Reza Gerami, Rave Promoter, And Two Coliseum Officials Arrested in Public Venue Corruption Scandal

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Reza Gerami.

Two former L.A. Coliseum officials and a rave promoter were arrested as part of a corruption scandal that has rocked the publicly run venue.

Former Coliseum general manager Patrick Lynch, events manager Todd DeStefano and rave promoter Reza Gerami were arrested this morning by investigators from the District Attorney's office, Jane Robison of the District Attorney's office told the Weekly.

Why?

They're not saying.

But it has been reported that all kinds of shenanigans were happening at the venue in recent years, including, as the Weekly first reported, the shuffling of under-the-table cash to union stagehands who probably should otherwise received payroll checks for their work.

The payments were said to have been made by event promoters. That amounted to hundreds of thousands if not more than a million dollars.

On top of that, DeStefano was accused, in reporting by the Los Angeles Times, of taking money on the side -- $1.5 million or more -- from event organizers, including rave promoters.

And Lynch, who allegedly stood by while all this happened, reportedly took advantage of perks and loopholes and was even accused of getting a publicly paid-for car out of his employment.

A tipster told us that "indictments" would come down this week. The District Attorney's office isn't commenting further.

[Added at 11:20 a.m.]: The furor at the Coliseum started after a 15-year-old girl died of an ecstasy overdose after following her attendance of a 2010 rave there called Electric Daisy Carnival.

There was a public outcry, and promoters had to lobby and fight to maintain their four-times-a-year events at the Coliseum and the Sports Arena.

The rave promoters and their representatives seemed smug and confident as they attended public meetings with Coliseum commissioners who include some of the most powerful leaders in Los Angeles, and the Times started digging.

The paper soon alleged that the promoters were in bed with DeStefano and had paid his own side events companies hundreds of thousands of dollars to help them put on their electronic music shows.

Soon it was clear that the promoters could not muster the political support to keep on going at the venues, and they were shut out.

In the meantime it came to our attention that members of a stagehands union were allegedly paid under the table, which would be illegal, for their work at events that included at least a few raves.

In a subsequent lawsuit against Gerami, Lynch, DeStefano and EDC promoter Pasquale Rotella (who was not arrested), the Coliseum alleged that Lynch received kick backs for stagehand and cleaning workers' pay since 2006 that amounted to $394,716.

As part of all the alleged scheming the Coliseum claimed more than $1 million in losses.

As we summarized previously, the suit ...

... accuses the defendants of filing false government claims, breaching fiduciary duty (for Lynch and DeStefano), fraud (for Lynch and DeStefano), unjust enrichment, (for Lynch, DeStefano and his wife), conspiracy to defraud (for Lynch, DeStefano and his wife), having a personal financial interest in government contracts, unfair business practices (for the rave promoters), breach of contract (for the rave promoters, negligence (for the rave promoters) and more.

[Added at 12:10 p.m.]: We're told that, as all this was going on, Rotella of EDC fame has been in Miami attending the annual DJs' retreat known as the Winter Music Conference.

[Update at 2:55 p.m.]: Insomniac Events, the promotion company run by Rotella, issued a statement this afternoon indicating that he was expecting to be arrested as part of the investigation.

The statement, attributed to his attorney, Gary Jay Kaufman, says Rotella is innocent and will fight any possible charges related to this scandal:

Pasquale Rotella has always acted lawfully and appropriately with respect to all of his dealings with the Coliseum. Any allegations of wrongdoing on the part of Mr. Rotella by the District Attorney are completely baseless and flat-out wrong, both on the law and on the facts.

All transactions between Insomniac and the Coliseum were transparent and approved by the Coliseum General Manager, his staff and the attorneys representing the Coliseum. While we recognize that issues surrounding the Coliseum demand attention, we are disappointed that the District Attorney would seek to have Mr. Rotella arrested when he did nothing wrong.

Any charges against Mr. Rotella are clearly politically motivated and publicity driven. Mr. Rotella will vigorously defend himself and looks forward to being completely vindicated.

Mr. Rotella is currently on pre-planned business travel and will be changing his plans to expeditiously return voluntarily to Los Angeles to defend himself against any baseless charges.

In the meantime, it is business as usual for Insomniac. The company has a robust leadership team in place implementing Mr. Rotella's vision and no events will be impacted.

[Added at 3:03 p.m.]: City controller Wendy Greuel issued this statement on the case:

We must demand zero tolerance when it comes to allegations of public corruption, wasteful spending, fraudulent activity and abuse of City resources. Today's arrests are indicative of the need for bold changes at the Coliseum. My hope is that our audit will serve as a blueprint for much needed reforms and a renewed commitment to transparency at the Coliseum and throughout all City departments. I will continue to work closely with prosecutors regarding my investigation of the Coliseum's finances.

[Added at 3:42 p.m.]: See the full statement from Insomniac after the jump: