Los Angeles Memorial Coliseum officials had “weak ornonexistent” financial controls to track millions of dollars in publicmoney that went missing or was not properly tracked in recent years, accordingto an audit of the storied venue’s management released today, April 12.
City Controller Wendy Greuel’s audit found Coliseum managersmade
$870,000 in non-refundable cash payments from 2003-09 forSouth American soccer teams to play at the stadium, but the events neverhappened and the contracts were never approved by the board that oversees theColiseum.
The audit also found that $950,000 worth of cash paymentswere made to staff outside of the regular payroll system, Greuel said.
She called the mismanagement discovered egregious and”one for the record books.”
In a letter responding to the audit, Coliseum CommissionPresident David Israel and Vice President Don Knabe, a member of the LosAngeles County Board of Supervisors, admitted to “past, insufficientoversight” but also blamed Greuel and past city controllers for not being”as engaged the last four decades as (the office) has been the lastyear.”
The findings come two weeks after District Attorney SteveCooley handed down indictments against six former top Coliseum managers orcontractors.
One of those six, former general manager Patrick Lynch,pleaded guilty in late March to a felony conflict-of-interest charge. He wasordered to pay $385,000 in restitution to the Coliseum and is expected to beplaced on three year’s probation and ordered to complete 1,500 hours ofcommunity service.
Prosecutors allege former Assistant General Manager ToddDeStefano received direct payments from rave producers that held events at theColiseum from 2007-10. During that time, the average rent for the four biggestrave events plummeted while gross ticket sales were going up, the audit found.The Electric Daisy Carnival 2010 was charged $20,000 in rent, but took in $12.9million in ticket sales.
Among the audit’s other notable findings, a janitorialvendor was paid
$4.8 million between January 2008 and June 2011without acontract; an employee was paid for “working” 25 hours in one day; andthe Coliseum’s management allowed its liquor license to be used by otherentities for private fundraising, a violation of state law.
Lynch was paid an annual $125,000 bonus for several yearsduring the height of the mismanagement.
“The tone at the top was, ‘I’m just going to take careof this, and
trust me.’ That’s not how government works,” Greuelsaid.
The audit contains more than 50 recommendations, includingshifting some authority over finances from Coliseum managers to the ColiseumCommission, which includes representatives from Los Angeles city and countygovernment, as well as the state. The commission should also formally order Coliseummanagers not to make cash payments for salaries, wages or other benefits,Greuel said.
Greuel said commissioners have already instituted a numberof the
audit’s recommendations.
The letter from Israel and Knabe to Greuel includeda sharply worded
section accusing her and past controllers of neglecting toaudit the Coliseum despite a provision in the 1956 joint powers agreementgiving the city controller the responsibility.
Their letter says “it was not until 2011 that theController’s office
expressed any interest in its responsibilities in thefinancial management of the Coliseum and Sports Arena.”
“There is plenty of blame to go around. The failure toprovide proper
oversight is a shared failure,” they wrote. “Andit is the future upon which we are now focused . . . . You and the public canbe assured that the errors of the past are, indeed, in the past.”