300,000 trust with Crocker National Bank (since defunct, and succeeded by Wells Fargo), to provide educational scholarships for her brother's offspring. The will specified that the trustee was to use only net income and "not the principal" for these scholarships.

Finally, all the remainder of her estate was left to Crocker Bank to be administered as a trust fund for the Humboldt Area Foundation (HAF). Again, she specified that "the income, but not the principal" should go to the foundation. (It's a specification that has been violated, according to Vera's heirs today.)

Her home was to be "used in perpetuity" as the foundation's office and headquarters building.

Then, tree-hugger to the end, Vera stated: "It has been one of the great pleasures of my life to leave this beautiful real property in its native and unspoiled condition, and it is my direction that the real property, and all of it, shall be open to members of the public to use and enjoy..."

She also directed that "the property shall not be despoiled by picnic tables, barbecue pits, swimming pools, or like improvements usually associated with public parks. Should the letter or the spirit of these provisions be breached at any future time, this trust shall terminate, and shall vest in the then-living issue of Henry W. Perrott."

[photo of Humboldt Area Foundation house] Humboldt Area Foundation house.

And even before the foundation got off the ground, Henry W. Perrott was going to the Humboldt County Superior Court, contesting the will on the grounds that his sister "was not of sound and disposing mind" this from her own brother, mind you and asking that the will be revoked.

Equally disconcerting, to put it mildly, was to hear Dolly Coffelt's statement to the Journal in a recent interview: "The Perrotts (Henry and his wife Blanche) wanted me to testify that she (Vera) was crazy, so they'd get more money." This pair invited Dolly and her husband Clark to dinner to divulge this little scheme. "It made my husband awful mad," she recalls, "and me too. And they offered to give me more money. I told them I wouldn't testify to that for all the tea and all the money in China."

A great grandmother 23 times, as she notes, Dolly Coffelt says it was about 1950 when she met Vera Perrott Vietor: "And I was with her until she died. She wanted somebody to help her in her yard, and she took to me right away. She told me, `You're younger than me, but you took the place of my mother.' She just wanted me for a companion. I'd go up to see her, and she'd say, `Let's not do anything today.' And we'd get in the car and just ride around, go out for lunch."

Dolly's daughter, Sharon Jackson, remembers that Lynn Vietor had bought tan, matching Lincolns for Vera and himself. Sharon was also a frequent visitor at the Vietor home, from about the time when she was 11 and on into her high school years. "I worked for her," she relates, "and sometimes stayed with her. She didn't like staying alone, so when Lynn went on a hunting or golfing trip, I'd stay with her when my mom couldn't because she was working with my dad. My dad was running a trucking business and she did the bookkeeping. Part of my job when I went up there was to put peanut butter and suet on little screens for the birds.

"She was ahead of her time in ecology. She always wore cotton, and a wool coat in winter. She wore sandals, no nylons. She would just cringe when she heard duck-hunting season open."

Dolly Coffelt says, "I was with Vera the day she made out the will, and she specifically told them (James Henderson, the Vietors' attorney, and Crocker Bank's representative for the embryonic HAF), not to move anything, not to paint the house, and if you can see that now, well, it's mutilated and torn up. She had a kind of driftwood finish on the house and they painted over it. She'd be turning over in her grave. It kind of goes against the grain with me when you take advantage of a dead person."

Coffelt also remembers hearing Lynn telling Vera one time, "I don't want the Perrotts to have any more of our property. They've already got more than they need."

[photo of Vera and Lynn, 1938] Vera and Lynn in Lynn's Klamath Glen Cabin, circa 1938.

Daughter Sharon remembers, too, that Vera apparently had no special fondness for brother Henry's wife, Blanche. "Vera never called her by her name. It was always `The Madame,'" in an obviously sardonic tone.

One thing Dolly Coffelt is certain of: "Vera was perfectly well mentally. She lived a long time after she made that will, and you don't need to think she was on her deathbed when she did."

Ellen Dusick, a witness to the will's signing, also agrees that Vera was mentally competent at the time.

"Oh, yes, certainly, of course!" she says. "She was not terribly well physically (because of the emphysema), but she certainly knew what she was doing. She was a sharp, bright lady. She knew exactly what she was doing."

