New York, NY – Dealers Club VP Petitions Supreme Court to Void Dec. Bylaws Change

New York, NY – Diamond Dealers Club vice president David Abraham filed a petition in New York Supreme Court seeking to void the club’s bylaws change that passed by three votes on December 4, 2008.

According to court documents obtained by Rapaport News, the 524 ballots cast in December included at least four votes from members who were not current with dues, along with a number of votes from inactive members and one from a club employee.

Additionally, fundamental changes to the bylaws were improper and became the basis for which to commence “a similarly improper election” tomorrow, on February 26, 2009, the civil suit stated.

According to the complaint,  Dealers Club president Jacob Banda “provided members who were in arrears with reductions in their outstanding dues in exchange for their promises to vote in favor of the proposed amendments to the bylaws” in December.

Furthermore, the suit alleged that Banda  “improperly induced the membership to vote for the amendments without describing the full extent or implication of the proposed changes.”

More specifically, the complaint alleged that Banda failed to explain that newly amended bylaws would allow him to seek a fifth term as president and enable him to seek an officer position after serving as president.

Abraham told the court that the bylaws were written to restrict one person from “exerting control over the board and the club in perpetuity,” but when the vote was announced on November 19, 2008, the notice didn’t include what would be deleted in the bylaws. “Coupled with the fact that most of the members who voted were ineligible to vote in the first place, the entire legitimacy of the vote is tainted, and should therefore be deemed null and void.”

Dealers Club bylaws specifically state that those who fail to pay dues are suspended from membership and thus cannot vote, but according to the suit, the plaintiff found the bylaws were not followed.

“Three or more of the voters who received reductions in their dues and were allowed to vote on December 4 have not been members of the club for twenty years….” Abraham stated.
“Moreover, Mr. Banda, waiver of dues committee chairman (Jacob) Weinstock, and other members of the board of directors provided improper reductions in dues to a number of voters in contravention of the parameters for such reductions set forth” in the bylaws in order to secure the right to vote, according to Abraham’s sworn testimony.

The suit alleged that Banda “kept one, or more, of the voting binders in his possession in advance of the vote on December 4, removing various ‘on hold’ stickers, thus entitling ineligible members to vote in the election.” Four voters cast ballots who had been placed “on hold” for non-payment of dues, according to the suit. Ten or more voters who had been members for more than 20 years received reductions in their dues between November 20, and December 4, 2008, according to the documents.

Ten or more voters paid outstanding dues with post-dated checks, Abraham found. “Even more egregiously, upon information and belief, some of these voters who paid their outstanding dues with post-dated checks actually took their checks back from the club after the vote took place,” he told the court.

Additionally, the testimony stated that Banda was “continuing to tamper with the voting binders and club financial records in order to further manipulate the club’s membership and eligible voters in advance of this Thursday’s (February 26) election.”

An emergency affirmation was also submitted to the Supreme Court seeking a temporary restraining order and preliminary injunction enjoining and restraining Diamond Dealers Club and Banda from conducting the election on February 26, pending a court ruling on the December 4 bylaws change.

Club president Banda was first elected for a two year term on June 22, 2000, and elected to a fourth term October 26, 2006.

According to the court documents, there has been “consistent and increasing erosion in how the bylaws, rules, and 78-year-old traditions and customs of the club have been observed and executed.”