Promote La Jolla, trio told to pay city or face suit

Promote La Jolla and three individuals could face a lawsuit next month if no action is taken by May 10 to repay the city $112,070.

PLJ President Rick Wildman said Monday he received a letter from the city attorney’s office late Friday notifying him of the pending action as well as a copy of the lawsuit.

The letter states that the city attorney has verified the findings of the audit report issued in June 2009 outlining “alleged accounting irregularities and possible misuse of city funds.” As a result, the City Council authorized the lawsuit “to be filed on behalf of the City of San Diego against PLJ, Deborah Marengo, Reza Ghasemi and Tiffany Sherer.”

It will be “filed and served on May 10, 2010, unless steps have been taken to pay the city ...,” the letter continues.

Daniel Bamberg, the chief deputy city attorney who signed the letter, did not respond to a request for details. However, spokeswoman Gina Coburn said Tuesday that the letter and draft lawsuit document provided the relevant information.

Wildman said he had informed PLJ’s insurance carrier of the lawsuit along with all of the parties named and the other board members. He said he released the information in light of “keeping the public informed.”

He said he told Bamberg “the hope is that it will get resolved short of litigation.”

Marengo and Ghasemi did not return phone calls seeking comment, and Sherer’s attorney, Don Detisch, could not be reached by press time.

The action follows a vote by the PLJ board on April 14 to talk to a bankruptcy attorney at their next meeting to discuss filing for liquidation under Chapter 7.

Wildman said then that the organization has accounts receivable of $24,000 and claims of $150,000 as well as the potential for additional claims “if the city files an action.”

“It’s insolvent. Why not put it out of its misery?” he added.

The proposed lawsuit alleges that Marengo, who is still a PLJ director, and Ghasemi, a former director, were negligent and breached their fiduciary duties when they established a line of credit with First Republic Bank. When the account was set up they moved money to First Republic that was being held in trust for the Coastal Access and Parking Board. Those funds were to be used to implement parking and traffic solutions in the Village, such as subsidized bus passes and parking fees for employees of Village merchants.

When Promote La Jolla defaulted on the loan, the pending lawsuit states, the bank “seized the monies” — totaling $65,323 — that had been placed in a certificate of deposit that had not been placed in a segregated account as was required under a memorandum of understanding.

In a separate action, the lawsuit alleges that Sherer, the former executive director of PLJ who now oversees the city’s Business Improvement District Council, knowingly submitted expenses that were not eligible for reimbursement. While saying the city “has been damaged in the sum of $46,747 or in a sum to be proved at trial,” it also notes that the amount of damages “related to any false claim or claims made by Sherer ... is in excess of $500.”

The lawsuit seeks repayment of the $46,747 as well as “treble damages and civil penalties up to $10,000 for each violation of the False Claims Act. It also seeks interest, attorney fees and costs of the suit.