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Council majority to probe spending at Holiday Market

Niagara Falls Repoerter

May 08, 2012

By Frank Parlato Jr.

They may have thought it was over when they submitted their final report on April 30 to the city.    Apparently it is not.  
Global Spectrum made the final report for the Holiday Market - the outdoor vendors market on Old Falls street that operated last year from November 26 to December 31. 
 The Market was developed by Idaho developer, Mark Rivers with $450,000 of public money - $225,000 from the city and $225,000 from the state through USA Niagara. 
 Mr. Rivers was supposed to match the $450,000 of public money with an equal amount of private money or in-kind goods and services to create a $900,000 market. 
Global Spectrum is an international management company that locally operates the Niagara Falls Conference Center and was assigned to monitor the expenditure of public money for the Holiday Market. 
Now there seems to be a problem. 
A majority on the Niagara Falls City Council feel the report made for Mr. Rivers’ is “totally insufficient,” and “vague.”  
Council Chairman Sam Fruscione told the Niagara Falls Reporter that the Holiday Market’s final report “was a mere outline, with a whole bunch of fluff. …I need to see invoices and bank statements. Proof of expenses. Receipts. I want the actual books. What I have instead is a summary and based on that summary, they must have assumed the council are dummies. This is what I call a make-believe audit. It’s like the Wizard of Oz. Where is the man behind the curtain?” 
 Mr. Fruscione is not alone in suspecting the sufficiency of the report, and is joined by two of his council colleagues, Robert Anderson and Glenn Choolokian. 
 Mr. Choolokian told the Reporter, “I think it is unbelievable that they said they spent over $700,000 on an event like that…. There is no way there was $700,000 spent down there. There is no way this was a $700,000 market. 
“I want proof that it was spent. I want to see every nickel. I want proof of how much money came in and how much was donated in in-kind services. 
 “This is a very poor report for determining what happened to $450,000 of the public’s money.” 
 Mr. Fruscione said he was troubled by the lack of receipts for tens of thousand of dollars Mr. Rivers or his company got in reimbursements. 
 “We need the real ledger. Anybody can make up a receipt on a computer. I want proof of every reimbursement.” 
 Council Member Robert Anderson said he wondered how $700,000 could have been invested into what was supposed to be a successful market and the city got none of its money back. 
“They made nothing?’ he said, “I’m pretty sure we took a nose dive. It was not an investment at all. It was like going to the race track.” 
Referring to the shabby, undersized and underdeveloped appearance of the Market, he added, “We got nothing, nothing but a joke.” 
 Mr. Fruscione was equally blunt: “I think we were defrauded on the market we got. The city and state put up the money and Rivers disappeared. He did not deliver what he promised. It was a solid rip off. Nothing was done right 
“$144,000 was spent on the ice skating rink and he took in just $6,000. That’s as stupid as it comes. Some vendors were not paid. The state paid an additional $32,000 to the Buffalo News meaning the public investment was close to $500,000 and nothing to show.” 
 Gerry Genova, head of the tourism advisory board, was with Mr. Fruscione during the interview and agreed to be interviewed also. 
 He said that his board had initially voted against the market and that Mr. Rivers set up some “make believe businesses” he said would be at the market to make it look like he had actual vendors in order to persuade the city to give him money. 
“Mr. Rivers met those first critical hurdles with make believe businesses and you could tell: specialty cookies and pretzels etc. So he could say, ‘we have vendors’” Mr. Genova said. “Something is not right here and that’s the next phase here. ‘Are we the patsy?”

