Updated: Breweries and Distributors Say Beer Fest's Organizers Owe Them $100,000
Beer Fest, in happier times.
Photo by Francisco Montes
Updated (July 25, 10:33 am): An early version of this story attributed a quote to Geoff Marolda. It should have been attributed to Walter Gordy III.
Nearly two months after the fourth annual Houston Beer Fest, brewers and distributors say the event's organizers owe them more than $100,000.
Although an estimated 30,000 people poured into Sam Houston Park for the two-day festival in early June, the event's director, Timothy Hudson, said unforeseen problems, including staff theft, had delayed the payments. Hudson and others who helped promote the event have also blamed money woes on headlining entertainer Rick Ross's last-minute cancellation, an assertion that makes no sense. We feel Beer Fest's promoters are serving up a frothy pint of craft-brewed bullshit.
Texas Alcoholic Beverage Commission Spokeswoman Carolyn Beck told us in an email that the Commission has received complaints from brewers and distributors who claim to be owed more than $100,000. (The event's ticket prices varied widely, with different prices for one- or two-day admission, and date purchased. Prices ranged from $20 to $200.)
"We have received complaints from distributors and brewers whose checks bounced," Beck wrote. "We placed a 'management halt' on the entity to ensure that no future temporary permits will be issued to it. Also, we referred the distributors/brewers to the Harris County DA's Office Check Fraud Division."
Incredibly, Beer Fest's chief operating officer, Geoff Marolda, told us he has no personal knowledge of breweries being stiffed. (He said that, after speaking with the event's directors, the bands "are the biggest issue" when it comes to folks who weren't paid.)
"To be honest, I think...this is blown a little bit out of proportion," he said. "We're taking steps to rectify the payment situation. And I 100 percent guarantee that not one of us will be paid; we'll put money into equity until everyone's paid this year."
It's unclear just how many people are still owed for their services.
Mary Gonzales, a police officer who worked security at the event, said that 17 officers were owed $16,840. She told us Friday morning that Hudson met with her assistant chief Thursday and made the payment by the totally non-sketchy exchange of a backpack full of cash.
But what of the nearly 300 temporary workers? So far, we've heard from two men who say they worked both days, between 10 and 12 hours each day, and still haven't been paid, despite Hudson's insistence that the checks are forthcoming. (They say they were promised $12 an hour.)
We're also waiting to hear from the Mayor's Office of Special Events to see if the organizers have covered all their fees for the city.
Hudson told Rocks Off earlier this month that the money the organizers spent on beer dwarfed ticket sales -- however, it's not clear if the organizers actually spent any money on beer. Hudson also declined to say how much money was stolen. After first agreeing to address our questions, Hudson stated in an email, "We ran into some unforeseen circumstances this year and we're doing our best to handle all the issues. We're looking forward to resolving the issues and getting ready for the 2015 Houston Beer Fest."
We're not sure how he's resolving the issues. We've heard from several people who tell us that, after a few empty promises, Hudson simply stopped returning calls, texts and emails. His partner, Bryan Crowder, also didn't respond to our repeated requests for comment.
And Rob Dauphin, the event's "Beer Director," told us he had nothing to do with HBF's finances, but for some reason was confident enough to assure us that Hudson never welshed on a deal.
Signature Foods & Imports, LLC, a vendor for the 2012 Houston Wine Festival, might have a different opinion: The small importer won a $17,578 judgment against Hudson in October 2013 after Hudson never paid up.
"Timothy single-handedly caused a great deal of trouble for my aspiring small business that I worked so hard to open," Signature's owner, Daniel Romo, told us via email. He said Hudson's non-payment hurt not only Romo but his suppliers. The breach of contract "caused multiple arguments and longtime business investors to flee due in part to his deceitfulness, lies, and false promises," Romo wrote.
The Texas Attorney General's Office might also disagree with Dauphin's stalwart defense of Hudson's payment history, at least when it comes to child support: Two months before Beer Fest, Hudson signed an order agreeing to pay $15,874 in arrears to his ex-wife, court records show. (He'd been ordered to pay child support in 2005.)
Others who say they've been stiffed include Austin's Adelbert's Brewery. The company's Houston sales rep, Eric Andreas, says Hudson still owes $4,200. Andreas says Hudson's check bounced. That's just on the invoice, Andreas said, and doesn't include the $700 registration fee or individual labor.
"First let me apologize for the bounce check [sic]," Hudson wrote Andreas in a June 16 email. "I will get payment out to you by the end of the week."
According to Andreas, that check never came.
Mark Nichols of Goliad Brewing Company says Hudson sold him a similar check-is-in-the-mail tale, but tells us that he's still waiting for his roughly $1,750. After an initial email exchange, Nichols said, Hudson cut off contact.
