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Former accounting firm settles claims over Coliseum audits

SingerLewak will pay $800,000 to the Coliseum commission in exchange for both parties dropping suits over charges that the company failed to detect alleged fraud.

November 21, 2013|By Paul Pringle
  • Workers started set up fireworks at the Los Angeles Memorial Coliseum
Workers started set up fireworks at the Los Angeles Memorial Coliseum (Michael Robinson Chavez…)

The former accounting firm for the Los Angeles Memorial Coliseum Commission has agreed to pay the agency $800,000 to settle claims that the company failed to detect alleged fraud by stadium managers who were later indicted in a corruption scandal.

The settlement between the commission and SingerLewak requires the two parties to drop lawsuits they filed against each other.

The commission alleged in its suit that SingerLewak was negligent in not uncovering about $2 million in questionable payments to the managers, in addition to nearly $1 million in cash outlays to a stagehands union at the Coliseum.

"SingerLewak's incompetent auditing and accounting services effectively protected the corrupt former employees," the suit said.

In a countersuit, SingerLewak said the managers misled the company's accountants.

Charles Slyngstad, an attorney for the commission, declined Thursday to discuss the settlement but issued a statement on behalf of the panel, saying that the disputes "were resolved to the satisfaction of all parties."

"Litigation of the matter would have been extremely expensive, involving many claims, defenses, technical and legal issues and voluminous evidence that the parties are pleased have been avoided as a result of this settlement."

An attorney for SingerLewak did not respond to an interview request.

The alleged corruption at the taxpayer-owned Coliseum was exposed in a series of Times reports starting in 2011. A resulting criminal investigation by the Los Angeles County district attorney's office led to the indictments last year of former stadium managers Patrick Lynch, Todd DeStefano and Leopold Caudillo Jr.

Also indicted were rave concert promoters Pasquale Rotella and Reza Gerami and a Coliseum janitorial contractor, Tony Estrada.

Lynch pleaded guilty to felony conflict of interest in connection with $385,000 in alleged kickbacks he received from Estrada, who is a fugitive. The other defendants have pleaded not guilty and are awaiting trial.

Most of the payments cited in the lawsuits and criminal cases were made by the rave promoters to DeStefano, who was responsible for overseeing their concerts as the Coliseum's events manager.

The cash payments by commission managers to Local 33 of the International Alliance of Theatrical Stage Employees were intended to cover stagehands' salaries for productions at the Coliseum and neighboring Sports Arena, according to interviews and stadium records.

The payments were made without proper record-keeping, payroll deductions and contributions to the workers' benefit funds, Coliseum officials said. Some of the money was delivered in suitcases or backpacks, officials said.

Last year, an audit of the Coliseum by then-City Controller Wendy Greuel's office found that the commission had allowed Lynch to run the stadium in a setting "void of essential formal policies, procedures and protocols."

In response, county Supervisor Don Knabe, who is a commissioner, and David Israel, the panel's president at the time, acknowledged that the agency applied "insufficient oversight" to managers, but they faulted Greuel for not using her authority to conduct an audit much earlier.

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