The former controller at the swank Chateau Marmont and Hollywood Standard hotels was arrested by FBI agents Wednesday on charges of embezzling $11.4 million.
Authorities alleged that Kelly T. Ebert, 39, used the money to buy a $2.3-million home near Lake Sherwood, a bed-and-breakfast establishment in Santa Barbara, luxury cars, movie star memorabilia and a failed travel business that he ran on the side.
According to an FBI affidavit, Ebert allegedly siphoned off the money by submitting new signature cards to the hotels' banks, giving him authority to sign and write checks and order wire transfers. Until then, the signatures of two hotel officers were required.
Andre Balazs, principal owner of the hotels, told investigators that he hired Ebert as controller of the Chateau Marmont on the Sunset Strip in 1993, partly because he liked his "preppy, East Coast business" look and personality. In 1998, the hotelier opened the Hollywood Standard, giving Ebert added responsibilities for that hotel's finances.
At the outset, Ebert lived modestly. He earned about $40,000 a year, stayed in a room in the hotel and drove a beat-up truck. But gradually, according to the affidavit, hotel employees began to see a change in his lifestyle as he went from renting a house to buying a $950,000 home in Bell Canyon, then trading up to his Lake Sherwood estate.
He purchased an expensive Mercedes-Benz and Toyota Land Cruiser, sported a new Rolex watch every year, collected Lucille Ball and Elvis Presley memorabilia, frequented Las Vegas and kept a pet bird for which he paid several thousand dollars, fellow employees told the FBI.
Ebert started a side business, CD-Rom Travel Planners in Chatsworth, that produced travel guides. The enterprise was a failure and closed after several years, but not before Ebert had transferred into its bank account at least $10 million in hotel funds, the FBI said. Investigators said he then moved the money into several personal accounts that bankrolled his lavish lifestyle.
Authorities alleged that Ebert's embezzlement lasted from 1997 to 2002. During that time, they said, he took steps to avoid detection.
The Chateau Marmont's main account was at the Bank of Orange County in Fountain Valley. Ebert allegedly instructed the bank not to return the hotel's checks and monthly statement by mail, fearing that they would fall into the wrong hands. Instead, he arranged for a messenger service to pick them up and drop them off at his Lake Sherwood home, according to the FBI. The owner of the messenger service said Ebert often tipped his drivers $200.
A cashier at the Hollywood Standard told investigators that Ebert instructed her to wait at the front desk, sometimes for several hours, to intercept arriving mail that contained bank statements. The employee said her orders were to place the statements in a brown bag, take a roundabout route through the hotel lobby to avoid surveillance cameras and proceed to the parking garage, depositing the bag in the trunk of his car, to which she was given a key.
The cashier said Ebert ordered her to shred large piles of hotel financial records, including bank statements, credit-card statements and canceled checks. She said she shredded so many documents that the hotel's paper shredder broke.
Ebert was relieved of his duties at the Hollywood Standard in the fall of 2001 when he was blamed for missing a deadline for the hotel's mortgage payment. He was fired from the Chateau Marmont in March 2002 after missing another mortgage payment that cost the hotel a $100,000 penalty.
After his ouster, the hotels' owners hired a private investigative service and a forensic accountant to review his activities. They discovered the alleged embezzlement.