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State Auditing Trust Fund for Hollywood Sign : Landmark: The Chamber of Commerce is under investigation by the attorney general's office for allegedly mishandling funds. The chamber denies fraud, blaming 'oversights and accounting errors.'

December 28, 1989|RON RUSSELL | TIMES STAFF WRITER

The state attorney general's office is investigating the Hollywood Chamber of Commerce's finances amid complaints that the chamber mishandled thousands of dollars in a tax-exempt trust fund set up to maintain the landmark Hollywood sign.

Deputy Atty. Gen. Patricia Barbosa said that an audit, which began in September, is nearly complete. She declined to discuss specifics of the matter.

However, sources close to the chamber's board of directors said that state officials are pressing the group to repay the trust $28,000 in interest, in addition to the $45,000 in interest it voluntarily repaid last June after its handling of the trust fund became public.

Last May The Times disclosed that of $122,166 in assets reported by chamber officials last year as belonging to the trust, $53,158 had been on loan to the chamber for nearly 10 years.

Chamber officials repaid the loan's principal at the same time they made the $45,000 interest payment.

Larry Kaplan, the chamber's executive director, expressed optimism this week about the outcome of the audit, saying that the chamber is "already considering several of the state's recommendations."

Established in 1978

"There have been oversights and accounting errors, but there was never an intent to defraud," he said. "Anyone expecting the audit to turn up that sort of thing will be sorely disappointed."

The trust was established in 1978 as part of a fund-raising effort to restore the famous landmark. About $214,000 of the almost $300,000 placed in the fund was spent that year to rebuild the sign. The rest was to be held in the trust to maintain the sign.

However, federal and state records showed that until last June, 11 years after the fund was created, only $600 was spent for the sign's maintenance, with more than $3,300 spent for bank and accounting fees.

Under terms of the trust's tax-exempt status, chamber officials agreed that the funds were to be used exclusively for the maintenance of the sign, and that the trust was "not to be affiliated with or controlled by the Hollywood Chamber of Commerce."

Chamber officials have defended their jurisdiction over the trust, saying that although documents submitted to the Internal Revenue Service may suggest otherwise, the terms under which the trust was established allows the chamber to exercise control over the trust.

However, sources close to the chamber board said state officials are pushing the group to revamp its oversight of the trust to include people not affiliated with the chamber.

"We think it's about time that they opened up their books and acted responsibly," said Christine O'Brien, president of the Hollywoodland Homeowner's Assn., which has been critical of the chamber's management of the sign.

Although the sign on the side of Mt. Lee in Griffith Park is under the jurisdiction of the Los Angeles Department of Recreation and Parks, by agreement with the city the chamber has been responsible for its upkeep since 1978, after raising the money to restore the sign.

The sign was declared a Cultural Historic Landmark in 1973.

Critics have complained for years that the chamber has refused to provide them with information about the handling of the trust fund.

"It's amazing that after all that has been revealed about the chamber's mismanagement of the sign, that they should still resist letting a cross section of the Hollywood community share in the management of the trust," said attorney Ed Cohan, who is among the chamber's most outspoken critics.

He and other community activists met with chamber officials last month to press their demand that management of the trust be shared with several Hollywood community groups.

In an interview, Kaplan said chamber officials remain unenthusiastic about such an arrangement.

"The thing people should remember," he said, "is that if it weren't for this organization, that sign would still say 'Hollywod' if it even existed at all."

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