Ex-board advisor files complaint against Marfa Invitational alleging misuse of donated funds

Sleeping Figure, a 150-foot-long, 40-foot-tall sculpture by artist Matt Johnson, awaits installation on the Marfa Invitational grounds. A previous board advisor for the Marfa Invitational filed a charitable trust complaint with the Attorney General last month, alleging the organization’s director, Michael Phelan, misused donated funds.

MARFA — A former board advisor for the Marfa Invitational art fair, Kathleen Irvin Loughlin, has filed a charitable trust complaint with the Texas Attorney General’s Office alleging the organization, specifically Director Michael Phelan, mismanaged donated funds by using them for personal expenses. 

Loughlin, along with several board members and another board advisor, recently cut ties with the Marfa Invitational, which lost its 501c3 nonprofit status this past May after failing to file tax forms for three consecutive years, according to the Internal Revenue Service. 

The Marfa Invitational is an annual art fair founded in 2019 by Phelan and wife Melissa Bent that showcases international gallerists at Saint George Hall and hosts splashy VIP events. In recent years, Phelan has promoted the creation of a permanent home for the Marfa Invitational. The site has been imagined by Phelan to serve as a sculpture park and year-round event space on land off of HWY 90, near Antelope Hills. According to the Presidio County Appraisal District, the land is owned by Matthew Kruger.

The charitable trust complaint against Marfa Invitational, obtained via a public records request by The Big Bend Sentinel, was filed by Loughlin in October 2023. It states that she was not made aware of the “potential loss” of nonprofit status until after she had donated $150,000 for a “foundation building” that she later learned was allocated towards unintended purposes. 

“In the process of helping the director properly file for reinstatement, I discovered that 2/3 of the financial gift I had given for a foundation building was already spent on what I deem as the director’s personal expenses,” Loughlin wrote in the complaint.

Loughlin further states that Phelan returned $25,000 to her out of the $150,000 she donated for a foundation building between 2022 and 2023, but the rest of the funds were spent “on the director’s personal and non-profit travel, car payment and other personal expenses.” 

In the complaint Loughlin explains that “after months of asking questions and requesting financial documents so we could support reinstatement of [Marfa Invitational]” she and now-resigned Board Member Alex Scull confronted Phelan about the alleged misuse of donated funds as well as contacted Marfa Invitational’s lawyer and all past and present board members. 

“At this point, I only wish that the non-profit does not regain 501c3 status, because I am concerned that financial mismanagement will happen again without supervision of the current director,” Loughlin wrote in the complaint. 

According to the office of the attorney general, not all charitable trust complaints lead to full investigations or other action. Complaints are more likely to be investigated if they “involve improper use of charitable funds,” “excessive amounts paid by a non-profit corporation or charitable trust for salaries, benefits, travel and entertainment,” or a “diversion of charitable trust funds from their intended purpose.” 

Loughlin is a member of the board of trustees, and past board president, at The Contemporary Austin art museum and is also a supporter of The Blanton Museum. She declined to comment further on the charitable trust complaint when reached by The Big Bend Sentinel

Phelan did not respond to requests for comment by press time. In an April 2022 email to The Big Bend Sentinel he claimed all funds raised from VIP ticket sales, which that year cost $700 each, were allocated towards the construction of the Marfa Invitational Foundation’s “new home  located on the edge of Marfa.” 

Loughlin’s charitable trust complaint was not the first filed against the Marfa Invitational. In August 2021 an individual, Ann Reeves, alleged “instances of charity and consumer fraud,” took place at the May 2021 event. Reeves wrote in the complaint that she was requesting Marfa Invitational be investigated for dual filing, or being formed as both a nonprofit as well as a for-profit Limited Liability Company (LLC) in Texas. “Marfa Invitational Art Fair, LLC” is listed as being registered with the secretary of state in October of 2018 and is currently “active,” maintaining the right to conduct business in the state, according to the comptroller’s website. Phelan did not respond to requests for comment about the existing LLC by press time.