Audit Finds Coliseum Officials Failed to Impose Financial Controls
Patrick Lynch, left, in 2009. Todd DeStefano, right, in February. (Credit: Mel Melcon, Ricardo DeAratanha / Los Angeles TImes)
The audit by Controller Wendy Greuel's office also found that the commission gave its disgraced former general manager, Patrick Lynch, an annual bonus of $125,000 for several years without requiring him to undergo a performance review.
In trying to explain how corruption had taken root at the Coliseum, the 70-page report says the commission, made up of three county supervisors and three appointees each of the city and state, permitted Lynch to manage the taxpayer-owned stadium in a "dysfunctional and risk-prone culture void of essential formal policies, procedures and protocols."
"The tone at the top was not suitable for a government entity," the report stated.
Lynch was one of six people charged last month in a 29-count indictment alleging bribery, embezzlement and conspiracy involving former Coliseum officials, rave concert promoters and a janitorial contractor at the stadium.
Lynch has pleaded guilty to a single count of conflict of interest to avoid trial and a possible lengthy prison term. Like Greuel's audit, the criminal investigation followed Times stories on financial irregularities at the Coliseum.
Much of the audit report mirrors disclosures by The Times, including inappropriate payments to Lynch and the stadium's former events manager, questionable spending by other officials and the delivery of about $1 million in cash to a union representative for stagehand wages without proper payroll deductions, benefit contributions and record-keeping.
Lynch pleaded guilty last month to a single criminal count of conflict of interest to avoid a possible lengthy prison sentence on multiple corruption charges.
Lynch will pay repay $385,000 that he allegedly received from a Coliseum contractor as part of a kickback scheme. He also will be placed on three years' probation.
In exchange for his plea, Los Angeles County prosecutors dropped other charges of receiving a bribe and embezzlement.
He faced up to 13 years in prison.
As part of the plea deal, Lynch agreed to testify against one or more of the other defendants, including former Coliseum events manager Todd DeStefano and prominent rave promoters Pasquale Rotella and Reza Gerami.
The indictment, unsealed Friday, caps a 13-month investigation by the district attorney's office, triggered by Los Angeles Times reports on a corruption scandal involving millions of dollars in questionable transactions at one of the nation's most storied stadiums.
Insomniac Inc. rave producer Pasquale Rotella, one of the top electronic rave producers in the nation, was named in the indictment, as expected. Also indicted were former Coliseum technology manager Leopold Caudillo Jr.; ex-stadium contractor Tony Estrada; Patrick Lynch, former Coliseum general manager; former Coliseum events manager Todd DeStefano; and Reza Gerami, chief executive of the rave company Go Ventures. Lynch, DeStefano and Gerami were taken into custody Thursday.
Bail for four of the defendants was set in amounts ranging from $800,000 to $1.2 million.
The Times has reported on payments by Go Ventures to companies owned by DeStefano and money directed to Lynch by a stadium contractor.
The 88-year-old Coliseum, home to USC football and the site of two Summer Olympics, is run jointly by the city, county and state. Two other state and federal probes into the operations of the Coliseum and companion Sports Arena are also underway.
Lynch's attorney, Tony Capozzola, said on Thursday that his client is innocent. Most of the money that Lynch received from the contractor was deposited in a Miami bank account, in regular installments over many years. Capozzola said the payments were for a private boat deal.
DeStefano's lawyer, Richard G. Hirsch, said in a statement Thursday that his client had permission from Lynch, his supervisor, to work on the side with promoters such as Gerami, while they did business with him in his Coliseum job.
Attempts to reach Gerami's attorney Thursday were unsuccessful. The promoter has previously denied doing anything wrong. For many years, his company staged popular raves at the Sports Arena.
DeStefano oversaw those concerts as part of his government duties. Two firms he set up collected at least $2.2 million in private fees from Go Ventures, a second rave company called Insomniac Inc. and other interests that had contracts at the Coliseum.
Insomniac presented an annual rave, Electric Daisy Carnival, at the Coliseum. The Times began to scrutinize Insomniac and Go Ventures productions after the fatal drug overdose of a 15-year-old girl at the 2010 Electric Daisy Carnival.