Alum sued for misappropriating funds from debate organization

Editor’s note appended below. Letter to the editor in response to this article linked here.

2008 college alumnus Alexander McCobin has been sued by Perspectives Debate Inc. – a nonprofit organization he founded while a student at Penn to teach high-school students debate skills – for breaching his fiduciary duty to Perspectives and misappropriating its funds, including allegedly withdrawing more than $37,000 from its bank account.

The Philadelphia Court of Common Pleas granted an injunction on March 3 preventing McCobin from entering the corporation’s place of business and from issuing any checks or receiving any salary from Perspectives without the approval of its managing director.

A complaint was filed against McCobin and his Perspectives co-founder and fiancee Lilly Deng in February. The couple resigned from Perspectives in November 2008, yet continued to access its business information and accounts after their departure.

Perspectives’ lawyer, Jonathan Crisp, said he is waiting for McCobin’s attorney to respond to the complaint. McCobin has not been charged with any criminal offenses.

According to members of Penn Parliamentary Debate, this is not the first time McCobin has improperly withdrawn money from organizations in which he had a leadership role. McCobin used a Parli debit card for purposes unrelated to the club during his senior year at Penn.

Background

According to Perspectives’ Web site, McCobin and Deng met in 2002 at a summer debate camp in Boston. Inspired by their experiences at the camp, and disturbed by the expenses and distant locations of existing summer debate programs, McCobin and Deng started the Philadelphia Debate Institute in the summer of 2005.

Perspectives Debate Inc. was formally set up as a 501©(3) nonprofit organization in November, 2005. In addition to running the PDI, the Philadelphia-based organization also offers affordable after-school Lincoln-Douglass debate programs to high-school students in the mid-Atlantic region.

In the fall of 2007, McCobin, then a Penn senior, created Penn for Youth Debate as a Penn-affiliated branch of Perspectives focusing on teaching students from the Philadelphia area. Penn students are involved in the group.

“We want to change students lives and not just go through the motions. We want more students in the program and want these students to get into college, gain scholarships and get jobs,” McCobin told The Daily Pennsylvanian about the mission of Penn for Youth Debate in November, 2007.

Penn for Youth Debate is no longer affiliated with Perspectives. The organizations formally separated about two months ago, according to a member of Parli who wished to remain anonymous for fear of repercussions.

The two organizations still win high praise.

Philadelphia Mayor Michael Nutter is listed as a director on the organization’s 2007 990 tax form, and a student who works for Perspectives confirmed that he is still a director. The 990 indicated that Nutter does not put in any hours in his role.

The Parli member who wished to remain anonymous called Penn for Youth Debate a “great organization.”

Wharton and College senior and former Parliamentary Debate President Daniel Rubin called Perspectives and Penn for Youth Debate “high-quality organizations that shouldn’t be run down by one person.”

In Spring 2008, McCobin graduated from Penn with bachelor’s degrees in Philosophy and Economics and a master’ degree in Philosophy. McCobin – who was also involved in Parli, founded the Penn Libertarians and was a resident advisor – currently works at the Cato Institute, a think tank in Washington, D.C.

Penn students who knew McCobin through Parli describe him as bright and cunning.

College senior and former Parli Vice President David Marcou said that while McCobin is “very smart,” he is also “very ambitious and willing to bend the rules in his favor.”

Rubin agreed, adding that he “is very good at marketing himself.”

According to court documents, McCobin and Deng, a recent Harvard University graduate, were believed to have become engaged in October, 2008.

The anonymous Parli member described McCobin and Deng’s relationship as “weird” because they did everything together. This sentiment was echoed by the complaint filed by Perspectives against them, which stated that “it was not uncommon for Deng to speak on McCobin’s behalf, or vice versa.”

Current legal problems

The lawsuit filed against McCobin and Deng involves their alleged inappropriate attempts to control Perspectives’ board of directors and their alleged withdrawal of money and tampering with Perspectives’ business accounts following their resignations in November 2008.

While serving as directors for Perspectives, McCobin and Deng engaged in a number of activities that were of concern to other members of the organization, according to Perspectives’ complaint.

In 2007, they added members to the board of directors without following the organization’s bylaws, the complaint stated. The bylaws called for three directors, so they should have been amended before adding additional ones.

Deng and McCobin did not make changes to the bylaws before appointing five new directors, however, and they considered all of the directors to have been properly appointed.

Later, the complaint stated, Deng and McCobin became dissatisfied with the performances of two of the recently appointed directors, and put pressure on them to either devote more time to Perspectives or to resign. One of these directors decided to resign, while the other refused and notified the other directors of the pressure put on her by McCobin and Deng.

Prior to the contact, in September 2008, one of the directors resigned for reasons unaffiliated to pressure from McCobin and Deng.

On November 17, 2008 McCobin sent the three remaining directors an e-mail that stated they were not members of the board because they had not been elected properly according to the bylaws, according to the complaint.

The next day, one of the directors sent McCobin and Deng an e-mail disputing their claim, and they suggested the board discuss the issue at a meeting scheduled for Nov. 20, 2008.

