In a case ripped from the pages of a business ethics textbook, a lawsuit filed in D.C. Superior Court is accusing leaders of the local alumni association for the Wharton School of the University of Pennsylvania of violating by-laws, withholding financial records and running the group like a dictatorship for nearly two decades.
Wharton, one of the nation’s preeminent business schools, has more than 4,000 alumni living in the metropolitan region, according to the Web site for the Wharton Club of Washington, D.C. For almost 20 years, Wharton alumnus and Bethesda-based attorney Alan Schlaifer has served as the club’s president; the club has about 550 members, according to Schlaifer.
In a suit filed late last week in D.C. Superior Court, Schlaifer and Jean-Francois Orsini, the club’s chairman and treasurer, are accused of preventing elections from taking place over the years and – following elections that did take place last April – of failing to surrender their authority. The suit claims the two are in violation of the club’s by-laws and also D.C. laws requiring nonprofits to hold elections at least once every three years.
The two are also accused of withholding financial records from newly-elected officers and members and also of improperly using club funds to pay themselves salaries.
When reached by phone this afternoon, Schlaifer said the claims were "baseless" and did not reflect the sentiments of the general membership, and that he disputes the outcome of the recent election. His attorney, Robert Klimek of Washington's Klimek & Casale, said he also did not believe the plaintiffs in this case had legal grounds to sue on behalf of the club.
Orsini did not immediately return a request for comment this afternoon.
The two plaintiffs – former club president Joan Walsh Cassedy and another long-time member, Margaret McDonald – are being represented by attorney Kathy Bailey of Washington’s Bailey Gary. Cassedy, when reached by phone this afternoon, said the complaint laid out the extent of her concerns. Contact information for McDonald was unavailable.
Bailey said in a phone interview today that club members had been concerned about how the group was being run for years, but that the failure of Schlaifer and Orsini to step down following the elections last year was the final straw.
“There was an election [and] new officers were chosen,” Bailey said. The defendants “chose not to recognize that.”
An almost identical suit was filed in D.C. Superior Court in October 2010, but it was voluntarily dismissed by the plaintiffs in February. Bailey said that originally, Cassedy and McDonald had decided to end that suit in order to “go in a different direction” in pursuing litigation.
However, Klimek said he still has motions for fees and to dismiss that suit with prejudice pending the first suit. How that case plays out will determine how he and his client will proceed in the latest suit, Klimek said.
Updated at 4:49 p.m. with additional reporting.