07/08/2024
July 1, 2024
VIA EMAIL
Marianne Splenda
Chair of the Board of Association for Research and Enlightenment
msplenda@gmail.com
mercy.martinez@edgarcayce.org
Re: Board Breaches of Fiduciary Duties
Dear Ms. Splenda:
This firm represents Gary Cohen, a member of the Association for Research and
Enlightenment, Inc. (“A.R.E.”). This letter is directed to you as Chairperson of the Board of
Trustees of A.R.E. It has come to our attention that the Board has failed to comply with its
obligations in connection with how the Board of Trustees is created and perpetuated, which is a
breach of the Board members’ fiduciary duty. This breach, as more fully set forth below, is
damaging both to A.R.E. itself, and also the membership and the future of the organization.
Dating back to the inception of A.R.E.’s Board when the Trustees were initially installed,
and thereafter, the members of the organization had a say in who would serve as the leaders. In
fact, in letters exchanged between both Edgar Cayce and Hugh Lynn Cayce and A.R.E. members
back as early as 1934, it is clear that members nominated and casted ballots for potential members
of the leadership board of A.R.E. Edgar Cayce himself recognized the importance of having an
informed and involved membership and personally wrote to members to ask them to return their
ballots for those nominated to positions on the Board. Excerpts from some of those exchanges
are attached hereto as Exhibit A.
My client and other members with whom he has spoken feel strongly that the Board has
failed to maintain the practice of involving the membership in nominating and voting for the
members of the Board. The unilaterally-imposed modification of a self-perpetuating Board has
never been voted on by the membership, which is the only group that can approve such a change
to the organizational documents that Edgar Cayce originally formed. Such a practice is not healthy
for this organization and certainly is contrary to what the members of A.R.E. want and expect. It
is this self-perpetuating cycle that leads to self-dealing, poor management, oversight failures and
other related deficiencies and breaches which serve only to harm the organization and its members.
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In fact, A.R.E. has already suffered from the “self-perpetuating Board” that was imposed
on the membership as reflected by the self-dealing and conflict of interest transaction by Mr.
Knueven 1 in purchasing the Gibbons House in 2023, all to the detriment of A.R.E. and its
membership. The Board intentionally, through Mr. Knueven as its Chairman, restricted the
property so that it was not marketed in the ordinary and customary manner to allow A.R.E. to
achieve the highest price possible. Considering that the potential sale of the Gibbons House was
motivated by the fact that A.R.E. is in financial distress, and that the intentional decision to sell a
portion of A.R.E. real property to fill immediate cash needs, the Board’s fiduciary duties require
the Board to use proper marketing tools to achieve the highest price possible. 2 The decision to
make such a sale was made without membership input and by a partially conflicted Board that did
not have the benefit of new people rotating in and adding their experience and knowledge for the
greater good of A.R.E. as a whole.
Moreover, the most egregious example of the Board’s mismanagement comes from the
recent claims of abuse at the A.R.E. camps. Putting aside whether the allegations are true, the
mere fact that the horrific claims went unanswered, and the Board continues to downplay the
severity of the potential outcome for A.R.E. is nothing short of inexcusable. Your recent report to
the membership at the June 2024 Congress included you expressly stating that members should
not worry about the claims because insurance is handling the matters and there are donations to
help cover any adverse judgment. Yet, you admitted to Mr. Cohen that donations have in fact
dried up since the filings of the camp-related lawsuits, and the number of plaintiffs only continues
to grow. It should be noted that the news reported in 2020 that the camp plaintiffs wanted to settle
for $350,000 each. Those matters did not settle, and upon information and belief, the closed-door
settlement negotiations by the A.R.E. Board were not handled properly and instead lead to an
additional lawsuit being filed and the current serious exposure A.R.E. faces today.
While the intentions for creating and keeping a self-perpetuating board are irrelevant, the
reality is that the dwindling membership of A.R.E. has had enough of being excluded from the
process of choosing the organization’s leadership. The goal of a member organization is to have
active member participation. Without having a say in the representation on the Board, it is
reminiscent of “no taxation without representation.” My client and his fellow members are
1 Board members and A.R.E. employees are barred from self-dealing not only pursuant to their
fiduciary duties, but also in accordance with the organization’s governing documents and
501(3)(c) IRS Rules.
2 Doug Knueven’s stated at the most recent Congress that the Board did not open up the potential
sale to the public to prevent the construction of a condominium on the site. Yet, common real
estate practice would be to put a deed restriction in place which would have eliminated that
objection and still allowed A.R.E. to maximize the sale price. This sale to Mr. Knueven must be
unwound for the benefit of A.R.E. and its members.
Page 3
prepared to file a class-action lawsuit should the Board not agree to re-constitute with a vote of the
full membership, which can be done now or when the current Board terms expire in June of 2025.
The governing documents must be amended to make clear that the Board is installed upon
votes of the full membership. If the Board chooses to wait until next June to reconstitute, then
the Board must agree to the formation of a special committee of five persons – also voted on by
the membership -- to act as an oversight group during the remainder of the current Board members’
term, with the same authority to act as the Board itself. This committee would have insight into
and provide input for how the Board manages the organization’s finances and insurance, as well
as the pending litigation to ensure that the Board does not continue to ignore or disregard the
realities facing A.R.E. From where my client sits, A.R.E.’s very future is in jeopardy while the
Board just recently misrepresented at the most recent Congress the full gravity of both its financial
condition and the extent of its exposure due to the camp claims. Such misrepresentations
exemplify the Board’s breaches of its fiduciary duties and its continued practice of a complete lack
of transparency for the membership.
Within ten days from the date of this letter, my client demands that the Board confirm that
it will reconstitute now or in June of 2025 with an oversight committee referenced above, and that
it will amend immediately the governing documents to properly reflect that A.R.E. members vote
for those who will serve on the Board. Should the Board choose not to agree, I will advise my
client of his – and other members’ – rights under the law, which could include a class action lawsuit
(something Mr. Cohen has expressly indicated he has a willingness to pursue), additional negative
publicity, and more dire financial consequences for A. R. E.
PLEASE GOVERN YOURSELF ACCORDINGLY.
Sincerely,
Eleanor T. Barnett, Esq.
ETB:ntc
Enclosure ARMSTRONG TEASDALE LLP
EXHIBIT A
For more than a century, Armstrong Teasdale has forged long-term relationships with clients large and small around the globe. Since our founding in 1901, we have grown to be one of the 200 largest law firms in the U.S.
