Founder, former director of Michael Wallace Foundation entangled in legal fight
HAMILTON - The Michael Wallace Foundation in Darby has temporarily shut down while its founder tries to pick up the pieces after conflict with its director led to a February termination.
The dispute involves allegations founder Pamela Wallace has leveled against Bill Zader, a former employee with experience at three Missoula-area nonprofit groups and a record of filing wrongful discharge suits against two of those organizations. It involves claims that Zader misappropriated money, sexually harassed Wallace and made threatening, anonymous phone calls to her.
It involves Zader's denial of Wallace's allegations, his complaint to the state labor board about wages and his alleged offer to leave the organization quietly in exchange for $15,000 from the foundation.
And it involves enough potential for civil suits from either party that Wallace has had to temporarily stay foundation operations and close its new office in Missoula until the dust settles.
As Wallace points out, no one wants to invest in a charitable group embroiled in a lawsuit; there's too great a chance donations will go to lawyers rather than to needy families. There's no faster way to besmirch an organization's reputation than to file a civil suit against it, she said.
"That's the kiss of death," Wallace said.
Although Wallace agreed to be interviewed, neither Zader nor his attorney, Jon Beal, accepted repeated requests to comment about Wallace's statements.
The Michael Wallace Foundation, started in 1998, is a Darby-born nonprofit agency dedicated to financially helping families and their critically ill children. Wallace founded and named the organization in honor of her son, Michael, who was born in 1995 with an extremely rare respiratory disorder.
After months of running the foundation from her home and tending the phone and fax lines, Wallace was looking for an office and a full-time administrator to alleviate a work backlog so she could spend more time with her sick son.
Early in January, the foundation opened an office on South Russell Street in Missoula and began the search for an administrator.
"This was the biggest move the foundation was going to make," she said. "We had some excellent candidates for the job."
Zader was among those candidates, and, Wallace said, appeared to have the right blend of experience and references. In the 1970s, he served as vice president for development at the College of Great Falls, then spent 10 years working for the University of Montana Foundation, where he was the foundation's executive director until September 1990.
Zader left the university to become vice president for the Lovelace Medical Foundation in Albuquerque, N.M. Then, in January 1992, he became executive director for the Boone and Crockett Club in Dumfries, Va. A few months later, his connection to the club severed, and Zader returned to Missoula about the same time Boone and Crockett relocated its headquarters to Missoula.
In 1997, Zader added to his nonprofit experience by working for the Craighead Institute in Missoula as its director of development and finance.
Based on his credentials and a strong recommendation from Michael Wallace Foundation's former vice president Jim Royan, Wallace hired Zader for a salary of $40,000. Only later would Wallace learn Zader had been fired from both the Craighead Institute and the Boone and Crockett Club and that he had a history of civil litigation.
In fact, in Missoula County, Zader filed civil suits against three different organizations, beginning with Delta Air Lines in 1990. In that case, Zader claimed personal injury after a beverage cart bumped his elbow on a plane en route to New York City in February 1989.
"As proximate cause of collision, (Zader) has been seriously injured and has incurred medical expenses and suffered loss of work, pain and suffering … ," Zader's complaint read.
A month later, Zader requested the complaint be dropped after the matter was settled privately between the parties, according to Missoula County court documents.
In 1992, another civil suit appeared with Zader's name on it, this time in Manassas, Va. The Boone and Crockett Club filed the suit claiming it had incurred more than $50,000 in costs and damages as a result of Zader's employment.
Zader worked for the club in Virginia between January and August of that year, then was fired because "some of (Zader's) conduct was intentional and in direct contravention of specific directive," the club's complaint stated.
"In addition," the complaint later said, "(Zader) turned over to third-parties Plaintiff's confidential mailing list, in direct contravention of his duties … (and) incurred substantial Club expenses which, on information and belief, were used for his own personal benefit and advantage, for which he had failed to properly account."
A six-month review of Zader's job performance - written by Boone and Crockett President Stephen Adams - listed a number of problems, some of which bear a resemblance to Wallace's complaints. The review pointed out some of Zader's successes, but then said Zader's ego was guiding his actions, that the club's success appeared to be secondary to his own and that he spent very little time in Dumfries.
