D.A. Orders Inquiry Into Finances of County Fair : Records: The general manager says the board has worked hard for a year to clear up the organization’s problems, which he blames on the previous administration.

Dist. Atty. Michael D. Bradbury ordered an inquiry Wednesday into the tangled finances of the Ventura County Fair.

Bradbury’s action came one day after the fair’s general manager, Michael Paluszak, told The Times that the fair board is considering calling for a state audit to review the fair’s financial records.

Paluszak said the audit is needed because of indecipherable records that make it difficult to accurately measure the full extent of substantial losses that the county’s annual fair has amassed in recent years.

Bradbury said the inquiry he ordered is a preliminary fact-gathering procedure to determine whether there are grounds for an official investigation.

“I haven’t seen the fair’s financial records, but I’ll be obviously interested in looking at the audit and monitoring the situation,” Bradbury said.

Paluszak declined to comment on the inquiry Wednesday, but said: “The fair board and staff have shown honorable intentions and worked hard all year to straighten out the financial records. There was never an attempt to cover anything up.”

Paluszak said the state audit being considered by the fair board is a routine procedure because the fair is run by the state’s 31st District Agricultural Assn., an agency of the Department of Food and Agriculture.

On Tuesday, at the monthly fair board meeting, Paluszak said the fair board postponed the scheduled announcement of its financial report for the 12-day August fair event until accounting mistakes can be corrected.

Paluszak said preliminary figures released last month showing that the fair lost $175,000 during the event were erroneous because they failed to take into account a number of expenses and revenue sources, such as some salaries and ticket sales.

He said the fair is concerned about providing accurate figures this year because, in the past, it has submitted overblown attendance figures, under-reported expenses and used satellite-wagering profits earmarked for improvements at the fair to cover mounting budget deficits on the fair’s year-round operations.

In each of the past two years, the fair under-reported its deficit for the annual event by more than $100,000, Paluszak said.

Paluszak, who took over as general manager in December, replacing former manager Jeremy Ferris, said the previous administration kept sloppy records. He said that when he took over he computerized the bookkeeping system and hired an accounting staff to sort out the fair’s finances. He said attendance at last year’s county fair was about 30,000 less than originally reported.

In a recent interview, fair board President Don Leach said the practice of padding attendance figures started four or five years ago when staff began adding to overall attendance an increasing number of people who they estimated visited the fairgrounds free of charge. “Eventually, the numbers got out of hand,” Leach said, “but that kind of stuff perpetuates itself.”

For his part, fair board Director Alfred A. Humes said Tuesday that he was unaware of any wrongdoing by the board but said he was troubled this year when he discovered that under the past administration the fair staff transferred satellite-wagering funds to its general operations fund without the board’s approval.

“The one thing that made me uncomfortable, and I questioned it once or twice, was the lateral transfer of funds without the board approval,” he said.

According to a statement of policy by the Department of Food and Agriculture, the 2% commissions on the satellite-wagering handle that the fair receives can only be used for “costs associated with satellite wagering” or “maintenance and replacement of existing facilities.”

The fair had earmarked about $2 million of its 2% funds to pay for part of a satellite-wagering building and the paving of a parking lot. Both projects are scheduled for completion in 1992, but the fair does not have enough money to pay for them.

Although the fair raised close to $1.8 million in 2% commissions over the past three years, its reserves only increased from $181,222 in 1987 to $939,443, by the end of 1989, fair records show. The lion’s share of the profits was used to cover deficits in the fair operations budget, the records show.

This year, the fair expects to significantly reduce its operational deficit and its reliance on 2% funds, Paluszak said.

The 1990 budget presented last June shows that the fair expects to reduce its operations deficit to $150,000, while increasing its satellite-wagering reserves by $809,950. Paluszak said he hopes to balance the operations budget next year.