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Vermont Files Suit Against Former Randall Drive-In Operators

Valley News Staff Writer
Published: 9/30/2016 9:58:12 AM
Modified: 10/3/2016 12:35:06 PM

Bethel — On every trip to the Randall Drive-In during the summer of 2014, Bethel residents Lisa McCrory and Carl Russell happily accepted free refills of popcorn in the bowl they’d received as a premium for contributing $100 to the drive-in’s crowdfunding effort to buy a digital projector.

Next thing McCrory and Russell knew, the drive-in was under new management, while former managers Adam Gerhard and Regina Franz were using the projector to show the latest releases at a drive-in in upstate New York.

“We thought we were supporting this young couple who were trying to keep this resource open,” McCrory recalled on Wednesday. “We thought we were doing something for our community.

“So I was having a little grumble a year ago, after they left.”

Welcome to the club: By the end of the summer of 2015, enough of the more than 250 other contributors to the fundraising effort had grumbled to the Vermont Attorney General’s Office to prompt that agency to launch an investigation. This month, the consumer-protection office filed a lawsuit against Gerhard and Franz in Washington County Superior Court “for making deceptive representations in connection with a fundraiser.”

The civil lawsuit, filed on Sept. 14 and announced this week, accuses the couple of violating Vermont’s consumer protection laws by soliciting and collecting more than $22,000 for the projector from donors through a Kickstarter campaign in 2014, all while knowing that their landlord would not renew their lease at the end of that summer.

The suit seeks restitution for all donors, and a permanent injunction requiring Gerhard and Franz to notify the Attorney General’s Office before mounting any other crowdfunding efforts in Vermont.

On Wednesday, Assistant Attorney General Shannon Salembier described the lawsuit against Gerhard and Franz as “the first consumer protection case brought in our office involving a crowdfunding campaign.”

Reached by way of his Facebook page on Wednesday, Gerhard, now living in Newmarket, N.H., and working as a web developer, referred all questions to his Montpelier-based lawyer, J. Scott Cameron. In an exchange of emails on Wednesday, Cameron denied that his client misled contributors.

“All of the statements Adam made during the Kickstarter campaign were true,” Cameron wrote. “If you were to Google other fundraising campaigns for digital movie projectors, you would see that they used the same language, because that’s the truth. Also, everyone who contributed to the Kickstarter campaign got everything they were promised. We have brought this information to the attention of the Attorney General’s Office, but they are not open to considering the facts.”

In the lawsuit, the consumer protection division of the Attorney General’s Office contends that Gerhard and Franz began their fundraising drive in April 2014, well after the owner of the Bethel drive-in property, Scott Corse, had told them, in mid-Feburary, that their lease wouldn’t be renewed at the end of the year.

The Kickstarter page said the drive-in needed to go digital or would go dark, court documents say.

As their lease negotiations were breaking down, Gerhard and Franz “undertook significant steps towards opening a new digital drive-in movie theater, which they planned to call ‘Starry Night Drive-In’ ” in southern New Hampshire.

Meanwhile, the AG’s office alleges, the couple “were not authorized to make conclusory statements about the Randall Drive-In closing if the fundraiser did not raise enough funds to purchase a digital projector because” the couple “neither owned the Randall Drive-In nor had assumed through the 2014 lease authority” over its future.

“In October 2013, defendants obtained at least two different estimates for the cost of a digital projector specifically for the Starry Night Drive-In,” the suit alleges. “Defendants appeared at two planning board meetings (March 5, 2014 and March 19, 2014) and two zoning board of adjustment meetings (Feb. 25, 2014 and March 25, 2014) in the town of Candia, N.H., with regards to the construction of the Starry Night Drive-in.”

Citing emails, the suit notes that “Mr. Corse conveyed his unwillingness to convert the Randall Drive-In to digital.”

And in a certified letter to Gerhard and Franz, cited in the lawsuit, Corse wrote that “any and all activity you are undertaking in soliciting funds” for digital equipment “is being done without my approval, without my participation and heretofore without my knowledge.”

Despite that warning and their lack of authority over the drive-in’s future, the lawsuit says, “Defendants threatened the closure of the Randall Drive-In to induce community members and small businesses to contribute funds. At no point did Defendants adequately inform consumers that the digital projector purchased with their funds would only benefit the Randall Drive-In for a single season.”

Ultimately, the campaign raised more than $22,000 from more than 250 contributors. And as late as September 2014, the Kickstarter page was announcing the arrival of T-shirts, cocoa mugs, Frisbees and other merchandise for contributors to the campaign. The campaign’s home page continues to note that the projector “costs around $75,000,” of which Gerhard and Franz were seeking $20,000 “to serve as the down payment … with plans of ongoing fundraising to pay down the balance.”

In the lawsuit, the AG’s office says that Gerhard and Franz “entered into a rent-to-own agreement on June 16, 2014, for a digital projector costing $36,300 with a down payment of $6,000. A year later, the suit continues, the couple “had only paid $11,140.90 towards the total cost of the digital projector, despite having raised significantly more than that amount. … On June 30, 2015, Defendants paid the remaining balance … and acquired ownership of the digital projector.”

By that time, Gerhard and Franz were using the digital projector to show first-run movies at the Fair Oaks Drive-In in Middletown, N.Y.

And by the end of that summer, the Vermont Attorney General’s Office began receiving complaints from the Bethel area.

“They were along the lines of, ‘I donated to this campaign. I thought this projector was going to be used at this theater, and could you look into this?’ ” Salembier said.

Meanwhile Tammy and David Tomaszewski, who run the Playhouse Movie Theatre in Randolph, were leasing the Randall property under the name of the Bethel Drive-In, and showing movies with a conventional 35-millimeter projector they’d borrowed from the Randolph Historical Society Museum.

In an email this week, David Tomaszewski wrote that he and his wife have a long-term lease with Corse, who “has worked with us both physically and financially in bringing back this drive-in that was left for dead.

“In addition to installing equipment in order to show movies,” Tomaszewski continued, “we installed a new septic tank, painted the bus, built a deck for the concession bus, put new flooring in the bus, built a retro marquee sign, and put up a new screen. The final piece that is left before we even think of how to go digital is to acclimatize the projection booth and the marquee needs to be rebuilt.”

In a story in May 2016, The Times Herald-Record newspaper in Middletown, N.Y., reported that Ron Mege, who had run the Fair Oaks Drive-In from 1990 to 2013, returned to take charge this summer, and expected to install $80,000 worth of digital projection equipment. Last weekend, the drive-in showed the animated movie Storks.

The story and the Vermont lawsuit refer to ongoing litigation between Mege and Gerhard.

On the drive-in’s Facebook page, Mege and his partner posted a link to Vermont’s complaint against Gerhard and Franz, adding “And the truth has finally been told. Please read!”

Back in Vermont, Salembier said that she hopes the case illuminates the need for donors to look and think twice before answering crowdfunding entreaties.

“It’s important that people look into these things and be careful where they give their money,” Salembier said. “It’s sort of the Wild West.”

David Corriveau can be reached at dcorriveau@vnews.com and at 603-727-3304.




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