Dusick at the time was legal secretary to lawyer James Henderson, and after his death she became the Humboldt Area Foundation's first executive director, a post she would hold until her retirement 18 years later, in 1992.

Dusick, a native of Humboldt County, said she believes that Jim Henderson and Jim White from Crocker National Bank had "introduced to her (Vera) the idea of a community foundation, based on the San Francisco Community Foundation." In perhaps a less charitable view, Dolly Coffelt says, "It was Crocker National Bank that pushed her into that foundation."

Crocker National Bank came under fire practically from the get-go from John Richard Perrott, honcho of the Perrotts' family corporation, Perrott Enterprises, Inc., and his attorney du jour, Edward A. Lawson. As Perrott puts it: "CNB was doing a lousy job of producing income, losing money on principal, and not funding educational requests that the family would have expected."

Perrott blamed that especially on the bank's Elaine Yeary, who was handling investments. Perrott, with one of his usual restrained statements, said of her: "She was a women's lib jerk, didn't know a good investment from rotten eggs!" What's more, she upbraided John Perrott, whose engineering work took him to many far-flung corners of the globe, "for working in Moslem Algeria, where women were downtrodden, without rights."

Well, you can't say this soap opera is without humor.

Ultimately, in 1979 Crocker resigned as trustee of Vera's educational trust with some persuasion from John Perrott and legal assistant and Perrott himself, with the endorsement of his siblings, was appointed by the Superior Court as trustee. He serves pro bono "I have never had a nickel out of the trust," he asserted recently. He also notes that when he took over, the original $300,000 principal was down to $240,000.

[photo of Henry Parrott] Henry Perrott

Henry W. Perrott's suit to overturn his sister's will wasn't settled until April 1974, with the agreement that he would receive 19 percent of the Vietor estate, which was then valued at $5 million, according to Humboldt County court documents, and the lion's share of 81 percent going to the newly created Humboldt Area Foundation. Perrott would thus receive $950,000. But 33 and 1/3rd percent of that or more than $315,000 had to be paid to his attorney, John Gromala.

(In one conversation with John R. Perrott, I asked him how much money he thought had been spent on lawyers over the years in this case millions? "Oh, my God! I can't answer that," he replied. But as "just a guess," he ventured to say $100,000-$200,000. Obviously, it went over that in just that one settlement case back in the '70s.)

Gromala, who no longer practices law but runs his Mediation Service in Eureka, said that he had represented Henry Perrott in that case on a contingency basis meaning he ran the risk of not getting anything if he lost the case. He had represented him in other legal matters, including at least one timberland sale for nearly $2 million, in which Henry W. Perrott and his five children each got $172,000; and Gromala and his then-partner, Gerald Harland, received fees totaling $91,800.

The court documents also note that even after this settlement payout, there was still "approximately" $4 million preserved for the Humboldt Area Foundation trust although the figure that is almost always mentioned as having been left to HAF by the Vietor estate is $2.4 million.

Today, the Humboldt Area Foundation once again is the target of a lawsuit, and again it's the Perrotts storming the battlements.

Their target is HAF's proposed construction of a 4,000-square-foot building for a non-profit support and community center, plus a parking lot, at the lower level of the hillside property. The foundation headquarters now has 23 parking spaces on its upper level asphalt-paved lot. In a letter to "Dear Friends of the Foundation" this past June 10, Executive Director Peter Pennekamp noted that HAF now gets 3,000-4,000 visitors each year; parking "has become a real problem and staff is elbow to elbow."

"John Yeon put a big oak tree in front of the guest bedroom (of the Vietor house), and it's been chopped down," said John R. Perrott in a recent telephone call to his home in suburban San Antonio, Texas. "And a dogwood, one that Yeon brought in, was also cut down (by HAF). It was in the way of their bloody sidewalk (a ramp for the disabled). Vera wanted everything left native and unspoiled. Vera says if you breach the letter or the spirit of this trust, the trust shall be terminated."

John Perrott, who spews out words like an erupting volcano popping out rocks, added: "Putting in the (original) parking lot was stupid, and now they're going to put in another big parking lot down below. That house was a nice small residence for two people ... and HAF now has 11 employees working there. "As they say in legalese, irreparable damage has been done."

