In his annual recap, Traverse City Film Festival Founder Michael Moore says the festival lost nearly a half million dollars in 2017 – and also uncovered something he believes might be worthy of investigation by the county prosecutor.

The non-profit’s most recent IRS Form 990 tax filing shows the festival posted 2017 revenues in excess of $2.8 million but expenses of nearly $3.3 million, a net loss of $486,346. The festival lost $456,196 in 2016 and $1,292 in 2015. Moore tells The Ticker that in previous years, deficits were planned due to significant investments in opening The Bijou Theatre or a new roof at the State Theatre; 2017 did not have a similar capital expenditure and still posted a large deficit.

But in the IRS filing, an email to supporters and in an interview with The Ticker, Moore also alleges something that could become a blockbuster of its own – that a festival employee took actions without board authorization, actions that resulted in internal investigations, conversations with the county prosecutor, and potential future legal action.

“We have spoken to the Grand Traverse County Prosecutor's Office and provided them with what we have learned,” Moore wrote in his email. “The festival's attorneys are assessing what other civil actions we may take. At this time I am prohibited from divulging any of these details.”

The employee allegedly directed $198,020 of temporarily restricted funds without board authorization or approval and also conducted a benefit for a community member without authorization or approval of the board of directors.

Moore declines to disclose which employee is being referred to, though the filing says “the involved employee was terminated from the organization.”

“The conclusions people draw are the conclusions people draw,” Moore says when asked about the identity of the former employee. “It will all come out, and I’ve released the maximum amount of information I can release at this time.”

He also declined to answer if money is actually missing or unaccounted for within the festival. “We’re not attorneys and we’re not law enforcement, but we think there’s enough here that we needed to have them see.”

He adds that the festival itself has engaged “lawyers, handwriting experts, and forensic investigators” to look into the matter over the last several months. He said enough was known by the time of the IRS filing in November 2018 to cause concern. In response to the question on the form, “Did the organization become aware during the year of a significant diversion of the organization’s assets?” the Film Festival’s response is “yes.”

Moore says the festival’s investigation has uncovered additional information since the November filing.

“I learned more just last week. We didn’t have all the investigators’ reports [in November] and we still don’t,” he says. 

“2017 was the anomaly,” he tells The Ticker. “The 2016 990 shows a significant deficit meaning that things that transpired in 2017 might have began in 2016 – those conducting the inquiry are helping us to figure that out.” He adds that 2018 looks to have been a significantly better year for the festival financially.

Deb Lake served as the festival’s executive director until December 2017, when she and the organization parted ways. At the time, Moore said, “Words cannot express the deep gratitude we all feel toward Deb. She has provided brilliant and dedicated service to this community.” Joseph Beyer was hired as Lake’s replacement in April 2018, but stayed in the job only 21 days before leaving. Susan Fisher and Meg Weichman now lead the festival, and Moore adds that they “not only kept the boat afloat, they made everything better.”

In more positive news, the 2018 Traverse City Film Festival posted its highest attendance since the event’s inception in 2005.