An open letter to Billings Bookstore Cooperative shareholders
NOTE: I wrote this letter to a few personal friends that are involved in the Billings Bookstore Cooperative, which is doing business as This House of Books. I did it because six months of attempted negotiations have failed, and the board has refused to even respond to offers and compromises. Today, the co-op addressed the letter publicly on their Facebook page. After months of staying quiet, it’s time to put this out in the open.
Let me make this clear: I have absolutely no ill-will toward the co-op itself. I designed and built that store (with a great deal of help, obviously), and I’m darned proud of it. I hope it is still around decades from now. But the current situation needs to be fixed. If you know the board members involved, please urge them to sit down and negotiate with me, or at least to return my emails. I’d love to get this over with and move on with my life.
As This House of Books celebrates the end of its first year in business, I think it’s important to understand where the business stands. In particular, it’s important to understand that our co-op is in default on over $60,000 of debt to me (plus debt to other vendors), the store is selling inventory that was never paid for, the board has failed to fulfil legal and contractual obligations to shareholders and former employees, and the board has made false claims about me to the state government.
Here’s how we got to this point:
In April of 2016, Carrie La Seur approached me for help with the bookstore she wanted to create. I reviewed her financial projections and business plans and made suggestions. This eventually led to an offer to buy out my store, Red Lodge Books & Tea. The deal included hiring me as General Manager and my daughter, Gwen, as Tea Manager. After Carrie and I negotiated a $100,000 price for my store, Nina & Precious came down to Red Lodge for a “due process” inspection. Carrie and I signed a contract, and the co-op made an initial payment on the purchase. At the same time, I signed an employment contract, which specified (among other things) that I’d receive a certain amount of PTO (“paid time off”) instead of sick days or vacation days.
At the “interview” meeting with the board Carrie, Nina, and Precious explained what they expected of me. Nina then asked what I expected of them. I said that I could run the business, but the board would have to handle fundraising. They agreed. The initial budget that was published in the business plan called for raising $250,000 through share sales.
That done, I helped the board to find a building, negotiated a lease, designed and laid out the interior of the building, built a commerce website, created national and local publicity, set up the accounting and POS systems, set up social media, hired and trained employees, established accounts with vendors, closed my old business down, and moved everything to Billings. I put in countless very long days and nights working side-by-side with volunteers on the physical labor of construction, painting, staining, packing, unpacking, and hauling.
As of early September, it was obvious that the fundraising wasn’t happening. In an email to the board on Wednesday, 27 Sep 2016, I said, “Carrie, if share sales, loans, and credit are my top priority, then opening in September is impossible. I have explained since our first meeting that I am happy to sit down one-on-one with anyone the board can line up. So far, there have been zero ‘high-roller’ investor meetings scheduled. I have attended every share sale party, organized the open house, set up PayPal, and am setting up the next two share sale parties. This can’t be my sole responsibility either.” In that same email, I reminded them that the co-op hadn’t paid for my bookstore yet.
By the time we opened the doors on September 30, 2016, the board had raised around 1/4 of the $250,000 that they had promised to raise. Over the next few months, I did what I could to help financially. I bought co-op shares, sold shares to my friends and family, spoke at the fundraisers the board set up, and set up a couple of fundraisers myself. I loaned the co-op $4,500 cash (which I had to borrow) and my personal credit card (which was used for about $11,000 of co-op purchases).
In the meantime, Carrie left for New York for a year while I dedicated my life to the co-op she wanted to build. Because so little cash had been raised, the co-op only managed to pay $55,000 of the $100,000 purchase price for my store on time, putting them in default of the contract. As a brand-new co-op, we were turned down by bank after bank for loans. The board did step up and loaned the co-op some money, although they pitched in far less than the store owed me by that point. The banks offered to lend money to the co-op if it was secured, but they wouldn’t accept the inventory as security and the board members weren’t willing to use their homes as security. The cash situation grew worse.
I attempted to save money by letting the co-op use my personal Microsoft Office and DropBox subscriptions, having work done by volunteers instead of employees or contractors, cutting the employees’ hours, and scrimping on inventory. I managed to get over 20,000 catalogs printed free, and I distributed them with the Billings Gazette. I also arranged thousands of dollars in free television and radio advertising. I negotiated with the landlord to get out of the lease for the co-op’s office and storage space, and landed a huge startup grant from the DBA. Nonetheless, the board’s inability to raise the money I was promised meant that I wasn’t able to pay all of the bills on time. In some cases this cost the co-op interest and/or penalties. One of those penalties (related to Worker’s Comp) was later used by Precious as an excuse not to pay me for the hours I worked.
By February, the cash situation was dire. On February 9, I offered (in writing) to quit—along with my daughter, Gwen—and train Gus to take over as the general manager. This would eliminate two salaries, and shift hours to lower-paid hourly employees. At the same time, I offered to take all of the tea equipment and inventory and forgive a significant portion of what the co-op owed me. This would have allowed the co-op to rent out the tea shop space to another coffee or tea business and get a monthly income from it.
The board would have been able to move forward with monthly expenses reduced by about $6,000 and debt reduced by $30,000. I even offered non-compete agreements. The board turned me down and instructed me to fire one of our employees.
Because of the lack of money, Gwen and I didn’t get our paychecks for the second half of February. Carrie told me not to pay Gus either, but I had already handed him his check by that time. We all agreed that it was, indeed, time for Gwen and me to leave, and began negotiating the terms in earnest.
