&apos;Newbo evolve&apos; organizers sent to prison

Feb. 16—CEDAR RAPIDS — Nearly five years after the "newbo evolve" festival featuring national recording stars and reality TV personalities turned into a financial debacle instead of a signature event, two of its key organizers were ordered Thursday to report to prison and pay over $1 million to a bank they defrauded to help bankroll it.

Doug S. Hargrave, 56, now of Puyallup, Wash., and Aaron McCreight, 47, now of Dothan, Ala., each pleaded guilty last year in U.S. District Court to one felony count each of bank fraud.

Hargrave was sentenced to 15 months and McCreight was sentenced to 18 months in prison. The two also are jointly and severally liable for $1,442,231.25 of restitution to be paid to Banker's Trust.

At the time, McCreight was the president and chief executive officer and Hargrave the finance director of GO Cedar Rapids, the nonprofit tourism and convention agency partially financed by the city of Cedar Rapids with public hotel-motel tax dollars.

The 2018 three-day festival featured headliners Kelly Clarkson and Maroon 5, and speakers including fashion designers Carson Kressley and Christian Siriano, filmmaker John Waters, woodworker Clint Harp and U.S. Olympian Adam Rippon, among others.

The festival lost $2.3 millions after sales of tickets — some costing up to $375 — and sponsorship revenue came up short. Of the losses, Banker' Trust was out about $1.5 million in loans and speakers and vendors were never paid the $800,000 total promised.

During Hargrave's plea hearing last year, he admitted that before the festival he sent a fraudulent budget, under McCreight's direction, to Banker's Trust in support of a request for an increased loan. The budget misrepresented how many tickets already been sold and how many more ticket sales were anticipated.

McCreight's defense argued in his sentencing Thursday that he did not direct Hargrave to create the false budget. But he acknowledged he was aware of it and that as the CEO he signed a promissory note for the loan that resulted from it.

An email to the bank included false projected of $475,000 in sponsorship income; more than $1.7 million in concert sales income; $475,000 in production expense and $65,654 in profit, a criminal complaint stated.

The bank approved an increase to an initial loan from $1.5 million to $1.75 million. After the event, GO Cedar Rapids couldn't repay the loan or $800,000 promised to vendors and speakers.

Bankers Trust fired its local president, and GO Cedar Rapids fired McCreight and Community Events Director Scott Tallman, saying it had been misled. The tourism agency later went out of business.

Sentencing hearings

During Thursday's hearings in federal court, both defendants requested diminished sentences without prison time, arguing they have shown in the years since that they have learned from their mistakes and they are contributing members of society.

"I can't tell you how embarrassed I am to be here, how surreal this whole thing is," Hargrave told Judge C.J. Williams. "I understand what I've done. I accept the recourse that I'm faced with."

McCreight's defense also referenced health challenges faced by his wife that make it difficult for her to work, and challenges faced by McCreight's children that rely on health insurance from his current job as president of the Dotham, Ala., tourism agency.

"You have no reason to fear me ever going astray. I put my family in jeopardy and that will always stay with me," McCreight said. "Please have mercy on my wife and kids, and allow me to continue to care for their needs."

Judge Williams said he believed prison time was necessary for both defendants in order to reflect the seriousness of the offense and deter others from committing similar crimes in the future.

Williams said both men had gotten in over their heads on a venture they weren't prepared for, but instead of acknowledging the financial issues and reevaluating, decided to commit fraud and "gamble with the bank's money."

Visit Dotham

Visit Dothan — where McCreight went to work as a tourism president and CEO after being fired in Cedar Rapids — previously said it was standing behind him and would allow him to keep his job if he wasn't sentenced to prison.

In a statement Thursday, the organization's board of directors said it had accepted McCreight's resignation from Visit Dothan. His resignation was effective immediately and the organization said it will search for a replacement.

"The board appreciates the job that Aaron has done during his tenure here in Dothan," the statement said.

According to the board, during McCreight's stint at the helm of Visit Dothan, sports tournaments and hotel room reservations grew, and visitor spending increased. He oversaw a new visitor website, improved sports facilities, an enhanced visitors guide and an international BMX event, among other things.

"Aaron passionately and effectively lifted Visit Dothan to be the catalyst for visitor and sports growth in our area and instituted many positive initiatives," the board said. "As a result, our organization and our community benefited tremendously from his work, dedication, integrity and collaborative community support."

Cedar Rapids tourism

After the festival failed and GO Cedar Rapids went out of business, Cedar Rapids brought in the company VenuWorks to revamp the local tourism bureau and manage the Cedar Rapids Tourism Office.

The City Council voted in 2021 to extend a contract with the management company through Oct. 14, 2025, to continue marketing the area and attracting visitors through conventions, sports and other events.

Since its 2018 inception, VenuWorks has been contracted to book events for city-owned performance venues including the Alliant Energy PowerHouse, Paramount Theatre, McGrath Amphitheatre and the Cedar Rapids Ice Arena.

The Cedar Rapids Tourism Office originally was pitched as a placeholder while tourism officials explored best practices and formed a new independent bureau to replace GO Cedar Rapids. But as it saw success in booking a number of concerts, large-scale business conferences and sports events, city officials have opted to stay the course.

For fiscal 2023 — the budget year that will end June 30 — Cedar Rapids paid the Tourism Office $1.2 million in hotel-motel tax revenue the city reaps from overnight guests, as the agency is the main driver of hotel stays in Cedar Rapids.

"We've been very pleased with the work that the Cedar Rapids Tourism Office is doing and VenuWorks, and there's no intention to change course at this time," City Manager Jeff Pomeranz said.

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