A judge on Thursday refused to drop Long Beach’s top tourism official from a lawsuit alleging he misspent over a million dollars in public funds and then engineered a conspiracy to fire a whistleblower who complained about it.
In his lawsuit, Paul Falzon, the former finance director for the Long Beach Convention & Entertainment Center, alleges he uncovered $1.3 million that was improperly spent on extravagant furniture, decorations and other unauthorized purchases at the convention center.
According to Falzon, that spending was orchestrated by Long Beach Convention & Visitors Bureau president and CEO Steve Goodling, whose organization promotes the convention center and tourism in Long Beach.
Those purchases—including items like crystal chandeliers, giant stuffed animals and a $3,800 set of Italian leather chairs—were wasteful and potentially fraudulent, according to Falzon, who said many of the items could not be located at the convention center, never arrived or were sitting broken or unused in storage.
When Falzon refused to reimburse Goodling’s organization for the purchases, Goodling got him fired, the lawsuit alleges. Goodling was able to do this, Falzon alleges, because of the political clout he had in Long Beach, which he was going to use to get the convention center operator’s lucrative contract with the city extended.
“Goodling managed, operated and ran the Convention Center and its Funds like it was his own personal checking account,” Falzon’s lawsuit says. “In that capacity, Goodling acted unlawfully and displayed the power and authority of a mafia-like Godfather.”
The judge’s decision doesn’t weigh in on whether any of Falzon’s accusations are true, but it is a blow to Goodling, who was trying to extricate himself from the lawsuit in its early stages—before a jury could decide on the facts of the case.
Because Goodling runs the Convention & Visitors Bureau, a separate entity from the city-owned convention center, his attorneys argued he couldn’t be held responsible for Falzon’s termination. (The convention center’s private operator, ASM Global, which directly employed Falzon, is also named as a defendant.)
Goodling “vehemently denies” Falzon’s accusations, his attorneys wrote in court papers, but even if they were true, Goodling shouldn’t be held responsible because there’s nothing illegal about influencing Falzon’s employer to fire him.
Judge Elaine Lu ultimately disagreed. If Falzon’s accusations prove to be true, she wrote, “Goodling was misappropriating public funds and when [Falzon] reported such conduct, Goodling utilized his connections and sway over [Falzon’s] employers and directly participated in terminating Plaintiff in retaliation.”
Her decision also left in place the possibility that Goodling could be held liable for potentially lucrative punitive damages.
An attorney representing Goodling declined to comment. Goodling’s supporters have maintained his purchases were legitimate, and part of a strategy to position the Long Beach convention center as a unique, boutique destination in a competitive market.
When the city of Long Beach hired an accounting firm to investigate Falzon’s complaint, auditors were soon stymied by the convention center’s lax record-keeping, which they said allowed Goodling’s organization to make unauthorized purchases outside the normal budgeting process.
City officials, however, decided against expanding the scope of their probe, instead relying on the available records to conclude the purchases in question were appropriate.
The convention center’s operator, ASM Global, committed to quickly tightening its financial controls, but a city spokesperson said Tuesday that there’s been a delay in that process.
“City staff are working with ASM Global to ensure the final corrective actions are feasible within the business operations of ASM Global and also meet the City’s standards,” spokesperson Jennifer De Prez said in an email.
Until ASM and the city agree on how to make those fixes, she said, the city won’t authorize any spending from the publicly funded account in question.
Editor’s note: This story has been updated to clarify when the city says it will allow new expenditures from the publicly funded account at issue.