Merger Foes Say Museum Trustees Lied About Finances

In a court case to be heard today, opponents of the Newport Harbor-Laguna Art Museum merger say new evidence shows that trustees lied in stating that the Laguna museum would go broke unless the institutions were combined.

Trustees have asserted repeatedly that the Laguna museum risked insolvency without a merger, which became effective two weeks ago after two votes by museum members.

But minutes from board meetings since 1993 show that the Laguna museum was “in good financial condition,” according to Vern Spitaleri of Laguna Beach, president of the Motivated Museum Members opposition group.

The minutes include statements that in February 1994, museum revenue exceeded expenditures by $110,894 in a budget of about $1 million, and that in June 1995, the museum’s “cash flow [was] satisfactory,” according to the opponents’ suit filed in Superior Court here.

Thus trustees “lied blatantly” about museum finances, Spitaleri said, “to succeed in scaring everybody into voting for the merger. Many people told us that if they knew the museum wasn’t [risking insolvency], they wouldn’t have voted for the merger.”

Trustee Ellen R. Marshall repeated Wednesday that the merger was intended to avoid insolvency.

“The Laguna museum overcame some [money troubles] through onetime, substantial donations that could not be repeated,” said Marshall, an attorney with Morrison & Foerster. “We also made [temporary] management and other operational changes to reduce expenditures, but those were not long-term solutions.”

Marshall did not deny the opponents’ assertion that some trustees failed to pay their dues (about $6,000 annually) but said that in recent years, “most trustees paid most of the money” and that in any case they are not legally bound to pay.

The opponents want independence returned to the Laguna museum, which has become a branch of the new Orange County Museum of Art. OCMA is based at the former Newport Harbor site in Newport Beach.

The opponents also are hoping the court will enable members to vote to undo the merger. Museum officials have said that undoing the merger is impossible at this point.

The officials have denied allegations of balloting irregularities in the votes so far.