First round in the court battle went to HAF. Perrott's initial request for a temporary restraining order was quickly denied by Superior Court Judge J. Michael Brown. In answer to the objection by Perrott's attorney, Joseph Paladin of Trinidad, that his client "had no notification of the project," HAF's attorney, Nancy K. Delaney, responded that "the foundation is not required to notify every member of the public." She also claimed that HAF "is the only beneficiary of the trust," and noted that the project has been approved by the California attorney general.

Ten days later, Aug. 27, the Perrotts took the next step of requesting a preliminary injunction against the proposed building, and this time Judge Brown took it under submission. At this writing, Judge Brown's ruling was being awaited.

Both Joseph Paladin and his client who, incidentally, have known one another since 1957, when the two of them were Navy fighter pilot trainees at Pensacola, Fla. have made it clear that even if they lose the injunction try, that won't be the end of it. They will then take it for appeal to the higher court. As John Perrott exclaims: "We have just begun to fight!"

[photo of Bill Perrott ] Bill Perrott at Perrott Grove on dedication plazue to his great grandfather William Perrot.

Indeed, even as they await the decision on their injunction request, they are readying still another petition for the Superior Court here. This will request the court to remove the present trustees both HAF and Wells Fargo Bank and replace them with John Perrott, "or his designee."

"They've obtained orders to spend principal for building," said Paladin. "We're challenging any court orders where the Perrotts have not received notice. It's required by law and of course protected by our Constitution. They deluded themselves into thinking the Perrotts had no interest in what Vera left."

Or as an alternative to this requested switching of trustees, Paladin concludes, the petition will request the court "to terminate the trust and give the money and the land to John Perrott and his siblings."

This new petition will also charge that Wells Fargo Bank, in the words of John Perrott, "is guilty of abandoning the fiduciary responsibility Vera Perrott Vietor entrusted them with as trustee" when it turned over to HAF the land-property part of its trusteeship in 1994. Wells Fargo, the successor to Crocker National Bank, is now trustee only for the Humboldt Area Foundation's financial assets. The bank, Perrott says, "didn't want to be responsible for injury or damage if one of those redwood trees came crashing down."

"That's totally incorrect!" retorts Linda Burille, assistant vice president and trust officer for Wells Fargo in Santa Rosa.

In a telephone call last week (with the bank's public relations person, Dan Conway, also in on it), Burrile told the Journal that there was "no abandonment of the land-property trust. It was part of the overall Vietor trust and in 1994, with approval of the court and the attorney general, Humboldt Area Foundation became the successor trustee to the land. That's the only thing that happened."

And that was at the bank's request?

"Yes, it was something Wells Fargo asked," Burille confirms. "It was done primarily in the interest of Humboldt Area Foundation, to save money to reduce bank fees. It was by mutual consent with Humboldt Area Foundation and the bank, a cost saving to the foundation. There was absolutely no breach of fiduciary trust."

However, in a letter to Judge Brown on Dec. 5, 1994, attorney William H. Carson Jr., representing both HAF and Wells Fargo, stated that "the underlying reason" for the change in trusteeship for the real property involved "is that the bank feels that serving as trustee for the real property carries with it certain liabilities to which the bank would just as soon not be exposed."

Peter Pennekamp, 47, born and raised in Oakland, came north to go to Humboldt State University in 1970, worked at a variety of jobs before winding up at CenterArts, bringing big-name talent to HSU, went off to Washington, D. C., to work at National Public Radio, finally coming back to Humboldt County in March 1993 to take over the executive director job at HAF.

When I ask about the Perrotts' lawsuit, he tells me: "Our attorneys say not to be worried about it at all. Before we did anything (about the building proposal), we went to the attorney general, and he came back basically with complete endorsement."

Why then, I wonder, if it's in the bag, so to speak, why wouldn't he have informed the Perrotts?

"We had no contact with them particularly for 27 years," he responds.

Peter Pennekamp, HAF executive director.

But there was correspondence, some as recently as 1997-98, on several matters in which the Perrotts were involved, and the foundation's executive director was copied on it.

