Mike Lacey deals in laughter. Six days out of the week, comedians stand on the stage of his Hermosa Beach Comedy & Magic Club and deliver punch lines, snappy retorts and goofy gags.
But these days, Lacey is hoping that the last laugh isn't on him.
His 28-year-old bookkeeper, Margaret Michelle Wood, was arrested late last month on suspicion of embezzlement and fraud in what police described as an elaborate scheme that allegedly netted her $175,000 over a two-year period. Wood's attorney confirmed in an interview that she took funds but said it was only $50,000. Wood herself could not be reached for comment.
The shortage of funds kept Lacey scrambling to meet his bills. When things got really tough, he had no choice but to ask comedians to perform for free. "This was clearly a shock," Lacey said, sitting in the Green Room of the club he opened in 1978. Behind him, the beige cinder-block wall is filled with the signatures and comments of comedians who have traded barbs and jokes at the club over the past 19 years. "She kept us so broke that everyone [here] was working three jobs."
Things got so bad in late 1995 that for the first time in years, the comedy club was unable to donate Christmas gifts to the children at the UCLA Medical Center cancer ward. He wondered if he would have to close the club, and constant worrying put him in the hospital with ulcers.
Lacey, who as a kid promised to take out the garbage in exchange for staying up late to watch Marx Brothers films, had weathered tough times in the early 1990s when the recession hit the South Bay particularly hard.
But in the last two years, the comedy club's business had appeared to grow. When Lacey and his general manager, Dana Klein, asked the bookkeeper why there was still so little money in their bank accounts, Wood simply said that food and supply costs had risen, he said.
In early March, Lacey decided to have an independent accountant check out the books. Two days later, the club owner later told police, Wood stepped forward and confessed she had stolen funds that amounted to $27,500.
As Lacey and his general manager started looking back through the club's books, they pieced together missing funds totaling $175,000, Hermosa Beach Police Det. Thomas Eckert said.
Police believe Wood forged signatures on checks made out to herself, took funds out of cash deposit bags and falsified documents.
In an interview, Robert Ernenwein, Wood's attorney, said his client took $50,000 in funds and is willing to repay that amount over time. "We regret the loss, but we also do not believe that [Margaret] Michelle Wood is solely responsible for the bad business of the Comedy & Magic Club," the attorney said, adding that his client is not responsible for embezzling $175,000.
Wood, a mother of three, already has returned $10,000 to the club, Lacey said.
Ernenwein said that Wood's family was undergoing financial difficulties, but gave no further explanation about the reasons she may have stolen money.
Charges have not yet been filed by the district attorney's office because investigators are waiting for several canceled checks to come back from the bank so that signatures on them can be verified, Eckert said. Wood, who is free on $15,000 bail, was arrested weeks ago, police say, because they were concerned she would move out of town before she could be apprehended.
Days after the news filtered out, stunned friends, customers and entertainers stepped forward to help, remembering when the comedy club was there to help them.
Torrance resident Eddie Coco showed up at the club with a box of chocolates and offered to call customers to drum up business.
"Dana and Mike are the most loving, kind, considerate, compassionate and extremely generous people on the face of the Earth," he said, noting that the pair helped him raise $4,000 to pay for experimental cancer treatments for his 34-year-old son, who died last year.
One woman sent a $500 check, which the owners said they are planning to return. Comedian Howie Mandel refused to be paid after performing several nights, and Jay Leno, who performs at the club on Sunday nights, offered to lend a hand.
This is not the first time the comedy club has seen troubles. In 1991, a doorman who had worked at the place for less than one week started fires on two separate occasions. One was severe enough that 200 guests had to be escorted out of the club during a performance.
These twists of bad luck have bedviled a club owner who has spent years dedicating much of his time to charity benefits and raising tens of thousands of dollars a year for various causes.
One of those causes was buying artificial limbs for Stephani Victor, a 27-year-old woman who lost her legs when a van struck her in 1995.
Victor, who was attending a benefit for the Hermosa Beach Firefighters Assn., was introduced to Lacey. They sat down and chatted. Before she knew it, the club owner was planning a benefit for her.
"He said, 'I have just had it in my mind that you probably have been having a rough time financially, and I would like to offer my club to you to have a fund-raiser.' I started to cry right then," Victor said. "I told him I needed $50,000 for my prostheses, and I had no idea how to pay for them. That was more money than I had ever seen."
Not only did Lacey and comedians Mandel and Rita Rudner raise $50,000, but the publicity generated by the benefit prompted Nissan to give Victor a handicapped-adjusted sports utility vehicle to help her get around.
"Talk about a big heart," said Hermosa Beach firefighter Paul Hawkins. "They should have a picture of him in the dictionary next to the word philanthropy."
Even the entertainers who work at the club say Lacey is an uncommon businessman.
"He makes Pollyanna look like a cynic," said comedian Larry Miller, who said that the club owner has a hard time saying no to anyone, or anything, in need. Lacey owns eight cats, seven goats, one sheep, one dog and two horses, most of them coming from local animal shelters.
Because he is dyslexic and has a hard time reading, he must trust people to be his reading eyes.
"This is a big lesson for me," Lacey said, leaning back and thinking. "You learn the most from the toughest of times. But the toughest of times here has brought out the best in people."
Correspondent Tracy Johnson contributed to this story.