The Rochester Civic Theatre (RCT) is under fire after the city council discovered it’s likely more than $600,000 in debt.
The Oversight Committee met Tuesday to break down the problems.
Kevin Miller, the Civic Theatre’s executive director, resigned on January 24 after he reportedly took out a $300,000 unsecured loan through the theater in September.
A press release said Miller wanted to spend more time with his family in Wisconsin.
"Kevin Miller was a snake oil salesman, he was a fraud, and he's cheated the community," City Councilman Michael Wojcik said.
Over the last year, Civic Theatre Company Board President Jeffrey Haynes said the theater had sold out a few shows, including Shrek.
Haynes said the Civic Theatre was relying on a promised “significant” donation to fund professional actors, which fell through and left the board with a $250,000 bill.
RCT board members have given personally $100,000 to the theater since September, Haynes said, but about 60 percent of that amount was considered loans.
Haynes said the Civic Theatre board has since instituted new financial safeguards.
Director of Finance and IT Dale Martinson said the council hadn’t seen an audited financial statement since July 31, 2018.
“There are no two ways of coaching this: this is not a healthy situation right now,” Wojcik said Tuesday.
City policy has been in the past to support the theater with taxpayer funding, but that may change.
"It would be one thing if we were being told that they were struggling, but instead, we were being told that everything was going really well," City Council member Nick Campion said Monday.
Campion pointed to city documents seeming to show RCT lost $640,000 over 18 months.
“For an operation the size of a theater, I have a hard time understanding when that became a board-level discussion,” Campion said.
Campion said that he can’t attest for the accuracy of the theater’s financial numbers because its Excel spreadsheet formulas may have been manipulated.
In 2018, the city gave RCT about $200,000 to maintain its building.
“You can’t be taking the city’s money in one hand, and running up substantial external debts on another hand, because that’s a sure sign the city’s money is being used as collateral for a loan,” Campion previously said, Minnesota Public Radio reported.
City Councilman Shaun Palmer said the RCT’s finances weren’t transparent.
"I'm ashamed that we gave you $200,000, and I'm on the city council. I think we were misled. I think we were duped, and I'm just offended by that," Palmer said.
Employees missed paychecks in November and December, the city council said, although RCT representatives admitted no problems.
RCT also missed payments to the Internal Revenue Service and the city of Rochester.
Wojcik said RCT’s financial statements had errors. An updated audit is set for mid-February.
“There is no bailout coming,” Wojcik said. “This is on them to fix this at this point.”
The city council previously agreed the RCT is an important city cultural landmark.
The Oversight Committee will meet on February 12 to discuss the next steps.