One request, in fact, was for a relatively modest contribution from the foundation to cover the cost of chain link fencing at the Table Bluff Cemetery, off Singley Road, just across from the old Perrott family ranch house the cemetery where Lynn and Vera Vietor are interred. The appeal, however, was turned down by HAF, with a letter from Pennekamp on Jan. 10, 1994, explaining that it was HAF policy "not to use discretionary funds for the maintenance of cemeteries."

As Pennekamp recently explained: "If you look at the needs in this community you know, we have hungry children, we have schools that need playgrounds. Supporting a cemetery is not on the public's mind."

That response prompted Richard Philipsen, secretary/treasurer of the low-budget, self-supporting Table Bluff Cemetery Association, to write to John Perrott about the turn-down: "Obviously, they were not interested in a one-time gift to help us, volunteers, in maintaining the final resting place of the two people who founded the organization they are in charge of overseeing."

Sally Perrott Hammack, one of Vera's two nieces, who lives not too far from brother John in San Antonio, told me in a telephone conversation it was that rejection that got her annoyed with the foundation. "That just offended me. It seemed to me that if they wanted to keep us happy not that they have to, but that was a kind of no-brainer."

In March 1998, as they recall, Bill Perrott and his wife, Elsie, on a trip down from Oregon stopped in at HAF headquarters Lynn and Vera's old home and went out to lunch with Barbara Dray, HAF attorney and planned-giving director, and Lynn Freeman, foundation secretary. Elsie Perrott remembers asking if they could be put on the mailing list for annual reports, and she also subsequently sent Dray a list of all the Perrott family members. "She (Dray) gave us some annual reports when we were there," Elsie Perrott relates, "but we never got any in the mail."

Thus, to say that there was no particular contact for 27 years does seem disingenuous. John Perrott dismisses Pennekamp's explanation as "more HAF chicanery."

The foundation's executive director insists that "there was no conscious effort to exclude them" from the mailing of the "Dear Friends" letter in June, announcing the new building plans. That letter went out to 4,000 people, he notes, and adds: "We're dealing with too much volume. We outgrew the point where we could be thoughtful enough to think of everyone we should inform."

"They sent out 4,000 of those letters; they could have made it 4,005," Bill Perrott observes wryly. "It was pure luck that we found out about it."

Although Bill Perrott, at 68, is the senior of the five Perrott siblings, it is the next in line, John R. Perrott, who'll be 67 in November, who is the take-charge guy in the court action.

"John is the one with the most money," Bill explains. "He did very well working overseas for Bechtel Corp. he got $20,000 tax-free. He had 800 people under him working on the Alaska pipeline for Bechtel."

Bill had driven down from Oregon for the Aug. 27 court hearing, and he said afterwards of the HAF people there: "Those people don't know where we're coming from. If they deny our injunction, we're gonna be fighting with them forever. John isn't going to give up on this."

Bill Perrott is driving us around Eureka, pointing out the house on F Street, where William and Cornelia Vietor, Lynn's parents, had lived, and then the Lynn and Vera home nearby.

Out in Loleta he takes us over what was once the old stagecoach road, tells how the general store in town was the genesis of the Loleta Bank, and drives up the town's Perrott Avenue. Going past the old water works, Bill says: "Pop (Henry W. Perrott) had a half interest in it." Again, driving by the town's fire hall, Bill says, "The family gave it to them for $10 in gold just to make it legal."

The Perrotts once owned a good chunk of what is now Loleta, 1,000 acres or more at one point, it is said. That was the Perrott ranch homesteaded by their pioneer forebears. Vera's grandmother, Sarah Jane Van Duzer Perrott, came West with her family at the age of 3, by covered wagon along the Oregon Trail.

"Who owned that land before the Perrotts?" I ask in one of my conversations with John Richard Perrott, and shooting from the hip in his scatter-word fashion, he snaps out: "It was owned by God! You just put your stakes down, went into the courthouse, and they'd give it to you."

Well, God and the American Indians anyhow. The white settlers moving westward prayed to the former and preyed upon the latter.

An illustrative tale from the family history is related by Bill Perrott. "Louella and Laura Perrott were daughters of Sarah Jane Perrott, and Louella was having an affair with a hired hand, an Indian." Of course that match wouldn't be sanctioned by the family. "It looked like he couldn't have her, and so nobody else would he shot and killed her. Sarah Jane wouldn't let them lynch him, and so it went to trial." Unfortunately, however, Bill doesn't know the outcome it wasn't a part of the family history that was talked about much.

