For 15 years, the New Orleans-based nonprofit Tipitina’s Foundation has donated thousands of instruments to school band programs and provided scores of musicians with job training, a legacy of community aid begun by Roland Von Kurnatowski, the longtime Tipitina’s owner and the nonprofit's founder.
But an examination of the foundation’s financial dealings and interviews with former board members, musicians and business associates of Von Kurnatowski suggest that the work of supporting New Orleans’ music scene has been closely intertwined with the business interests of the nonprofit’s founder.
Von Kurnatowski operated Tipitina’s Foundation with little or no oversight since he founded it in 2003 as the nonprofit arm of the famed Uptown music club of the same name, according to former board members. Over that time, he engaged in a host of transactions between the foundation and for-profit entities he controlled, documents show.
For instance, three buildings owned by the foundation in Shreveport were transferred, for free, to for-profit entities that Von Kurnatowski owned or controlled, before they were developed into luxury lofts and retail space.
He borrowed over $500,000 in the nonprofit’s name and paid most of it to a construction company he owned for work on the buildings. Some of the work, according to the documents, hadn’t yet been completed at the time. He also rented out space in buildings he owned to the nonprofit, donating large portions of the lease and utilities but charging for others, according to the documents.
The board never received written reports about the foundation’s finances or operations, according to two longtime board members, and the foundation has failed to provide publicly available audited financial reports since 2015. The Louisiana Legislative Auditor's Office said the foundation is in noncompliance for failing to timely file its 2017 financials.
“It didn’t seem like he was running it right as a true nonprofit, but he kind of ran it as his business,” said Jeffrey Goldring, a New Orleans businessman and part-owner of the Sazerac Co. and Crescent Crown Distributing, who served as a foundation board member until 2014.
“We’ve been friends with Roland and Mary for many, many years," he said, referring to Von Kurnatowski and his wife. "But it didn’t really occur to me that I’m an active member of this foundation — because I’m not.”
The revelations related to the Tipitina’s Foundation come amid a series of potential missteps by Von Kurnatowski that have raised questions about his businesses and other interests.
On Friday, members of the local funk band Galactic reached a deal to purchase Tipitina's, the famed New Orleans music venue that has been affiliated with the nonprofit that bears its name.
Tipitina’s, one of New Orleans’ flagship music clubs, has new owners: the five members of the local funk band Galactic.
In recent days, multiple performers have said that under Von Kurnatowski’s ownership the club failed to pay them, only relenting after angry demands and threats of legal action.
In two separate legal entanglements that appear unrelated to the foundation, Von Kurnatowski is also accused of defaulting on about $180,000 in loans from Hancock Whitney Bank and reneging on a debt of nearly $1 million owed to a real estate firm known as Riverlake New Orleans Properties LLC.
Riverlake is owned by Von Kurnatowski’s sister, Joan Hooper, and her two sons, Christian and Andre Hooper.
He is also facing federal and state lawsuits in which multiple people contend that they lost hundreds of thousands of dollars investing in Bond Fund One, or BF-1, a fund pitched by Von Kurnatowski to invest in relatively safe U.S. Treasury bonds.
In October, a retired Jesuit priest, Antone Lynch, filed a federal lawsuit against Von Kurnatowski alleging that the fund was an illegal “Ponzi scheme” and demanding that his money be returned.
Four other investors, including retired WDSU-TV meteorologist Dan Milham and his wife, media consultant Paula Pendarvis-Milham, filed a lawsuit in Civil District Court in July, alleging they have not been able to access hundreds of thousands of dollars invested in the fund despite repeatedly asking for their money back.
Two recent lawsuits filed against Roland Von Kurnatowski, an owner of Tipitina's and the Orpheum Theater, accuse the New Orleans businessman o…
Other investors have contacted The Advocate in recent weeks alleging they too may have been bilked.
Taken together, the mounting allegations have exposed troubles in a business empire built by Von Kurnatowski, a New Orleans native who bought and renovated the famed Napoleon Avenue music club and is a well-connected figure in the city’s business and social circles.
