Former Zephyr Theatre employee files fraud lawsuit against director, board

A former employee of Stillwater's Zephyr Theatre alleges in a federal lawsuit that he found financial fraud and mismanagement within the theater but was fired when he brought it to the attention of its board of trustees.

The suit brought by Bil MacLeslie, a longtime volunteer hired as managing director in 2021, says theater director Calyssa Hall ran the enterprise for her own enrichment and without interference from the trustees despite their legal obligation to oversee the nonprofit's finances.

The suit depicts the theater's management as a freewheeling operation in which donors were misled, tax forms were not filed, and vendors and employees went unpaid even as Hall double-dipped from the theater's funds. When MacLeslie reported the mismanagement last summer to a consultant hired by the theater, he and other employees who had also reported the issues were put on an indefinite hiatus that was tantamount to termination, the suit alleges.

"Rather than take action based on [the consultant's] findings, the Board of Trustees attempted to cover up the findings and prevent the reality of the Zephyr Theatre's status — and the Board's own wrongdoing — from coming to light," the suit states.

Hall could not be reached for comment and did not respond to an email. In response to a request for comment, Zephyr board member Alexander Eder sent a statement that read: "The Zephyr Board of Trustees has no comment other than to vigorously dispute the claims contained in this lawsuit. The Zephyr Board of Trustees is committed to moving forward and continuing to provide arts education and experiences in our community."

The theater collapsed last fall amid mounting debts and allegations that Hall had misled donors and the board of trustees. According to board minutes, the trustees seemed unaware of how much debt had been incurred just weeks before they were forced to shutter productions and let go most of the staff. The board later reported that it owed at least $272,000 in back taxes, employee pay and credit card debt, plus an unspecified amount to vendors. Hall has since left Stillwater to start a theater company in Marine on St. Croix, Minn.

The lawsuit alleges that the Zephyr board and Hall had an agreement that she would essentially run the "Only a Dim Image Productions" nonprofit which does business as the Zephyr. Without the board's legally required oversight, Hall ran the theater for the enrichment of herself and her family, several members of whom were employed there, the suit alleges.

The suit also alleges that Hall lied to donors in a 2018 capital campaign when she said it had successfully reached its goal of raising $1 million for the purpose of buying the former Zephyr train depot at 601 Main St. N. in Stillwater. Donors were told the campaign would only take their money if donations reached the $1 million mark, but when the campaign fell short, Hall took the donations anyway.

The misrepresentation of the amount raised allowed the theater to get a mortgage from Lake Elmo Bank to purchase the depot, the suit states.

Adriane Lepage of Valley Vision LLC, a consultant hired in 2022 to prepare a strategic plan for the theater, cut her work short when she discovered the financial mismanagement at the theater, the suit says.

MacLeslie said he's owed some $11,000 in unpaid salary and PTO. Several checks issued to MacLeslie in October were illegally backdated for Dec. 1; when he tried to cash them at the Lake Elmo Bank, he was told that the Zephyr had ordered a "stop payment" on the checks, the suit states.

MacLeslie requested a jury trial and damages of at least $100,000.