The Bay City State Theatre lawsuit settlements have returned roughly $372,000 to the bankrupt nonprofit’s estate, resolving two civil cases tied to a scheme in which the theatre’s former executive director funneled nearly a million dollars in loan money into a city park renovation. The money came from the City of Bay City, a construction contractor, and three former theatre officials, including the director who orchestrated the fraud and later received a two-year federal prison sentence.
What the Trustee Recovered
Chapter 7 trustee Randall L. Frank pursued two separate lawsuits on behalf of the theatre’s creditors after the nonprofit filed for bankruptcy on March 1, 2024, listing about $1.6 million in debt against just under $83,000 in assets.1WNEM. Bay City State Theatre Files Bankruptcy, Closes2WNEM. New Details on State Theatre’s Finances, Bankruptcy Together, the two settlements produced the following payments:
- City of Bay City: $70,000
- Serenus Johnson & Son Construction: $30,000
- Michael Bacigalupo (former executive director): $72,000
- Mark Delestowicz and Stephanie Martinez (former board chairman and treasurer), jointly: $200,000
The first settlement, with the city and the contractors, was approved by the Bay City Commission on a 7-0 vote on June 16, 2025, with financial terms released on July 17, 2025 and payments due within 15 days.3MLive. Bay City Commission Approves Settlement in State Theatre Bankruptcy Case4MLive. Settlement Details Released in Bay City State Theatre Bankruptcy Lawsuit The second, with the former theatre officers, was approved by U.S. Bankruptcy Judge Daniel S. Opperman on December 10, 2025, with all payments due by December 31, 2025.5MLive. Former Bay City Theater Officials to Pay Back Thousands in Misused Loan Settlement
The combined recovery is a fraction of the nearly $1 million the trustee’s suit against the city and contractors originally sought, and a smaller fraction still of the theatre’s total debt.
What the Lawsuits Alleged
The trustee filed the first lawsuit on December 9, 2024, in federal court against Bay City, Serenus Johnson & Son Construction Co. Inc., and Clements Electric Inc.6MLive. State Theatre Bankruptcy Lawsuit Targets Bay City, Businesses The theory was unjust enrichment: because the renovated bandshell sat in a city-owned park, Bay City (not the nonprofit theatre) should have borne the cost. The suit alleged Serenus Johnson received more than $914,000 from the theatre’s loan proceeds in July and September 2020, and Clements Electric received more than $35,000 in July and August 2020, all for work on the city’s bandshell.7MLive. Settlement Reached in Bay City State Theatre Bankruptcy Case The case was resolved through mediation. Available reporting does not break out a specific figure for Clements Electric, though the company was part of the mediated resolution.8WNEM. Settlement Reached in Lawsuit Filed by Bay City State Theatre Trustee
The second lawsuit went after the theatre’s own leadership. It alleged that Bacigalupo, Delestowicz, and Martinez breached their fiduciary duties and were negligent in handling loans the theatre never benefited from. The trustee’s position was that while Bacigalupo drove the scheme, the chairman and treasurer knew about the loans and “never acted to protect the State Theatre when they learned about them.”9WNEM. Bay City State Theatre Bankruptcy Lawsuit Reaches Settlement
The Fraud Behind the Money
Between roughly June 2020 and November 2023, Bacigalupo held three overlapping jobs in Bay City: executive director of the State Theatre, executive director of the Bay County Historical Society, and director of the Bay City Downtown Development Authority.10U.S. Department of Justice. Former Bay City Civic Leader Sentenced to 2 Years in Federal Prison for Defrauding Non-Profits Federal prosecutors said he used those positions to divert more than $750,000 toward renovating the World Friendship Shell in city-owned Wenonah Park.
The core piece was an $800,000 loan from the Bay County Growth Alliance, secured by a mortgage on the theatre building that Bacigalupo signed in June 2020. Prosecutors said he fabricated board minutes to make it appear the theatre’s board had authorized the borrowing.10U.S. Department of Justice. Former Bay City Civic Leader Sentenced to 2 Years in Federal Prison for Defrauding Non-Profits A $150,000 loan from the U.S. Small Business Administration also went to the bandshell project.9WNEM. Bay City State Theatre Bankruptcy Lawsuit Reaches Settlement Neither loan was spent on theatre operations. Instead, the proceeds paid contractors doing work on the city’s park.
Bacigalupo also diverted $231,541 from the Bay County Historical Society by fabricating invoices and manipulating accounting records, and he applied for a $900,000 state grant from the Michigan Economic Development Corporation using falsified documents. That grant application was caught before any money went out.10U.S. Department of Justice. Former Bay City Civic Leader Sentenced to 2 Years in Federal Prison for Defrauding Non-Profits
When the Chapter 7 case opened, the Bay County Growth Alliance was listed as the largest creditor at $662,514, followed by the SBA at roughly $157,000.2WNEM. New Details on State Theatre’s Finances, Bankruptcy
Bacigalupo’s Criminal Sentence
The civil settlements ran alongside a federal criminal case. On September 23, 2025, Bacigalupo pleaded guilty to one count of wire fraud in U.S. District Court for the Eastern District of Michigan.11U.S. Department of Justice. Former Non-Profit Executive Director and City Development Official Pleads Guilty Prosecutors recommended 54 months in prison.12MLive. Feds Recommend Prison for Former Bay City Nonprofit Director
On April 24, 2026, U.S. District Judge David M. Lawson sentenced him to 24 months in federal prison followed by two years of supervised release, ordered restitution of $196,641 to the Bay County Historical Society and $151,000 to the State Theatre or its successor, and imposed a forfeiture judgment of more than $750,000.10U.S. Department of Justice. Former Bay City Civic Leader Sentenced to 2 Years in Federal Prison for Defrauding Non-Profits He is required to report to prison by September 11, 2026.13WNEM. Bacigalupo Files Bankruptcy After Sentencing for Wire Fraud
Weeks later, on May 15, 2026, Bacigalupo filed his own Chapter 7 bankruptcy. The filing listed more than $1.34 million in unsecured debt, including roughly $1.1 million owed to the federal government for restitution and forfeiture, against about $29,000 in assets.14MLive. Mike Bacigalupo Files Chapter 7 Bankruptcy Ahead of Looming Imprisonment Whether his personal bankruptcy can eliminate the court-ordered restitution has not been resolved.15ABC 12. Former Bay City State Theatre Director Files for Chapter 7 Bankruptcy
What’s Still Outstanding
The roughly $372,000 recovered through the two civil settlements leaves a substantial gap against the $1.6 million in debt the theatre carried into bankruptcy. The $151,000 criminal restitution ordered for the theatre could add to that, but Bacigalupo’s personal bankruptcy and minimal assets make collection uncertain.
A separate matter is also pending. Musician Rick Springfield obtained a consent judgment of $68,750 against Bacigalupo in Bay County Circuit Court in March 2026 over a bounced check for an August 2023 concert at Wenonah Park; a second count in that lawsuit is stayed pending the federal bankruptcy proceedings.16MLive. Ex-State Theatre Director Agrees to Pay Rick Springfield $68,750 for Summer 2023 Gig
The theatre building at 913 Washington Avenue was put up for sale after the Chapter 7 filing.17MLive. Bay City’s State Theatre Saga Continues as Historic Site Goes Up for Sale Available reporting does not indicate whether a buyer has come forward.