Coliseum sues ex-auditor, alleging failure to detect corruption
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The financially troubled Los Angeles Memorial Coliseum Commission is suing its former auditor for more than $11 million, alleging that it failed to detect errors in financial statements between 2007 and 2011, a time when alleged corruption ensnared the taxpayer-owned agency.
The suit, filed Thursday in Los Angeles Superior Court, says California-based SingerLewak’s “incompetent auditing and accounting services effectively protected the corrupt former employees and promoters.”
“Its grossly insufficient management letters and disclosures to the Coliseum ... left the commissioners ... under the control of the corrupt former management employees,” the lawsuit said.
SingerLewak released a statement defending its work: “Our audits were performed properly and with the highest level of professionalism in every respect. We will aggressively defend the allegations in this suit and are confident that the evidence will show the allegations to be false.”
In its lawsuit, the taxpayer-owned Coliseum said that if the audits had been done properly, the commissioners “would have detected that certain former employees were engaged in self-dealing and conflicts of interest.’
The allegations refer in part to how a manager allegedly received about $2 million from rave companies to help them stage the dance concerts at the Coliseum and adjacent Sports Arena. That accusation is at the heart of a bribery charge in the corruption scandal. In all, eight people have been charged with wrongdoing, and one has pleaded guilty.
FULL COVERAGE: Coliseum under scrutiny
The Coliseum also said in the lawsuit that it was unaware of the stadium’s delicate financial position. It said that had officials “known the true state of their financial affairs, plaintiffs would not have agreed to certain terms” in its 2008 promise to USC to invest tens of millions of dollars in upgrades to renovate the stadium.
The stadium, now on the verge of financial failure and unable to afford the renovation, is trying to hand over its operations to USC, whose football team plays there. The Coliseum Commission also alleged that the auditor failed to detect about $1 million that was given in cash to a union shop steward in connection with Coliseum events. The lawsuit alleged that the purpose of the cash payments might be wage payments to the union shop steward and stagehands “that were outside the ordinary and usual employment compensation practices” of the Coliseum.
The lawsuit said a result of the cash payments was a failure to pay federal and state taxes on the wages, and workers compensation costs; it said the cash payments exposed the Coliseum to liability.
New audits show the Coliseum has lost $10.6 million in the last three years.
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