Two former Los Angeles Memorial Coliseum executives and the head of a prominent rave company have been arrested in connection with a corruption scandal involving millions of dollars in questionable financial transactions at one of the nation's most storied stadiums.
Former longtime General Manager Patrick Lynch and former Events Manager Todd DeStefano were taken into custody Thursday morning by Los Angeles County investigators, as was Reza Gerami, chief executive of the rave company Go Ventures.
The district attorney's office did not immediately disclose the charges against them. The inquiry has focused on broader allegations of conflict of interest, kickbacks and misappropriation of public funds. The 88-year-old Coliseum, home to USC football and the site of two Summer Olympics, is run jointly by the city, county and state.
The arrests follow a 13-month investigation triggered by Times reports on the Coliseum's finances, including payments made by Go Ventures to companies owned by DeStefano and money directed to Lynch by a stadium contractor.
At least one more arrest is possible, according to sources close to the investigation. Two other state and federal probes into the operations of the Coliseum and companion Sports Arena are also underway.
"Today's events were predictable," said City Councilman Bernard C. Parks, a member of the Coliseum's governing commission. "But it's a horribly unfortunate situation for the city and this historic facility."
Jane Robison, a spokeswoman for Dist. Atty. Steve Cooley, said authorities arrested Lynch at his Torrance home and DeStefano at a friend's home in Venice. Gerami was picked up at his Malibu residence.
Lynch's attorney, Tony Capozzola, said his client is innocent.
"I'm not aware of all of the charges they intend to file," he said. "But I have been providing information to the district attorney's office that I believe conclusively proves that Pat Lynch did not profit illegally from any event ever hosted at the Coliseum."
Most of the money that Lynch received from the contractor was deposited in a Miami bank account, in regular installments over many years. Capozzola said the payments were for a private boat deal.
DeStefano's lawyer, Richard G. Hirsch, said in a statement that his client had permission from Lynch, his supervisor, to work on the side with promoters such as Gerami, while they did business with him in his Coliseum job. Hirsch blamed the nine-member Coliseum Commission for the stadium's financial woes.
"Todd DeStefano did exactly what Coliseum commissioners asked and expected him to do: make the Coliseum and Sports Arena a profitable enterprise," the attorney added. "Rather than owning up to their failure to manage the Coliseum, a group of commissioners with the help of the district attorney are trying to turn attention away from their own mismanagement by manipulating the facts to support unfounded criminal charges against Mr. DeStefano."
Attempts to reach Gerami's attorney were unsuccessful. The promoter has previously denied doing anything wrong. For many years, his company staged popular raves at the Sports Arena.
DeStefano oversaw those concerts as part of his government duties. Two firms he set up collected at least $2.2 million in private fees from Go Ventures, a second rave company called Insomniac Inc. and other interests that had contracts at the Coliseum.
Insomiac presented an annual rave, Electric Daisy Carnival, at the Coliseum. The Times began to scrutinize Insomniac and Go Ventures productions after the fatal drug overdose of a 15-year-old girl at the 2010 Electric Daisy Carnival.
After the financial scandal broke, the commission decided to no longer hold raves at the Coliseum and Sports Arena.
The panel has filed a civil suit against Lynch, DeStefano, Go Ventures and Insomniac, seeking the return of the money paid to DeStefano's companies as well as roughly $400,000 that Lynch collected from a Coliseum janitorial contractor.
On Thursday, an attorney for Insomniac chief executive Pasquale Rotella issued a statement suggesting that his client should not face charges.
"Any allegations of wrongdoing on the part of Mr. Rotella by the district attorney are completely baseless and flat-out wrong," said the lawyer, Gary Jay Kaufman. "Any charges against Mr. Rotella are clearly politically motivated and publicity-driven. Mr. Rotella will vigorously defend himself and looks forward to being completely vindicated."
Kaufman said Rotella was out of town but expected back soon.
DeStefano quit the stadium in January 2011 to work full time in the promotion field. Lynch, who had run the Coliseum and Sports Arena for 17 years, resigned a month later.
Three other Coliseum managers and employees, including former Finance Director Ronald Lederkramer, have subsequently left the stadium's employment. All have denied wrongdoing.
"It's the beginning of the end of a long and sordid tale of corruption and betrayal of the public trust," county Supervisor Zev Yaroslavsky, a commission member, said of the arrests.
At the Coliseum in Exposition Park, Acting Interim General Manager John Sandbrook declined to comment. Staff members appeared resigned to the latest round of bad news. "It is what it is," said Lynda Habash, who works in events.
The groundwork for the scandal lay in years of clumsy stewardship, marked by inattentiveness by commission members and a cozy relationship between Lynch and his bosses. Lynch, DeStefano and Lederkramer spent money, with few controls, on luxury cars, golf outings, massages and other perks.
At one point, Lynch transferred to himself ownership of a Coliseum-bought Cadillac. He and the other managers had unlimited use of a government gasoline card, racking up tens of thousands of dollars in charges even though their jobs required little driving.
Federal investigators are examining cash payments of more than $1 million — much of it in suitcases — to a Coliseum union representative, according to those familiar with the probe. The money was intended to cover stagehands' wages.
The Coliseum has been operating in the red since 2008 and is now so broke that it is unable to make upgrades promised in its lease with USC, the stadium's main tenant. As a result, the panel is about to surrender day-to-day control of the taxpayer-owned property to the private school.
Times staff writers Ari Bloomekatz and Robert Faturechi contributed to this report.