The Theft Issue
Along with Hudson, Beer Fest's chief operating officer, Geoff Marolda, blamed a lot of the nonpayment on alleged employee theft. The event was staffed by "close to 300" temporary workers, Marolda said.
"At some level, you have to put some trust into people, and at every level, that...level of trust was breached," Marolda said. He said temporary workers stole cash and beer tickets and gave away free beer and tickets. Nearly two months later, Marold said, the event's organizers still don't know how much money was stolen.
"We're actually still trying to figure that out, but it's significant," he said. "I would say minimum $50,000-plus."
Marolda said the alleged theft wasn't reported to police because no workers were caught "red-handed."
Melissa Hauser, a consultant who was contracted to hire and oversee the festival's workers, told us in an email she was aware of only two incidents of employee theft.
"Tim and I have not spoken about the alleged theft that he claims went on. An email was sent out by another HBF team leader after the festival, with details about what was reported to have happened," Hauser wrote. "But I personally did not see it. If I had, I would have notified HPD and had those involved arrested. All HBF employees are required to attend a training session where we outlined the expectations and rules of employment. The HBF does not tolerate theft, and if caught, the HBF will prosecute."
Compounding the alleged theft problem, both Hudson and Marolda said Rick Ross's last-minute cancellation had a devastating effect on revenue. Yet the announcement was made approximately five hours before the end of the two-day festival, so we're not exactly sure how much money could've been lost in that time -- especially since the tickets were prepaid.
The Rick Ross Issue
One thing's for sure: For some strange reason, an entity managed by Hudson called Hudson Marketing Group agreed to pay Rick Ross $150,700 in advance. (It's unclear if Ross was paid with a backpack full of cash.) Marolda told us the decision to pay Ross upfront was solely Hudson's.
The total contract was for $155,000 plus expenses, according to a letter from Hudson Marketing Group's attorney, Keith Lapeze, to Ross's representatives.
According to the June 27 letter, Hudson Marketing Group lost over $36,000 in expenses for stage modifications, riders, security, marketing and equipment.
"Thus far, no one has been forthcoming with any realistic attempts to satisfy these losses, despite my client's attempts to be reasonable," Lapeze wrote in the letter. He demanded the full payment of $187,384.24 within 30 days.
Xavier R. Donaldson, one of Ross's attorneys, told us last week that both parties were close to resolving the issue, but Lapeze told us otherwise. He said that after an initial discussion that prompted the demand letter, he hasn't heard a peep from Ross's peeps.
The How the F is This Thing Structured Anyway Issue
Further complicating matters is just how Houston Beer Fest -- incorporated as a nonprofit -- is tied to Hudson Marketing Group, LLC.
Beer Fest operated under a temporary TABC license issued to HWF Young Leader Scholarship, a nonprofit formed in 2010 with the stated primary purpose to "raise funds for our scholarship which is rewarded each year to twenty high school students." The entity forfeited its charter in February for nonpayment of taxes.
The directors included Hudson, Crowder and Walter Gordy III. Gordy told us he had little knowledge of HWF's operations and
But Marolda HWF has never awarded a scholarship.
"It's a rolling capital type thing," Marolda told us. "We put our initial investment, a private investment into Beer Fest...whatever profits [raised] from that go into Wine Fest, and vice versa."
Marolda told us that Wine Fest was rained out for the past two years, and cancellations by sponsors and vendors compounded financial woes.
"This past year, Wine Fest 2013, was particularly hard on us. [The] majority of our vineyards had issues, [the] majority of our vendors -- the people that bring food and stuff -- had issues... It was a two-day event; a lot of people didn't come back to the second day, including staff...That was a big problem going into Beer Fest this year."
But another problem might be Beer Fest's dependence upon Hudson's business acumen, or lack thereof.
Marolda was critical of Hudson Marketing Group's contract with Ross, saying, "There's a reason I have yet to invest in Beer Fest with my own money. I've spotted them money before, but...there's a reason I'm not named as a partner."
The organizers have already announced Houston Beer Fest 2015, an event so enthralling it deserves no fewer than four exclamation points: "We're turning 5 and want you to be a part of the celebration!! Save the date!!
"Tim owns the brand, Tim owns Beer Fest. He'll be involved, but probably not to the extent that he is now," Marolda said. "Down the road, I don't see him being involved, unless major changes are made with his mind-set and his skills as a businessman."
We really wish Hudson had spoken with us. We wish even more that he would shoot straight with the folks who say they're owed money. But, according to Hudson's email containing his boilerplate non-statement about "resolving the issues," "in my experience with the Houston Press, I'm not going to come out on top. Regardless of what I say to you."
Actually, it's more what he didn't say.
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