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LA Coliseum Misspent Millions
The Los Angeles Memorial Coliseum lost millions of dollars during the past decade through shoddy practices such as charging rave producers a pittance and paying for unauthorized events that never took place, according to a city audit released Thursday.
The landmark 1923 arena that has hosted two Olympic Games lacked even basic financial controls, City Controller Wendy Greuel said in a statement.
The audit, which began last fall, identified at least $6 million in “wasteful spending, fraudulent activity and/or abuse of resources and that figure could be greater,” Greuel spokeswoman Shannon Murphy said.
The Coliseum Commission that is supposed to run the arena delegated its authority to former General Manager Patrick Lynch, who created a “`do as I ask’ tone-at-the-top that, combined with a complete absence of policies and procedures, created a dysfunctional and risk-prone culture,” the audit concluded.
Last month, Lynch, along with former Coliseum Assistant General Manager Todd DeStefano, two rave promoters and two contractors were named in a grand jury indictment alleging schemes involving bribery, embezzlement, conspiracy and conflict of interest.
Lynch pleaded guilty last month to felony conflict of interest. He was ordered to pay $385,000 in restitution and under the plea agreement will have to complete 1,500 hours of community service.
Attorney Michael Nasatir, who represents DeStefano, has said his client is innocent.
Among the audit’s findings:
_ From 2003-2009, Coliseum managers paid $870,000 in non-refundable cash advances to have Uruguayan soccer teams play at the arena. However, the events never took place and the contracts weren’t approved by the Coliseum Commission.
_ Worker pay was mismanaged. Employees were paid at least $75,000 in bonuses that were not properly filed with the Internal Revenue Service. In one case, an employee was paid for working 25 hours in a single day. More than $950,000 in untracked cash payments also were made to technical staff.
_ Between 2007 and 2010, promoters of electronic music concerts, or raves, were charged tiny rates to use the venue even as their ticket sales soared. Producers of the Love Fest were not charged any rent in 2010, while the Electric Daisy Carnival that year was charged $20,000 and sold nearly $13 million worth of tickets. Prosecutors have accused DeStefano of receiving nearly $2 million from rave promoters.
_ DeStefano improperly negotiated a contract with Coca-Cola and diverted an annual $70,000 payment intended for the arena to his personal company.
_ A janitorial and security vendor was paid nearly $5 million for services between 2008 and mid-2011 even though it had no contract.
_ The Coliseum lost $750,000 in revenue over the past three years by failing to properly renew a contract with the state for use of a parking lot.
_ Managers allowed the Coliseum’s liquor license to be used by others for private fundraising, in violation of state law.
The audit makes some 50 recommendations for establishing clear policies and stronger financial procedures.
The Coliseum Commission acknowledged past oversight problems but said it has been aggressively working on reforms.
“The Commission accepts its responsibility and embraces its (role) in instituting change and preserving the Coliseum for generations to come,” said a statement from commission President David Israel and Vice President Don Knabe.
The commission forced the resignation of senior managers after investigating misconduct claims, and has cooperated with prosecutors, the statement said.
However, it also laid some blame on the city controller’s office, saying a 1956 joint powers agreement gave the office responsibility to weigh in on Coliseum financial affairs.
“Had the city controller’s office been as engaged the last four decades as it has been the last year, it is entirely possible that the illegal activity the commission uncovered would never have occurred,” the statement said.
Murphy, her spokeswoman, replied: “Greuel’s job is to protect taxpayers and as soon as there was any indication of shenanigans at the Coliseum, Wendy made it a top priority to look into matter.”