Olympics Promotion Firm Draws Fire : Suits Claim Landau Misappropriated Funds for High Living

The collapse of a New York-based sports marketing company that played a key behind-the-scenes role at the 1984 Olympics has created a swirl of allegations about misappropriation of funds to buy racehorses, fancy homes and cocaine.

Robert Landau Associates, a well-known sports marketing and sales promotion firm, had contracts in recent years with such major organizations as the Olympics Organizing Committee for the 1984 Winter Games in Sarajevo, Yugoslavia, and American Broadcasting Cos., whose TV network broadcast last year’s Summer and Winter Olympics.

One month after the Summer Games in Los Angeles ended, however, the Landau firm filed for protection under Chapter 11 of the Federal Bankruptcy Code, leaving more than 1,500 unpaid creditors ranging from waiters to major corporations.

The bankruptcy proceedings in New York and two more recent lawsuits have produced a series of allegations against the company, primarily surrounding the company’s president and sole shareholder, Robert Landau, 44.

In a $19-million federal lawsuit brought by Milwaukee-based Miller Brewing, Landau himself is accused of operating RLA through a “pattern of racketeering” that includes using money advanced by clients to invest in race horses, to purchase or furnish lavish residences in New York, Massachusetts and Florida and to make “repeated illegal purchases of cocaine.”

Miller claims that it advanced more than $2 million to Landau’s firm in part to pay vendors at auto races and other promotional events sponsored by the brewery. The vendors have never been paid, the Miller suit alleges.

Before it filed for bankruptcy protection, Landau and his firm cut a swath through the Madison Avenue advertising community and the sports world, with such clients as Major League Baseball and the United States Football League, as well as corporations such as Miller, Ford Motor and Burger King, for whom Landau Associates handled sports and non-sports promotions.

Additionally, the company controlled the U.S. marketing and licensing rights for last year’s Winter Olympics in Sarajevo, a contract awarded by the organizing committee of the Games. As part of the contract, Landau Associates acted as the official agent in selling sponsorships for the Winter Games, such as Miller’s status as the “official beer.”

Landau has been unavailable for interviews, but his attorney said he intends to formally deny all the allegations. Hehas claimed in a court document that some of the actions now cited in the lawsuits were at least partly outgrowths of his company’s involvement with the Winter Olympics, the U.S. Olympic Organizing Committee and its president, former Treasury Secretary William E. Simon.

In his formal denial of allegations in Miller’s lawsuit, filed in U.S. District Court in Milwaukee, Landau said one reason he purchased racehorses, “was that (Landau Associates) was the exclusive marketing agent for the U.S. Olympic Committee and Mr. William E. Simon, former Secretary of the Treasury and president of the United States Olympic Committee, was the principal partner in Castleton Farms of Lexington, Ky., which handled the racehorse transactions.” Simon did not return a reporter’s phone calls.

Previously, Landau testified in a creditors hearing that he took a personal cash advance of $1 million from his company to buy racehorses. Landau later said that when he sold his stake in the racehorse business for $600,000, the proceeds were put back into his company.

In response to Miller’s allegation that he had “smuggled” $20,000 cash out of the country in February, 1984, in violation of U.S. currency regulations, Landau claimed that “several (Landau Associates) executives” took that amount to the Winter Olympics in Sarajevo where “the monies were to be used for enormous entertainment expenses.” According to Landau, “$10,000 of that money was ultimately used to buy the bobsled for the U.S. team, which aided in the team placing fourth in the Winter Olympics.”

Landau did not say how the race horse transaction was linked to the company’s Olympics dealings, or why it was necessary for Landau Associates to buy the bobsled.

Handled Catering

Additional controversy surrounding Landau has to do with his activities at the Summer Olympics in Los Angeles. During the Games, Landau Associates was retained by clients, primarily ABC-TV, to handle catering and hospitality for guests. On behalf of ABC, Landau Associates handled about 1,300 people a day, including the network’s employees, clients and other guests. The Landau firm ran several hospitality suites and staged elaborate nightly dinner parties.

By the close of the Games, ABC had paid Landau Associates a total of $2.1 million for the suites and parties, according to court documents. That amount was supposed to cover all expenses, including labor.

But dozens of Los Angeles-area residents hired by Landau Associates to work during the Olympics, primarily as waiters and caterers at parties, say they were never paid. Nor were a number of small businesses in the Los Angeles area that supplied goods and services, such as flower arrangements and liquor, to the parties.

In interviews, many of the workers said they had been promised $15 an hour. Some also were told that their pay would be in cash. Instead, many received checks that were not honored by the banks, if they were paid at all, according to court records.

Agency Files Charges

As a result of worker complaints, the California Labor Commission several weeks ago filed 11 criminal misdemeanor charges against an RLA subsidiary and Landau himself. The commission has alleged violations of the state labor code, including nine charges of paying employees with bad checks and two charges involving employment of a minor. Landau has not responded to the charges.