Bill Perrott himself worked the Loleta ranch for three, four years, but it was a losing battle. He'd gross $18,000 a year, but expenses came to $12,000 and taxes to $3,000. "So you can understand there's no money in that."

All five Perrott siblings grew up on that ranch, went to grammar school in Loleta and high school in Fortuna. About five years ago they sold most of the Loleta property for approximately $1.2 million.

All that's left now are the 5-1/2 acres on which the ranch house sits, where Henry Albert Perrott and his wife, Janice, live with their two younger daughters (an older daughter and son are out on their own), plus 160 acres west of Highway 101, near Table Bluff, where Henry runs 70 head of cattle.

"Four generations on this ranch," he muses. A solid-looking, suntanned man of 58, he's no longer the "Little Henry" he was known to his siblings as a boy. "I'm the black sheep," he says. "No. 4 in a litter of five." He and younger sister Carol were the later arrivals.

Selling the ranch wasn't Henry's idea, and it obviously still rankles some.

"We argued and haggled," he recalls, "and the lawyers got involved. I was supposed to be the major shareholder, with 30 percent, but the four of them kind of voted against me. I had veto rights, but they applied enough pressure that I gave up. The other thing they wanted was for me not to have a clear one-fifth of the money. I told `em, `I'm sick and tired of you people.' I wanted to have an RV park on the land, but the family said, `No, we want cash money.' And by now they've spent it all."

Still, family is family, and Henry joined the others in filing a declaration supporting John's court action against HAF. Henry says he can think of "some good things" the foundation has done such as helping Loleta School to get a gymnasium and grants to St. Bernard School in Eureka, for instance but he also deplores what he sees as empire-building.

"What's going on over there? They want to put up a building and have guys sitting on their butts, sucking up money in wages," he says in unfancy rancher language.

Tossing such brickbats at the Humboldt Area Foundation is like attacking God and Motherhood. It has to be Humboldt County's sacred cow nonpareil.

True, as Henry Albert Perrott suggests, staff and salaries have escalated in the past seven years. Ellen Dusick, HAF's first executive director, was the only paid employee for the first five years, and even by the time she left, in June 1992, there were only three employees. In 1978, her fourth full year on the job, her annual salary was a modest $15,000.

By contrast, Peter Pennekamp's salary in 1997, his fourth year in the executive director's office, was $89,250. And total HAF wages came to $436,386.

But also by contrast, HAF's present staff of 11 is administering more than 320 funds, up from "about 200" when Dusick left in 1992; HAF during the 1997-98 fiscal year (it switched from calendar-year accounting with the beginning of the Pennekamp tenure) awarded grants of $2.7 million, compared to $642,258 in 1992.

There are other areas, however, that seem to merit closer inspection of the foundation's operation over the years.

One that jumps out was the original method of selecting HAF's board of governors (now directors). The seven members, serving five-year terms without compensation, were picked by: the chair of the county's Board of Supervisors, the presiding judge of the Superior Court, the committee of trustees (as many as five banks at one time), the president of the Eureka Chamber of Commerce, the president of Humboldt State University, the president of College of the Redwoods and the United Way president.

That was an interlocking relationship that suggested obvious pitfalls. A perusal of the foundation's annual reports for the past 2-1/2 decades indicates that HSU and CR, for example, certainly got their share of grants, and a grant of $12,500 to the county's Superior Court for publishing a "youth services survey" is another example of one that raises an eyebrow.

That was a concern the board members themselves expressed to Pennekamp when he came aboard.

"Invariably," he said, "there was someone on the board who saw that their role was to get money for who appointed them." Looking at past grants, he adds, they felt that "there was undue influence coming from certain institutions, because they were able to appoint people to the board."

"That could have been one of the issues," John R. (Jack) Selvage concurs.

A fourth generation Humboldter, who is chief executive officer of Eureka's SHN Engineers & Geologists, Selvage has been on the HAF board since 1985, thus spanning both the old and new director selection processes.

"I don't want to offend past board members," he says but then goes on to say some things that probably will.

