ILR BOARD MINUTES

ILR Board of Directors Conference
January 29, 2003
12:12 PM EDT

The ILR Board of Directors teleconference meeting was called to order at 12:03 PM, EST, by President, Sally Rucker. Present: Karen Baum, Art Kennel, Jack Moore, Sally Rucker, Sally Taylor and Jan Wassink, Registrar.

Motion: Jack Moore. Approve minutes of January 22, 2003, teleconference call. Second: Art Kennel. 5 Ayes.

The next teleconference call will be Wednesday, February 5, 2003, at 12 Noon EST.

1. Stachowski/Reed Hearing Date
   The date for the Stachowski/Reed hearing will be February 19, 2003.
2. USAHA Expenses
   Jan reported that the expenses submitted by Bob Frost for his attendance at the 2002 USAHA meeting have been reimbursed.
3. Letter to Mr. Don Haueter
   Motion: Sally Taylor. Accept the official letter written by the ILR attorney, Tim Goddard, to Don Haueter detailing the findings and sanctions posed on Mr. Haueter by ILR. Second. Jack Moore. 5 Ayes.
4. Letter to Mr. Don Haueter
   Motion: Sally Rucker. Second. Karen Baum. Send the afore- mentioned letter to Don Haueter today, January 29, 2003. 5 Ayes. *(see addendum to minutes below)
5. ILR Policy Violations, Regulations and Enforcement Committee
   An ad hoc committee has been formed to study the ILR Policy violations, regulations and enforcement. Barbara Carlemagno and Kathi McKinney, both past presidents of ILR, have agreed to serve on this committee with Sally Taylor.
6. Crossbreed Certificate
   Alan Schmautz has worked out a design for the certificate for crossbreed animals. It will state "Crossbreed" in bold letters across the face of the certificate.
7. Waiving Signatures When Parentage is DNA Verified
   Motion. Sally Rucker. Waive requiring signatures of the sire owner and the dam owner for animals whose parentage has been verified by DNA testing. However, because these signatures are often used by sire owners and dam owners to enforce breeding contracts, the sire owner or dam owner will be able to request that signatures be required for particular animas. Second: Karen Baum 5 Ayes
8. Crossbreed Registry
   There have been more letters, phone calls and e-mails requesting ILR to close or increase the requirement for leaving the Crossbreed Registry than for any other issue in the last four or five years. Sally Rucker has contacted several of the members who own registered crossbreed lamas. The members she contacted felt ILR should close the Crossbreed Registry completely. Motion: Art Kennel. In order to have a consistent set of policies regarding registration ILR will as of February 1, 2003, place a moratorium on any crossover of animals or their offspring from the Crossbreed Registry into the Llama Registry. In addition, beginning on February 1, 2003, there will be a moratorium on the registration of any animals without two registered ILR parents. Second: Sally Rucker. 5 Ayes.

Motion: Karen Baum. Adjourn the meeting. Second: Art Kennel. Meeting adjourned at 2:21, EST.

Respectfully submitted,
Sally Taylor,
Secretary

Addendum: Letter to Mr. Don Haueter

IN THE MATTER OF: DONALD HAUETER, Respondent.

On December 18, 2002, the Board of Directors of the International Llama Registry, Inc. ("ILR") received a formal request and Complaint to hold a hearing and take enforcement action with respect to violations of the Registry Policies of the ILR ("ILR Policies") allegedly committed by ILR member Donald Haueter (Mr. Haueter). A copy of the Complaint is attached as Appendix A. Notice of Hearing and Request for Response together with a copy of the Complaint were properly served upon Mr. Haueter by certified mail, return receipt requested, on December 24, 2002, and received by Mr. Haueter on January 3, 2003. Section 4(B) of the ILR Policies and Procedures for Enforcement by the Board of Directors of Bylaws and Policies ("Enforcement Policies") requires any respondent who chooses to participate in the hearing in person, by legal counsel or by other representative, to file a response to the Complaint within ten days of service of the Complaint. Mr. Haueter failed to file any response to the Complaint and did not participate at the hearing.

In accordance with the Enforcement Policies, the Board held a hearing on January 22, 2003, to determine whether Mr. Haueter had violated the ILR Policies and, if so, to determine appropriate sanctions that the ILR should impose. Board members Karen Baum, Art Kennel, Sally Rucker, Sally Taylor and Jack Moore were present. Board member Sally Rucker was appointed to act as the presenter of evidence and argument on behalf of the ILR. The Board, having carefully considered all of the evidence that was presented and the argument of Ms. Rucker, makes the following findings:

1. Article IV(B) of the Policies states "Owners are responsible for accurate record-keeping of all births, deaths, breedings, transfers of ownership, and for furnishing the Registry with this information."

