When Fresno Grand Opera went public June 16 with allegations of financial misconduct on the part of two former key employees, the news rocked many of the organization’s donors and supporters. Other local arts organizations, most of whom have scraped their way through a brutal recession and need every dollar they can raise, were rattled as well. One concern: Bad news about one organization has the potential to spook donors to others even when there is no connection.
Dale Kingen, on the other hand, sat down the day the story broke and wrote a check to the opera company on behalf of him and his partner, Joseph Boado.
The Fresno couple has been an opera supporter for 17 years. Kingen and Boado increased their annual donation to $1,500, a 50 percent increase, as a sign of their support for the opera’s general director and board of directors, which “self-reported” May 16 to the state attorney general for fiscal irregularities, conflicts of interest and improper corporate governance ranging from 2009-14.
“I wish we could give more,” Kingen said. “Fresno Grand Opera is so important to this community, and I like the way they’re taking the organization in a completely new direction. On the day The Bee story came out, I sent (General Director Matthew Buckman) a text that said, ‘Hey, if you were a stock, I’d be waving buy, buy, buy.’ ”
As the fallout from the opera board’s decision to go to the attorney general continues, there are many threads to follow. Here is an update and rundown on some of them.
In a nutshell, what has happened so far?
After Fresno Grand Opera transitioned to new leadership in November 2014 with a new board, general director (Buckman) and partnership with Modesto’s Townsend Opera, it hired a tax attorney and certified public accountant to investigate the company’s books. The company delivered its internal review, a ream of documents and a list of allegations to the attorney general.
As part of the self-reporting process, the company says it will amend and refile its Form 990 tax filings for the period covering 2010-14.
The allegations are directed at Ronald D. Eichman, the opera’s former general director, and Thi Nguyen, the former associate director. The allegations include falsification of tax forms, an alleged failure to disclose an outside business relationship with a for-profit company owned by key employees, alleged improper accounting methods misrepresenting the organization’s true financial health, and allegations that board minutes were created several years after meeting dates.
There is no evidence that the Fresno Grand Opera board in place from 2010-14 was aware of the financial irregularities, Buckman said.
Any word from the state attorney general’s office?
None on any potential investigation, Buckman said, though the company has been working with the Attorney General’s Office to remedy past practices, Buckman said. Monthly financial statements are approved by the board, and other revisions and safeguards to corporate governance have been put in place.
The Attorney General’s Office does not comment on potential or ongoing reviews or investigations.
Any new reaction from the old board and former management?
Contacted on Thursday, former board member Edward L. Fanucchi said he has seen nothing in terms of the allegations except what was published in The Bee and had not heard from anyone else regarding the issue.
“We have mulled it over, but we certainly won’t respond to an article in a newspaper,” Fanucchi said. “Nobody in the community has inquired.”
He added: “The new board has started something, and we’ll see where they take it.”
Eichman did not return a phone message left for him on Thursday.
Other than The Bee article, how can the public learn about the allegations?
The internal report and supporting documentation can be read at the Fresno Grand Opera office by making an appointment, Buckman said.
The state attorney general oversees nonprofits, also known as community benefit organizations. Other than a potential investigation by that office, could the IRS get involved as well?
Possibly, said Don R. Simmons, a Fresno State professor and expert in philanthropy and community benefit organization governance.
“My opinion is that’s the bigger problem,” he said. “The state is one thing, but the IRS is another. The attorney general has a communication responsibility with the IRS. It’s possible that the refiling of the 990 forms is not adequate. The IRS could bring its own charges.”
The company has not heard anything from the IRS, Buckman said. The board is still considering its options in terms of filing a civil lawsuit.
How are donors responding?
Along with Kingen, other donors stepped forward the day the announcement was made, Buckman said. Others reiterated support for the opera’s decision to go public with the charges.
Still, the opera company faces financial challenges. Some of its biggest donors stopped giving after the board transition, according to the internal report. Its current deficit is about $250,000.
How are people in the arts community responding?
Stephen Wilson, president and CEO of the Fresno Philharmonic, said he doesn’t think the controversy will create a chilling effect in terms of people giving to arts organizations.
“I certainly hope not,” he said. “I think the arts organizations in this town are doing a good job of trying to serve the community.”
With its 24 board members – including three certified public accountants and two attorneys – the Fresno Philharmonic takes seriously its fiduciary and oversight responsibilities, Wilson said. “We do have in place governance practices that ensure transparency, both within the organization and externally,” Wilson said.
Michele Ellis Pracy, executive director of the Fresno Art Museum, said she was concerned when she heard the news.
“In the nonprofit world, we have to be extra careful,” she said. “We’re using other people’s money.”
Ellis Pracy does not feel, however, there is significant crossover between opera and museum donors.
Like Buckman, she only has been in the job for a relatively short amount of time. When she read about the opera allegations, she said she emailed members of her board’s executive committee and thanked them for being diligent about keeping finances transparent.
“When I did take over I could understand the fiscal situation without any trouble, and I could see where I could plug in new avenues for income,” she said.