As early as March 2011, the Holiday Market came on the public horizon. 
 Reported in local newspapers as, “A European-style holiday market along Old Falls Street in downtown Niagara Falls,” Mr. Rivers, president and chief executive officer of Brix and Co. of Idaho, emerged to partner with the city and state in a total investment of “between $900,000 and $1 million,” according to the Niagara Gazette. 
It was billed as “an indoor-outdoor market that would feature 80 vendors offering regional, national and international goods and food and a regular schedule of entertainment and events. An estimate provided to the city council (by Mr. Rivers) suggests the proposed market could draw as many as 250,000 people to Old Falls Street by year’s end,” according to the Gazette. 
Mr. Rivers informed city lawmakers that his company would run the event as a nonprofit operation. He said he would contribute his efforts free of charge. 
 With questions swirling, the Reporter contacted Ryan Coate of Global Spectrum who supervised the report. Mr. Coate said Global Spectrum, the escrow agent for Mr. River’s company, has nothing to hide. 
 “The report was audited by Freed Maxick CPA of Buffalo NY.,” he said. “They went through all the auditing tests that are proper procedures. Everything was done legitimately. Everything has passed the test of the CPA firm. The council is more than welcome to go through it with Freed Maxick at the city’s expense.” 
The formal agreement states that Global Spectrum will provide the city, USA Niagara and Brix with a “full and complete” accounting of the event and that Mr. Rivers’ firm will assist Global in the accounting and providing all relevant information. 
 Last week, Niagara Falls Mayor Paul Dyster told the media that he has no concerns about the handling of dollars — public or private — by Mr. Rivers or any of the market organizers. 
 Mayor Dyster said he believes Mr. Rivers’ firm did a quality job of both organizing and running the market under the circumstances. 
 Still the report leaves many questions unanswered. It does not mention that Mr. Rivers was himself a vendor. He operated seven of the 30 booths. 
 Were his employees paid by taxpayers? Was his inventory paid by taxpayers? Who got the money from the sale of these products? 
 USA Niagara President Chris Schoepflin said the project was expected to create 300 part-time jobs, $30,000 in sales tax for the city, $35,000 to $50,000 in added parking revenue, and $3,000 more in bed tax from increased hotel stays 
 In the report there is no proof of any of this. 
The market in reality was four concerts, an ice-skating rink, 30 wooden booths, not unlike tool sheds and several tents for vendors, a 21-foot-tall Christmas tree, some decorations and scattered events – the latter mostly paid by sponsors. 
 One interesting detail – in terms of what was promised and what was delivered - is that while Mr. Rivers said 250,000 people would likely come to the market, the Global report places the figure at 75,000. 
 Another promise was one where Mr. Rivers, repeatedly, including in a written email to the board  members of USA Niagara, said that the market will “include 80 vendors.” 
 There were only 35, of which seven were operated by Mr. Rivers himself. 
 Looking further into the report, one learns that the cost of the 30 vendor’s booths was around $100,000. 
The Reporter contacted Dominic Cortese, of Cortese Brothers, who built the sheds. He confirmed that the price of $100,000 was accurate. 
 The Reporter contacted John Echel, Brix Niagara's lead operational and logistics person for the market to get a handle on other costs. 
 When contacted by the Reporter, Mr. Echel said, “I did not get paid in full for what I worked. I was paid the first couple of months and the last payment I had to settle for substantially less than the amount I billed for…. Mark Rivers shorted me….I think he was in over his head.” 
The Global report also reads that “Advertising was critical to raising awareness of the Market and driving traffic to specific events… a number of promotions/giveaways... were successfully executed with the media partners.” 
 One of these media partners Mr. Rivers utilized was Western New York Family Magazine. According to Michele Miller, owner, publisher and editor of the magazine, founded in 1984, she said was stiffed on a bill owed by Mr. Rivers to the tune of more than $1,000. 
Ms. Miller told the Reporter, “We assumed Mr. Rivers word was good. We tried every way possible to politely request our unpaid bill for advertising be paid. Mr. Rivers ignored us. I just sent the bill to a collection agency…  I am sure the entire community would be upset. I mean this gent had to know his reputation was going to ruined one way or another if he does not pay his bills.” 
Moving into the category of bizarre and foolish decisions, the report speaks of the concerts. 
 “There was no profit earned from any of the concerts,” the Global report said “The concerts were designed to bring awareness of the event, provide a unique holiday experience, generate foot traffic and elevate the stature of downtown Niagara Falls as a venue for world-class entertainment.… The concerts did not perform well and were a large expense of the overall market.... Global Spectrum is hopeful that this series of concerts has allowed the opportunity to raise awareness to the venue as a concert destination in Niagara Falls, New York.  
Of course, this is odd. Niagara Falls is to be a “concert destination,” but concerts here “do not perform well.” 
 Here are the Facts: The Canadian Tenors ticket sales grossed $9,334.85. According to the report, the act cost $40,000, plus production. 
Aaron Neville grossed $9,240.55. He cost $25,000. 
 BPO grossed $7,062.94 and cost $17,500.  
Elisabeth Von Trap grossed $2,817.04. She cost $3,500 plus production, 
$86,000 was allegedly spent on acts. Sales were less than $30,000. 
 But this was nothing compared to the ice skating rink. The alleged cost of the rink: $146.448. 
 During the event, the rink attracted only 366 paying customers for a total income of $6,463. 
Someone decided to spend $144,448 on an ice skating rink for a 37 day event and it lost $138,000. 
 Where is the rink now?

