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Coliseum case widens; six are charged

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In a public corruption scandal that has tarred one of the city's most treasured landmarks, six men were charged Friday with bilking the Los Angeles Memorial Coliseum out of millions of dollars during a six-year spree of embezzlement, bribery and kickbacks.

Among those named in a 29-count indictment were three former managers of the taxpayer-owned Coliseum and two of the nation's most prominent rave promoters, Insomniac Inc. Chief Executive Pasquale Rotella and Go Ventures Inc. head Reza Gerami. Both staged major events at the historic stadium and companion Sports Arena.

A former Coliseum contractor also was charged.

Appearing in blue jail jumpsuits before L.A. County Superior Court Judge Patricia Schnegg, ex-Coliseum General Manager Patrick Lynch, former Events Manager Todd DeStefano and Gerami pleaded not guilty to a variety of charges that included embezzlement, bribery, conflict of interest and conspiracy.

The 13-month investigation followed a Times report on DeStefano's financial ties to Insomniac. Subsequent articles disclosed the dealings by Lynch, Gerami and the others charged in the indictment. The 88-year-old Coliseum, home to USC football and host to two Summer Olympics, is jointly run by the city, county and state.

"Mr. DeStefano's conduct was outrageous," prosecutors wrote in court papers, "and we have yet to see whether it will have resulted in the financial ruin of the Coliseum."

Jessica Levinson, a Loyola Law School professor who studies public corruption, likened the Coliseum case to the scandal in the city of Bell, where eight public officials were charged with enriching themselves through illegally inflated salaries and other means.

"This type of corruption and rank flouting of the law doesn't happen every day," Levinson said.

Lynch's bail was set $800,000 and DeStefano's at $1.2 million. DeStefano was also accused of accepting bribes from Rotella and Gerami.

Rotella and Gerami were charged with bribing a public employee — DeStefano — embezzlement and conspiracy. Rotella, who pleaded not guilty, was taken into custody Friday and Gerami was arrested Thursday. Bail was set at $1.2 million for each.

Tony Estrada, a longtime Coliseum janitorial contractor, was charged with embezzlement and conspiracy. He is accused of paying Lynch $385,000 in regular installments, depositing most of the money in a Miami bank account.

Those payments are the basis of embezzlement and conspiracy counts against Lynch, according to the indictment.

The sixth defendant is former Coliseum Technology Manager Leopold Caudillo Jr., who was charged with criminal conflict of interest for allegedly directing more than $20,000 in stadium funds to a firm he co-founded.

Estrada and Caudillo were out of the country Friday, authorities said. It was not known when or if they would surrender. Estrada's bail was set at $375,000 and Caudillo's at $20,000. The court granted the prosecution's motion to freeze the defendants' assets.

Court documents spelled out a complex scheme in which Rotella and Gerami paid DeStefano at least $1.9 million by check, wire transfer and electronic deposit to ensure low-cost access to the Coliseum and Sports Arena for their concerts.

The sources of the money included a 2008 partnership contract DeStefano drafted that guaranteed him 10% of ticket sales from Rotella and Gerami, according to the indictment.

At the time, DeStefano was overseeing the promoters as part of his government duties. He resigned in January 2011, shortly after The Times began inquiring about his relationship with a rave company.

In other court documents, prosecutors alleged that DeStefano became a "tireless advocate" for keeping raves at the stadium complex even after a 15-year-old girl died after overdosing on Ecstasy at Insomniac's June 2010 Electric Daisy Carnival rave at the Coliseum.

The documents state that DeStefano acted as a "mole" for Rotella and Gerami, providing information on which members of the Coliseum's governing commission favored or opposed the raves. He also offered the promoters advice on which commission members to support with political contributions, including City Councilman Bernard C. Parks, whose district includes the Coliseum, the documents allege.

In 2010, the councilman's son, Bernard Parks Jr., "solicited" DeStefano to obtain campaign contributions for his father, the documents say. The events manager then suggested to the rave promoters that they each donate $500, according to the documents. That was shortly after the death of the teenage girl.

DeStefano also asked the promoters to give him $10,000 to contribute to a Coliseum fireworks show the senior Parks hosted, the documents state. It was not clear whether that money made it to the show. Neither Parks is accused of wrongdoing.

Parks Jr., who was not interviewed by investigators, said DeStefano repeatedly offered to raise money for his father's campaign, not the other way around.

City records show that the only contribution Parks' campaign received from the promoters in 2010 was $250 from Rotella.

In the court documents, prosecutors say that none of the nine commissioners was informed by those involved that DeStefano was working on the side for the promoters. Then-incoming commission President David Israel has said Lynch notified him about DeStefano's side job in January 2011.

DeStefano is also accused of embezzling a total of $240,000 from DreamWorks, Coca-Cola, the producers of the television show "American Gladiators" and the Southern Wine & Spirits company. DreamWorks and "American Gladiators" used the Sports Arena for location filming. Coca Cola and Southern Wine sold drinks there. The documents say DeStefano "tricked" the companies into believing they were paying the Coliseum because the money went to a company he founded called Los Angeles Coliseum Events.

Lynch told the commission's lawyer, Donovan Main, in 2009 that DeStefano was considering doing outside work for promoters, according to the documents. Main warned Lynch that such a relationship could violate conflict of interest laws, the documents say, but the general manager still allowed DeStefano to run Insomniac and Go Ventures concerts in his government job while being paid by the companies.

In the counts against Lynch and Estrada, prosecutors alleged that they formed a partnership in 2006 in which the contractor paid the general manager $1 for every hour worked by a janitorial employee. This alleged kickback was financed with an increase in Estrada's hourly rates that Lynch arranged, according to the documents.

To endorse the checks deposited in the Miami bank, Estrada used a rubber stamp of Lynch's signature, the documents say.

andrew.blankstein@latimes.com

paul.pringle@latimes.com

ron.lin@latimes.com

Copyright © 2014, Los Angeles Times
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