Dallas museum boss hasn't repaid loan

Jeremy Strick

Dallas museum boss hasn't repaid loan
10:14 AM Mon, Apr 20, 2009
Brooks Egerton/Reporter

Non-profit groups around the nation have made questionable loans to their executives, an Internal Revenue Service investigation is finding.

IRS officials won't name targets. But they say they're focusing on loans over $100,000 -- and are troubled by "loans with no real terms for repayment or loans where there are terms for repayment but no follow-up if the repayment is not made."

The Dallas Morning News reported in January on a local arts exec who got a loan of more than $500,000: Jeremy Strick (right), who recently became director of the Nasher Sculpture Center.

The lender was his previous employer, the Museum of Contemporary Art in Los Angeles. A written contract required him to repay any balance when his employment ended.

But Strick -- who quit his MOCA job under pressure in December, as the museum's finances crumbled -- now says he didn't meet the contract's terms. "When I left, we changed that," he told me.

Strick said that under the new deal, he owes the money when he sells a house that the loan helped him buy.

Good luck with that. Southern California has suffered some of the nation's steepest declines in housing prices.

MOCA spokeswoman Lyn Winter would not answer my questions about the deal, saying that Strick's employment agreement was confidential. I learned of the loan by reading to the bottom of the museum's IRS filings, which are public for many tax-exempt organizations.

Winter did say that the IRS has not contacted MOCA as part of its investigation.

Strick said he wouldn't advise other non-profits to go down the road MOCA went with him.

"Ideally the museum would own the house" and provide it to the chief executive, he said. "I think that's better and easier for all parties."

Strick also said housing loans are common in the museum world. That may well be true. There have been plenty of reports in recent years about nominally non-profit institutions rewarding executives handsomely.

I checked the IRS filings of many Dallas-area museums, arts groups and other non-profits for insider loans. The only one I found was at Texas Ballet Theater, which provided Artistic Director Ben Stevenson (right) about $41,000 for a down payment and closing costs on a house.

The loan has no repayment schedule. It becomes due in full, plus 5.32 percent interest, when Stevenson dies, sells the house or goes to work for a competitor.

Texas Ballet Theater nearly folded last year after a series of questionable financial moves, as my story in The Dallas Morning News showed yesterday.

Ballet officials say they're now in strong financial shape and defend the loan as a way to help an underpaid employee. They pay Stevenson about $138,500 a year, including the value of a car lease.

Federal law bars most publicly traded for-profit businesses from making insider loans (banks are a big exception), yet generally allows non-profits to make them.

However, the government can tax payments if it thinks a non-profit is being overly generous to an executive. In extreme cases, it can revoke a group's tax-exempt status.

And, as of this year's tax filings, the IRS is requiring all non-profits to reveal more about all sorts of spending practices that benefit insiders.

Some states forbid charities from making insider loans. Others limit the practice -- Texas, for example, allows loans to top staffers, but not to members of the board of directors.