Cafe Faces Loss of License : Investigation: Restaurant Splash in Malibu, a target of police, is on losing end of liquor permit finding.

Splash, the tony Malibu restaurant that Los Angeles police investigators charged was an organized-crime front, should have its liquor license revoked because of a cover-up of its true ownership, according to a proposed decision by an administrative law judge.

“It is still not clear just who owns how much of the business,” Administrative Law Judge W.F. Byrnes said in a three-page proposed ruling, dated Oct. 12 and made public Thursday by the state Department of Alcoholic Beverage Control. “The only thing that is certain is that the true ownership is not as it has been reported to the (ABC).”

As a result of a September hearing, Byrnes proposed that Splash’s liquor license be revoked, but that the revocation be stayed for six months to give the restaurant’s management time to sell the license to someone “acceptable” to the ABC.

Such action usually means the sale of the restaurant too, said David B. Wainstein, an ABC attorney who prosecuted Splash. Historically, he said, revocation of a liquor license translates into a big business loss. The license alone has a value in excess of $30,000, he added.

But the ABC may not be satisfied with Byrnes’ proposal.

ABC Deputy Director Manuel Espinoza said the agency may reject the decision and instead call for immediate revocation of Splash’s liquor license when it reviews the case later this year.

“It was our understanding that the evidence was far more than sufficient to warrant outright revocation,” Espinoza said in a telephone interview from Sacramento. “We want to see if the judge’s decision is consistent with the evidence.”

Immediate revocation of the license would reduce the restaurant’s market value and could prevent the current owners from realizing a substantial profit from any future sale, ABC attorneys said.

Ronnie Lorenzo, 43, of Malibu, who has said that he owns the restaurant, has 40 days to appeal the decision. The restaurant can continue serving liquor during the appeal.

Splash’s attorney, Rick A. Blake, did not return a reporter’s telephone calls. Lorenzo said he would appeal any adverse ABC decision.

The ABC inquiry into Splash, a restaurant frequented by film and television celebrities, was connected with a federal and local investigation into Barry Minkow, the San Fernando Valley whiz kid whose ZZZZ Best carpet-cleaning company made him a millionaire and a darling of Wall Street.

Los Angeles Police Chief Daryl F. Gates charged at a July 7, 1987, news conference that organized-crime investigators had uncovered a massive network of narcotics trafficking and money laundering involving Minkow and others.

Gates called Splash one of the “fronts for laundering large organized-crime profits from narcotic trafficking.”

He also named Minkow and Lorenzo as “persons involved in the conspiracy.”

Minkow was convicted in federal court last December on 57 fraud counts for masterminding a complex securities swindle involving ZZZZ Best. Lorenzo has not been accused of any wrongdoing.

The ABC alleged that Splash’s real owners were Maurice Rind, 50, of Tarzana and Richard Schulman, 55, of Encino. Gates accused them of using Splash as a money-laundering conduit through their company, Richman Financial Services.

Lorenzo said Thursday that he could not understand how the ABC could say he was not Splash’s owner.

“I was approved by the ABC from Day 1,” he said.

Byrnes, the administrative law judge, said in his proposed decision that “it was not established” by the ABC that Rind and Schulman secretly controlled Splash.

Rind and Schulman, according to the ABC complaint and FBI records, had criminal convictions--Rind for stock fraud, Schulman for a number of felonies.