Instead of meeting with the board, McCobin and Deng resigned from Perspectives on Nov. 19, 2008.

Following their resignation, the remaining Board members removed McCobin and Deng from Perspectives’ business accounts, including its bank account. The board also directed Perspectives’ managing director and recent Columbia University graduate Matthew Scarola and Perspectives’ program director and College sophomore Allison Huberlie to change the passwords for Perspectives’ accounts.

Additionally, Huberlie requested that McCobin and Deng provide Perspectives with information regarding upcoming grants and turn in their Perspectives’ checkbooks and credit cards, which according to the court documents, McCobin and Deng still have not done.

Despite the actions that Perspectives took to revoke McCobin’s and Deng’s power, the couple allegedly managed to access the company’s e-mail accounts following their resignation and the e-mails and contacts stored in one of the addresses were deleted. Deng is believed by Perspectives to have accessed the e-mail account.

The online marketing and survey accounts of Perspectives were also accessed shortly after the resignations. The survey account was believed by Perspectives to have been accessed by Deng while she was visiting McCobin’s mother.

Furthermore, Scarola and Huberlie were blocked from using Perspectives’ PayPal account in late November 2008, according to the complaint.

After McCobin and Deng were notified of the account breaches, Deng sought a lawyer who tried to negotiate on behalf of McCobin and herself.

According to a list of demands sent to Perspectives on Dec. 2, 2008, Deng and McCobin would only disclose the documents they had pertaining to Perspectives if Perspectives succumbed to a number of demands, including payment of $3,000 to McCobin and Deng each.

After several days of negotiations between the Perspectives board and Deng’s lawyer, Deng’s lawyer on Dec. 11, 2008 sent another list of demands.

Perspectives had to respond to the demands requested by Deng’s lawyer prior to Dec. 12, 2008 at 5 p.m. The board asked for an extension to consider the settlement on Dec. 12 at 12:21 p.m, but there was no response to this request.

At 3:26 p.m. that day, $37,000 was withdrawn from Perspectives’ bank account, nearly all of the accounts’ money. A specialist for the bank said the withdrawal ticket appeared to be signed by McCobin, and the money was withdrawn from a bank near where McCobin works. The incident was reported to the police, and the bank agreed to cease payment on the cashier’s check requested for the $37,000.

Scarola later discovered that McCobin and Deng had withdrawn more money from Perspectives’ bank account prior to the $37,000. These included checks made out to each of McCobin and Deng for $3,000, as well as checks labeled as reimbursement that the board had not been made aware of.

According to the 2007 990 form, the group’s total assets equaled $73,797.

Because of McCobin and Deng’s actions, “the board members felt it was in the best interests of the company” to bring forth a lawsuit against them, Crisp said.

Crisp added that the injunction granted last month only applies to McCobin and not Deng, because Deng has not yet been reached, and he is waiting for McCobin’s lawyers to respond to the complaint.

McCobin wrote in an e-mail that he disputes Perspectives’ allegations and plans to “defend vigorously.”

“I feel confident that legal defense will vindicate what we have done and look forward to a successful resolution of the litigation,” McCobin wrote.

Penn, Parli and PYD

Not only did McCobin allegedly misappropriate Perspectives’ funds, but, according to members of Parli and Penn for Youth Debate, he also engaged in irresponsible financial behavior while holding leadership positions in Penn-affiliated debate activities.

As a member of Parli, McCobin ran the team’s tournament for high-schoolers, called the Liberty Bell Classic. According to Marcou and Rubin, the Liberty Bell Classic was supposed to be a fundraiser for Parli.

In the fall of 2007, McCobin transitioned the Liberty Bell Classic from being a Parli event to being a Penn for Youth Debate event, which Parli leadership allowed.

In spring 2008, when Parli’s leadership was trying to determine why the organization had a great deal of debt, they discovered that McCobin was spending money on a Parli debit card that was unrelated to the tournament. The charges included about $1,000 for rent of rooms for Penn for Youth Debate’s fall tournament, according to Rubin and Marcou.

When Parli leadership tried to confront McCobin about his spending, “he was not very pleased,” Rubin said.

Eventually, issues concerning the debt brought on from the tournament were resolved with the Office of Student Life. Penn for Youth Debate assumed most of the responsibility and the debt for the tournament.

OSL associate director Rodney Robinson confirmed that he helped resolve financial issues between Parli and Penn for Youth Debate, but wrote in an email that he was unaware of any “personal purchases” by McCobin.

Now, Parli and Penn for Youth Debate are on good terms with each other, according to Rubin, Marcou and Huberlie, who is the president of Penn for Youth Debate in addition to her role at Perspectives.

Marcou and Rubin also emphasized that it was with McCobin, not with Penn for Youth Debate, that Parli experienced problems.

Editor’s Note: This article has been changed from its original version. The original version of this article stated that, according to students affiliated with Penn Parliamentary Debate, 2008 College alumnus Alexander McCobin had charged approximately $400 to a Penn student activity account for the purchase of a camera in 2007, while he was an undergraduate. The DP has now learned that the $400 purchase in question was for a printer.

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