US foundation embroiled in bank IT bribe claims seeks fresh start

Organisation previously accused of being used to channel money to former CBA IT execs seeks distance from controversy

A US not-for-profit that was linked to bribery allegations involving former Commonwealth Bank of Australia IT executives has sought a fresh start, ditching its previous name and online presence.

The Ace Foundation is a not-for-profit corporation that NSW Police have alleged was used to channel kickbacks to former CBA executives, Jon Waldron and Keith Hunter, who are accused of accepting money in return for awarding contracts to US software company ServiceMesh.

The foundation has rejected any wrongdoing on its part.

ServiceMesh was acquired by CSC in 2013; the business from CBA allegedly boosted the price paid for the company.

The two former CBA employees have rejected accusations they accepted kickbacks.

Waldron and Hunter in March last year were charged by NSW Police following an internal investigation conducted by the bank in 2014.

The two men were subsequently fired by CBA.

The Ace Foundation has previously said it engaged Waldron and Hunter as consultants to work on charitable, technology-based projects and advanced funds to the two between May and December 2014 to cover any costs they incurred.

In May 2015, the foundation filed a civil action in the Los Angeles Superior Court against the Commonwealth Bank seeking the return of US$2.5 million at the centre of the allegations against Hunter and Waldron, as well as legal fees.

In its initial court filing, the foundation alleged the bank objected to the duo working on Ace Foundation projects after CBA learned that the two then-employees were intending to leave the bank to work for competitors.

After learning CBA had objected to Waldron and Hunter working on its projects, the foundation said it sought the return of the funds it had advanced to the two but the bank blocked the return of the funds.

A number of months after the civil lawsuit was filed, the online presence of the Ace Foundation was steadily reduced.

Content on the website detailing the foundation’s projects was progressively removed before it went offline completely after the registration for its domain, Acefoundation.us, lapsed. Its Facebook page was also removed.

However, the work of the organisation, which seeks to help nonprofits better leverage technology, has continued under a new name.

The organisation is now known as the CoreTech Foundation. The foundation’s new website does not acknowledge a link between Ace and CoreTech; however, a statement from the foundation via its lawyers indicated that the rebrand was an attempt to distance itself from the distraction of the widely reported CBA case.

“The ACE Foundation was established in 2014 to apply next-generation technology to the most pressing challenges facing economically distressed populations and developing nations,” the statement said.

“ACE was already making significant progress on its mission when the controversy in Australia began. To avoid any distractions that could be caused by the Australian matter, the ACE Foundation became the CoreTech Foundation, and the work started by the ACE Foundation has continued and intensified with CoreTech with a new and expanded management team.”

An example of the continuity of the two organisations is Project LiQuidity, which seeks to improve the distribution of drinking water in impoverished communities. The project is in beta and the organisation is “developing several field trials with non-profit partners to test the software”.

CoreTech says it operates as a Californian public benefit corporation the fiscal sponsorship of the Edward Charles Foundation, which is a Beverly Hills-based 501(c)(3) tax-exempt organisation. It is not clear whether it is an entirely new corporate entity (the Ace Foundation is registered as a corporation in Delaware, a popular state for incorporating).

According to the Ace Foundation’s civil complaint against CBA, Ace was initially founded after Harvard graduate Andrew Goldstein approached ServiceMesh CEO Eric Pulier “to discuss his interest in taking on new challenges”.

Pulier made an initial donation to start the foundation but has never been a director, officer or employee of the organisation, according to the Ace Foundation.

Goldstein became the organisation’s inaugural CEO. A 990 return subsequently lodged by the foundation with the IRS in September 2015 revealed that the title had passed to Clark Hogan, an Ace director and now CEO of CoreTech.

Interrelated legal actions

In addition to the criminal case in Sydney and the civil case launched by Ace in the US, there are two other related court actions.

One is a civil action filed by CSC in Delaware against ServiceMesh founder, Pulier.

CSC filed the civil complaint against Pulier in May 2015. CSC has argued that the price it paid for ServiceMesh was inflated by the CBA contract won by ServiceMesh.

Pulier was suspended from his position in March 2015 and in April 2015 quit CSC.

The other is a civil case launched by the NSW Crime Commission against Waldron and Hunter in the NSW Supreme Court.

According to the US lawyers retained by CBA, K&L Gates LLP, the case involves a restraining order to freeze the funds at the centre of the allegations against Waldron and Hunter.

The US-based civil action against the Commonwealth Bank was last month removed from the Los Angeles Superior Court to the federal US District Court after an application by lawyers representing CBA.

According to a notice of removal filed on 12 January 2016 by CBA’s lawyers, the bank was finally served with the Ace Foundation’s complaint on December 14 (the Ace Foundation indicated in October that although its complaint was lodged with the LA Superior Court in May 2015 it had yet to serve the bank).

There are generally considered to be potential advantages in shifting to the US federal court system, including the possibility of resolving a case speedily without oral argument (‘on the papers’).

A response by CBA to the Ace Foundation’s complaint is expected by 18 February. A directions hearing for the NSW Crime Commission case is due on 8 February. The Australian criminal case is scheduled to be mentioned in court on 18 February.

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