"Over the life of Tipitina’s Foundation, I have donated millions of dollars to the foundation," said Von Kurnatowski in an emailed statement. He has also provided it free rent and utilities, he said, and has forgiven debts owed to him for these and other expenses, and plans to continue to do so in the future.
He said that financial statements are posted on Tipitina's website "to underscore our transparency."
Last month, he said that the recent lawsuits were a misunderstanding and that he was working to settle the claims, some of which involve relatives and longtime friends.
Facing a raft of accusations that he defrauded investors of hundreds of thousands and perhaps millions of dollars, real estate developer and T…
A phantom board
In recent interviews, two of the nonprofit's former board members said that for over a decade, they never participated in a board meeting, nor were they asked to.
They also said they provided no oversight of the nonprofit's finances, programming or fundraising efforts, leaving most of the decision-making in the hands of Von Kurnatowski, whom they saw as a friend and an upstanding member of the community.
“I’ve never seen any minutes. I’ve never had any involvement with the board at any level. I just agreed to serve,” said Doug Thornton, a board member for more than a decade until he asked to be removed last month after being contacted by a reporter about his involvement.
Thornton, the senior vice president of SMG, which manages the Superdome, agreed to serve on the board shortly before Hurricane Katrina. But after the storm, his focus was largely on the Superdome’s massive recovery project.
“I agreed to basically lend my name and that was it,” he said.
Goldring said that over the years, his family’s philanthropic arm, the Goldring Family Foundation, donated around $200,000 to the Tipitina’s Foundation.
“They were putting instruments back in the hands of musicians who had lost instruments during Katrina, and so we stepped up and supported it,” he said.
But despite being on the board, Goldring was never invited to any board meetings. After more than a decade, Von Kurnatowski asked to replace him with Dr. Eric George, a business partner. That was fine with Goldring, who disagreed with the board’s approach to oversight.
“I would have coffee or lunch with Roland from time to time, and he would talk about what was going on in generalities, but I never saw a financial statement,” he said.
By 2016, the foundation’s board had six members. In addition to Thornton and George, the roster included Roland and his wife, Mary Von Kurnatowski, and Dean Dupuy, a lobbyist for the foundation. Doug Kilton, a banking industry veteran who has since moved to Houston, was also listed. Kilton did not return a message Friday. Dupuy died earlier this year.
Through a spokesman, George declined multiple interview requests. Instead, his New Orleans-based investment firm, ERG Enterprises, released a statement saying: “Von Kurnatowski and George no longer have any shared interests, nor business or personal connections.”
Nonprofits are required to file certain information about their financial dealings on an annual basis. But the Tipitina’s Foundation’s audited financial report for 2017 was due March 31 and has yet to be filed. It does not appear that the organization provided a 2016 audited financial report either.
Meanwhile, a review of the foundation’s financial statements for 2014 and 2015, the most recent available, describe a series of transactions that raise questions as to whether Von Kurnatowski benefited personally from the nonprofit’s work.
The documents show that Tipitina’s paid more than $100,000 for rent in 2015 for property owned by Von Kurnatowski.
The nonprofit leased space in New Orleans as well as Alexandria, Shreveport, Lake Charles and Monroe, according to its 2015 financial statement. Rent totaled $216,200 that year, and Von Kurnatowski donated nearly half. As of the end of 2015, though, the nonprofit still owed him $61,378.
The financial statements also note three buildings in downtown Shreveport that were donated to the foundation prior to 2012. According to the foundation, they were in bad shape. The owners at the time said they were eager to see someone with the resources restore them and put them into use.
Tipitina’s Foundation took out nearly $900,000 in loans on the three buildings on Texas Street. That tally includes a $511,000 loan that was mostly used to pay Fountainbleau Construction LLC, a company owned by Von Kurnatowski, to cover construction costs, according to the financial documents. The documents state that some of the money paid was for work that hadn't yet been completed.
The buildings at 616, 620 and 624 Texas St. weren’t developed by the Tipitina’s Foundation. They also weren't sold to another buyer.
