Alhambra Concessionaire Underreported $300,000 Over Last 3 Years

WE INVESTIGATE

Alhambra at night (Photo – Frank Qiu)

A recently finalized report by the accounting firm Rogers, Anderson, Malody & Scott, LLP (RAMS) with respect to Alhambra contractor Brad Perrin’s Almansor Court, Inc. (“Almansor Court”), found that it had underreported to Alhambra $300,000 in gross receipts from 2015-2018, requiring $30,000 in additional fee payments to Alhambra.

By Sean McMorris

Almansor Court has a 50-year non-competitive bid contract with Alhambra for concession services at Almansor Court, the restaurant and banquet hall at Alhambra’s public golf course.

Colorado Boulevard.net was first to report on the existence of the report as well as the suspect nature of Alhambra’s lengthy contract and rocky relationship with Almansor Court and its owners, Brad and David Perrin.

Initiated in August 2018, the report was conducted by RAMS and summarized by Alhambra Finance Director, Paul Espinoza:

In their [RAMS] initial sample, it was determined the Concessionaire had understated Gross Receipts for June 2016 by $75,000 and for December by $25,000 and had overstated Gross Receipts for August 2015 by $40,000. The net amount is an understatement of $60,000 with a balance owed to the City of $6,000. The Concessionaire remitted a check to the City dated March 6, 2019 for $6,000.

In addition:

Due to the above findings, RAMS expanded their scope and included additional months for testing. As a result of additional testing, it was determined the concessionaire had understated Gross Receipts for June 2017 by $140,000 and for June 2018 by $100,000. The total understatement was $240,000 with a balance owed to the City of $24,000. The Concessionaire remitted a check to the City dated March 20, 2019 for $24,000.

The report also found that Almansor Court, Inc. underreported to the City $4,781 in 2016 rental payments.

Suspicious Accounting Activity

The RAMS report noted that the $300,000 in unreported gross receipts from 2015-2018 were initially recorded in Almansor Court’s account books as gratuities, which are not reportable to Alhambra under the terms of its contract.  That amount was then transferred to a miscellaneous income account as a liability; however, the money was not paid out to employees and therefore should have been reported to Alhambra as income.

Limited in Scope and Opinion

RAMS stated in its findings that it was not engaged by Alhambra to examine or review Almansor Court’s financial statements and therefore did not provide an opinion or conclusion on them. RAMS wrote in its report to Alhambra City, “had we performed additional procedures, other matters might have come to our attention that would have been reported to you.” Indeed, RAMS made clear to the City in its draft proposal for services that the limited procedures sought by the City did not constitute an audit.

It is unknown why Alhambra did not engage RAMS to conduct an audit of Almansor Court’s financial records rather than limit the investigation to certain procedures. It is unknown why Alhambra did not investigate the records of Almansor Court prior to now or why this investigation was limited to the last three fiscal years when Alhambra has had a contract with Almansor Court for the last 35 years.

Consequences Unclear

Alhambra City Manager, Jessica Binnquist, did not respond to a request for comment on whether Alhambra views Almansor Court’s underreporting as cause to terminate its contract and seek a new concessionare for Alhambra’s golf course.

Bad Actors?

No strangers to controversy, the Perrins are known for their substantial political giving in city council races where they hold city contracts. Multiple Perrin entities were also singled out in a 2018 California State Auditor Report on the City of Montebello. That audit report concluded that Montebello’s contracts with the Perrins were unusually long, unduly noncompetitive and binding, and detrimental to the City of Montebello’s financial health.

In addition, Alhambra was engaged in two previous lawsuits with the Perrins regarding Almansor Court that ultimately cost Alhambra over $1,000,000 in lawyer and settlement fees.

Will Alhambra City Hall Act?

The Almansor Court contract is one of many questionable Alhambra contracts on which Colorado Boulevard.net has reported. Colorado Boulevard.net also exposed how Alhambra’s Municipal Code allows engagement in dubious procurement practices.

As a result of the RAMS report, Almansor Court has reimbursed Alhambra for the amount it underreported over the last three years.  That is not a sufficient reason to continue the Almansor Court contract for the next 15 years, which is the remainder of the contract term. Without penalties imposed upon Almansor Court, most of the money recovered will go to cover the cost of the report, which RAMS estimated in August 2018 to be $12,000 to $15,000, assuming cooperation and no unforeseen circumstances. The report, however, was subject to numerous delays and little cooperation from Almansor Court, and it also was expanded in scope after RAMS found the initial underreporting. Then there is the question of the losses potentially incurred by Alhambra over the prior 31 contractual years not investigated by RAMS in the report.

These questions are relevant as Alhambra purportedly will undertake its first-ever audit of the Alhambra Chamber of Commerce (Chamber), with which the City has noncompetitively contracted for hundreds of thousands of dollars a year for decades. Will this “audit” of the Chamber actually be a report limited in time and scope just as with Almansor Court? During the May 16, 2019 City Council meeting at which City Manager Binnquist committed to an “audit” of the Chamber, she also referred to completion of the “audit” of Amansor Court, although the procedures conducted by RAMS did not constitute an “audit.”

In addition, if any impropriety by the Chamber occurred, it likely would have occurred before the Chamber contracts were exposed in the press two years ago, so a 2-3 year limited report would be inadequate. Will the Chamber investigation look into whether Alhambra funds are or have ever been used to produce and distribute the Chamber’s Around Alhambra newsletter, which would be a violation of the Political Reform Act?  There also should be a full accounting of Alhambra funds used by the Chamber as a supposed “pass-through” for the construction of Alhambra’s Rose Parade float for the last 50 years? If these issues are not addressed, any investigation of the finances of the Chamber could be used simply as a cover for past and future contracts with the Chamber.

If Alhambra is serious about cleaning up its image, it must take these financial investigations seriously and act appropriately to end bad contracts, not justify them.