"There've been some board members who were pretty ineffective, for whatever reason," he says. "Maybe they weren't into it, maybe they were just at that point in life where they wanted to travel, and they'd miss board meetings. I guess what frustrated me about the system, even though I was a product of it (he was an appointee of the Superior Court's presiding judge), was that we would go to meetings and there would be board members who hadn't even read the agenda. They weren't even prepared for the meeting.

"I kind of looked at some of these appointments as maybe it was you're being appointed because of the years of service that you gave to CR or Humboldt State or to the courts or to the chamber. And I think a lot of people may have read it that way, and just weren't active."

Under the new system, taking a leaf from the MacArthur Foundation method, "nominators" from the community are suggested, and they in turn recommend board members.

"We have this fairness standard," Pennekamp explains. "Everyone has to know there are going to be clear criteria, that there will be no backroom deals. We have a whole standard for board members that talks about no brokering. We pick people because of their non-profit background, they know the community, they've served on other boards, and once they're here they do not represent those organizations."

Jack Selvage says, "One of the things that I really get concerned about is putting our values as board members, imposing those on the community."

As one example, he cites birth control. "That's a hot button," he says. "The only time that I've ever gotten hate mail as a board member is over birth control; personal letters from agencies or people saying, you know: `You shouldn't be doing this. This is a bad thing.'"

In going over HAF annual reports, I had noticed occasional grants to Planned Parenthood, and I wondered what kind of reaction that got from the community. Selvage gave the answer: That was the hot button.

On selecting board members, Selvage has two personal priorities. "I believe in gender balance on a board," he explains, "and I believe in ethnic balance on a board." The latter has obviously been absent, judging from the photos of board members in annual reports down through the years. Selvage has been able, for starters, to recruit a Native American, Amos Tripp, as a board member, and he "really adds a perspective to the board," Selvage notes.

If you go through enough HAF annual reports, you are bound to find yourself asking: How in the world do they check out all these grants?

Peter Pennekamp likes to emphasize that the HAF staff does 180 visits a year to grantees, who also have to turn in a written report at the end of their grant period.

"Periodically," he acknowledges, "the money comes back. We've had a couple of grantees we've told they will never be funded again. In the absolute worst case, we've actually worked with the attorney general to make sure what was being done was within the law."

The Humboldt Area Foundation has doled out millions of dollars since its inception everything from $500 for Christmas baskets to $2,000 to help raise guide dogs for Northern Humboldt Eyes for the Blind; from $10,000 to restore the Madaket (the Humboldt Bay tour boat) to $45,000 to the city of Eureka for Sequoia Park Zoo renovation; from $2,100 to HSU for a Navajo blanket exhibition to $19,600 for "mini-camera and support equipment to KEET-TV."

One area subject to question is grants to public, tax-supported entities, such as city and county governments, or local school districts. A grant that caught my eye, for example, was one in 1986 for $33,400 to the Humboldt County Juvenile Hall/Probation Department to establish an assigned-work program for juveniles. Very likely a worthwhile endeavor, but why wasn't the county government footing that bill?

"Back then a board of governors got together and talked about what was good for the county, based on the fact they were appointed from these positions," Pennekamp replies.

But, one wonders, how could HAF justify that kind of grant?

"I have no idea," Pennekamp admits. "But I tell you that's why there were members of that board (who felt) it was the wrong way to do it, and that's why we ended up changing the way we did business."

Another eyebrow-raiser was a grant of $7,749 to the California Highway Patrol in 1992 for an electronic sign declaring the speed of passing vehicles.

"It's before my time," Pennekamp says, "and that's likely something we wouldn't fund at this point."

This whole question of a community foundation supporting government is now a subject of national debate, and Pennekamp asserts that HAF is on the fairly conservative end of it. He says that HAF "will not fund the operating costs of tax-supported entities."

He gives an example by way of explanation. "McKinleyville wanted us to fund a sheriff's substation. We said, `That's a function of government.' On the other hand, the people voted through the McKinleyville Community Services District to create a youth facility, so we have given a series of grants to support activities to get the kids engaged."

An examination of annual reports also suggests that HAF shies away from making public its salary expenses.

