ABC Seeks to Revoke Cafe’s License : Charges 2 With Criminal Records Secretly Control Trendy Malibu Spot

An attorney for the state Department of Alcoholic Beverage Control argued Monday that the liquor license for the Malibu restaurant Splash should be revoked because the popular hangout for show business personalities is secretly controlled by two San Fernando Valley businessmen with criminal records.

“We know the people involved are dirty,” attorney David B. Wainstein told an ABC license hearing in Los Angeles conducted by Administrative Law Judge William F. Byrnes.

But both the restaurant’s owner, Ronnie Lorenzo, and his attorney, Rick Blake, denied any secret ownership deal had been made with anyone. Instead, they maintained that the two businessmen, Maurice Rind and Richard Schulman, through their company, Richman Financial Services Inc., had made Lorenzo a $67,500 loan in 1986 to help the then-year-old restaurant financially.

Lorenzo, under questioning, said that he has not had to pay anything on the personal loan for “over a year.”

Summed up Lorenzo’s lawyer, Blake: “I don’t think the (ABC) has much.”

Fugitive Warrant

But a Los Angeles Police Department organized-crime specialist, Detective Michael Brambles, testified that when he arrested Lorenzo on March 3, 1987, on a New Jersey fugitive warrant, Lorenzo declared he was really only a “hidden owner” of Splash.

Lorenzo, on the witness stand, claimed that Brambles’ statement was untrue.

“That’s ridiculous,” said Lorenzo, 43, of Malibu. “If I had been a hidden owner, the last thing I would do is tell a cop.”

Byrne said he would issue his decision on whether Splash can keep its liquor license in about a month.

The hearing had its roots in the massive federal and local investigation into one-time whiz kid Barry Minkow, who became a teen-age millionaire after launching his ZZZZ Best carpet cleaning company in his parents’ garage in the San Fernando Valley.

Minkow was convicted last December on 57 fraud counts for masterminding a sophisticated securities swindle that propelled his firm into a hot Wall Street commodity.

Eventually Paid

According to law enforcement sources, the ZZZZ Best investigation began with the arrest of Lorenzo more than 2 1/2 years ago--an arrest Lorenzo said on Monday was much ado about nothing, some overdue traffic fines in New Jersey and Malibu that he eventually paid.

Five months later, on July 7, 1987, Los Angeles Police Chief Daryl F. Gates told a news conference that his agency’s Organized-Crime Intelligence Division had cracked a major drug-trafficking and money-laundering ring.

Leading the ZZZZ Best investigation for the Police Department’s organized-crime unit was Brambles.

One of the money-laundering “fronts,” Gates told reporters at the time, was Splash, a two-story restaurant on Westward Beach Road adjacent to Zuma Beach.

Among the individuals Gates named “in the conspiracy” included Minkow, Lorenzo and the two individuals who the ABC on Monday alleged to be Splash’s real owners--Rind, 50, of Tarzana and Schulman, 55, of Encino.

In the ensuing months, only the 22-year-old Minkow was tried and convicted, receiving a sentence of 25 years in federal prison.

Stock Offering

During his trial, Minkow’s defense unsuccessfully sought to introduce evidence that financier Rind, who was the architect of a lucrative ZZZZ Best stock offering, engineered the carpet cleaning company fraud. Rind has denied any criminality in connection with the ZZZZ Best case.

The ABC complaint against Splash was filed March 22, 1988. But due to continuances, it did not come up for hearing until Monday.

The essence of the complaint is that in December, 1986, Rind and Schulman, through their company, Richman, acquired 5,000 of the 10,000 outstanding shares in Scouse Corp., the firm doing business as Splash. Three other investors held the balance of the shares.

The ABC complaint alleges that Scouse never notified the ABC of the stock transfer to Richman Financial.

Rind and Schulman, according to the ABC complaint and FBI records, have criminal convictions--Rind, in 1976 and 1977 on stock fraud, conspiracy and transportation of stolen securities; Schulman in 1970 and 1971 for extortion.

‘Very Remote’

Lorenzo’s attorney, Blake, a former ABC attorney, said the felony records of Rind and Schulman were “very remote in time” to be considered in the current ABC hearing.

Under California law, individuals with criminal convictions are not automatically precluded from receiving a green light from the ABC for a liquor license. But, in the case of Splash, argued ABC attorney Wainstein, Rind and Schulman intentionally deceived the agency.

“They may be a lot of things, but I don’t think they’re stupid,” Wainstein said in his closing argument. “They knew what they were doing.”

Rind’s attorney, James E. Blatt, has said repeatedly that Rind and Schulman “have no interest whatsoever in Splash, nor have they ever had any financial interest in Splash.”

Lorenzo also emphasized under questioning that Rind, a longtime friend from New York, and Schulman have never owned Splash.

New to Business

He said he was new to the restaurant business and had relied on the expertise of his maitre d’, Richard Chesterfield, and the loan to get him off the ground.

“I had never done anything like this before, and I was naive in it,” Lorenzo said of his Splash venture.

Chesterfield, 52, a native of Great Britain, was arrested at Splash on March 15, 1988, by immigration officials on charges of having an invalid visa. According to his immigration lawyer, Luc Odabashian, rather than face an immigration hearing, Chesterfield left the country voluntarily Jan. 1. He has since returned to his job at Splash.

Lorenzo was hazy on just how much Splash stock he currently owns. According to ABC officials, he possessed 4,000 of the restaurant’s 10,000 outstanding shares in April, 1986. Now, he believes he owns almost all of the stock, he testified Monday.

“I’m a little unclear about that,” he said.