Instead, in 2013 and 2014, the foundation controlled by Von Kurnatowski transferred the buildings, for free, to Studio Network Shreveport, a limited-liability company controlled by Von Kurnatowski and George.
Studio Network agreed to pay off the two loans, though they still appeared as liabilities on the foundation’s financial statements at the end of 2015.
One of the buildings, a former Sears department store, has since been renovated by the developers into a mixed-use building that includes trendy loft apartments and ground-floor commercial space.
“Be the talk of Shreveport with this Penthouse offering. With a patio, you’ll have the best view of lovely downtown Shreveport,” the development, called Lofts @ 624, boasts on its website.
The units have been in high demand since the building opened last year, with monthly rents ranging from roughly $700 for studios to $1,800 for the top-floor penthouse.
“The project, even though it’s taken longer than anyone would’ve liked, it’s been wildly successful,” said Liz Swaine, executive director of Shreveport’s Downtown Development Authority.
“So from that perspective, we thought we had a good partner in him and again, he has followed through with the things he said he was going to do,” she said of Von Kurnatowski.
Von Kurnatowski said that he transferred the Shreveport properties because of $400,000 in asbestos abatement costs that were "at that point a burden on the foundation." He didn't try to find other buyers because "it was presumably marketed for 40 years while it sat vacant and dilapidated."
He said that the property is now contributing to the local economy and the foundation "is now in a position to enjoy a special class of ownership."
However, there is no equity position in any property listed as an asset of the foundation in audited financial statements from 2015, which is after the transfer took place.
It isn't clear what, if any, equity positions the foundation currently holds in any Shreveport properties.
According to his statement, George got involved in the development in 2013 “as a real estate investment in the growing Shreveport market” and sold his stake in January of this year.
Experts on nonprofit governance, as well as guidelines supplied by the Internal Revenue Service, indicate that the related-party transactions undertaken by Von Kurnatowski, along with such a hands-off approach by board members, could raise questions about whom the foundation is really benefiting.
Max Stephenson Jr., director of the Virginia Tech Institute for Policy and Governance and an expert on nonprofit ethics, said nonprofit boards are obligated to serve as the “legal, ethical, fiduciary and operational steward of the assets of the foundation.”
He said nonprofits are typically governed by a charter that outlines issues like how often the board meets, how members are added and how long they serve. Not all nonprofits maintain the highest standards, or meet as often as civic watchdogs would prefer, he added. But having years pass without the board meeting is well beyond the norm.
In addition, IRS rules stipulate that nonprofits like the Tipitina’s Foundation cannot be used to benefit a private interest, like the organization’s founder or family, and it is the board’s responsibility to ensure that doesn't occur.
Since the board seemingly didn’t sign off on any of the related-party transactions, they raise questions, at least, of potential self-dealing, according to Stephenson and other observers.
Thornton, who volunteers on several boards, said he’s now concerned that his name may have been used to give the public a belief that the foundation was being watched by responsible people.
“I don’t know how those decisions were made,” he said. “I guess it troubles me a little bit … if these were things that were done without proper notice, or without the advice of the members.”
As the nonprofit’s finances have become strained, Von Kurnatowski's standing in the city's music community has suffered. A number of bands have had trouble getting paid for performances at either Tipitina’s or the Orpheum Theater dating back to at least late 2017.
With the sale of Tipitina’s, Von Kurnatowski appears to be on his way out of the music business. In October, he transferred his stake in the Orpheum to George, according to Orleans Parish land records. The two purchased the theater together for $1.5 million in 2014 and spent $13 million to restore it.
The legendary local band the Radiators’ association with Tipitina’s dates back more than 30 years. But the band endured three weeks of delays and excuses before finally being paid for three reunion concerts at Tipitina’s in January, even though tickets had sold out well in advance.
“That’s not the way to do business,” Radiators bassist Reggie Scanlan said before the sale of Tipitina’s last week. “I didn’t want to ever play at Tipitina’s again. This is not the Tipitina’s we were associated with or that musicians built up over the years. Now it’s just another building block in some guy’s real estate empire.”
Advocate staff writers Keith Spera, Gordon Russell and Jerry DiColo contributed to this report.