During Ellen Dusick's tenure as executive director, the salary figure was broken out to begin with, but was cut off abruptly in 1980. It hasn't been resumed since in the annual reports.

In fact, for the past three years the foundation's annual reports have boiled down the financial picture to a one-page "Financial Summary." It has all the glitz of a Madison Avenue art work, but little substance. There are a couple of colorful pie charts, showing the slices of Assets by Fund Type and Grants Paid by Field, plus a Growth of Assets graph, also in vivid color, showing the foundation's worth climbing from zip in 1972 to an impressive $47 million in 1998.

A "Foundation Highlights" column at the side lets you know that operating expenses that year "were less than one percent" of total assets and that's it.

When I mention to Pennekamp that I found earlier annual reports much more informative, he waxes eloquent in explaining why I am mistaken.

"When we asked people what they read in the annual report, no one used to read that old financial statement. Most people couldn't understand it. We never found anyone who ever read it. Ever. Period," he declares.

He goes on: "The first year we went to this (new) format, we started getting tons of comments." (And to think journalists are accused of hyperbole!) "We did focus groups asking about the annual report. When we did it about that old format, no comment, no one read it, no one cared. Now, it's one of the most important pages. So that might be your perception, but, boy, it's not the way the people we serve see it!"

Perhaps what it says about the people HAF serves is that much like most Americans today they want their news in sound bites. The management has appropriately responded with the abbreviated format, which, as financial manager Laura Hamby notes, is "user friendly."

The annual report always includes the obligatory word that complete audited financial statements are available on request. But Hamby gets only "one or two a year" of such requests, usually from someone with a fund.

It could be that HAF's 4,000 "dear friends" don't know what they're missing.

An examination of the foundation's 1997 Form 990, the Internal Revenue Service return for a tax-exempt organization, which is also open to the public, reveals that in 1995 the foundation granted a personal loan of $85,000 to its executive director, Peter Pennekamp. The note, with a maturity date of June 14, 2005, is secured by a deed of trust on real property (the home in Freshwater where Pennekamp lives with his wife and their two boys). It carried a 6 percent interest rate, and at the time of the IRS filing, the balance due was down to $43,993.

One wonders how many of the people HAF serves are aware of this transaction it certainly wasn't carried in the annual report's user friendly financial report and what they would make of it. Management dug into the William T. Rooney Fund for the loan money. Laura Hamby described Bill Rooney as "a very amazing person," who left HAF about $1.8 million, and who stipulated that he wanted it "to be spent."

Jack Selvage, who recalls that he was one of the board members who advocated the loan, tells the story like this: "When Peter came to work for us, out of National Public Radio in Washington, D. C., that was a time when the real estate market there just died. So he had his residential foot on the West and the East coasts, and his (Washington) house wasn't selling. Emotionally and economically it was very draining for him. The thing that worried me was that it was affecting his work. So we entered into this agreement with him.

"I don't have any qualms about that agreement. He's been pretty faithfully paying it back. There's a reasonable interest rate in there; it probably could have been more, and (you) could probably criticize that. The whole idea here was to give the guy a break. I think it was a good move for the foundation."

At least two obvious questions it raises are about setting a precedent and how other HAF employees might have felt about it. Not to mention possible questions of ethics and legality.

Pennekamp himself said that he has since sold the house in Washington. He said it was the board that "came up with" the loan idea. "I'd never done such a thing before," he says. "I know it was at a time when we were considering whether we could afford to stay here or would have to move back to Washington."

He said he knew, too, that the board had checked our the loan idea with the attorney general.

John Perrott, in pushing the lawsuit trying to stop HAF from carrying out its expansion plans, repeatedly characterizes his four siblings and himself as "Vera's watchdogs."

Some of the questions raised in even a cursory examination of foundation grants and financial operations do suggest the need for some kind of watch-dogging. But whom do you get to judge the judges?

What keeps popping into my head is a comment Henry Albert Perrott made when we were discussing the issues in this story at the old family ranch house in mid-August, very early on in the Journal undertaking.

"I'm going to use a five-letter word," he told me. "GREED. There's enough greed to go around for everyone."

That's about the one sure thing you can count on in this saga.

Comments? E-mail the Journal: ncjour@northcoast.com

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