Audit Finds Coliseum Finances Are `Appalling'

LOS ANGELES (CBS) — Los Angeles Memorial Coliseum officials had "weak or nonexistent" financial controls to track millions of dollars in public money that went missing or was not properly tracked in recent years, according to an audit of the storied venue's management released Thursday.

City Controller Wendy Greuel's audit found Coliseum managers made $870,000 in non-refundable cash payments from 2003-09 for South American soccer teams to play at the stadium, but the events never happened and the contracts were never approved by the board that oversees the Coliseum.

KNX 1070's Margaret Carrero reports the audit also found that $950,000 worth of cash payments were 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 Commission President David Israel and Vice President Don Knabe, a member of the Los Angeles County Board of Supervisors, admitted to "past, insufficient oversight" but also blamed Greuel and past city controllers for not being "as engaged the last four decades as (the office) has been the last year."

The findings come two weeks after District Attorney Steve Cooley handed down indictments against six former top Coliseum managers or contractors.

One of those six, former general manager Patrick Lynch, pleaded guilty in late March to a felony conflict-of-interest charge. He was ordered to pay $385,000 in restitution to the Coliseum and is expected to be placed on three years probation and ordered to complete 1,500 hours of community service.

Prosecutors allege former Assistant General Manager Todd DeStefano received direct payments from rave producers that held events at the Coliseum from 2007-10. During that time, the average rent for the four biggest rave 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 $12.9 million in ticket sales.

Among the audit's other notable findings, a janitorial vendor was paid $4.8 million between January 2008 and June 2011without a contract; an employee was paid for "working" 25 hours in one day; and the Coliseum's management allowed its liquor license to be used by other entities for private fundraising, a violation of state law.

Lynch was paid an annual $125,000 bonus for several years during the height of the mismanagement.

"The tone at the top was, `I'm just going to take care of this, and trust me.' That's not how government works," Greuel said.

The audit contains more than 50 recommendations, including shifting some authority over finances from Coliseum managers to the Coliseum Commission, which includes representatives from Los Angeles city and county government, as well as the state. The commission should also formally order Coliseum managers not to make cash payments for salaries, wages or other benefits, Greuel said.

Greuel said commissioners have already instituted a number of the audit's recommendations.

The letter from Israel and Knabe to Greuel included a sharply worded section accusing her and past controllers of neglecting to audit the Coliseum despite a provision in the 1956 joint powers agreement giving the city controller the responsibility.

Their letter says "it was not until 2011 that the Controller's office expressed any interest in its responsibilities in the financial management of the Coliseum and Sports Arena."

"There is plenty of blame to go around. The failure to provide proper oversight is a shared failure," they wrote. "And it is the future upon which we are now focused ... You and the public can be assured that the errors of the past are, indeed, in the past."

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