LEWISTON — City officials are examining the finances of the Great Falls Balloon Festival after someone connected with the 25-year-old event raised concerns about its management.

Mell Hamlyn

Those concerns come just weeks after three of five festival board members abruptly quit. Two of those board members said this week they left because they were worried about the way the festival was being managed.

At the same time, a number of entertainers and businesses — including the festival’s insurer — say they had to chase longtime treasurer Mell Hamlyn for months over payment and only very recently got checks for work they did during the festival in August 2016.

Among the questions city officials want answered: Is the festival still a nonprofit?

Hamlyn — one of the two board members left — said there’s no reason to be concerned and called the allegations of mismanagement “unfounded.”

“We are confident the city’s review will put these accusations to rest,” she said.

The balloon festival spans Lewiston and Auburn and is one of the area’s biggest and most popular events, drawing tens of thousands of people to the Twin Cities during a single weekend in August. More than 30 nonprofits sell food at the festival or otherwise rely on it for a large chunk of their annual fundraising.

The festival is run by a board of volunteers and has long been considered a 501(c)(4), a nonprofit that is tax-exempt even though donations are not tax-deductible as they are with a 501(c)3.

The festival is funded through sponsorship, donations and the sale of souvenir items. It also makes some money on passenger balloon rides and the fees it sets on for-profit vendors who have booths at the event and on nonprofits that sell food or other items.

Someone connected to the balloon festival recently brought concerns about possible financial management problems to Lewiston Deputy City Administrator Phil Nadeau. The city lets the festival use Simard-Payne Memorial Park and spends about $16,000 each year on police patrols, Public Works assistance and other help.

“We’re going to do everything that we can to be fair and responsive to (the festival) and to the public because we’ve got taxpayer dollars tied up in this,” Nadeau said. “We’ve got a responsibility to everybody.”

Although the city helps a lot of nonprofit events, this is the first time it has examined a group’s finances.

“I’m not taking this lightly,” Nadeau said. “This isn’t just about Great Falls, this is about all of those people that are depending on this event. When people say stuff like that, I want to be serious about it. I just don’t want to be dismissive about it. We’re not rushing into anything. We’re going to be thoughtful about it; we’re going to be careful about it.”

Hamlyn gave the festival’s financial paperwork to Nadeau this week. He said he and the city’s finance director expect to complete their review by mid-April.

Nadeau said they will be looking at how the festival is “accounting for their information in their financials.” He declined to provide specific examples, though he did say they want to find out whether the festival is still a nonprofit.

According to the Maine Secretary of State’s Office, the state dissolved the festival as a nonprofit coporation three times since 2005. The first two times, in 2005 and 2014, the festival failed to file its annual report with the state. The last time, in 2015, it failed to update its contact information with the state.

The festival lost its nonprofit corporation status with the state from Sept. 10, 2015, to March 6, 2017. That means it was not registered during the 2016 balloon fest.

The spokeswoman for the Secretary of State’s Office said its not unusual for groups to lose and regain their registration, but they’re not supposed to do business in Maine without it.

Hamlyn — who works as an accountant and has been, according to state records, the festival’s treasurer since 2005 — said she only recently learned the festival wasn’t in compliance.

The festival’s nonprofit corporation was reinstated last week.

The festival’s tax-exempt status with the federal government is also in question. According to the IRS, the 501(c)(4) status was revoked in 2013 because it had not filed its paperwork for the previous three years, which was Hamlyn’s responsibility as treasurer. The IRS said it has received nothing from the festival since 2009.

The IRS said the festival’s tax-exempt status is still revoked.

Hamlyn said she’s filed the required documents every year and she emailed copies to the Sun Journal as proof. The copies were not dated or signed; Hamlyn said that’s because they were computer copies and only printed versions are signed and dated before being sent to the IRS.

She said she believes the IRS situation was caused by a problem with the festival’s identification number. However, the same ID number is listed on both the IRS Form 990s Hamlyn provided and the IRS’ revocation notice. The IRS also lists the festival’s current address.

