Manhattan Beach Hotelier Hit With New Tax Charges
The operator of the Radisson Plaza Hotel & Golf Course in Manhattan Beach deducted thousands of dollars from employees’ paychecks but failed to pass the tax money on to the state, the district attorney’s office charged this week.
Horst Dieter Osterkamp is scheduled to appear May 10 in South Bay Municipal Court to answer misdemeanor criminal charges that he failed to turn over to the state $120,000 in taxes.
The allegations are among a set of problems besetting the hotel’s management, including a bitter labor dispute and criminal charges that the Radisson has not paid more than $200,000 in hotel bed taxes.
If convicted of all the criminal allegations, Osterkamp could be sentenced to up to seven years in jail.
Continued Confidence
The hotelier did not return telephone calls, and his lawyer declined to comment Thursday on the charges. The partnership that owns the hotel continues to have confidence in Osterkamp’s management, a spokeswoman said.
Osterkamp, 48, is president of US Hotel Properties, which operates the 364-room Radisson and a dozen other American hotels. US Hotel leases the Radisson from a partnership headed by the investment firm of Shearson Lehman Hutton.
In the criminal case filed this week, the district attorney’s office charged Osterkamp with six misdemeanor violations. He is charged with failing to turn over to the state income taxes and disability insurance deducted from employees’ paychecks, as well as making inadequate contributions to the state’s unemployment insurance fund.
The charges stem from alleged violations in the fall and winter quarters of 1987.
Osterkamp did not respond to at least three separate orders to pay the delinquent taxes, said a report by David Zitch, a state tax compliance representative.
“As a last resort, we are going to the criminal charges,” said a law enforcement official, who asked not to be named. “Since the notices don’t seem to work, what else can we do?”
Problems for the hotel’s management began not long after opening day in July, 1987, and by last August, the company that runs the Radisson’s restaurants and bars filed for protection from creditors under Chapter 11 of federal bankruptcy laws.
Two criminal charges were filed in January against Osterkamp and Radisson Controller Herb Hammann for allegedly failing to pay more than $200,000 in hotel bed taxes to the city of Manhattan Beach in 1988. The hotel operators face those misdemeanor charges next month in South Bay Municipal Court and could be sentenced to a year in county jail if they are convicted.
Taxes Come From Surcharge
The taxes come from an 8 1/2% surcharge paid by guests at all Manhattan Beach hotels and motels. Room rates at the Radisson range from $89 to $130 a night.
Manhattan Beach Finance Director Merle Lundberg said the hotel has paid most of its current bed taxes, but still owes about $250,000 in past taxes and penalties.
Revenue from the hotel--about $600,000 in bed taxes and rent of about $540,000--amounts to about 4% of the city’s budget, Lundberg said. The criminal prosecution will give the city “a little more clout” in receiving timely payments on the bed tax, he said.
City Manager David Thompson said he is confident that the company will meet its obligations. Thompson said he is happy that the hotel has been about 80% full during the last year, ahead of occupancy projections of 60% to 70%.
The hotel’s management has come under additional criticism from employees, who voted last November to recognize the Hotel Employees and Restaurant Employees Union, Local 814, as their bargaining agent. The union--which represents 275 maids, cashiers, waiters and other employees--has asked for a dental plan and improved medical insurance, as well as higher wages for workers, who now receive base pay of $4.25 to $6 an hour.
Organizers took out a quarter-page advertisement in Thursday’s Wall Street Journal, suggesting that a new company could be brought in to operate the hotel.
Union organizer Gary Guthman said in an interview that “there is a common interest between the owners and the workers here to shape up” US Hotel Properties or bring in a new management company.
But the hotel’s owners said they have no intention of hiring a new management company.
“Horst Osterkamp is a very good hotel operator,” said Shearson spokeswoman Milka Djuric, “and the hotel is performing very well against occupancy rates for hotels in the Los Angeles metropolitan area.”