On Sunday, March 12, I had a conference call with Carrie, Nina, and Precious, and we came to agreement on how Gwen & I would leave and I would buy some of the inventory and fixtures from the co-op to reduce the bookstore’s towering debt load. The following day, I sent the board a written copy of what we had agreed upon. I got no response.
I carefully copied all co-op related documents out of my personal DropBox and onto the main computer at the bookstore. Since I was told not to come in, I wasn’t there to show employees where I had put them. Precious falsely accused me of “taking information from DropBox that directly impacts the bookstore’s ability to do business.” I told her where everything was.
On Tuesday, March 14, I emailed the board to say, “Do you want me to come in to the store this afternoon to work with Gus, or do you want me to stay away while we’re still working on the agreements?” Carrie responded with “Don’t come in to work. You are no longer an employee of the co-op.”
I pushed for my pay—as I still hadn’t been paid for the last half of February or any of March—and for my accumulated PTO. Carrie sent me an email saying “We will honor PTO claimed from months in which we have a record of hours worked. That leaves 10.67 hours.” Note that, as a salaried employee, PTO isn’t tied to hours worked. My actual accumulated PTO was 50.67 hours. Despite Carrie’s written commitment, no PTO (not even the tiny portion they agreed to) has been paid.
On March 15, I emailed the board saying, “For the last three days, I’ve been responding to every single request the board has made, offering help to employees and board alike, and turning over all accounts and passwords you’ve requested (and some you didn’t even ask for). I have been nothing but cooperative throughout this entire process.” Carrie responded by saying, “We’re working diligently to get the accounting up to date to verify that there are funds to pay your due wages.” Over six months later, I still haven’t received the paychecks or the PTO. Gwen finally got her pay just this week.
Over the next few days, I cooperated with the board in every way, and continued to push for the board to honor the agreement we had reached on the 12th. They never did.
On March 17, I received an email from George Kimmet, an attorney representing the co-op. I continued to try to resolve everything in good faith, and suggested that since Carrie was returning from New York City for the annual meeting, we could have a face-to-face discussion and reach an amicable settlement. Kimmet responded with, “The Board has requested that Mr. Robson not contact them directly, and that communications be directed through me. As I mentioned to you on our phone call, the Co-op is not in a financial position to respond to your client’s demand. At this time, they do not feel that a pre-annual meeting sit-down would be fruitful.” No member of the board has spoken to me since that time.
In late March, I finally decided that the only way I was going to get my last two paychecks was by filing a claim with the Montana Department of Labor & Industry.
Since that time, Carrie and Precious have embarked upon what appears to be a personal vendetta:
- They stopped making minimum payments on the $11,400 balance on my credit card, despite having records showing that it had been used only for co-op business. This has severely damaged my credit rating and bumped the interest on the card up to 30%.
- The co-op has made no payments on the $4,500 loan I made to them, which was for six months only. I am now making interest payments on that.
- The co-op has made no payments on the $45,000 unpaid balance of what they owe for the purchase of my bookstore. They have been in default on that contract since last year.
- At the annual meeting, Carrie handed out financial statements, including a balance sheet. This balance sheet did not include the $45,000 unpaid balance nor the $4,500 loan—although it did include loans from the board members!—which paints a false picture of the co-op’s financial status.
- Co-op employee Gwen Gunn held a book signing at the co-op last fall. All of the books the co-op ordered were sold, and the co-op collected the money. They have still not paid for those books despite being billed repeatedly for them.
- They have insisted that I should not be paid any of my accumulated paid time off (PTO), not even the partial amount Carrie agreed to in writing last March.
- I still haven’t received my last two paychecks (they are in escrow at the Department of Labor, but I can’t have them unless I agree to give up the PTO that they promised me).
- Precious told the Department of Labor (in writing) that I had written a sizeable check to Gwen before she started work at the co-op. This accusation was a complete fabrication. When the Department of Labor asked for proof, she backed down and agreed to pay Gwen her salary (over six months late).
- In an email to the shareholders, they implied that the co-op’s financial problems were all because of my actions, despite Carrie including in her own budget that the store wouldn’t be profitable for at least the first year and the board’s failure to raise the promised funds.
- I’ve made repeated offers, both oral and written, to accept a payment plan for what the co-op owes me. The board stopped responding months ago and won’t meet with me.
- It has recently come to my attention that members of the board have been telling people that I was responsible for leaving a lot of unpaid bills. They are not mentioning that my purchases were approved by Carrie, and that those bills would all have been paid on time if they had raised the money Carrie had promised.
I have made numerous overtures and offers of compromise to the board. The co-op continues to sell products that were purchased with my money and never reimbursed. They continue to use the assets of my old bookstore despite the fact that they are in default on the purchase agreement. Carrie and Precious continue to blame me for the co-op’s problems, even though she has ignored many opportunities to make things right.
For over half a year I have acted in good faith and attempted to negotiate a deal that makes sense for both me and the co-op. Carrie has refused to honor oral, email, and written agreements, and Precious has intentionally provided false information to a government agency about me. At this point, I just want this to end, so that I never again have to deal with them.
I’m done staying quiet. I am done being taken advantage of. I have backup data for every contract, every email, every filing with the state. I’m happy to hand it to any shareholder that asks.
Since the board won’t talk to me, I ask that my fellow shareholders step in and fix the problem while it’s still fixable. Interest and penalties on this $60,000+ debt are accumulating fast, and it’s clear that Carrie and Precious are simply going to continue ignoring the crisis until they destroy the co-op.
It is time for my fellow shareholders and the other board members to appoint a negotiator or negotiating committee and remove Carrie and Precious from the equation.