 Perhaps most telling is the income generated by paying customers.

Here is the list:

Vendor Rental: $17,238.50 
Food show Rental:  $11,350.00 
Concert Income: $48,630.38 
Consignment sales:    $6,930,00 
Ice Rink Revenue:  $6,463.00

The expenses were: 
Ice Rink:  $145,106; Concerts:   $113,220; Advertising/Marketing:   $103,770; Booth Construction:  $103,280; Salaries:  $100,677; Tents       $61,182; Food Show Expenses $22,833; Insurance: $21,000; Landscaping:  $19,585; Travel: $15,100; Part-time salaries:  $13,495; Retail & Ice  Rink: $10,222; Propane: $8,342; Decorations:   $7,122; and various smaller items totaling another $22,000. 
The Holiday Market cost $782,423 and brought in $83,682, a business that lost $698,741 in 37 days.

The report raises many more questions. How much money was really spent? One item, $61,000 for tents seems high. Did the ice rink really cost $144,000? Who got salaries of $108,677? 
There is no breakout as to what vendors showed up. There are no figures about who made money selling what goods. 
It appears there was no mechanism in place to calculate attendance. 
 Were there the 300 temporary jobs Mr. Shoeplin said would be created? 
 Where were the media schedules, the proof of ads running and at what costs? 
Of course, this story would not be complete, if we did not speak to Mr. Rivers. 
I asked him about WNY family magazine. 
 He said, “they either have or will be paid.” 
 He scolded next. 
 “You could not pick me out of a police lineup yet you character assassinate me every chance… You do not have journalistic integrity” 
 I asked, “Why did you get involved in this project at a not for profit level?” 
 “I wanted to try to do something good and meaningful in the community,” he said. 
 Why? 
 “Because some people actually care about their community. Some people care about doing good. Some people are actually interested in trying to make places better. I know you like to tear everything down by being negative and being a liar, being untruthful and being a horrible reporter but some of us actually like to try to do good in our community.” 
Is Niagara Falls your community? 
“I’m a Western New York guy.” 
Was the market a success? 
“Sure it was. By the standard that was drafted for it, it was of course.” 
Did you personally pocket any money? 
“I never received any money.... The money was placed into a trust account that Global managed for the entirety of the market. No one ever wrote a check to me except for some reimbursements on behalf of the market that I made in advance.” 
Is there any missing money? 
 “Read the audit. There is no missing money. I am sure you will go out and lie.  There is more accounting and auditing of this project than most public projects.... You’re a liar you’re a negative Nelly. You serve no societal purpose. Why for a second should I talk to you?...  I have no reason to believe that you have it in your DNA to write a fair and balanced story…. I did invest personal money and I did invest an extraordinary amount of personal time on this.” 
The promises you made were a lot different than what the public actually got. 
 “There were a number of projections and targets that were made. Part of the challenge that we had …  is that the council did not decide to make its final approval of the project until October leaving us with about 90 days to put together a project that should  have taken nine months or more.” 
 So what was the value of this project? 
 “It brought thousand of people into the heart of downtown at a time of year when there are usually only dozens.  It generated commerce. It shined a light on Niagara Falls as a holiday destination. It brought families down to a safe and secure environment, proved that downtown Niagara Falls after dark in the winter can be a safe pedestrian place; it generated activity; it generated business; it supported existing business.” 
 Did you make a profit? 
 “No. I wasn’t paid a nickel. I spent thousand of dollars out of my own pocket and hundred so hours of my time and my staff time.” 
 Was it pure altruism? 
 “I always felt Niagara Falls could do better and I would love to be a part of its renaissance…  If we could build something great out of this maybe there would be a business opportunity of some kind.” 
Mr. Fruscione said he, Mr. Anderson and Mr. Choolokian will be meeting with corporation counsel, Craig Johnson to determine how to pursue a vigorous legal probe of this matter. 
He also said he intends to meet with Mr. Coate of Global Spectrum. 
The Reporter will be following this matter closely in the coming weeks.

 

 

 
 
 
  Copyright © 2008 Frank Parlato Jr.