The head of the nonprofit that runs the historic Carolina Theatre resigned Friday, one month after announcing the organization was more than $1 million in debt.
Bob Nocek joined the Carolina Theatre of Durham staff as vice president in 2009 and became president in 2010.
“Under Bob’s leadership, the Carolina Theatre has been recognized for its creativity and innovation, and has played a key role in the renaissance of downtown Durham,” board Chairman Scott Harmon said in a statement. “We are grateful for Bob’s service to the Carolina Theatre, and for helping us achieve new levels of attendance and diversity in programming. We wish him well in his new pursuits.”
The board has named Durham businessman and philanthropist Dan Berman interim president and CEO.
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The city pays Carolina Theatre of Durham $654,000 a year to run the city-owned complex on Morgan Street. In 2014, it approved a 10-year agreement under which the nonprofit would continue running the complex through 2024.
The fate of that contract, which has performance measures, is unclear.
The next step is a meeting between city officials and the nonprofit’s finance committee Feb. 1, City Manager Tom Bonfield said Thursday.
Nocek was not scheduled to be at that meeting, Bonfield said.
In a joint interview last month, Nocek and Harmon announced the nonprofit had run up an additional $800,000 in debt since July 2013, during a time when the board thought the theater was making a profit.
Previous information released by the nonprofit had indicated it ended the 2013 and 2014 fiscal years with small surpluses and cut its long-term debt to $224,909.
The leaders blamed the additional deficit on faulty accounting.
They said they became aware of the errors in May 2015 when the state put a levy on the organization’s bank account seeking unpaid sales taxes on ticket sales. The nonprofit owed about $155,000, which Nocek said it paid by July.
A subsequent examination of the financial data by an accounting firm and management found the overall deficit and indicated the losses were due to “errors and omissions in our financial reporting,” the men said.
There was no intentional misrepresentation or fraud, but the finance director was no longer working for the organization, they said.
Efforts to reach Nocek for this story were unsuccessful Friday.
In a telephone interview, Harmon said he could not comment on what more the nonprofit has learned about the financial problems since he and Nocek spoke to reporters last month.
He did say “the conversations (about Nocek’s resigning) occurred this week.” He would not say whether Nocek, whose contract ran through June 2019, would receive severance.
State tax collection procedures suggest the nonprofit, which reported $3.9 million in revenue in fiscal 2013-14, should have known it had fallen behind in paying its taxes several months before Nocek and Harmon said they learned of the problem.
The N.C. Department of Revenue sends a delinquent notice roughly 45 days after the return is due and has not been received, spokesman Trevor Johnson said.
According to state records, Carolina Theatre of Durham started owing tax money by October 2014, when it failed to pay $25,966 and was assessed a penalty and interest, for a total bill of $35,616.
By February 2015, the nonprofit had failed to pay the state $120,264 in taxes and with penalties and interest owed $155,510, the records show.
Johnson said he could not discuss the Carolina Theatre and could not say when or whom the department notified the nonprofit was delinquent.
In the interview last month, Nocek and Harmon acknowledged the theater’s offerings had grown fast.
Nocek expanded concerts and other live performances in the 1,000-seat Fletcher Hall from about 60 events per year to over 100, added weekend matinees in the cinemas and increased rental activity.
Nocek worked 50 hours a week and was paid a salary of $89,341 and other compensation of $9,658, according to the organization’s federal tax records.
But while Harmon said in the December interview that Nocek’s job was safe, he also said: “There were things we should have seen along the way. Bob should have known this was going on, and the finance committee of the board should have known this was going on.”
To address short-term cash-flow shortages, the board has asked the city to advance the organization about $75,000 from each of the remaining eight years on the management contract – or $600,000.
Moving forward, Nocek has said, the nonprofit plans to pay down the debt by achieving long-term profitability. It has cut full-time staff from 22 to 18 and plans to scale back live events to between 60 and 70 per year and take fewer programming risks.
Berman, the new interim CEO, has served on numerous boards, including the Full Frame Documentary Film Festival, for which he served as board chair, and Center for Documentary Studies at Duke University, for which he is finance chair.
He will assume responsibility for all financial, operational and programming activities at the theater beginning Monday.
Berman will not be paid, Harmon said Friday.
“His purpose and desire is to help the theater,” Harmon said. “The theater is his favorite place in Durham.”
Staff writer Virginia Bridges contributed to this story.
About new interim CEO
Dan Berman was the founder and former president of the MainQuad Group, an assembly of businesses that was engaged in the acquisition and operation of radio stations throughout North Carolina and Virginia prior to the stations’ sale to private equity groups. Before becoming a broadcaster, Berman graduated from Duke Law School. He received his undergraduate degree from Duke University and a Master in Fine Arts from the University of Southern California School of Cinema and Television.