By Francisco Alvarado
By Trevor Bach
By Chris Joseph
By Michael E. Miller
By Allie Conti
By Keegan Hamilton and Francisco Alvarado
By Jake Rossen
By Allie Conti
There's Lottes, who has contributed thousands to city commission and mayoral campaigns, in Mexico, vacationing with his good friend Alan Koslow, the powerhouse lobbyist who also serves as Lottes' lawyer and corporate agent.
And there's Lottes humbly accepting the Small Businessperson of the Year award from the Greater Hollywood Chamber of Commerce.
Lottes, who holds a lucrative contract to run the three public golf courses in Hollywood, spends a good deal of time in the limelight, but it's his strokes behind the closed doors of city-owned pro shops that have recently left him in the deep rough.
Last year Lottes came under fire for pocketing thousands of dollars in parking-lot revenues that he should have shared with taxpayers. Now a city-commissioned report indicates he may have been taking more than just parking money. An Orlando consulting firm hired to review the golf course accounting records has determined that Golf Hollywood, Lottes' company, possibly shorted the city $215,000 during the past four years.
The document, which is dated June 21 and includes 70 pages of backup, has been kept from the public and the city council while officials prepare a response. City manager Sam Finz and finance director Carlos Garcia say the findings may be presented as early as this week's council meeting.
The Orlando firm, ATCS, found no proof of embezzlement. But it did turn up suspicious and inconsistent sales patterns as well as poor and in some cases nonexistent record-keeping that "places a doubt on the reliability of sales reported to the city" by Hollywood Beach Golf and Country Club.
ATCS also confirmed a 1999 city audit showing Lottes kept roughly $35,000 in golf money that should have gone to the city. After first refusing to refund the money, Lottes recently did so.
Koslow, a partner in the firm Becker and Poliakoff, and Lottes met with city officials last month to contest ATCS' findings. Lottes, however, refused to discuss the matter with New Times. "We are still formulating our response," Lottes says. "There are many areas we dispute."
Koslow, who calls the ATCS review a "triple bogey that misses the mark," insists most of the concerns stem from "gray areas" in the contract. While downplaying the issue of whether Lottes took money that was rightfully the city's, Koslow said Lottes "is not intentionally doing anything wrong at all" and insisted there was no "intentional" breach of contract.
Garcia, who in the past few weeks has met with Lottes and Koslow, says he has done a "limited" review of the situation. He told New Times he doesn't know if the city was cheated. Like Koslow, Garcia chooses his words carefully. "Evidently [Golf Hollywood] made mistakes, and I'm not saying it was honest mistakes," Garcia says. "It was a literal misinterpretation of the contract -- in their favor."
The eight-page ATCS report, which was prepared by manager Cristeta Cruzada, focuses only on the Hollywood Beach course, not Orangebrook or Eco, the other two city courses Lottes runs. To understand the findings, it pays to know the Hollywood Beach contract. Lottes agreed to a $110,000 rental fee and to operate the 18-hole club, 31-room motel, restaurant, and bar located on Johnson Street just east of Federal Highway. In exchange he receives all profits generated by the motel, restaurant, and bar. He also is permitted to retain all golf revenues up to $900,000 annually; Lottes must pay to Hollywood 40 percent of any income over that amount. So far the provision hasn't added up to much for the city, as yearly revenues from the course have averaged only about $950,000.
The agreement also requires Lottes to provide more than $100,000 per year in capital improvements to the course. ATCS drew no conclusion about whether Lottes had fulfilled this responsibility because he turned in only a fraction of the invoices for the work he claims to have done.
The first aberration listed in the review concerns profit earned from motel-and-golf packages. Lottes kept these funds in a motel account, which he was not required by contract to share. The consultants determined that Lottes should have paid Hollywood $35,000. Officials learned of this failure last year, but it wasn't until the ATCS findings were submitted to Finz that Lottes agreed to surrender the money.
Potentially more damning to Golf Hollywood is the ATCS conclusion that course activity reports were wildly inconsistent. "We noted some patterns wherein some days of the week are unusually low in comparison with the other days," Cruzada writes. "Also, we noted that on days when greens fees were unusually low, the bar and food sales were unusually very high. We cannot assume that sales were all posted to proper accounts." When the consultants tried to discover whether Golf Hollywood was shifting golf revenues to bar and restaurant accounts, they ran into a brick wall. Lottes refused to hand over more detailed information. "Lottes believes that the city has no claim on the sales of [restaurant and bar] activities," Cruzada writes. "None were provided us for this review to vouch for the accuracy of the posted sales."