Restaurant Told It Must Give Up Liquor Permit : Malibu: Splash was once alleged by Chief Gates to be a conduit for laundering drug money.

Splash, a fashionable Malibu restaurant which Los Angeles Police Chief Daryl F. Gates once alleged was a conduit for laundering drug money, has been ordered by the state Alcoholic Beverage Control Department to surrender its liquor license by May 24.

ABC Director Jay Stroh said he made the decision to revoke the license “based on our independent investigation” that almost half of Splash’s stock was transferred to two individuals with criminal records without his agency’s knowledge.

Stroh’s April 13 decision, which was made public Tuesday, was decidedly tougher than a proposed ruling handed down in Los Angeles last October by an administrative law judge.

At that time, W.F. Byrnes ruled that Splash’s liquor license should be revoked--but he gave the owners six months to find a buyer for the license, which oftentimes is critical to the success of a restaurant.

Stroh prohibited the restaurant from selling the license, demanding instead that the owners turn it in to the ABC.

Ronnie Lorenzo, 44, a Malibu resident who has maintained that he is the restaurant’s legal owner, said Stroh’s decision will be protested to the ABC appeals board. An appeal, which must be filed by May 23, could delay the revocation action by several months.

In a separate action on April 16, three days after the ABC director’s decision, the restaurant sought protection from creditors under Chapter 11 of the federal Bankruptcy Code, according to papers filed in U.S. Bankruptcy Court in Los Angeles

Scouse Corp., doing business as Splash Restaurant, listed assets at $42,500 and debts of $206,000, mostly federal income taxes owed the government. The maneuver allows Splash’s management to be at least temporarily protected from creditors while it works out a plan to eventually pay them.

The filing, however, “has no legal bearing” on the liquor license revocation proceeding, according to ABC attorney David Wainstein.

Splash, located on Westward Beach Road near Malibu’s popular Zuma Beach, was thrust into controversy stemming from the LAPD’s investigation of the scandal-ridden ZZZZ Best carpet cleaning firm and its onetime chief executive, whiz kid Barry Minkow.

At a July 7, 1987, news conference, Gates charged that organized crime investigators had uncovered a massive network of narcotics trafficking and money laundering involving Minkow and others.

Gates branded Splash as 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, who entertained business associates at Splash, was subsequently convicted in federal court on 57 fraud counts for masterminding a securities swindle involving his San Fernando Valley-based ZZZZ Best firm.

In the case of Splash, however, detectives combed through its records, but were never able to persuade the Los Angeles County district attorney’s office that the restaurant was being used for money laundering.

Lorenzo was never charged with any wrongdoing.

In its order revoking Splash’s liquor license, the ABC alleged that in December, 1986, the restaurant transferred 4,500 of its 10,000 privately-held shares to Richman Financial Services Inc. of Encino without seeking ABC approval, as the ABC said was required under state law.

The revocation order stated that Richman Financial’s two officers, Richard Schulman, 56, of Encino, and Maurice Rind, 51, of Tarzana, were convicted felons. Schulman was convicted in 1971 of extortion; Rind was twice convicted, in 1976 and in 1977, of securities fraud, the ABC order declared.

Although Gates also named Rind and Schulman as “persons involved” in a narcotics money-laundering conspiracy linked to the ZZZZ Best case, they were never charged with any wrongdoing in that matter.