The “bizarre” agreement promises a former leader up to $175,000 if the group fails to meet his demands.

MARYSVILLE — A “bizarre, self-serving agreement” that was part of the 2017 resignation of a controversial former leader for the annual Strawberry Festival has put the community celebration at risk, and must be thrown out because it is illegal, the state Attorney General’s Office says in a new lawsuit.

The previously secret agreement between the nonprofit that sponsors the festival and Mark Jensen, of Woodinville, promises him up to $175,000 if the group fails to meet his demands.

Among other things, the agreement calls for lifetime bans for six former board members who were key to the festival’s earlier success. Those targeted for shunning include people who previously had landed major sponsors, including the Tulalip Tribes and big-name retailers in town, who in recent years have withdrawn support. Jensen had accused those banned for having engaged in unwarranted attacks on his reputation.

Lawyers with Attorney General Bob Ferguson’s consumer protection division brought the lawsuit with the support of the current board of Maryfest, the nonprofit that presents the festival.

The agreement reached with Jensen is “blatantly illegal,” wrote Joshua Studor and David Horn, assistant attorneys general. “With full support from leaders of the festival, the state respectfully asks this court to remove the handcuffs and rid the festival of this illegal agreement.”

In court papers, attorneys for the state ask that a judge toss out the agreement before it does more harm.

“To this day, fearing the consequences of breaching the provisions of the agreement, no one has made the agreement public,” according to the complaint. “The confidentiality portion of the agreement has limited Maryfest’s ability to explain to its donors and past and present members why certain individuals are unable to participate in the Strawberry Festival despite their expertise and experience.”

The state’s attorneys filed a copy of the agreement as part of their pleadings in Snohomish County Superior Court.

Jensen said the agreement was drafted by Maryfest’s attorney at the time and that he did not have his own legal counsel. He has not entered into agreements like it in the past, he said.

“There were several people who left Maryfest because they did not get their way, and I became the apparent target,” he said in a phone interview Tuesday. “For the good of Maryfest, I came to an agreement to leave in an attempt to protect Maryfest in the future.”

Jensen joined the Maryfest board in 2014 and was elected vice president starting in 2016. He was excited to work on the Strawberry Festival, he said. His understanding was that Maryfest had faced problems for years, including volunteers threatening to quit. He claims he’s tried to reach out to the current board multiple times, and that volunteers who helped run the festival for the past two years have been turned away by the new leadership.

“I’m heartbroken,” he said.

The nonprofit’s leadership changed last year after Marysville Mayor Jon Nehring began asking questions. He’d been hearing complaints since 2015 about perceived problems with the Strawberry Festival.

The city doesn’t have authority over the Strawberry Festival, Nehring said. But after receiving a petition signed by more than 100 people, the mayor met with the board, including Jensen, in early 2017. His goal was to find a solution that would allow all volunteers to participate, and to help the two groups at odds over the nonprofit’s operations coexist.

“We left that meeting hoping that something would be worked out,” he said. “That didn’t transpire. I have no reason to believe they didn’t try, but it never happened.”

The meeting with the mayor sparked an emergency session of the Maryfest executive committee, according to the state’s lawsuit. Jensen agreed to resign, “but not before binding Maryfest to an onerous separation agreement,” the complaint says.

Jensen voted to approve the agreement — a conflict of interest the state says contributes to its legal flaws. He did not resign from the board until five days after that agreement was signed.

Among those supporting the state’s intervention now is Jodi Hiatt, Maryfest’s current board president. She had served on the board from 1999 to 2015, but resigned out of “major concerns” about festival leadership then provided by Jensen and others, including Paul Brown, who is a former publisher for The Marysville Globe, a sister paper of The Daily Herald.

“When I returned as president in October 2017, I found the finances a mess. There was apparently no board treasurer for at least two years,” Hiatt said in a declaration filed with the lawsuit.

A review of the group’s records shows that Maryfest is at least a year behind on taxes and in recent years has exercised scant control over who has spent money and why, she wrote.

When the new board first saw the agreement with Jensen, “we were shocked,” Hiatt wrote. It was presented to them by Jared Karstetter, who was the attorney for Maryfest when the agreement was signed.

Defendants listed in the state’s lawsuit include Maryfest, Jensen and the Holiday Treasure Chest Charity Foundation, originally the Seafair Pirates Charity Foundation, of which Jensen is a director. Part of the agreement now being contested required Maryfest to give $10,000 to Treasure Chest. The state is asking the court to order return of those funds, and to bar Jensen from future participation in Maryfest.

Jensen previously was banned from charitable solicitation in Washington for five years in the 1990s, following a suit by the attorney general for violations of the charitable solicitations act and consumer protection act, the complaint says.

He also was part of the Seattle Seafair Pirates Fund. He left around 2013 but continues to be a director for Treasure Chest, which changed its name from the Seafair Pirates Charity Foundation in 2014.

Under the agreement between Jensen and Maryfest, the Seafair Pirates also are barred from helping with the Strawberry Festival. Some in the pirates group had defamed and attempted to “blacklist” Jensen during the Marysville controversy, the agreement says.

The Strawberry Festival is scheduled in June, with the Grand Parade on June 16. The festival’s estimated cost is about $260,000, according to Hiatt’s declaration. The board anticipates it will bring in just over $90,000 and can use roughly $87,000 each from its checking and reserve accounts. Without more sponsors, paying for this year’s festival would wipe out the organization’s remaining funds, according to Hiatt.

Kari Bray: 425-339-3439; kbray@heraldnet.com.