Adams also alleged, among other things, that Zader possessed a "desire for control without accountability," and that when he filed his expenses for moving from Albuquerque to Dumfries, he submitted duplicate billings and expenses "that had nothing to do with moving."
A month after he was fired, Zader filed a wrongful discharge suit in Missoula against Boone and Crockett. The case remained open until 1995, when, with a trial imminent, the two parties reached a settlement and the case was dismissed.
Zader spent several months at the Craighead Institute, a Missoula research center, before being fired when the organization closed its development department. The group's executive director, John W. Craighead, told the Ravalli Republic, "We'd made a decision to start a development office in the organization and then decided it really wasn't right for us and made the business decision not to have a development office."
Zader filed a wrongful discharge suit against the center in November 1998. Court documents said the organization offered Zader conflicting reasons for his termination. On the one hand, Zader was told the group was downsizing, but on the other, he was told he was gaining too much control and was being fired, court documents said. Zader asked for the case to be dismissed in March 1999 after an out-of-court settlement was reached.
In both the Craighead and the Boone and Crockett cases, nondisclosure agreements prevent the organizations and Zader from discussing the terms of the settlement.
Before Wallace ever knew about Zader's civil suits, though, she was beginning to have doubts about his work performance and attendance. Things came to a head after Zader returned from a personal trip to Florida in early February. In a Feb. 10 meeting with Wallace, Zader and Wallace's friend and volunteer Barbara Ackerman, Wallace ran through a list of problems she saw with Zader's work.
"He was working on things she didn't ask him to and not working on things she asked him to," Ackerman said, adding Zader didn't offer much of a response to Wallace's critiques. "He was uncomfortable, to say the least."
Then, despite Wallace's previous request not to do so, Zader purportedly made an ill-prepared presentation to Ackerman, asking her to join the foundation's board of directors.
"It was so illogical, we were stunned," Ackerman said. "And it was so poorly done."
According to Wallace, two days later during a phone conversation, Zader hung up on her after she fired him. On Feb. 14, she faxed Zader a termination letter discussing not only the meeting with Ackerman and the phone call, but also several grievances she had with regard to Zader's job performance.
The five-page fax cited a number of reasons for Zader's termination, including ignoring Wallace's authority as his immediate supervisor and failing to be at the foundation's Missoula office when he was expected to be.
"Why did we open the office in Missoula?" Wallace wrote in the letter. "Did you think we had a need to pay rent, phone, utilities for a space that no one ever showed up at?"
Wallace also accused Zader of taking blank checks she had signed and using them to make unauthorized office purchases rather than filling them out and forwarding them to families in need.
Wallace's letter said Zader did very little work for the foundation, failed to account for his work hours, and, when he was at the Missoula office, made "rude remarks" to volunteers.
"Everybody was uncomfortable being in the same room with him," Wallace said.
Toshua Krushensky, a foundation volunteer who drives from Helena to work for the organization, said Zader affected her as well.
"He had no tolerance for volunteers," Krushensky said. "He was the bigwig and we were just peons." In a letter to the labor board dated May 15, Krushensky reiterated her impression that Zader was rude and "made numerous inappropriate remarks."
Moreover, according to Wallace, Zader bought unnecessary office furniture without approval, took a weeklong trip to Florida with only a day's notice to her and the rest of the foundation's board, and never filled out time cards as required in the group's written personnel policies.
"My sense of it is he came in and acted like a bull in a china closet and created a situation where he could only be terminated," said board member Ron Hauge. After he was fired, Zader continued to show up at the foundation's office in Missoula, Wallace said. Finally, on March 7, Wallace had her attorney sent Zader a letter memorializing the Feb. 14 fax and the reasons why he was fired.
A short time later, Zader approached the foundation and offered to leave quietly in exchange for $15,000 and a nondisclosure agreement, according to Wallace and Hauge. Zader eventually dropped his proposal to $10,000, but the board unanimously rejected the offer, according to the March 7 letter from Wallace's attorney.