In addition, an Atlanta printing company, Dittler Bros., which previously had manufactured promotional games for Landau Associates, claims that it is out $1.5 million it was supposed to have received from the Landau firm’s Summer Olympics funds. At present, however, Dittler’s dispute is with ABC.

Dittler claims in a lawsuit filed in U.S. District Court in New York that it lent $1 million to Landau Associates in July, 1983, based on a letter signed by John Lazarus, who was then ABC’s vice president of sports sales and marketing. According to the lawsuit, the Lazarus letter said ABC would assure repayment of the Dittler loan by assigning to the Atlanta firm a $1.5-million “account receivable” owed by ABC to Landau Associates for its Olympics service to the network.

Officials at ABC and Dittler Bros. would not comment on the lawsuit or Landau Associates, citing the pending litigation.

Resigned After Probe

In his position at ABC, Lazarus not only had responsibility for the ABC Olympics parties and hospitality suites, but also for ABC’s entire Olympics marketing and advertising sales plan, which was considered highly successful. He resigned from the network last Oct. 1, after an internal investigation at ABC regarding Olympics expenditures. ABC has not disclosed the findings of that investigation.

In a telephone interview, Lazarus said he resigned because “my contract was up and we were not going to have a successful renegotiation because of the potential publicity (about Landau Associates) involved.” However, he insisted that he was “never” asked to resign or accused of any wrongdoing by ABC.

Days after Lazarus resigned, ABC filed suit for the dismissal of Dittler’s claim, saying that Lazarus lacked the authority to promise the $1.5 million and that Dittler did not take sufficient steps to find that out before the account receivable became payable last Sept. 15. Landau Associates filed its Chapter 11 petition the day before. It has since gone into Chapter 7, or liquidation.

Miller Brewing’s lawsuit alleges that Landau Associates suffered a severe cash flow crisis at least as early as 1983, partly because Landau and RLA Executive Vice President Charles A. Lockwood, engaged in “illegal and irresponsible use of corporate assets.”

In addition, Landau and Lockwood “conspired to deal and did deal in narcotics or other dangerous drugs,” the Miller suit alleges.

Alleges Financing Scheme

In order to purchase cocaine, the suit alleges, Landau obtained cash from company accounts through a scheme involving checks made out to employees. On several occasions, the checks were for $9,900, Miller says, in order to avoid detection by the Treasury Department, which requires reports on transactions of $10,000 or more.

In his response to the Miller lawsuit, Landau denied that he dealt in narcotics or used Landau Associates corporate funds to purchase cocaine. Claiming that the charges are “unfounded lies,” he said they were placed in the lawsuit in “an attempt to embarrass and humiliate me.”

According to depositions taken in the Dittler lawsuit, Landau urgently sought financing from ABC while the Summer Olympics were taking place, offering a letter signed by former Treasury Secretary Simon as evidence of Landau Associates’ future ability to repay a loan.

According to the deposition of ABC Treasurer David J. Vondrak, Landau approached Vondrak during the Games in Los Angeles, asking for both a loan and an advance against future business, claiming that he had marketing rights from the U.S. Olympics Committee “worth many millions of dollars in potential revenue to RLA.”

Letter From Simon

To substantiate the claim, Vondrak testified, Landau gave him a letter signed by Simon, which was “a general statement that the USOC . . . had given them (Landau Associates) exclusive marketing and licensing rights” for a period of five years. Vondrak testified that he was unable to locate the letter, but he said that it had a 1984 date.

Harvey D. Myerson, an attorney representing Simon and the USOC, said: “There was never a letter agreement that conferred the rights. There was correspondence that discussed the possibility (with Landau).”

While attempting to get the loan from ABC, Landau also was trying to get out of a racehorse syndicate that he had invested in at Simon’s suggestion, according to Vondrak’s testimony. As Vondrak said Landau explained it to him, Simon approached Landau and said, “I’ve got a (racehorse) syndicate that I want you--that you can invest in. It’s only for insiders, you can’t lose any money.”

Landau found it “very difficult” to ask for the money back, Vondrak testified, because of Landau’s friendship with Simon. Landau lost $400,000 or $600,000 on the deal, according to Vondrak.

F. Don Miller, executive director of the USOC until February of this year, said there was no contractual relationship between the committee and Landau Associates, although the USOC considered awarding RLA the marketing rights, for a period “right prior to the (Summer) Olympic Games and through the Games.”

“The reason it did not occur is because we changed our minds,” Miller said. Asked why, he replied, “No comment.”

If the Dittler case is not settled out of court, it could go to trial as early as June. Dittler, which was not paid by either ABC or Landau Associates, is asking for a total of $5 million in actual and punitive damages from ABC. The Miller case is also still in the pretrial stage.

Times staff member Tony Robinson also contributed to this story.