Biddeford and state officials are investigating to determine whether the former president of the La Kermesse Franco-American festival misused the organization’s line of credit, the vice president of the group said Wednesday.

Raymond Gagne said the investigation centers around a line of credit from PeoplesChoice Credit Union, formerly St. Joseph’s Credit Union, that was supposed to have been paid off and closed in 2004.

Gagne said the former president of the festival, Priscille Gagnon, paid off the balance with money loaned to the festival from another source, Saco & Biddeford Savings Institution, but never closed the account.

Because Gagnon was the only festival official with a key to the group’s post office box, no one ever saw statements from the credit union that would have alerted the board that the account was still open and active, Gagne said.

Gagne said PeoplesChoice contacted Leo Bourgeault, the former treasurer of La Kermesse, several months ago because payments on the line were lagging. Bourgeault told the credit union that the account was supposed to have been closed, and he contacted Gagne about the problem.

Bourgeault confirmed Gagne’s account, but declined to comment further.

Gagne and the La Kermesse board contacted Biddeford police, Gagne said. Biddeford’s department has since called in the state Attorney General’s Office, because the city’s police chief, Roger Beaupre, is a former treasurer of La Kermesse and was concerned about a possible conflict of interest, said Kate Simmons, a spokeswoman for the attorney general.

Attempts to reach Gagnon, who resigned as president of the festival this year for personal reasons, were not successful Wednesday. A phone number in her name in Biddeford had been disconnected.

Simmons declined to discuss the reason for the investigation, except to say that it involves La Kermesse’s finances. She said the Attorney General’s Office is “working diligently to find out if misconduct occurred.”

Gagne said he didn’t know how much money was involved in the line of credit, which had a limit of $20,000. He said the problems with the line are not the sole reason for financial problems with the summer festival, which honors the Biddeford area’s strong Franco heritage.

Organizers are running a deficit of about $25,000 from last year’s event, and this year’s festival was almost canceled after Biddeford officials denied La Kermesse the use of St. Louis Field, where the event has always been held.

The field was damaged during last year’s festival, which was marred by heavy rain, and La Kermesse has not paid the city the $25,000 it claims it is owed for repairs.

Gagne said there are three key reasons for the deficit: last year’s bad weather, the death of a longtime donor, and problems with the operator of the festival’s carnival rides.

Rain cut down attendance in 2009, and a woman who regularly donated $10,000 to La Kermesse died a month before last year’s festival, he said. Then, the carnival ride operator shut down on the last day of the festival because of the rain.

The festival expected to collect a percentage of the proceeds from the ride tickets and was owed $14,500, but the ride operator left town without paying, Gagne said.

The festival hired a lawyer to try to recover the money, but the ride operator has not been found, Gagne said.

This year’s festival will be scaled back, said La Kermesse’s treasurer, Paul Gagne, who is not related to Raymond Gagne. It will be 2½ days instead of four, some events will be held in the Biddeford Ice Arena, and a parade, carnival rides and fireworks have been canceled.

Bands will play and the “La Kermesse Idol” event will still be held, Paul Gagne said. The rest of the schedule for the festival June 25-27 is still being worked out.

Paul Gagne said the festival is trying a pay-as-you-go approach this year, raising money and using it to pay for rentals and entertainment in advance. He said the organization considered, but rejected, skipping a year for the festival, which began in 1982.

“We’ve always maintained that if you stop it one year, it’s awfully hard to start it up again,” Paul Gagne said.

The festival board will meet about a month after this year’s event, he said, to decide whether to continue operating, and to elect new officers if it does.

Gagnon’s post as president has not yet been filled.

 

Staff Writer Edward D. Murphy may be contacted at 791-6465 or at:

emurphy@pressherald.com