"He thought we were just going to pay him off and he would be on his way," Wallace said. "All that does is sets somebody else up to be taken advantage of."
Zader has since denied many of Wallace's claims against him through written correspondence. Though he never returned the Ravalli Republic's repeated requests for an interview, Zader did outline many of his positions in a May letter to the Montana Department of Labor and Industry.
Zader filed a complaint with the labor department in March claiming he had not been fired until he received the March 7 letter and that he was owed more than $4,000 in wages for his work from Feb. 1 forward. Wallace maintains Zader was overpaid by $600.
Zader's May letter responds to Wallace's explanation about the Feb. 14 termination date and her reasons for firing Zader. At the heart of Zader's arguments is the claim Wallace and her Missoula attorney, Bill VanCanagan, whipped up potentially incriminating documents, such as the check request forms and written personnel policies, after he'd been fired.
"There were no check request forms as Mr. VanCanagan states," Zader wrote. "The documents provided to you have been created after I was terminated … There were no such forms in existence and Mrs. Wallace made these up after I was terminated."
Wallace insists, however, the check request forms were in place before Zader came on board, a claim supported by foundation board member Hauge and volunteer Krushensky.
"She had been using the same system pretty much through 1999," Hauge said. "This was all basically set up by the CPA that we hired for the foundation. She has a complete system and those vouchers accompany those checks with instructions, with who to send those to."
Later in his letter, Zader discussed the personnel policies.
"The material presented as personnel policies from the Foundation have been produced after my employment with the foundation," he wrote.
He claimed he never received Wallace's letter from Feb. 14 but characterized it as "the product of a very ill person" after receiving a copy of it from the labor department.
Zader's letter also claims he told Wallace about his planned trip to Florida at the time he was hired, that he worked 12 hours a day for the foundation and that he was not required to fill out time cards because he was paid monthly, not hourly.
Wallace, however, said personnel policies clearly indicated Zader had to submit time cards.
"I had an inventory down to every stamp," Wallace said. "As a new organization you want to make sure you have every 'i' dotted because you're building a reputation."
To that end, Wallace said she attempted to reconstruct some of Zader's work hours to the best of her knowledge so she would have a record for the IRS.
Zader responded in his letter: "The fictitious time sheets presented to you were not signed by me and are a fraud. Time sheets are used for hourly employees and I held an executive position."
In his letter, Zader also encouraged the labor department to contact Jim Royan, the foundation's former vice president who recommended Zader for the job.
"I do hope you will make every effort to visit with Mr. Royan about the true facts of this situation," Zader wrote.
When the Ravalli Republic contacted Royan to verify Zader's claims, Royan declined to comment.
Recently, the labor department sent a letter to Zader asking him to provide not only written documentation showing he worked 12 hours a day for the foundation, but also a letter from Royan supporting his statements.
For Wallace's part, she's standing by her statements, confident what she's said and reported is factual and verifiable.
"I would be setting myself up for a huge lawsuit if everything I'm saying wasn't backed up," she said. "I swear to you on my son's beating heart, I have no reasons to lie."
Since Wallace fired Zader, she said she's received harassing and threatening phone messages at her home in Darby. Ackerman and Krushensky both said they heard some of the messages.
Last week at a restraining order hearing in Ravalli County Justice Court, Wallace testified that U S West traced those messages back to Zader's home in Florence. She also testified - and reported to Missoula police - Zader touched both her and himself inappropriately while in a work setting. The sexual harassment and phone message claims are not part of the labor department inquiry.
Based on her testimony, Wallace received a six-month restraining order against Zader.
Wallace said since she temporarily shut down the foundation's operations in March she's had to turn away many applications from needy families looking for help for medical and traveling expenses. It's a position Wallace, volunteers and board members don't like to be in, but they say it's also an unavoidable one for the moment.
"I feel strongly that the Wallaces have created a wonderful foundation that had helped hundreds of families in Montana, and it's a shame to see it thrown off track like this," Hauge said.
Kerry Thomson is a reporter for the Ravalli Republic in Hamilton.
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