X-Message-Number: 29190
Date: Mon, 26 Feb 2007 03:24:38 -0500 (EST)
From: Charles Platt <>
Subject: Response to Michael Riskin

I'm glad that Michael RIskin has spelled out some financial
details which are known among a small number of people but
are not widely discussed. I certainly was not qualified to
examine this material, although I did make it clear that
Alcor patients are better funded than the patients at CI.

Michael writes: "Alcor  keeps all of its pre-funded
membership moneys in a separate liability (as a debt due to
the member) account . . . these funds  are segregated from
operating funds, to be only used for future services due a
member or for a member refund if so requested. CI takes
pre-funding moneys into current assets to use for overall
operating expenses in  the hope that future revenues will
cover such pre-funding needs."

If I understand this (which I may not), it means that someone
who prefunds cryopreservation with cash or a similar method,
instead of insurance, will find that CI uses the money in
much the same way that a bank uses my bank deposit. The bank
doesn't just keep the money in a safe for me, in case I need
it later. It loans it to someone else and makes interest.
This works fine so long as there is not a run on the bank,
with too many people asking for their money back. In
cryonics, according to Michael, if all the people who have
prepaid CI decided they wanted their money back, the
organization would have to go and round it up somewhere. At
Alcor, the money is still on hand and has not been reused for
any other purpose.

Several comments come to mind, if I have this right.

1. How many prefunded members does CI actually have? I doubt
there are many. Even if there are, CI's minimums are so much
lower, I doubt that a large sum could be involved.

2. The presence of cash-on-hand belonging to an Alcor member
does of course create its own problem, since someone may be
tempted to steal it. This happened; as I recall, at Alcor: a
$100,000 prepayment disappeared. Paradoxically, if the money
had been used for other purposes, it would have been safer!

3. By keeping a lot of cash and not doing anything with it,
one could argue that Alcor is not making the most productive
use of the money.

4. On the other hand, by conforming with GAAP one could argue
that Alcor should only proceed in this fashion. But are there
other comparable examples of conservatively run institutions
which have reached the opposite conclusion?

Michael also points out that Alcor has a patient trust to
protect patient funding. I should have mentioned this,
because it is a significant asset. I do wonder, though, how
well the Alcor trustees would resist attempts at raiding the
money which they have been charged to protect if Alcor was in
a real financial crisis. As I recall, there are only three
trustees, all of them Alcor members, and one of them is an
Alcor director. That leaves two supposedly independent from
Alcor politically, but just one of them would be the swing
vote. In the past, I have seen attempts to reclassify some
expenses so that they become trust expenses, lightening the
load for Alcor. Thus, we know the temptation exists.

Of course this just means that the CI system makes me feel
even more insecure.

I appreciate this opportunity to get into the details. I must
add that currently, I am not a member of either organization.

Rate This Message: http://www.cryonet.org/cgi-bin/rate.cgi?msg=29190