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VenuWorks to pay back $138,000 after misuse of funds by former Sanford Center director

BEMIDJI -- The Bemidji City Council voted Monday to modify its contract with the Sanford Center’s management company and accept $138,000 to make up for unauthorized spending by the facility’s former director.

According to an internal investigation by VenuWorks and a report from the Minnesota State Auditor’s Office, Curtis Webb, who helmed the city-owned event center from late 2012 until April 2016, misused more than $100,000 of public funds. Reports from both entities show there were improper payments made directly to Webb and that Webb used city funds for non-business items.

To prevent it from happening again, Bemidji leaders approved a recommendation from city staff that was based on the state’s audit report. The recommendation was to change the structure of two Sanford Center accounts to better protect public funds.

One of the accounts is used for the facility’s operations and the other is tied to its box office. Before Monday, VenuWorks had staff with signatories on both accounts.

“The purpose of providing VenuWorks access to those accounts relates to their ability to close out events,” City Finance Director Ron Eischens said. “They often need to pay the promoter the day of the event, so VenuWorks staff needed access to be able to do that.”

Moving forward, the council approved removing all VenuWorks signatures from the operations account, which will now require council approval for payments. The box office account, meanwhile, will be made in VenuWorks’ name and have their staff’s signatures.

That account will receive any ticket and facility revenue prior to the day of an event. Once the event takes place, VenuWorks will have access to the account to pay for the promoter and expenses. Any dollars left over after the event will then be transferred to the operations account.

The other recommendation Monday was to accept $137,616.12 reimbursement from VenuWorks,which includes $38,812 more than the total presented to the city by the state auditor. The additional money represents amounts not reviewed by the state, but are funds VenuWorks found to be questionable or didn’t meet company standards.

The Ames, Iowa-based management company discovered Webb’s misuse of funds in fall 2016. After leaving Bemidji, Webb took a similar position at another VenuWorks facility in Bloomington, Ill. There, he was fired by VenuWorks after the company found him misusing a company credit card. Illinois authorities have since charged Webb with theft of government money. Webb entered a not guilty plea in November.

Locally, the Beltrami County Sheriff’s Office is the agency investigating the matter. At Monday’s work session, City Attorney Alan Felix said the process with the case could be lengthy.

“We all understand that in the criminal court world, to convict somebody of a crime, you have to prove beyond a reasonable doubt,” Felix said. “They’re going to be looking at this information in a very critical perspective to see if there’s enough proof to be able to convict somebody.”

Before Monday’s meeting ended, VenuWorks President Steve Peters committed to reimbursing more money to the city, after a point was raised by Ward 3 Council member Ron Johnson. In his remarks, Johnson said that there was also $17,000 paid to Webb in 2015 and $18,000 paid to Webb in 2016 as part of company bonuses.

According to Peters, the bonuses to employees at the Sanford Center are an operating expense, which is from city funds.

“We’ll verify the amounts of those bonuses and we’ll give them back to the city, for those two years,” Peters said.

In response, Ward 5 Council member Nancy Erickson said that she’s pleased with the reimbursement for the bonuses, but added that she disagrees with using public dollars for the them.

“In the future, I don’t want to think that we are using public money for such,” Erickson said. “I’m not arguing against your bonus, I’m arguing against where it comes from.”

In April, the City Council approved a new five-year contract with VenuWorks that runs through 2024.

Matthew Liedke

Matthew Liedke is the city, county and state government reporter for the Bemidji Pioneer. He also covers business, politics and financial news.

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