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SHIPROCK — A reported $4 million to $5 million was generated last month at the Shiprock Navajo Fair, yet no oversight exists to track the money, no one seems to be sure where it all goes and there are legal questions about the credibility of the fair board as a tax-exempt organization, a Daily Times investigation found.
The four-day fair, which recently completed its 98th year, is held in a dusty field in south Shiprock. Parking is scarce, existing buildings are dilapidated and no permanent infrastructure is installed, including bathrooms, drinking fountains or paved grounds.
Yet the fair, administered by a self-appointed fair board, charges admission and parade entry fees higher than those at the neighboring San Juan County Fair in Farmington.
An estimated 100,000 people pay to attend the fair every year, and about 200 organizations and individuals pay the expensive entrance fee to participate in the Saturday morning parade.
The county fair costs $5 for adults and $3 for children and seniors. Admission to the Shiprock fair, by comparison, is $8 for adults and $4 for children and seniors.
Parade fees for the Shiprock fair are $500 for political entries or $250 for private or business entries. The county fair does not charge for parade entries.
The apparent lack of financial accountability raises concern among lawmakers and Navajo citizens about where the money goes, with several key officials at a loss of explanation and equally
"What has the fair done to account for its dollars?" asked Leonard Anthony, Shiprock delegate to the Navajo Tribal Council. "The fair board has not even attempted to report to the chapter or the community."
Clinton Jim, executive staff assistant for Navajo President Joe Shirley Jr., and other Navajo officials told an Albuquerque television station during an interview before the 2009 Shiprock Navajo Fair that the fair generates $4 million to $5 million annually in revenue.
It is unclear where Jim got his estimates. He did not return repeated phone calls seeking comment.
Former Shiprock Chapter President Duane "Chili" Yazzie estimated profits more likely are less than $1 million, but the fair board has failed to make its actions transparent or records public.
"They have not released any financial reports in recent history," Yazzie said. "They have been very secretive about it. Through the years there have been many allegations, suspicions and stories that the fair sponsors have personally profited."
Questionable tax status
The Shiprock Navajo Fair was incorporated as a domestic nonprofit organization in 1995, according to information from the state Public Regulation Commission. It also is recognized as a nonprofit by the Navajo Nation.
However, the Internal Revenue Service said there is no record that the group qualifies as a tax-exempt nonprofit organization.
If the Shiprock fair was recognized as tax-exempt by the IRS, any reported revenue would be public record, an IRS spokesman said.
Members of the fair board claim the organization holds a tax-exempt status certificate, but they denied The Daily Times' repeated requests to view the documents.
The IRS has no record of the Shiprock Navajo Fair Inc., or SNFI, applying for or receiving tax-exempt status. Further, the IRS also has no record of SNFI filing tax returns for the years 2006, 2007 or 2008.
Citing privacy laws, the IRS could not provide additional information about the fair, but an IRS spokesman said nonprofit corporations are required to report revenue and expenditures and those without tax-exempt status must file tax returns.
The Navajo Tax Commission also could not elaborate on the fair's status.
"I can't give out information about a taxpayer without their consent," Tax Attorney Amy Alderman said.
The Public Regulation Commission failed to produce a tax-exempt status certificate for SNFI, but it confirmed the fair is registered as a nonprofit in the state. Nonprofit status comes from the state while tax-exempt status is granted only by the IRS through an application process.
The fair board has filed its annual nonprofit corporation reports in accordance with PRC regulations, and Fair Board Vice President Charley Joe claims the board has done everything required of it by tribal, state and federal laws.
"We report how much we make and our expenditures," he said. "We give that information to the state."
The board refused to make copies of this information available to The Daily Times or the public.
Joe, however, could not comment on revenue, deferring questions to other board members.
The self-elected board comprises of four or five members, with positions held by Frank Yabeny, president; Joe as vice president; Chevonne Jennings, treasurer; and Sylvia Manuelito, secretary.
The fair is not registered as a nonprofit organization with the national databank GuideStar, but 29 other Shiprock organizations are.
Common reasons an organization qualifies for tax-exempt status include being operated by a government or religious company, being a subsidiary under a parent company, or bringing in annual gross receipts totaling less than $25,000, an IRS spokesman said.
The fair is independently operated with no oversight from either the Shiprock Chapter or the Navajo Nation.
Based on the fair board's informal reports of participation in the fair events and the number of patrons, a conservative estimate of annual gross receipts tops $650,000, with many believing it is much more.
Expenditures
The fair board also gets donations from local businesses, usually in the form of checks, Joe said. The fair historically has received contributions from the chapter and the Navajo Tribal Council, most recently in the form of about $20,000 granted from the tribe's Unreserved, Undesignated Fund Balance last year. Neither the chapter nor the Nation contributed funds this year, Joe said.
