Connecticut court OKs receiver for Amistad America; organization vows to cooperate [New Haven Register]

August 22, 2014

By Mark Zaretsky, New Haven Register

HARTFORD >> A court today approved Attorney General George Jepsen’s application to appoint a receiver for Amistad America Inc., which operates Freedom Schooner Amistad, state officials said.

The New Haven Register first reported the story that the state was seeking receivership Wednesday night.

An order approved by Superior Court in Hartford prevents Amistad America’s existing leadership “from taking actions on behalf of the corporation during the term of the receivership,” Gov. Dannel P. Malloy, Jepsen and Department of Economic & Community Development Commissioner Catherine Smith said in a joint press release. “It also prohibits the organization’s creditors from taking action to collect on debts without first giving notice to the receiver and the state and obtaining court approval.”

The order places full control of Amistad America in the hands of the state’s receiver, New Haven attorney Katharine B. Sacks.

Sacks has operated a law practice since 2001 and has extensive experience as a court-approved receiver in Connecticut, the announcement said.

“In addition to assuming all responsibilities for the day-to-day maintenance and operations of the Amistad, Attorney Sacks will work with the Governor’s Office, the Office of the Attorney General, the Office of Policy & Management, DECD, the City of New Haven and other stakeholders to assess and provide recommendations on the necessary next steps to address the Amistad’s debts and rebuild the organization,” the officials said.

The 79-foot official Connecticut flagship is home-ported at Long Wharf Pier in New Haven, although it frequently travels as part of Amistad America’s mission to “advance knowledge of the ‘Amistad Affair’ and of the struggle for human rights through education and operation of the vessel.”

“This is an important and necessary step to assure the people of Connecticut that there is appropriate oversight of the Amistad and that this vessel is living up to its educational mission,” said Malloy. “The Amistad represents not only an important chapter in our state’s history; it’s a symbol of how far we’ve come as a nation in pursuit of individual rights and freedom.

“We look forward to continuing our work with the Attorney General and to working with the receiver to protect this state asset,” Malloy said.

Jepsen said the Amistad “is an important piece of Connecticut’s history and cultural heritage. Today’s action puts in place a professional and experienced receiver who will ensure that, over the coming months, the organization’s finances are handled correctly and that existing obligations are addressed.

“We will seek to continue the receivership until the public can be assured that its money is being properly used and accounted for and that a plan exists for the organization to responsibly carry out its mission into the future,” Jepsen said.

He said that “substantial challenges” remain for the Amistad, “not least of which are designing an appropriate governing structure for the organization and identifying consistent and adequate sources for its operational funding.”

“Success is not guaranteed, but today’s action is a necessary first step and one that can give the state the confidence needed to continue expending funds allocated for the Ship’s operations,” Jepsen said.

“I am especially grateful to Mayor Harp and the City of New Haven — the Amistad’s home port — for the vital support that they have pledged in identifying and supporting a sustainable future for Connecticut’s ship,” he said. “We look forward to working towards that goal with them, the Governor’s office, OPM, DECD, the non-profit community and others.”

Jepsen said state officials “also appreciate the cooperation of the Amistad’s existing staff, crew and directors both in ensuring the continuity of the ship’s programming under the direction of the receiver and in developing long term plans for the ship’s operations.”

Jepsen said, “Continuity of operations is essential, and we do not expect the receivership to interfere in any way the Amistad’s currently planned schedule of activities, including its planned visit to New London in the coming days.”

Amistad America Inc.’s board of trustees opted not to object to the state’s move to put the organization in receivership, adopting a resolution Tuesday evening supporting the application and pledging to cooperate, the state’s release said.

Amistad America’s Executive Director Hanifa Washington said in a separate release, “We’ve been working closely with the state through this entire rebuilding process, and we trust they have the best intentions of our organization in mind.

“Having a direct link between the organization and the state to approve funding and ultimately address the concerns of taxpayers is exactly what we need,” Washington said.

The Amistad, which spent last weekend in Bridgeport and part of this week in New Haven, is scheduled to be in New London this weekend for the celebration of the 175th Anniversary of the Amistad Incident of 1839, Washington said.

