Despite Fraud Conviction, Firm Will Run Burbank Airport Shops

An Atlanta-based concessionaire convicted last month of felony mail fraud and conspiracy in a corruption scandal that rocked the Georgia capital is scheduled to set up shop at Burbank Airport in April.

The Paradies Shops, one of the nation’s largest airport news and gift concession agents, will take over three stores at the airport and open a fourth after the current concessionaire’s contract expires March 31. The 34-year-old company won the contract in December after outbidding five others.

But a federal jury last month found The Paradies Shops and its owner, Daniel M. Paradies, guilty of 83 counts of mail fraud in one of the most politically charged trials in Atlanta history.

Daniel Paradies also was convicted of one count of conspiracy for his role in a scheme to funnel more than $1 million in illegal payoffs to a prominent former city official and airport commissioner.

Burbank Airport officials said Thursday they are aware of the conviction, but that their agreement with The Paradies Shops would stand.

“I accept the fact that there’s been a judgment rendered. . . . But we’re not going to say that because there was a conviction back East there’s automatically a loss of your concession out here,” said Robert Garcin, Burbank-Glendale-Pasadena Airport Authority president.

But he added that the matter has been referred to the airport’s legal counsel.

Richard Dickson, senior vice president of The Paradies Shops, insisted that his company would have no trouble meeting its Burbank Airport obligations.

In a letter sent to airport authority members, however, Assemblyman Richard Polanco (D-Los Angeles) urged the airport to cancel its contract with Paradies as “a prudent public interest decision.”

In an interview, Polanco acknowledged that his letter was spurred by a complaint from an unsuccessful rival bidder for the concession, MBE Inc. in South Pasadena. But he reiterated his contention that the contract does not represent “good public policy.”

“Do you want to reward the leadership of companies that have been convicted of felonies?” Polanco said. “I don’t think so.”

He noted that Denver city officials have decided to end their relationship with Paradies, even though opening day for the new Denver International Airport is scheduled in less than two weeks.

Mark K. McBee, Burbank Airport’s manager of contracts and properties, said the airport’s contract with Paradies does not allow termination solely because of convictions of criminal charges.

“We don’t feel it’s going to impact their ability to operate,” he said.

A spokeswoman for John Wayne Airport in Orange County said the company’s two stores there have performed “very satisfactorily” since they began four years ago and that there are no plans to review its 10-year contract. The company does not operate a concession at Los Angeles International Airport.

The company, which logged $100 million in sales last year and operates in 38 U.S. cities, landed the Burbank concession after a search process spanning several months. Six proposals were submitted to the airport, and the list was winnowed to two in November: The Paradies Shops and British concern W. H. Smith, both of which guaranteed at least $2.4 million in rent over a five-year period.

At the time, Daniel Paradies and his company were under indictment on fraud and conspiracy charges, and as required, his bid mentioned that both he and The Paradies Shops had been named as defendants in a criminal action.

But based on expected revenue and the company’s plans for a specialty shop with a golf theme, Burbank Airport staff members recommended approval of the Paradies bid as “a superior proposal,” according to an agenda report. The airport authority voted unanimously at its Dec. 20 meeting to award the contract to Paradies, praising Paradies-owned shops as “a beautiful, quality operation.”

The indictment was not mentioned in a 5 1/2-minute discussion at the meeting. Authority and staff members agree that commissioners had been briefed, but officials said Thursday it did not seem necessary to bring up the matter again.

Convictions in the Atlanta case were handed down Jan. 22.

Within days, Denver Mayor Wellington Webb announced that he would seek to end his city’s relationship with the company. “The mayor just felt that he didn’t want that cloud over the new airport,” said Briggs Gamblin, an aide to Webb.

For its mail-fraud convictions, the company faces maximum fines of $500,000 for each count. Daniel Paradies could receive up to five years in prison and a $250,000 fine for each mail-fraud count. The conspiracy conviction also could net him a five-year prison term and $250,000 fine. Sentencing is scheduled for April 15. Paradies, 72, has vowed to appeal.