"All the money is just revolving," he said. "We don't have any extra. We pay for port-a-potties, the electricity, the sewer and waste management."
Fair Board President Frank Yabeny did not return repeated calls to the fair board office. His home phone number is not publicly listed.
San Juan County this year paid $9,000 to assist the fair. The donation included $5,000 to put extra law enforcement officers in area hotels while they worked the fair, and $4,000 for portable restroom services.
"We paid that directly to the hotel to avoid accountability issues," said GloJean Todacheene, a county commissioner and Shiprock delegate to the Navajo Tribal Council.
The fair has no full-time employees, and none of the board members or event coordinators take a salary, Joe said. Instead, the board is forced to seek donations just to produce the annual fair.
"We have struggles with the chapter and community just for support," he said. "This is not an 8-to-5 job. It's all volunteer."
The board hires workers on a temporary basis to help set up and take down modular buildings, bleachers and vendor booths. A handful of temporary employees patrolled the grounds days after the fair this year to pick up trash.
The fair board, event coordinators and temporary employees work for about one month every year. The fair is headquartered in a single-wide trailer located on the corner of the fairgrounds, but the building is closed 11 months of the year, Joe said.
Joe could not account for the fair's profit and refused comment on expenditures.
"Do we make millions annually?" he said. "I don't think so."
No chapter oversight
The Shiprock Navajo Fair was formed to cater to all 20 chapters in the Nation's Northern Agency, and for the last 98 years, it has set up in Shiprock.
The location and lack of improvements through the decades have become sore points in the community.
Citizens have voiced concerns about the poor amenities, lack of parking and near Third World conditions they endure to attend the fair.
The community is calling on the fair board for transparency and improvements to the nearly century-old event.
"If you bring in all this money, why is there no improvements? If you're making that much money, you should think of your customers," Todacheene said. "It all boils down to whether there is fairness or respect for the law. There are laws, but no one enforces them. People are afraid to rock the boat."
The Shiprock Chapter within the last decade tried to force the board to disclose its records, said Yazzie, who himself is under investigation by the Navajo government along with suspended Navajo President Shirley for business dealings unrelated to the fair.
The Shiprock chapter oversaw the fair until 1995 when SNFI was incorporated. Yet when the chapter tried to disband the board years later, the case went to the Nation's courts.
The final ruling from the Window Rock District Court, Yazzie said, was that neither the chapter nor any other entity had the "authority to touch the fair board."
"As an incorporated entity, they could not be touched," Yazzie said. "I publicly disagreed with the court ruling."
The chapter then turned to the board's bylaws, filed with the Public Regulation Commission, to challenge the election process.
However, the bylaws state board members have exclusive power to vote on and name new board members. Board members serve staggered four-year terms, and when a member decides not to seek re-election, the board elects a person of its choice.
"They re-elect themselves," Yazzie said.
Shiprock Chapter President William Lee did not return repeated phone calls seeking comment.
Navajo Nation Attorney General Louis Denetsosie also did not return repeated phone calls seeking comment.
No tribal oversight
Fair boards are locally operated without oversight from the Navajo Nation government, said George Hardeen, a spokesman for President Shirley.
"They are not centrally organized," he said of the Nation's fairs, of which there are about a dozen. "There are individual fair boards that are selected in the chapters that host the fairs."
The exception is the annual fair held in the Window Rock, Ariz., capital of the Nation, which is organized by the Navajo Parks and Recreation Department.
The Navajo Nation fair reports gross receipts of about $750,000, Yazzie said.
Despite numerous requests for reports locally, the Shiprock community still is in the dark about the revenues of its fair.
"We have tried to get copies of their financial reports from both corporation offices," Yazzie said. "We were told that only (the board) can release those reports unless they are court ordered."
Public demands accountability
Joe says the board is not improving the fairgrounds because it is waiting for the tribe and Bureau of Indian Affairs to OK a 200-acre lot near Navajo Route 36 for relocation of the fair. The move would allow the fair to grow from its current 33-acre plot.
"We're trying to get this thing going," he said. "We're really working on the business site lease and the grazing site lease, but those people want to be compensated for that land and we don't have the money yet."
Joe said the board tentatively is planning the big move in two years, around the fair's 100th anniversary.
Yet community members and politicians are crying foul, worried that the money is not going into improvements, but into the fair board's pockets. The lack of transparency by the board along with the failure to produce public records that verify its tax-exempt status does little to alleviate those concerns. Furthermore, if the fair board is not tax exempt, it means the board owes taxes.
"I think they saw how much money they could make," Todacheene said. "It really turned into a money-making thing. They only look at the dollar sign. I don't know whose pocket I lined."
Alysa Landry: alandry@daily-times.com
