EFTA00584436.pdf

February 9, 2014 Ms. Jennifer Nugent-Hill ACE)/Chief Operating Officer United States Virgin Islands Economic Development Authority 8000 Nisky Shopping Center Suite 620 St. Thomas, USVI 00802 Dear Ms. Nugent- Hill, This is in response to your Compliance Review Report dated January 31, 2014 received via U.S. Post on February 5, 2014, for Financial Trust Company, Inc. (FTC) As Of December 31, 2008 and As Of March 23, 2012. As instructed in your cover letter we are providing a response to the Compliance Report as we are not in agreement with your findings. Our response are as noted herein. Report covering the Period January 1, 2007 to December 31, 2008 The Beneficiary did not comply with the requirements of procurement process Your report concludes that FTC did not comply with procurement requirements. We provide the following. We strongly assert that FTC is a responsible EDC Citizen and take our obligation to the Virgin Islands community very seriously. FTC has always supported the premise on which the Economic Development Council (EDC) Program was founded and makes the utmost effort to support local Virgin Islands business. We note that in many instances our procurement of local goods would allow us to purchase off-island to be more cost effective, while falling within the procurement rules, however we have never purchased goods or services to save money at the expense of local Virgin Islands businesses. Any procurement with a Non-Virgin Islands supplier was due to circumstances that goods and service were not available locally. Your findings provide a summary of expenditures as provided in our annual report. However we believe your analysis is skewed as the report findings do not break out exempt procurements under Section 708-706 4. - Contracts for professional services. Although you do not take exception to procurement for the period January 1, 2009 to March 23, 2012 we provide these expenditures in our analysis as it demonstrates and supports our commitment to the Virgin Islands Community. EFTA00584436 In our procurement process we reference your Procurement Notice and note that all of FTC's non- exempt procurements fall under simple procurements under Section 708-709, as they do not exceed contracts for over $25,000, with the exception of occupancy costs which fall under FTC's lease with IYG-American Yacht Harbor. GOODS AND SERVICES YEAR VI SUPPLIERS NON-VI TOTAL PERCENTAGE OF PROCUREMENT IN THE SUPPLIERS VIRGIN ISLANDS 2008 240,234 19,476 259,710 93% 2007 205,515 27,376 232,891 88% Total 445,749 46,852 492,601 90% 2012 65,899 1,369 67,168 98% 2011 239,042 2,089 241,131 99% 2010 213,101 4,709 217,810 98% 2009 185,510 4,771 190,281 97% Total 703,552 12,938 716,490 98% Reported procurement for Non-Virgin Islands suppliers were spent on the following: YEAR INSURANCE SUPPLIES UTIUTIES REPAIR/MAINTENANCE 2008 Excess liability Supplies to Internet T-1 Copier maintenance insurance not vendors for service through the Xerox — available locally items not procured Puerto Rico available locally through Disbursement less than such as Intuit Sprint $700. and American Ribbon & Tonner Disbursements less than $1000 2007 Excess liability Supplies to Not Copier maintenance insurance not vendors for Applicable through the Xerox — available locally items not Puerto Rico available locally Disbursement less than such as Intuit $250. and American Ribbon & Tonner Disbursements less than $1000 EFTA00584437  CAPITAL EXPENDITURES YEAR VI SUPPLIERS NON-VI TOTAL PERCENTAGE OF PROCUREMENT IN THE SUPPLIERS U.S. VIRGIN ISLANDS 2007 29,925 0 29,925 100% 2008 9709 37,172 46,668 21% Total 39,634 37,712 76,806 52% Reported procurement for Non-Virgin Islands suppliers were spent on the following: YEAR Furniture Office equipment 2008 Office chairs Phone switch and component phone parts $25,000 $11,000 CONTRIBUTIONS The Compliance Report finds that during the period covered in this report the J. Epstein V.I. Foundation made contributions totaling $26,500 to the St. Thomas-St. John Chamber of Commerce. The Foundation did not make contributions to the St. Thomas- ST. John Chamber of Commerce totaling $26,500. The Foundation made contributions of $4,000 in support of a new teacher's reception and an annual fundraiser. Report covering the Period January 1, 2009 to March 31, 2012 Unable to determine