By Paul Pringle and Rong-Gong Lin II
Los Angeles Times
February 1, 2012
For at least five years, officials with the Los Angeles Memorial Coliseum passed bundles of cash totaling more than $1 million to a union representative, sometimes in a suitcase packed with $100 bills.
The payments, ranging from $1,400 to $187,700 each, were to cover the wages of stagehands on Coliseum events -- rave concerts, Cinco de Mayo performances and a Lakers championship celebration -- according to records and interviews.
Invoice reports from the publicly owned Coliseum, obtained by The Times under the California Public Records Act, show that the International Alliance of Theatrical Stage Employees received the cash advances from March 2006 through last February. But the Coliseum imposed no controls over whether the money ended up in the right pockets, and the commissioners who govern the property say they may have been swindled.
DOCUMENT: Coliseum invoices
Now criminal investigators for the U.S. Labor Department are looking into the payments, people familiar with the matter say.
With no detailed accounting of what happened to the cash after it left the stadium, the Coliseum Commission does not know how much actually went to wages and whether required contributions were made to employee benefit plans. In addition, the stadium could be on the hook for hundreds of thousands of dollars in back payroll and withholding taxes.
It's as though the Coliseum was run "like an underground business," said Jessica Levinson, a Loyola Law School professor who studies government corruption. "This idea of cash in suitcases reads like a bad crime novel."
The storied stadium has been embroiled in controversy for about year, since The Times began reporting financial irregularities involving its top executives, most of whom have departed.
Two of the managers founded side companies that received money from firms doing business with the Coliseum, records and interviews show. And according to invoices and expense reports, the Coliseum spent tens of thousands of dollars on luxury cars, unlimited gasoline purchases, massages, snoring treatments, golf outings and steakhouse meals, all billed to the public.
A district attorney's investigation is underway. The former managers have denied any wrongdoing.
The Labor Department probe adds a federal dimension to the Coliseum's troubles. Most of the cash payments to Local 33 of the union were for the raves at the Coliseum and companion Sports Arena and for bookings by Latino music and dance productions.
The $187,700 advance -- the largest in the reports -- was for a mixed martial arts event in June 2007. The other big payments were mostly for raves sponsored by a company called Go Ventures Inc., including $82,000 for a 2010 New Year's Eve concert the firm co-produced and $71,200 for its Halloween show the year before, according to the reports.
An advance of $53,058 was paid for a July 2007 Daft Punk concert. And the union received $7,131 in cash for the Lakers' June 2009 victory parade, which was capped by a rally at the Coliseum. Thousands of dollars in payments were also made for a Filipino game show and a Filipino religious program.
The advances are clearly itemized on the reports, nearly all of which show that they were approved by the Coliseum's then-finance director, Ronald Lederkramer.
A Coliseum attorney said in an email that the finance director's boss, former General Manager Patrick Lynch, did not present the reports to the nine-member commission for review.
"[T]herefore, the commissioners would not have had the opportunity to review those statements and call the cash advance entries into question," said the attorney, Assistant County Counsel Thomas Faughnan.
Los Angeles County Supervisor Zev Yaroslavsky, one of four commissioners who are elected officials, said in a statement that until controversy engulfed the Coliseum last February, "I was never made privy to, nor informed of, financial statements of any kind that documented any cash payments to anyone."
Two other county supervisors who are commissioners -- Mark Ridley-Thomas and Don Knabe -- did not respond to queries about the invoices.
City Councilman Bernard C. Parks, who also sits on the commission, confirmed that the Labor Department is examining the advances.
"Their office called my office to get some information," said Parks, adding that his staff referred the federal agency's request to the Coliseum's interim general manager and City Controller Wendy Greuel.
A Labor Department spokeswoman declined to comment.
Parks said commissioners were told by an accountant that the cash came from the Coliseum box office or was ordered from a bank. "I don't think this can be explained away legally," he said.
Calls to the president of the union's Burbank-based Local 33 were not returned. The head of the international organization in New York, Matthew Loeb, did not respond to an interview request.
The union is prominent in the entertainment industry, with more than 100,000 members nationwide.
The distinctive IATSE union label is often seen at the tail end of movie credits.
An internal commission audit started to focus on the cash advances after The Times made a public records request in September for material on the Coliseum's failure to make required contributions to employee retirement accounts.
The Coliseum hired the stagehands under a union contract that mandated the retirement contributions.
It is unclear whether those contributions were made when workers' wages were paid in cash.
The commission has sued Lynch, his former events manager and two rave companies to recover allegedly misappropriated funds. The lawsuit does not name the stagehands union or any of its representatives.
It alleges that Lynch, former Events Manager Todd DeStefano and unidentified promoters "caused or made" the cash payments. It alleges that cash advances of $557,710 were made at events promoted by Go Ventures, and payments of $209,581 were delivered at events promoted by another rave company, Insomniac Inc. The suit also accuses Go Ventures and Insomniac of acting with Lynch and DeStefano to siphon off concert revenue that should have gone to the commission.
Lynch's lawyer, Tony Capozzola, said his client never handled the cash. Lynch, DeStefano and the rave companies have denied any wrongdoing.
Sources with knowledge of the situation have said that one or more firms founded by DeStefano received about $400,000 from Insomniac in 2009.
That would bring to at least $2.2 million the sum that DeStefano's firms collected from Insomniac, Go Ventures and other companies that did business with the Coliseum while he oversaw them in his government job, records and interviews show.
Lynch, for his part, received roughly $400,000 from a Coliseum janitorial contractor in regular payments over about five years, with most of the money sent to a Miami bank, according to records and interviews. Capozzola has said the payments were for a private boat deal between his client and the contractor.
Los Angeles Times staff writer Andrew Blankstein contributed to this report.
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