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Judgment for theaters, but money lost

Posted 11/03/15 (Tue)

Judgment for theaters, but money lost

By Cecile Krimm
The Dakota Theatre of Crosby is one of three victims named in a summary judgment of over $100,000 against a Massachusetts contractor who failed to deliver digital projector systems for which he accepted payment.
The judgment came as good news to Meadowlark Arts Council officers, even though they may never recover the funds lost -- about $27,000 in Meadowlark’s case.
“I’d still like to see him go to jail,” said Rosemary Tanberg, treasurer of the non-profit arts council, which owns the theater.
But at the very least, Brian Vita of Cinema Service and Supply, LLC, won’t be able to do any more business in North Dakota.
“Mr. Vita took advantage of our small community theaters and he will be accountable,” said North Dakota Attorney General Wayne Stenehjem, who noted the fraud diverted funds raised from local donors to pay Vita’s own business debts. 
The Dakota Theatre was the first of Vita’s victims, having contracted with him in September 2012 to install a new digital projection system. 
At that time, movie companies were threatening to stop delivering film to small towns by the end of the year and Dakota Theatre’s management group acted swiftly to meet the deadline. 
A number of fundraisers were held the spring and summer leading up to the purchase. They sold movie posters for cash, conducted coin drives at the elementary school and received several sizable gifts from benefactors.
“The money he fraudulently took from the theater was really the community’s money,” said Chrissy Running, a member of the theater’s management board.
Vita had serviced the show hall’s equipment for years, so his request for a down payment of half the $72,000 cost was not questioned. He promised delivery of the new equipment the following month, but it never arrived.
Three months later, the theater board requested a refund so they could purchase the equipment elsewhere.
“We had to take out a loan in order to go through a different company,” said Holly Anderson, arts council president, when Vita returned only about $7,000.
Over the course of the nearly three year saga, two attorneys with local roots assisted the arts council at no charge -- Levi Andrist and Seth Thompson.
The arts council obtained a judgment, with Vita agreeing to pay $1,000 a month until the balance was paid off, but after one payment, no more money was forthcoming.
“Our lawyers contacted the attorney general, so it was really pretty involved,” said Anderson.
But even as Meadowlark fought for the return of its money, Vita was taking payments from two more theaters.
“He was basically robbing Peter to pay Paul,” said Tanberg.
According to the civil judgment, Vita obtained $30,000 from a Park River theater group in November 2013 -- a year after Meadowlark was left hanging.
The following January, the IRS froze Vita’s assets and the business went bankrupt.
Four months after that, Vita  accepted $47,000 from a theater group in Grafton.
“Vita did not disclose that he was experiencing financial difficulties, and continued to accept payments even after he filed bankruptcy under his business name and the IRS had frozen his business accounts,” according to the attorney general’s release.
Stenehjem directed investigators to initiate a consumer fraud legal action and the court imposed a ban preventing Vita from operating in North Dakota for at least five years and until all monies are repaid to the victims. 
However, according to Parrell Grossman, director of the consumer protection division, Vita does not appear to have assets to pay the restitution and likely will never be allowed to work in North Dakota again.
For Tanberg, an accountant, that’s small comfort. She worries Vita could still victimize others using a different business name or operating in another state.
“You get to the point you can’t trust anybody,” she said, even someone you’ve done business with for years.
She said it’s a good warning to everyone to do their due diligence. Even businesses that are familiar and have a long term association may become financially troubled, she said, particularly in the oil patch.
She recommends doing a credit check on any customer with whom you have significant business dealings.
“Things change,” she said, and you don’t want to be left holding the bag. 
 Said Running, “I realize that getting a civil judgment on him doesn’t get us the money back right away, but it’s a step in the right direction.”
Luckily for the Dakota Theatre, a significant uptick in patronage due to the oil boom helped pay off the loan in short order, but the groups to the east may have a harder time.
“These small nonprofit organizations fight for every dollar possible to provide movie entertainment options for their local citizens, and his actions are very damaging. When Vita failed to meet his commitments, these organizations were devastated and were scrambling to try and replace the funding and continue their operations,” Stenehjem said.