A Real Chip Shot
There's David Lottes, the golf king, surrounded by Hollywood officials and politicians, with a shovel in his hand for an official groundbreaking. He smiles wide for the photographers.
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.
There's Lottes chumming it up with friends at a fundraiser, wearing a silly Statue of Liberty hat and posing with Shirley Gottlieb, wife of state senator Ron Gottlieb.
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."
ATCS also found that on many of the days that course revenues seemed abnormally low, tournaments and other special functions were scheduled. When Cruzada asked Lottes for additional information on those events, which usually generate substantial golf sales, she was told he didn't keep records for that type of activity. Using monthly sales reports, ATCS conducted a study of "inconsistent day sales" at the course and estimated a shortfall in reported income of $539,186 -- $215,676 of which would have gone into Hollywood's coffers.
Indeed Lottes' numbers seem to show the course is badly underutilized, according to ATCS. Although Lottes told the auditors he keeps no records of the number of golfers at Hollywood Beach, ATCS estimated 41,785 rounds are played there annually. For the sake of comparison, Cruzada selected two similar courses, in Pompano Beach and Ocala. Analysis disclosed those courses average more than 70,000 rounds per year.
Moreover ATCS recommended the city further examine Golf Hollywood's financial records. But if the past is any indication, city administrators will be less than aggressive. When New Times reported ("A Bunker Mentality," October 7, 1999) that Lottes was improperly pocketing the parking revenues, the State Attorney's Office asked officials whether they wanted to press charges. The city declined the offer.
At least one Hollywood commissioner is calling for further investigation. Commissioner Sal Oliveri, who was informed of the ATCS review by New Times, requested an outside audit of Golf Hollywood. "I think this has to be resolved once and for all because Mr. Lottes' business dealings have been questioned for a long time," Oliveri comments. "An audit should certainly bring out whether there is money missing."
Finz says neither an audit nor a criminal investigation is necessary. "There have been a lot of liberties taken [by Golf Hollywood] in the way things have been accounted for," Finz says. "There is going to be corrective action taken. But I see no indication that anything [criminal] has occurred."
Instead of probing whether $540,000 went unreported or not, finance director Garcia states the city is taking "drastic action" to ensure Lottes' mistakes are not repeated. Among the new requirements is a provision to force Lottes to submit detailed records of receipts from tournaments and the like to the city.
Howard Sher, a Hollywood political activist who has dogged Lottes and his company for the past two years, says the city's protective attitude toward Golf Hollywood is to be expected. After all, Lottes and Koslow are close to the city commission and Finz. "I have no relationship with Golf Hollywood whatsoever," responds Finz, adding that he believes Lottes is doing a good job managing the golf courses. "Why would I protect [Lottes and Koslow]?"
But Sher is determined to get to the bottom of Golf Hollywood's finances and is pressing for a criminal investigation. "This report should bring outrage," Sher says. "Instead the city is going to try and cover it up, guaranteed. This is a whitewash."
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