Hamlyn said she spoke to the IRS this week and “I am told that what I have already sent in will resolve everything and we should be reinstated back to the revocation date without issue — with no lapse.”

‘I have emailed you several times’

A number of entertainers and businesses have also complained that they had to chase Hamlyn for payments that should have been sent six months ago.

In one series of emails to festival board members, including Hamlyn, a Maryland insurance agent started claiming in October that the festival owed $4,338 for its insurance. The emails continued through the winter, escalating in intensity as time went on.

“I have emailed you several times regarding the outstanding balance on the above — $4,338. As we have worked together for many years I have been most patient in waiting for payment. Please respond to me and let me know when the outstanding payment from August will be made — my company will soon move this to collections without response and payment from you,” Jennifer Zak, an assistant vice president at the Shannon & Luchs Insurance Agency, wrote to Hamlyn on Jan. 10.

Hamlyn said Tuesday that she mailed the insurance check in November, then learned in February that the check didn’t reach the insurance agency. She reissued that check last month, she said.

Zak could not be reached for comment Tuesday.

Mad Science of Maine and bands Farmhouse Project and Back Woods Road said they weren’t paid on time, either.

Jane Bernier, with Back Woods Road, said she and a mutual friend of Hamlyn’s knocked on Hamlyn’s door asking about payment a month or two after the festival. She got payment that day.

Tony Morin, with Farmhouse Project, said one of his band members had half a dozen conversations or so with a festival representative about the money they were owed, but to no avail. He said the band also tried Hamlyn but she didn’t respond. Morin finally asked another board member he knew for help. The band got its $200 two weeks ago.

Taryn Friedman, co-owner of Mad Science of Maine, said her children’s show was owed about $600 for festival work last August. She said the festival has consistently paid late over the past three years, but the time between event and payment keeps getting longer.

“We were waiting and waiting and waiting, and calling and calling, and a lot of times sending emails, sending invoices,” she said.

Friedman said Hamlyn told her after the festival that a check had been waiting for Mad Science to pick up at the event, but Friedman said Hamlyn “never communicates that it’s going to be there or where it’s going to be” beforehand.

Friedman said Hamlyn told her in January that she’d mail it right out.

“That didn’t happen,” Friedman said. “She said she had personal issues that arose that got in the way of her writing a check and putting it in the mail.”

Mad Science got its check two weeks ago.

“It almost makes me want to be like, yeah, we’re not coming back anymore,” Friedman said.

Hamlyn acknowledged that “some things may have been missed” and said that was because the board didn’t have enough members to do all of the work. She also said she discovered about a month ago that a handful of checks from the same check run had not been delivered, including the one to the insurance company and some of the entertainers. She replaced them all.

“The original check stub and the replacement check stub are attached to the bill,” she said. “So I don’t know.”

Hamlyn said she put in her own funds to keep the festival going for years, which means the festival also owes her money. She declined to say how much she put in or how much she’s owed.

In the IRS documents Hamlyn provided, one line asks whether the organization borrowed money from an officer, director or trustee, which includes the treasurer. In all of the documents, Hamlyn checked “no.”

She said Tuesday that’s because she accounted for the expense differently. She said that box would be checked “yes” for 2017.

The concerns over the balloon festival’s financial management come as the board faces its own upheaval. The three members who recently resigned declined to elaborate.

Hamlyn said the board just got three new members and others are interested in joining. She believes that will bring the festival needed help.

“The festival is as vibrant as ever and it would be a shame if unfounded allegations by someone like that would put a damper on it,” she said. “We’re looking forward to celebrating our 25th anniversary.”

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This story was edited on March 15, 2017, to remove a reference to a payment sent to Drew Desjardins, owner of Mr. Drew and His Animals Too. Desjardins was paid a month after the festival in 2015, not five to six months after as he originally stated. It was also edited to clarify the Secretary of State’s Office’s involvement with nonprofit corporations.

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