2. ILR records show that Mr. Haueter is the owner of Cometego, Registration No. 76788 ("Cometego").

3. Article VI(A)(1)(f) of the ILR Policies requires the ILR to be provided DNA testing for male llamas that have 10 or more registered or listed crias or that have performed any outside breedings before their offspring can be registered with the ILR.

4. Mr. Haueter has admitted in letters that have been submitted to the ILR that he submitted a blood sample for an alpaca named 4 Peruvian Magnifico 6055 ("Magnifico") as being the blood of Cometego. Hearing Exs. 8 and 9, attached as Appendix B.

5. The blood sample submitted as being the blood of Cometego was sent by the ILR to the University of California at Davis Laboratory for testing. The test results have confirmed that the blood sample is not the blood of Cometego and matches exactly to the DNA profile for Magnifico. Hearing Exs. 1 and 2, attached as Appendix C.

6. Mr. Haueter knew, or should have known, that the blood that was submitted as being drawn from Cometego was actually blood that was drawn from Magnifico and that he was committing a fraud upon the ILR by submitting the blood sample as being taken from Cometego when, according to his own admission, he knew the blood was not taken from Cometego.

7. Mr. Haueter signed registration documents with the ILR attesting that Cometego was the sire of CVAL’s Magnifire ("Magnifire"). Mr. Haueter knew the representation was false and made the false representation for the purpose of causing the ILR to register Magnifire as a cria of the sire Cometego and the dam Rejoice, Registration No. 71621, owned by ILR Member Mary Z. Reed.

8. Mr. Haueter knew, or should have known, that a blood sample of the sire of Magnifire would be required to register Magnifire with the ILR, because the alleged sire, Cometego had more than 10 crias and the ILR did not have an accurate DNA report on file for Cometego. Mr. Haueter knew, or should have known, that Magnifire’s DNA would be compared to that of Cometego to verify and substan-tiate the parentage of Magnifire, as provided in Article VIII(A)(3) of the ILR Policies. Mr. Haueter further knew, or should have known, that the blood supplied would be relied upon by the ILR as part of the registration process for Magnifire.

9. In signing Magnifire’s registration application, attesting that Cometego was the sire of Magnifire, and in submitting the blood of Magnifico as being the blood of Cometego, Mr. Haueter violated the ILR Policies and perpetrated, or participated in the perpetration of, a fraud upon the ILR.

10. In determining the appropriate sanction, the Board is to follow the factors set forth in Section 9 of the Enforcement Policies. Those factors are:

a. Whether the violation was temporary and/or inadvertent.

b. Whether the violation was caused by factors beyond the Respondent’s reasonable control.

c. Whether the Respondent has taken steps which render the reoccurrence of such violation unlikely.

d. Whether the Respondent reasonably believes that his or her action was not in violation of the Governing Documents.

e. Whether the violation caused harm to any other person or to the ILR.

f. Whether the Respondent cooperated with the ILR in the investigation of the violation and/or correction of the cause of the violation.

g. Whether the Respondent has previously engaged in the same or a similar violation.

h. Whether the violation was inconsequential in nature and/or duration.

i. Whether the Respondent acted reasonably and responsibly to avoid or prevent such violation.

j. Whether the violation caused damage to the integrity, accuracy and/or reliability of the Registry system.

k. Whether the violation caused damage to third parties who relied upon the Registry system.

l. Whether the violation was the result of intentional action, carelessness, gross negligence or mere negligence.

m. Any other factors the Board of Directors may determine appropriate.

11. Applying the above factors, the Board finds that:

a. The violations were not temporary and/or inadvertent. Rather, the violations were intentional and would have remained without remedy had an alert ILR member not discovered the discrepancy.

b. The violations were not caused by factors beyond Mr. Haueter’s control; the violations were willful and intentional.

c. Mr. Haueter has not taken any steps that would render the reoccurrence of such a violation unlikely. He has expressed no remorse or offered to remedy the losses experienced by the ILR or any of the victims of the fraud. The Board is satisfied that the only reasonable means to prevent a reoccurrence is to restrict Mr. Haueter’s ability to register llamas free of controls such as DNA testing on all of his animals, parent verification of all crias and blood samples obtained by an independent veterinarian or to suspend Mr. Haueter’s membership in the ILR.

