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December 30, 2013

Van Dyke murder, Conneaut Lake Park court drama stories No. 3, 2 in year's biggest

(Continued)

MEADVILLE — 2. Trustees of Conneaut Lake Park in court

The board that oversees operations of Conneaut Lake Park amusement park found itself in court this fall as the Pennsylvania Office of Attorney General filed a petition to oust the group.

The issue hasn’t been fully resolved as 2013 comes to a close with attorneys for both sides due back in Crawford County Court of Common Pleas in January 2014.

In October, Attorney General Kathleen Kane petitioned county court to oust the current Trustees of Conneaut Lake Park for allegedly failing to properly care for the amusement park.

Trustees of Conneaut Lake Park is the corporation that oversees the public trust that owns the amusement park. The original Trustees of Conneaut Lake Park are volunteers who were appointed by President Judge Anthony Vardaro. The Trustees then select candidates whenever there are openings.

Kane’s petition asks county court to compel the Trustees to show why the court should not: permanently remove all current Trustees and directors of Trustees; appoint a new board to govern the affairs of Trustees going forward; and order any other relief which the court deems appropriate.

In the filing of the petition to remove Trustees of Conneaut Lake Park, the petition alleges: The board failed to take advantage of business opportunities that would have generated more revenue; that Trustees steered business away from Hotel Conneaut; and that these incidents and failure to insure Dreamland Ballroom and The Beach Club represent “serious breaches of their (Trustees) fiduciary duty.”

According to the court petition, the damage inflicted on Conneaut Lake Park includes failing to insure against the structural loss due to the fire at the Dreamland Ballroom on Feb. 1, 2008, and the fire at The Beach Club on Aug. 1 this year; and failing to exploit opportunities and/or promote the best interests of the park.

Trustees were ordered by the court to turn over copies of all financial records it has for the amusement park to Kane. The records are under review by the state and the two sides are due back in court before Vardaro on Jan. 27, 2014.

However, Trustees of Conneaut Lake Park are fighting the state’s petition.

In a petition response filed by Trustees on Dec. 19, the Trustees claim that there was no money to insure Dreamland Ballroom or the Beach Club. Trustees blame the financial problems on past owners and managers of the park as well as the current operator of Hotel Conneaut, whom they claim has failed to pay up though their written contracts.

In the response, Trustees admit the sitting board of directors in 2008 didn’t carry fire insurance on the Dreamland Ballroom as well as not having fire insurance on the Beach Club. However, in both instances, Trustees deny failing to have fire insurance violates Trustees’ fiduciary duty under Pennsylvania law.

The Trustees said they “did not have sufficient funds with which to pay such insurance as no revenue centers had been put in place yet” at the time of the Dreamland Ballroom.

And, according to the Trustees, “poor cash flow made it impossible to maintain fire insurance on the Beach Club.”

Park Restoration LLC, which has lease agreements with the Trustees to operate the Beach Club and Hotel Conneaut, was to maintain fire insurance, according to the Trustees’ response.

Park Restoration owes the Trustees thousands of dollars in back payments, according to the Trustees’ response. Trustees claim Park Restoration owes more than $20,000 in back rent and unpaid expenses required to be paid under a lease agreement. The Trustees also claim Park Restoration owes Trustees $38,327.62 for failing to pay on a management agreement it has with Trustees.

Trustees deny the board has breached any of its fiduciary duties, including when it turned down business opportunities offered in the past.

The deals were rejected by the board after considering the viability and profitability of the offers, according to the Trustees.

The Trustees said the majority of those opportunities came from Park Restoration.

“The rejection of those business opportunities was a direct result of the conduct of Park Restoration ignoring and outright defying its contractual obligation to pay the Trustees under its agreements,” the Trustees claim.

Meanwhile, Park Restoration officials disagree the firm owes any money to Trustees and, instead, Park Restoration believes it is owed $2,000 to $3,000 by the Trustees.

Park Restoration officials claim Park Restoration would pay for work done at the Beach Club and Hotel Conneaut for the Trustees, then settle accounts at the end of the year.

In its response to Kane’s petition, Trustees deny failing to pay property taxes was willful or intentional conduct by the board, but instead inherited a tax burden when the board was appointed in 2007.

The park owes more than $850,000 in overdue property taxes interest and penalties to Crawford County, Summit and Sadsbury townships and Conneaut School District dating back to the 1990s.

The Trustees also deny they committed any financial irregularities and asks that Kane’s petition be dismissed.

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