“To commemorate the anniversary, Amistad America plans to have the freedom schooner Amistad at New London’s ‘Amistad Pier’ from Saturday, August 23, through Monday, August 25, 2014,” the release said. “Two three-hour lighthouse sails are planned, on Saturday and Sunday from 1 to 4 p.m. Dockside ceremonies begin at 6 p.m. on Monday.”

State Sen. Len Fasano, R-North Haven, the Senate’s minority leader pro tempore and the primary voice criticizing the state’s handling of the situation to date, said in a press release that he supported the attorney general’s move.

“It is a shame that years of lax oversight by this administration has put such an important educational and cultural asset at risk and possibly resulted in the squandering of taxpayer dollars,” Fasano said. “It is essential that we protect and preserve the Amistad for future generations. I am grateful to the Attorney General for his thorough review and action on this matter.

“By appointing an independent receiver, we can ensure the survival of the Amistad and verify that taxpayer dollars are spent efficiently and put to best use,” Fasano said.

State Rep. Diana Urban, D-Stonington, who has been the loudest voice of criticism since Amistad America’s fiscal problems first came to light, said that she and other legislators working with her “support the attorney general completely on this — and he has assured me that the investigation is still open.”

“I’m very happy that they’re not closing that investigation,” Urban said.

“The bottom line is, it needed to happen,” Urban said of the receivership. “The whole organization needs to be built up from the bottom again. We need people that have experience with finance. Amistad was in deficit in 2006-2007 to the tune of $755,000, and nobody called anybody on it … and it just got worse.

“So basically, they were playing catch-up all the time,” she said.

“With the state stopping the funding, no one is going to invest in that … because the ship is sinking,” she said, referring to Amistad’s need to raise additional funding each year to support expenses not covered by the state. “No foundation, no investor is going to put money into that organization until it has a board of directors and a CEO who have experience running a tall ship.”

A press release Urban sent out also was issued by state Rep. Ed Jutila, D-East Lyme, and state Rep. Ted Moukawsher, D-Groton.

Amistad America’s tax-exempt status with the Internal Revenue Service has been revoked as a result of its failure to file the required forms, and the organization has racked up significant debts, the state said.

“Audits released earlier this month accounted for the significant amount of state funds invested in the vessel over several years, but faulted the organization for lacking the controls necessary to ensure proper accounting and recordkeeping,” the state’s release said.

Amistad America Inc. will see its insurance on the ship run out at the end of the month. It needs to obtain insurance on its own in order to continue operating. Its contract with the Maine-based Ocean Classroom Foundation, which has operated and insured the ship for the past 20 months, ends Aug. 31.

Ocean Classroom announced last month that it is going out of business, unable to sustain its 20-year-old model operating educational programs on three older, tall ships, all of which need major repairs.

The state froze payments on Amistad’s $359,000 annual subsidy earlier this summer until four years of outstanding, required audits were delivered. Amistad America submitted the audits Aug. 8 to the state Office of Policy and Management.

The state is still reviewing them and the funding remains frozen.

Built in 1999 at a cost of $2.5 million, the Amistad is an updated replica of the original slave ship, La Amistad, which was used in 1839 to transport 53 African captives, before they took control of the ship.

La Amistad was seized as salvage by the USS Washington near Montauk Point, Long Island, and towed to New London Harbor. The captives were taken to New Haven and jailed, charged with murder, drawing sympathy and support from locals.

After trials in New Haven and later Hartford and Washington, D.C. — where former President John Quincy Adams successfully argued on their behalf before the U.S. Supreme Court — the captives were set free. It was one of the first significant civil rights cases in U.S. history.

The latter-day Amistad has cost the state nearly $9 million to date, although Amistad America officials point out that much of that money was spent before Amistad America existed.

Washington took over at Amistad America on July 1, 2013, after former executive director Gregory Belanger, who forged the partnership with Ocean Classroom Foundation, left to take a job as executive director of that organization.

She has said she knows that Amistad needs to make changes in order to get back on a firm footing.

The balance of the Amistad’s summer schedule includes trips to the Gloucester (Mass.) Schooner Festival at the end of August, the Mystic Eats festival Sept. 5-7 and the Connecticut Maritime Heritage Festival in New London Sept. 11-14, Washington said.

On Sept. 15, Amistad will return to New Haven and be open for school programs and day sails. Then, in mid-October, it is scheduled to go to the Oyster Bay, N.Y., Oyster Festival on Long Island; Amistad’s only paid event in the region this year.