d. Mr. Haueter had to reasonably believe that his actions were in violation of the ILR Policies. His obvious objective was to cause the ILR to register Magnifire as a registered llama when the sire of Magnifire was Magnifico, an alpaca. In furtherance of that objective and to satisfy the DNA requirement for Cometego, a stud with 10 or more registered cria, Mr. Haueter submitted, or participated in the submission of, the blood of Magnifico as being the blood of Cometego.

e. Mr. Haueter’s actions have caused substantial harm to the ILR and its members. The false and fraudulent information stated on Magnifire’s registration certificate, as a result of the fraudulent DNA submission, resulted in a purchase by a third party of a one-half interest in Magnifire based on his status as a registered llama and encouraged others to seek breedings to Magnifire based on his verified status as a registered llama. Some of these breedings were aborted when the true information about Magnifire was confirmed. The ILR has also received numerous communications from ILR members expressing loss of confidence in the registration process due to Mr. Haueter’s actions.

f. Mr. Haueter has not cooperated with the ILR in its investigation of the violations and/or correction of the cause of the violations. Although, he has admitted culpability, the story he has provided to explain the circumstances of the violations and the persons involved in the violations lacks credibility and causes the Board to believe that Mr. Haueter is attempting to secret the true facts and further mislead the ILR in identifying all of the responsible persons.

g. The violations were not inconsequential in nature and/or duration. They were part of an intentional and deliberate course to defraud the ILR for the purpose of improperly causing the ILR to register Magnifire as a llama. If the misrepresentation had not been discovered, it would have com-promised the accuracy of the ILR records for Magnifire in perpetuity.

h. The violations caused substantial damage to the integrity, accuracy and/or reliability of the registry system. The violations strike to the heart of the registration process. The ILR must rely on representations from members and their integrity in attesting to the truth of the facts stated. Members who violate that trust harm all members and impair the faith in the integrity of the registration process, which is fundamental and vital to the continued operation of the ILR. The submission of information to the ILR that a member knows, or should know, is false is among the most serious offenses that could be committed against an entity that purports to disseminate accurate information on which people make breeding, buying and other decisions in their breeding programs. The ILR must, therefore, have a policy of zero tolerance toward these types of offenses.

Based upon the above findings, the Board concludes that Mr. Haueter did violate the ILR Policies. The Board further concludes that the following sanctions should be imposed:

1. Mr. Haueter’s ILR membership should be, and hereby is, immediately suspended for a period not less than five (5) years.

2. Mr. Haueter shall not be permitted to submit any registration to the ILR during the period his membership is suspended.

3. Any member who assists Mr. Haueter, directly or indirectly, in the registration of any llama that is owned by Mr. Haueter, or in which Mr. Haueter has any interest, shall be subject to having their registration privileges and/or membership suspended.

4. Any person who purchases an ILR registered llama owned by Mr. Haueter, or in which he has any interest, shall be permitted to register the transfer only upon special application submitted to the ILR and subject to DNA testing for the sire, dam and cria as the ILR may determine necessary. The ILR records show that the following llamas are owned by Mr. Haueter: Touch of Lace 64363, Cinnamon & Apples 64365, Cotton Club 64368, Cometego 76788, Kavalear 79585, Telstarr 93756, Escobar 93758, and Kor-Don-Blue 121944

5. Mr. Haueter shall not be permitted apply to have his membership suspension lifted for a period of five (5) years from this date. Any lifting of the suspension shall be subject to a five (5) year probationary period and Mr. Haueter’s repayment to the ILR of all costs and fees, including attorney fees, that the ILR has incurred in the investigation and prosecution of Mr. Haueter’s violations of the ILR Policies and evidence of full recompense of any costs or damages that all other person(s) have suffered as a result of the violations.

6. This opinion shall be published in the Official minutes of the ILR Board of Directors, the ILR report, and shall be made available to lama publications requesting a public statement on the matter.

7. This decision and/or the proceedings are not intended to be, and shall not be, construed to limit the ILR’s right to pursue damages or other relief against Mr. Haueter for the harm caused to the ILR in a court of proper jurisdiction.

Dated this 29th day of January, 2003.

BY THE BOARD OF DIRECTORS OF THE
INTERNATIONAL LLAMA REGISTRY, INC.*

* The Board’s decision was unanimous. Sally Rucker recused herself from participating in the decision, in accordance with the provisions of the Enforcement Policies.

Respectfully submitted,
Sally Taylor, Secretry