As scandal continues to rock the Coliseum, Los Angeles City Controller Wendy Greuel today released a highly critical audit of the Coliseum’s financial operations.
Ms. Greuel’s investigation reveals that management controls over Coliseum spending were weak or nonexistent, resulting in a dysfunctional and wasteful fiscal environment.
The audit also exposes a laundry list of questionable practices and poor decisions by Coliseum officials, including $870,000 in advance payments to companies in South America for events that never happened, at least $75,000 in bonuses paid to employees outside of the city’s payroll system that were not filed properly with the IRS and 42 instances of over $950,000 worth of untracked cash payments being made to technical staff.
“The lax oversight and poor state of the Coliseum’s finances are appalling,” said Ms. Greuel. “My audit found that the former General Manager established an unsuitable ‘do as I ask’ tone-at-the-top that, combined with a complete absence of policies and procedures, created a dysfunctional and risk-prone culture.”
Controller Greuel’s audit shows that between 2003 and 2009, Coliseum executives scheduled five separate dates to bring multiple different Uruguayan all-star soccer teams to the Coliseum.
Despite investing over $870,000 in unreturned deposits, none of these events ever occurred. The Coliseum Commission Board never formally approved the event contracts.
In 2009, the Coliseum’s former General Manager, Patrick Lynch, secured $56,670 worth of hotel rooms for one of these proposed events on his personal credit card. The Coliseum reimbursed him fully for this expenditure. Despite ultimately canceling the rooms; an additional $17,000 was lost because the event never happened.
Between 2007 and 2010, the period during which prosecutors allege that former Assistant G.M. for Events Todd DeStefano received direct payments from rave producers, the average rent for the four most prominent raves held at the Coliseum significantly declined, while those same events’ gross tickets sales increased significantly. One of these events, Love Fest, was not charged any rent in 2010, and Electric Daisy Carnival 2010 was charged only $20,000 in rent, and took in over $12.9 million in ticket sales.
Each of these events was only charged for the use of a single venue, despite using multiple different Coliseum facilities, and were waived from the move-in and move-out fees charged to other large events without the Commission Board’s approval. Despite the lax environment and increasing unprofitability of the Coliseum, Mr. Lynch received the maximum bonus allowed under his contract – $125,000 – each year between 2007 and 2010.
Additional impacts of lax controls include:
• The Coliseum failed to properly renew a contract with the state for the use of Exposition Parking Lot 3 after the initial contract expired in 2009. This omission led to $750,000 in lost revenue over the last three years.
• Mr. DeStefano was allowed to negotiate a contract with Coca-Cola despite not being an eligible representative of the Coliseum Association. Mr. DeStefano then diverted a $70,000 annual payment intended for the Coliseum to his personal company.
• A janitorial and security vendor was paid a total of $4.8 million between January 2008 and June of 2011 with no contract.
• An employee was paid through non-city payroll for working 25 hours in one day.
• The Coliseum allowed its liquor licenses to be used by others for private fund-raising purposes, in violation of California’s Alcoholic Beverage Control provisions. “The Los Angeles Memorial Coliseum Commission needs to implement the audit recommendations immediately to ensure that the Coliseum’s unacceptable business practices come to a halt,” said Ms. Greuel.
She has conducted more than 50 audits and uncovered nearly $130 million that the City has lost to wasteful spending, fraudulent activity, and abuse of government resources.
For more information, log on to the website of Ms. Greuel, a candidate for Mayor next year: http://controller.lacity.org/index.htm
