FBI, IRS Investigate Grand Avenue Business Association for embezzlement

Grand+Avenue+at+night.+Photo+by+Kori+Suzuki+%2721.
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FBI, IRS Investigate Grand Avenue Business Association for embezzlement

Grand Avenue at night. Photo by Kori Suzuki '21.

Grand Avenue at night. Photo by Kori Suzuki '21.

Grand Avenue at night. Photo by Kori Suzuki '21.

Grand Avenue at night. Photo by Kori Suzuki '21.

Lindsay Weber, Web Editor

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Nobody saw it coming when news broke that Grand Old Day — the popular street festival celebrating Grand Avenue businesses — was cancelled in March 2019 due to a lack of funds. Even members of the Grand Avenue Business Association (GABA), the non-profit organization that hosts the annual event, were taken aback.

“I had no idea [about GABA’s financial struggles] until that point,” general manager of Jamba Juice on Grand avenue Maddie Scott said. Jamba Juice on Grand is a premier member of GABA — meaning they pay $1,250 in dues to GABA each year for premium benefits like priority website and flyer listings.

Macalester College, too, is a premier member of GABA, although the school is not particularly involved with the association.

“We support [GABA] because it’s Grand Avenue, and it supports Grand Avenue as a whole,” Director of the Macalester High Winds Fund Deanna Seppanen said. “We pay a higher membership due because we can.”

But following an outpouring of community support and donations for the beloved celebration, Grand Old Day was saved. The event was an unequivocal success, attracting over $200,000 to the St. Paul business district and making $88,444 in profit, according to the Pioneer Press.

However, GABA’s troubles didn’t end with the revival of their signature event. According to the Pioneer Press, the St. Paul Police Department (SPPD) reached out to GABA just after the initial cancellation of Grand Old Day to audit their financials. GABA complied with their requests, and SPPD found possible evidence of financial mismanagement, prompting a formal investigation.

The probe into GABA’s financials has since been turned over to federal investigators including the U.S. Attorney’s Office for Minnesota, the IRS and the Secret Service. Their investigation concerns GABA’s spending between 2014 and 2018, during which the organization lost tens of thousands of dollars.

According to KSTP news, some of GABA’s potentially suspicious spending includes a $3,000 visit to Mystic Lake Casino and $4,000 in “happy hour” expenses.

GABA President Bob Lawrence, who took over earlier this year, could not be reached for comment. He told the Star Tribune that no current GABA board members are implicated in the investigation.

The investigation again took GABA members by surprise when KSTP reported on it in late August.

Seppanen said that she and other college administrators only realized GABA was struggling financially when the news about Grand Old Day’s cancellation broke.

She noted the importance of recognizing GABA as an entity separate from local business owners.

“[Grand Ave businesses] are pretty independent of whatever happens with GABA, because GABA is different than the businesses on Grand Avenue.”

On her own time, Seppanen is involved in an offshoot of GABA called the Future is Grand Task Force. The group evolved in March 2019 in response to concerns over Grand Old Day’s cancellation and the closure of several Grand Avenue businesses including D’Amico and Sons, Bonfire and Traditions. Business owners cited high rent, high taxes and city council indifference as the main causes of the closures.

Few people have a clear picture on the future vitality of Grand Avenue in the wake of this news. Seppanen notes that the western end of Grand, where Macalester is located, is experiencing more prosperity and fewer closures than the eastern side.

“The portion of Grand that’s closest to Macalester is probably one of the strongest nodes of business,” Seppanen said.

Still, Scott and Seppanen both note that they have received no further emails or communication from GABA’s administration since the news about the federal investigation broke.

“I hope it’s nothing that could put us out of business or anything like that,” Scott said. “But other than that… I mean, I’m definitely gonna go home and read about this.”