Latest tax filings from Arts Club show large, mysterious expenses

Town & Village; Thursday, April 28, 2011

By Sabina Mollot

For most people, tax day has come and gone, with most eagerly anticipating their returns from 2010, if they haven't gotten them already.

However, the National Arts Club, which is currently being investigated by the District Attorney and the Attorney General, has yet to file for last year. As a nonprofit organization, its tax-exempt return filings are made public, and their most recently filed forms, those for the year 2008, make for interesting reading.

Hillary Weldon, a spokesperson for NAC, said at the request of the D.A. And the A.G., she and others involved have been asked not to comment about anything that could hinder the investigations.

Meanwhile, the club, which earns revenue from member dues as well as rent for the apartments in the landmarked building, reported accruing bad debt in the amount of $185,000 in 2008.

The 990 form, which was filed in May, 2010, also reported that O. Aldon James, the president of the club until recently stepping down for what members have called a "vacation," worked 60 hours a week, collecting no salary. The only high-level employees who did collect salaries were dining room manager Joseph Frappaolo, who earned a salary of $220,000 with additional compensation of about $6,000, and executive chef Robert Ahle, who earned $124,000. For that, Ahle worked a total of 60 hours a week, according to the filing, while Frappaolo was listed as having worked a whopping 84 hours a week.

Accounting expenses were listed as being $85,618, with an additional $55,990 have been spent on expenses marked only as "other." Travel expenses were $37,270. The year's plays and exhibitions were said to cost $398,488 to put on, with an additional $249,908 for "audio, visual and books." Another $94,650 was listed under "miscellaneous" and another $114,812 was listed as "other." In total, the club's expenses were $2,627,342, with $2,110,588 of that going towards program expenses. The rest, $516,754, went towards management and general expenses.

By the end of the year, the club's total liabilities and net assets/fund balances was reported as being $4,507,555.

In the section on the club's governing body and management, when asked if any officer, director, trustee, or key employee had a family relationship or a business relationship with any officer, director, trustee or key employee, there was a check in the "no" column. Meanwhile, James' brother John has been a power player at the club for years.

Revenue earned from "committee functions" was $171,474 with an additional $14,397 in "book sales."

Net rental income was stated as $529,162, although $396,745 was reported as having been lost from sales of inventory. Over the year, NAC received $1,791,096 from member dues as well as grants.

Rents of board members living in the club were also listed, with the cheapest apartment ($4,272 for the year) going to John James. Aldon's rent for the year was $13,712, and board member Steven Leitner's was $10,298. Other board members, meanwhile, shelled out significantly more. Florence Boyle paid $52,708 in 2008, while Dianne Bernhard, now the club's acting president, paid $91,200.

In supplemental information, the club said it has a policy of avoiding conflicts of interests and avoiding "the use of assets or resources of the club solely for the personal or financial gain of any governor, officer, or employee or any other person, interest or entity."

This would contradict claims by former members who said that for years, nepotism and favoritism were rampant when financial decisions were made at NAC.

Marc Piszko of the firm O'Connor Davies Munns & Dobbins, whose signature appears on the form as the preparer, didn't return a phone call for comment.