The city sues longtime Queen Mary director Joseph Prevratil. Now we can wonder whether legal action will change Long Beach’s political culture of favoritism for insiders

PHOTO by DANIEL DE BOOM

Oldtimers still tell of the days when Joseph Prevratil roamed the 14th floor of City Hall—where City Council members have their offices—possessed of a confidence and purpose that suggested a captain patrolling the deck of his ship. Now that they think about it, those oldtimers remember Prevratil looking pretty comfortable on all the other floors of City Hall, too. He got extremely cozy with Long Beach politicians and bureaucrats during the 13 years he ran the Queen Mary, and it never seemed to matter that he was always running it aground.

Until now. The City Council voted unanimously in closed session last Tuesday to sue Prevratil in U.S. Bankruptcy Court. The complaint, filed last Thursday, alleges that Prevratil diverted $1.5 million from Queen’s Seaport Development Inc. (QSDI) to himself and his one-man management company, Leisure Horizons, in a long series of transfers between 2001 and 2004—not long before filing for bankruptcy in March 2005. The suit also claims Prevratil used QSDI funds to purchase a condominium now worth $1 million in Hawaii that he jointly owns with QSDI’s former CFO, Howard Bell.

Prevratil, who has long endured suspicion about his questionable financial practices but never such a forthright legal accusation, has fallen back on familiar explanations. He says the transfers from QSDI to Leisure Horizons were reimbursements for short-term loans that had been made to keep QSDI afloat.

For years, senior Long Beach officials have accepted such explanations from Prevratil at face value, much to the offense and frustration of some lower-level staffers and many community activists.

“It’s sickening to look at this,” says Jim McCabe, who as a deputy city attorney worked on Queen Mary-related issues during the last 10 years of a career that ended in 2004, “because you see a culture of a city doing business for the benefit of insiders.”

According to McCabe, former city manager Jerry Miller and former city auditor Gary Burroughs were among those who for years fended off attempts to force Prevratil to live up to his contracts with the city.

“People at City Hall always talked as though Joe had to run the Queen Mary,” recalls McCabe. “There were always lots of jokes, people saying things like, ‘Jerry will be the first mate, and you’ll be the ship’s purser.’ Everybody loved Joe.”

Actually, it doesn’t take an oldtimer to remember that. It was only last July—while the Queen Mary was spending its 40th anniversary in Long Beach being dragged through bankruptcy court—that Prevratil scribbled out a $3,600 check from Leisure Horizons to First District Councilwoman Bonnie Lowenthal, who was stocking her war chest for a state Assembly campaign.

“Oh, I already returned that,” Lowenthal said Saturday, a scant two days after the lawsuit was filed against Prevratil. “Oh, yes, the contribution was immediately returned.”

There may be no better proof that Prevratil’s mysterious spell over several incarnations of City Hall has finally been broken: When a politician returns a campaign contribution, that’s serious.

Unfortunately, there’s no evidence that the lawsuit signals a fundamental change in the culture of insiderism and its lack of full disclosure. The City Council cast its unanimous vote to sue Prevratil without ever seeing a complete audit of Queen Mary finances under his reign.

“When we were given the memo that the lawsuit had been filed there was no attached copy of the audit that the suit was based upon,” said Fifth District Councilmember Gerrie Schipske. “We look forward to seeing that.”

Unsettling accounts of Prevratil’s administration of Long Beach’s signature asset date back to the early 1990s. The first to suggest them was Dr. Robert Gumbiner—Prevratil’s former partner, whose $2 million check launched the not-for-profit RMS Foundation that enabled Prevratil to become the Queen Mary’s director in 1993. Gumbiner told me in a 2004 interview that Prevratil began ignoring the terms of his first five-year lease with the city almost immediately after signing it.

“That’s why I left,” said Gumbiner, who instead used his money to found the Museum of Latin American Art.

A 1995 audit by the city supported Gumbiner’s allegation, finding that Prevratil was in “substantial noncompliance” with his lease. That didn’t stop city officials from amending the contract over and over, each time giving Prevratil longer and more generous terms—which each time he abused.

In the early part of this decade McCabe says he discovered that Prevratil was taking advantage of a complicated lease by claiming undeserved rent credits, which by March 2004 amounted to nearly $4 million. McCabe says his push to collect that money created such conflicts with Shannon, Burroughs and Miller that he took early retirement a month later.

“There is no rational explanation why Jerry Miller resisted sending out a demand letter for that rent until May of 2003—and even then withdrawing that letter eight days later at the request of Joe Prevratil,” says McCabe. “He might have been pressured by members of the City Council. He might have been acting on his own volition. I’m not sure we’ll ever know.”

While McCabe could not go public until his retirement—and even now is tethered by attorney-client confidentiality—former Long Beach housewife Traci Wilson-Kleekamp was not so constrained. She pieced together thousands of pages of public documents that revealed Prevratil’s shoddy and unsupervised accounting practices that left millions of dollars unaccounted for, and she shouted for action. Mostly, she was dismissed by city officials and often insulted in the press.

“The lawsuit that was just filed feels a little like vindication because I was always considered nuts, a conspiracy theorist, all those nice things,” says Wilson-Kleekamp, who now lives with her family in Missouri. “But my disappointment is that nobody is still being held accountable on this. Where were the people—public officials, professionals, being paid with taxpayer money—who were supposed to be overseeing this?”

“The lawsuit that was finally filed is almost certainly just the tip of the iceberg,” says Juan Pardell, a former Long Beach Community Development Advisory commissioner. As The District reported last July, Pardell has filed a complaint with the California Attorney General alleging that Prevratil had improperly diverted approximately $2.3 million from the RMS Foundation to Leisure Horizons between late 2003 and mid 2005. A court filing indicates that Prevratil shifted the money in 37 payments ranging from $25,850 to $135,000. Tax documents show that neither Prevratil nor his former partner Howard Bell requested permission from the Attorney General to engage in these self-dealing transactions, nor declared them afterward, as required by law. Mysteriously, a 2006 audit of RMS by the prominent local accounting firm of Windes and McClaughry makes no mention of the transactions.

Meanwhile, the local press continued to defend Prevratil. Late last spring the Long Beach Business Journal ran a front-page story with a photo of Prevratil posed at the helm of the ship beneath the headline “Long Live the Queen!” And the Press-Telegram never wavered in its contention that “Skipper Joe” was an unappreciated hero, saddled with the thankless command of steering an underfunded city asset through impossibly stormy financial waters.

As the Queen Mary lease was put on the auction block last spring, the P-T reported that trustee Howard Ehrenberg had overseen “a thorough audit of QSDI’s books, the relationship between the for-profit QSDI and the nonprofit RMS Foundation, and the validity of those rent credits. This was an added blessing, since it puts an end to colorful but energy-draining conspiratorial thinking about what really was gong on down at the Queen Mary. There was nothing much to worry about, except the operation was underfinanced, which we knew all along.”

Of course, the P-T wrote this without ever seeing the audit, either.

“Bottom line, the Queen Mary was making money all along,” says Pardell, the former commissioner.

“There was just too much going into private entities owned by Joe Prevratil.”

Back in Missouri, Wilson-Kleekamp just sighs into the phone.

“How come everybody doesn’t want to know what really went on—what may still be going on?” she asks, bewildered. “Aren’t they just a little curious?”

Tags: bankruptcy, corruption, Joe Prevratil, lawsuit, Long Beach, News, Queen Mary