EarthQuest Institute received $500,000 from EMCID
Thursday, April 05, 2012
The Tribune has attempted to document the EarthQuest Institute's (EQI) history from its creation in February of 2008, and recent findings present several gaps in who is left in charge and how EQI funding was presented and used.
Here is the sequence of Tribune findings:
A request made to EarthQuest and development consultant Don Holbrook by another entity, received a denial of current involvement with EQI by Holbrook on Feb. 28. Holbrook said he ceased his officialy employment after John Marlin, of Marlin-Atlantis and a director of EQI, was unable to meet financial obligations. Holbrook also denied knowledge of available access to any current financial records. However, this appears to be a contradiction to what EQI's accountant, Derek Ryan, told The Tribune on March 20 after an information request was made.
According to Ryan, Holbrook would not authorize Ryan & Company, PC from releasing any records to The Tribune. Although Ryan said EQI has not reported any activity to his firm since 2010.
A phone call and email to Holbrook were not returned. However, Holbrook wrote to another entity that “EarthQuest Institute has gone on hiatus from operations and fundraising,” which EQI Chairman and EMCID Chairman Leon Cubillas publicly confirmed on March 22.
Existing financial documents for EQI are presently at the EMCID building, according to EQI Science Officer Dr. Matthew Gardner. He claims they were shipped to the New Caney address following his resignation from the board in 2011. Gardner is listed as the principal officer for the organization, according to the IRS.
“You'll need to go to EMCID and talk to Frank McCrady,” Gardner told The Tribune.
EMCID President and CEO Frank McCrady denied Gardner's claim since the institute is a private corporation. McCrady emphatically stated that the institute did not have an office, nor a filing cabinet at the EMCID address, which is listed as the same physical address as EQI on its website. An information request sent to McCrady, Cubillas and EMCID attorney David Marks on Feb. 16 was met with the following response on March 12:
“Since the District is legally not affiliated … it has no control over its records and if request, would refuse to accept such responsibility for the records...” Marks wrote.
Don Lessem, one of the directors for EQI and the original proponent of EarthQuest, claimed that any documents could have been shipped to EMCID, but they would have to be forwarded to Holbrook. Lessem also mentioned that he has not been involved with EQI for well over a year.
Cubillas said he could not produce any knowledge of the whereabouts of any records, their accessibility nor a current director or employee roster for the institute when questioned on March 9 and March 22.
The only records The Tribune has obtained are tax returns (Form 990s) for 2008, 2009 and 2010 and documents relating to the formation of EQI, still in existence, according to records from The Texas Secretary of State. The tax returns, eventually found online through a nonprofit information website, GuideStar, consecutively list Holbrook, Cubillas, Gardner, Lessem, Marlin and Deborah Thomas as officers for EQI. Holbrook as President and CEO, Thomas as Treasurer, Cubillas as Chairman, Gardner as Science Officer, Lessem as Director and Marlin as Director. Only Holbrook, Thomas and Gardner received compensation from EQI. Holbrook received $272,333 in total compensation for those three reported years. Thomas received $203,018 in total, while Gardner was only compensated $25,000 in 2008. For 2009 and 2010, EQI listed $298,771 in land investment.
According to the formation filings through the Texas Secretary of State, EQI was formed on Feb. 28, 2008, and restated formation on Oct. 1, 2008. David Rosenberg, an attorney with Thompson & Knight, LLP, is the current registered agent. However, Rosenberg said he is in the process of resigning. According to Rosenberg, EQI ended a formal client relationship with him in 2009, yet he “forgot to resign.” Thomas was his primary contact with EQI, who is allegedly also not connected any longer, yet phone calls to confirm have not been returned.
The original certificate of formation lists Lessem, Cubillas and Austin attorney Daniel Matheson as the EQI directors. Matheson told The Tribune he originally signed, but did not conduct any role beyond that. According to him, Marlin and Lessem took more control over the direction of EQI.
The restated certificate, signed on Sept. 30, 2008 by Lessem, replaces Matheson with Marlin. The assumed name certificate was also signed on Sept. 30 by Lessem and notarized by Patricia Suzanne Parmer, the office administrator for EMCID.
Although Parmer notarized the certificate, the ties between EMCID and EQI remain unclear. The Tribune has been unable to establish a consistent or definite relationship between the two entities, as both McCrady and Cubillas maintained there is complete independence of the two, while Lessem claimed a direct relationship existed. Questions about funding from EMCID have been raised as well as much of the revenue is alleged to be from private donation.
One previous donor, Todd Casselman, said he was disappointed with the current lack of disclosure from EQI officials. However, Casselman said that he supports the project as it could provide positive development for the area. According to Casselman, he donated approximately $2,500 after attending two fundraisers, one at the EMCID building and one in Houston.
"This is one of those things that we would rather be on the inside looking out rather than the other way looking in," he said, but further explaining that he understood large-scale projects could always fail to achieve any tangible construction.
Casselman disclosed that his waste management company, Pro Star Waste, was interested in pursuing a business contract during the construction phase of the park, but the donation was simply a gift to EQI.
On March 22, EMCID member Vickie Thumann said EMCID did contribute to EQI, but could not present a specific itemized amount, but assured it would be listed in EMCID records. Lessem confirmed that EMCID contributed to EQI during its early incorporation but could not recollect an exact amount, nor could he state whether it was a grant in one sum or through several contributions. Three available audits reflect EMCID expenditures on EarthQuest, but only year end schedules (June 30) for 2010 and 2011 display itemized EQI funding at $250,000 both times.
Those EMCID expenses on the 2008 and 2009 cash flow are:
$18,257.74 (Feb. 14, 2008) for Project Rex
$13,500 (March 24, 2008) to Holbrook Development Company for Project Rex
$5,000 (March 24, 2008) to Holbrook for EarthQuest
$24,250 (Aug. 14, 2008) wired to Project Rex
$1,383,036.86 (July 9, 2009) to Global EarthQuest Ventures, LP for a developer reimbursement
$386,223.61 (Aug. 26, 2009) to Global EarthQuest Ventures
$388,864.11 (Sept. 10, 2009) to Global EarthQuest Ventures
$111,937.15 (Oct. 2009) to Global EarthQuest Ventures
EQI Revenue and Expense Totals:
Holbrook Compensation Totals:
$55,922 (contributions to employee benefit plans and deferred compensation)
Thomas Compensation Totals:
$14,325 (contributions to employee benefit plans and deferred compensation)
*EMCID=East Montgomery County Improvement District
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