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    Sunday, April 28, 2024

    AG acted when it made legal sense

    Thanks to the reporting of this paper and others, The Day's readers are by now familiar with the troubles of Amistad America, Inc., the organization that owns and operates the Freedom Schooner Amistad. Last week, my office went to court to have a receiver appointed to take over the organization's operations and assets. To avoid further straining the Amistad's precarious condition, I have previously been hesitant to speak publicly and in detail about my office's efforts. With the ship under the receiver's control, I can now address why I took the legal action I did and what it means now and for the future of the Amistad.

    The Amistad is privately owned, but its story of freedom belongs to all of us. It stands as a tangible symbol for America's and Connecticut's commitment to human dignity and civil rights. Fittingly, the Amistad is designated as Connecticut's tall ship ambassador. Taxpayers have contributed millions over the years to its construction and operations. In recent years, state government has supported the Amistad to the tune of approximately $400,000 in annual grant funding. Connecticut residents and state government have a legitimate right to demand that the Amistad be properly managed.

    Sadly, however, the Amistad America, Inc., has suffered in recent years from substantial financial strain and poor management. While further information will be revealed and analyzed during the course of the receivership, there is no evidence to believe that crimes or fraud were committed. Rather, it appears that the leadership of Amistad America was poorly equipped to handle the responsibilities and challenges of managing the organization. Audits released earlier this month have so far satisfactorily accounted for the state funds invested in the vessel, but faulted the organization for lacking controls necessary to ensure proper accounting and recordkeeping.

    The audits confirmed that a change in leadership of Amistad America was necessary. I concluded that that this was best achieved, in the near term, through the appointment of a court-ordered receiver. The receiver is empowered to assume full and sole control and responsibility for the operations of Amistad America. It prohibits the organization's creditors from taking action to collect on debts without first giving notice to the receiver and the state and obtaining court approval. In short, it puts in place a professional and experienced individual who can ensure that, over the coming months, the organization's finances are handled correctly and that existing obligations are addressed in an orderly fashion.

    Some will wonder why we did not act sooner, before the audits were released. I sympathize with their frustration. However, legal action at an earlier stage could very likely have compounded the already daunting challenges of shoring up the Amistad's future.

    My office, while not directly involved in the audits, monitored them closely for any signs that immediate action was necessary before their completion - and no such signs emerged. The conclusions of the audits were important to have, but even more helpful was that the audits provided a process for gathering, organizing and understanding the Amistad's fiscal and operational circumstance. That work, supervised by the auditing accountants, will facilitate and jump start the work of the receiver as she sets out to untangle the Amistad's challenges and chart its path forward to fiscal sustainability. Full cooperation of the Amistad organization in the audits was vital, but would almost certainly have evaporated the moment we initiated legal action.

    Nor did I go to court when I did because some lawmakers had in the previous days called for action, although the concerns they raised are valid and they served the public interest in raising them. The Day's recent editorial was correct in noting that "the negotiations and legal maneuverings that led to Thursday's order were clearly in the works for a while." Most significantly, my office obtained the agreement of Amistad America for the receivership, avoiding a costly and damaging legal fight. This allowed the receiver to assume responsibility and begin work immediately, and will help to ensure the continuing cooperation of the ship's existing staff and crew in on-going operations.

    By the time we appeared in court, we had identified and retained a highly competent receiver, and she had begun the work of familiarizing herself with the relevant facts and circumstances. We had coordinated closely with Gov. Malloy's administration so that state funding for the Amistad, which appropriately had been suspended, could begin flowing to the receiver in the coming days. Our preparations also included outreach to the City of New Haven, which has expressed an interest in expanding its commitment to the Amistad's future, and with members of the non-profit community, whose support for the ship's mission will be vital.

    To be sure, much work and steep challenges lie ahead ahead for the Amistad and those who support its survival - not least of which are designing an appropriate governing structure for the organization and identifying consistent and adequate sources for its operational funding. Success is not guaranteed, but the receivership was a necessary and appropriate first step.

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