The city of Long Beach has frozen a million-dollar convention center fund and is auditing its use in response to allegations by the facility’s former finance director that public money was being improperly spent, the Post has learned.
Paul Falzon, the former finance director for the Long Beach Convention & Entertainment Center, has alleged in a lawsuit that he was fired after complaining that hundreds of thousands of dollars in furniture and other items were being purchased without required approvals from the city.
In his wrongful termination lawsuit, Falzon, who worked for the private operator of the convention center, alleged that many of the purchases were extravagant and wasteful. He said they were orchestrated by the top official of the Long Beach Convention and Visitors Bureau, Steve Goodling, whose organization operates separately from, but in support of, the city-owned convention center.
In numerous instances, Falzon said, items were missing that should have been delivered to the convention center, where storage areas were crammed with unused items Goodling had earlier bought for events at the facility, ranging from giant stuffed animals to chaise lounges to crystal chandeliers. Some of those items, Falzon said, had never been used and were still in their original packaging.
Falzon said he repeatedly complained about his discoveries to his boss at ASM Global, which has a contract to operate the convention center. He said he was accused of risking the company’s future with Long Beach because of Goodling’s clout at City Hall.
In a short statement to the Post, Goodling said he had engaged in no improper behavior.
“The allegations and assertions made in this complaint are absurd. Beyond that, I cannot comment at this time,” said Goodling, who has served for over 20 years at the helm of the city’s nationally acclaimed visitors bureau and is credited with raising the city’s profile in the convention industry.
CVB Board chair Todd Lemmis said the nonprofit organization, which draws half of its funding from the city, stands behind its CEO.
“As chair of the board of the CVB I have reviewed the complaint and discussed it with the executive board and I find the complaint wholeheartedly without merit,” he said. “The board supports Steve and has never had an occasion to question his integrity.”
(Lemmis is a partner in Pacific6, the parent company of the Long Beach Post.)
Long Beach officials and an attorney for ASM declined to discuss in detail Falzon’s accusations of financial improprieties and retaliation, citing the ongoing litigation.
After two decades as a key finance executive with Fox Entertainment Group, Falzon was hired to oversee convention center finances by an ASM subsidiary, SMG Holdings, in late 2020 and was fired a year later. He filed his whistleblower suit in April of this year.
Months before turning to the court, however, Falzon said he had been complaining not only internally but also to the city’s economic development team about the alleged problems he was encountering.
In response, then-Economic Development Director John Keisler sent a warning letter to ASM in July 2021 about abiding by city purchasing requirements and, in October of last year, notified the company that the city was freezing the account that has been used to pay for purchases because of allegations of “mismanagement and misuse.” He disclosed that an audit was being undertaken.
The city hired the accounting firm of Macias Gini & O’Connell to conduct the audit, which, according to Long Beach officials, is in its final stages. The city said ASM has already “committed to adopting/instituting any resulting recommendations” of the audit.
The account under scrutiny is called the “$5 Parking Fund” and is earmarked for convention center improvements. It is fed by the center’s parking revenues, with one dollar of every five going into the account.
City officials said the parking fund had been reduced in recent years because of COVID-19’s impact on convention center events and activities but has risen and now stands at $1.1 million.
Under the fund’s rules, ASM is allowed to use the public money on specific improvement projects but must first get approvals from the city.
In an interview, Falzon said Goodling would use his own organization’s funds for purchases as he saw fit and then submit invoices to the convention center for reimbursement through the parking fund. The convention center would then seek city approval for the purchases, even though the items had already been bought.
“Steve [Goodling] was just buying things willy-nilly, there was no approval in advance. And it was stuff we didn’t want and we didn’t need, especially not in a pandemic,” said Falzon, who said he refused to risk his professional standing by transmitting retroactive invoices to the city.
“Most of it is just sitting there, falling into disrepair,” Falzon said, adding that items were bought without purchase orders, competitive bidding or a vendor selection process.
The Post reviewed over 100 pages of invoices and hand-written receipts that show that, among other purchases, nearly $110,000 was spent on various furnishings during the pandemic when the convention center was closed for business. For example, during one 10-day stretch in October 2020, Goodling’s organization purchased $19,363 in high-end merchandise from a consignment shop not far from his home.
The purchases from Lido Gallery Newport included: four black leather Italian chairs for $3,800; a petrified wood table with four chairs for $2,000; black oval accent tables for $1,280, two table lamps for $700, and cast aluminum leaf tables for $1,200.
Falzon said he calculated that, in all, Goodling had spent about $1.3 million in public funds on furniture, lighting fixtures and art from Lido Gallery and other businesses, including Wayfair and Restoration Hardware.
There were so many warehoused items, he said, that convention center management at one point considered holding a “yard sale” but feared the plan might upset Goodling, who sought to create unique convention center settings that his organization hoped would give Long Beach an edge in the competitive events market.
Throughout most of 2021, Falzon said, he continued to complain that Goodling was violating city protocol in using the parking fund but was told by the convention center’s then-general manager, Charlie Beirne, to ignore the issue. He “swept it under the rug,” Falzon alleged in his lawsuit.
Beirne, now general manager of an ASM-managed convention center in Florida, did not return a phone message seeking comment.
For their part, city officials apparently were taking note of Falzon’s complaints. In July of 2021, the Economic Development Department sent Beirne a letter reiterating the city’s rules for using the parking fund.
In the letter, obtained by the Post, economic development director Keisler said he had approved the most recent request but wanted to “take this opportunity to clarify or refine the request process going forward.” He stressed that “Parking Fund Requests should be submitted prior to expenditures being made.”
The letter warned that if purchases were made without the city’s prior approval, then the convention center’s operator would be on the hook “to cover these costs as regular operational expenditures.”
Falzon said the final straw for him was when he was asked to sign off on invoices from Goodling for thousands of dollars in items that he could not verify had been received by the convention center. It was not a new problem, he said. Among items that could not be located during previous searches were a $1,620 Schonbek crystal chandelier, a $1,728 John Widdicomb buffet and a $900 set of Restoration Hardware dining chairs.
As a certified public accountant, Falzon said, he told Beirne, “I’m not signing off on these invoices unless you can prove we’ve received all this stuff.”
Several weeks later—and just days before being asked to transmit yet another invoice to the city—Falzon said he was asked to meet with Beirne and Goodling, who wanted Falzon to apologize for his complaints of wrongdoing. Falzon said Goodling “went off” on him and accused him of not being “on board for the vision” of the convention center.
“I remember telling him I didn’t have an issue with his vision, I had an issue with how he was spending city funds and not following ASM and city spending guidelines,” Falzon said. “He said if I’m not on board with his vision, then I should go.”
The following month, Falzon said he was told his position was being eliminated due to a reorganization. According to the lawsuit, Falzon said ASM offered him a job at a corporate office in Los Angeles, however, he said the offer was vague and that the position was temporary.
Falzon said he was shocked because he had just received a salary increase from $130,000 to $170,000 and had never had any negative performance reviews.
Falzon said he was escorted out of the building in October and told to work from home until his last day in November. “I was blindsided,” he said.
Falzon’s suit, filed in Los Angeles Superior Court, seeks unspecified damages against Goodling, ASM and its subsidiary, SMG.