Former Bay City Civic Leader Sentenced to 2 Years in Federal Prison for Defrauding Non-Profits and Driving Historic Theatre into Bankruptcy

BAY CITY - A former Bay City civic leader was sentenced today in connection with a multi-year scheme that defrauded two Bay City non-profit organizations of more than $750,000 and drove one of them into bankruptcy, announced United States Attorney Jerome F. Gorgon Jr.

Gorgon was joined in the announcement by Caleb Rowell, Director, Bay City Department of Public Safety.

Michael Bacigalupo, 64, of Essexville, Michigan, was sentenced by U.S. District Judge David M. Lawson to 24 months in federal prison. He was also ordered to pay restitution in the amount of $196,641.17 to the Bay County Historical Society, and $151,000 to the Bay City State Theatre or its successor and to serve a two-year term of supervised release following his incarceration.

According to court records, between June 2020 and November 2023, Bacigalupo simultaneously served as Director of the Bay City Downtown Development Authority, Chief Operating Officer of the Bay City State Theatre (BCST), and Executive Director of the Bay City Historical Society (BCHS). He exploited these positions to fraudulently divert funds to the renovation of the Wenona Park Bandshell, without the authorization of either organization's board.

In the first phase of the scheme, Bacigalupo approached the Bay County Growth Alliance (BCGA), a local non-profit lender, and obtained an $800,000 loan using the BCST building as collateral. He falsely represented to BCGA that the BCST Board had approved the transaction and provided fabricated board minutes to substantiate that lie. Bacigalupo deposited the loan proceeds into BCST accounts and diverted them to the Bandshell project without the Board's knowledge. After making partial repayments of $277,000, he ceased payments altogether, leaving an unpaid balance of at least $523,000. Unable to service a debt it never authorized, BCST defaulted and declared bankruptcy.

Separately, from November 2020 through January 2022, Bacigalupo diverted $231,541 from BCHS toward the Bandshell project by manipulating the organization's accounting records and fabricating contractor invoices. Left without the funds Bacigalupo had misappropriated, BCHS was unable to complete planned renovations to its own museum and was forced to lay off staff.

Bacigalupo also fraudulently obtained approval of a $900,000 federal grant from the Michigan Economic Development Corporation by misrepresenting the identity of the applicant and the purpose of the funds. When MEDC sought documentation to support an initial $450,000 disbursement, Bacigalupo submitted fabricated invoices and falsified accounting records. MEDC determined the documentation was insufficient and ultimately withheld the grant entirely.

United States Attorney Gorgon stated, "Fraud in the garb of civic leadership is still fraud. And this man's fraud hurt cherished Bay City organizations."

This case was investigated by the Bay City Department of Public Safety. The case is being prosecuted by Assistant United States Attorneys William Thomas Orr and Ryan A. Particka