the Beneficiary's compliance with Special Conditions three, four, five, seven and eight We have attached the following: • Special Condition Three: Copy of health insurance bills for the first and last month of each annual period noting that the Company provided and paid for 100% of health and dental benefits as well as life insurance coverage under the health insurance policy for both the employee and family coverage. • Special Condition Four: Disbursement journal nothing payment to life insurance carriers for the period under review. Note the policies are for two times earnings and are maintained in the individual employee's name. • Special Condition Five: Employee Payroll Summary (FTC payroll records) noting the Company provided its employees with a Simple IRA plan matching 100% of employee elective deferral at 3% of annual compensation. • Special Condition Seven: • Special Condition Eight: Disbursement journal for payments made under the tuition and continuing education reimbursement program made for those employees electing to take course work or continuing education. EFTA00584438 We would note that although FTC suspended benefits on March 23, 2012 it maintained its commitments to its employee under the terms of its certificate with no reduction in benefits. Did not comply with the reporting requirement of the EDC For your records, we have attached the Lt. Governor's stamped copy of FTC's Annual Report and Franchise Tax Report filed in June of 2010, 2011, 2012. As well as a copy of Certificate of Good Standing, dated April 11, 2013, subsequent to the date of the compliance period ended March 23, 2012. Company was out of compliance with Capital Investment, Special Condition 1 and 2. We provide the following. Financial Trust Company, Inc. submitted a renewal application on January 9, 2009 and received Notice of a Recommendation of Benefits Granted in December, 2009. FTC entered discussion with the EDC surrounding the condition of the benefits granted and received Notice of Benefits Approved in February 2010, with a description of the terms and conditions. FTC was in final negotiation surrounding the terms of the Special Conditions and received a signed Renewal Certificate executed on October 13, 2010. During the period in which the Company was awaiting approval of its renewal terms it was instructed to operate under the terms of its original certificate. As such for the period April 1, 2009 to December 31, 2009 FTC followed the terms of its certificate executed on March 21, 2000. Financial Trust Company, Inc was granted a suspension of benefits on March 23, 2012. In which the EDC noted that FTC would be held responsible for non-compliance through May 23, 2012. Accordingly, the Company finds that it is in compliance with the terms of its certificate using a proration of days benefits received as follows. YEAR DAYS 2009 275 2010 365 2011 365 2012 82 TOTAL 1087 DAYS UNDER THE RENEWAL CERTIFICATE PERIOD 1825 PERCENTAGE OF DAYS BENEFITS RECEIVED 59.6% EFTA00584439 COMPLIANCE WITH CAPITAL INVESTMENT YEAR VI SUPPLERS NON -VI 2012 8759 1,408 2011 13,362 15,402 2010 35,803 2009 10,455 TOTAL CAPITAL INVESTMENT 68,379 16,810 PRO-RATED REQUIREMENT -$100,000 @ 59,600 59.6% CAPITAL EXPENDITURE IN MESS OF 8,773 REQUIREMENT COMPLIANCE WITH SPECIAL CONDITION 1. - CHARITABLE GIVING YEAR TOTAL Requirement under Requirement under Requirement under original certificate renewal certificate renewal certificate $37,500 over(under) $100,000 over(under) prorated $22,400 overfunder) 2012 62,125 39,386 2011 139,275 39,275 2010 104,464 4,464 2009 52,405 14,905 TOTAL 358,269 14,905 43,739 39,386 CONTRIBUTIONS IN EXCESS 98,030 OF COMPLIANCE REQUIREMENT COMPLIANCE WITH SPECIAL CONDITION 2. - ACADEMIC SHCOLARSHIPS YEAR TOTAL NOTES 2013 20,000 2012 30,000 Granted deferral paid 2011 10,000 Recipient requested a deferral to 2012 2010 20,000 2009 NA Program not identified as of date of lune Graduation TOTAL 80,000 PRO-RATED ACADEMIC 60,000 SCHOLARSHIPS REQUIREMENT Amount paid in excess of 20,000 compliance requirements COMPLIANCE WITH SPECIAL CONDITION 2. - Workforce Development fund and Territorial Scholarship fund YEAR TOTAL NOTES 2012 NA Benefits suspended 2011 25,500 2010 25,500 2009 12,500 Not a requirement under original certificate rather a co-op marketing fee requirement EFTA00584440 EFTA00584441