Former execs rap Erickson improprieties.

Former execs rap Erickson improprieties

More bizarre revelations surfaced last week concerning the business and personal exploits of award-winning architect Arthur Erickson, who was unexpectedly evicted from his West Los Angeles offices last month, leaving behind a gaggle of unpaid and angry consultants.

Erickson - designer of the largest real estate project in downtown Los Angeles, California Plaza and winner of several prestigious architectural honors - maintained last week in a phone call from Berlin that he had been kept totally in the dark about the financial condition of his L.A. company, Arthur Erickson Associates.

He also maintained that his L.A. company's problems are totally the fault of his "business-end" advisors.

Several of those advisors, however, came forward last week to defend themselves against Erickson's charges and to allege that Erickson for the past decade has diverted millions of dollars from his L.A. company for personal use.

"Arthur Erickson has been a financial alcoholic for years," charged Richard J. Gordon, a highly paid Westside consultant who was retained to manage Arthur Erickson Associates' business affairs from 1986 to 1989. "Arthur is fully cognizant of his business affairs, but he plays the naive artist when it's convenient to do so."

Erickson, a native of Vancouver, Canada, has received international acclaim for his architectural work. His sprawling Robson Square and Courthouse governmental complex in Vancouver was featured in Time magazine. And the American Institute of Architects declared him as the nation's top architect in 1986 by awarding him the AIA Gold Medal.

But several of Erickson's business associates, consultants and employees are now rising up against him.

Cathryn Parker, who until last month was employed as controller of Arthur Erickson Associates, the Los Angeles company, also came forward last week to challenge Erickson's assertions that he knew nothing of financial problems in the L.A. operation and that they resulted from his business advisors' failings.

She provided extensive accounts of how Erickson and his friend and business partner, Francisco Kripacz, diverted company funds to support their incredibly lavis lifestyles in L.A. and Canada.

"If he (Erickson) is going to blame me, I have no alternative but to tell the truth," said Parker. "They (Erickson and Kripacz) were running personal expenses through the company and showing them as business expenses."

She added, "I told Arthur, |You can't deduct your car and house and food; that's tax fraud.' He said, |Everybody does it.' And I told him, |Yeah, but that's why (New York hotelier) Leona Helmsley (was convicted of tax evasion),'" Parker said.

Under a limited partnership agreement signed in 1986, Erickson and Kripacz are entitled to receive management fees equal to 7 percent of their L.A. company's gross billings.

(Erickson has a separate company in Vancouver, and did have a third company in Toronto. But that Toronto company suddenly folded in 1989 in a scenario similar to the scenario now unfolding in Los Angeles.)

Company records supplied by Parker revealed that Erickson and Kripacz have regularly and grossly been exceeding their 7 percent L.A. management fee.

For example, between April and June 1990, Arthur Erickson Associates of Los Angeles took in gross receipts of $549,531, which would entitle Erickson and Kripacz to management fees of $38,467.

The two partners, however, actually took $125,722 out of the business during that three-month period, company records showed, which is more than three times the amount they were due.

Most of the diverted company funds were never reported as personal income for tax purposes, either, according to Parker.

"Arthur had really been pressuring me to keep my mouth shut and had even asked me to actually change things on the books," she said. "I'm going to the IRS, and I have been advised by two attorney's to go on the record with this."

Alleged improprieties also surfaced during an audit recently conducted by the Boston-based architectural firm of Shepley, Bulfinch, Richardson & Abbott, which was considering merging with Erickson's L.A. company.

"They (Arthur Erickson Associates) weren't paying their withholding taxes," confirmed Leo McEachern, Shepley, Bulfinch's treasurer. "When we discovered there were IRS monies delinquent, that was a major deciding factor for us to withdraw the (merger) matter from consideration."

Erickson then approached the venerable firm of Leo A. Daly about a possible L.A. merger, but Daly likewise backed away after inspecting Erickson's books, sources said.

Much of the money being diverted from Erickson's company was actually being spent to support the extravagant lifestyle of company president Kripacz, said Parker.

"Arthur once told me he'd rather see the company fold than let Franciso go," said another former controller of Erickson's L.A. company, who asked not to be identified. "It really has been a little cesspool of activity."

Among Kripacz's personal expenses allegedly paid for with company funds included: rental of a Malibu beach house; purchase of a Beverly Hills home, which was subsequently remodeled with company money; purchase of a Manhattan condominium, complete with about $100,000 worth of contemporary artwork inside; exotic European autos; a personal chef; a live-in maid; and several personal assistants.

Kripacz and Erickson recently bought a new $90,000 BMW sedan with company funds, and are now hiding that car in a private garage in Canada, Parker said.

Kripacz, an interior designer by training, only worked about five to 10 hours a month, at most, Parker claimed.

"The rest of the time he spent going out to lunch, having his hair done, getting massages, going to doctor appointments and going on vacations," she said. "The only time he ever came to talk to me was when he wanted some more money."

Kripacz and Erickson, up until December of last year, were renting a Beverly Hills house for $12,500 a month, plus spending another $2,000 or so for utilities, company records showed.

"They used to hide in the closet whenever the landlord showed up" for rent payments, Parker said. "But they were finally evicted last December."

The high-living partners then moved into $500-a-day accommodations at the Four Seasons Hotel in Beverly Hills, sources confirmed.

Many of those outlays were written off as business expenses; some expenses were actually charged to various jobs that Erickson's L.A. firm had been hired to design, Parker revealed.

Nyal Leslie, president of Metropolitan Structures, which is lead developer of California Plaza, insisted that revelations about Erickson's problems are "of no concern to California Plaza."

"We are in contact with Arthur regularly about California Plaza issues," Leslie said. "I don't think (Erickson's financial problems) will put Cal Plaza in a negative light."

Leslie added that his company has not yet decided whether to retain Erickson as designer of the project's third phase.

Meanwhile, as Kripacz and Erickson allegedly cavorted in high style, the company's consultants remained unpaid, clients' projects remained sorely understaffed, and the firm's employees remained underpaid (no one had gotten a raise in more than two years) and overworked, sources said.

"Our staff was working 12- to 14-hour days," Parker said. "Arthur said we had to treat them like Egyptian slaves and keep them hungry to get them to work."

Also, Kripacz exchanged the design services of Erickson's L.A. architects for free service from a variety of personal-service providers (doctors, hair stylists, etc.), sources said.

Meanwhile, Erickson himself only spent about one or two days a month in Los Angeles, Parker said. Although his contract stipulated that he spend 50 percent of his time here.

Erickson last week blamed his L.A. company's demise on Gordon, a private consultant and convicted felon. Gordon refused to specify the crime for which he was convicted in 1980 and at presstime public records were unavailable.

Erickson claimed that Gordon "stole more than $1 million" during the three years Gordon was retained as an outside consultant in charge of the restructuring and management of Erickson's L.A. company.

At that time, Gordon convinced a handful of very wealthy Canadian and American investors to pump a substantial amount of new capital into Erickson's troubled L.A. company. In exchange, those investors were made limited partners in Erickson's restructured L.A. company. And now those limited partners have apparently seen their investments go up in smoke.

Last week, Erickson insisted that Gordon had illegally siphoned off much of his 1986 capital infusion. "I've been in the hands of people I trusted who, unfortunately, turned out to have criminal records," Erickson said.

Erickson admitted he knew of Gordon's criminal past prior to hiring Gordon to restructure his distressed L.A. company. But he hired Gordon anyway, Erickson explained, because he had been assured by attorneys in the Century City law offices of Irell & Manella that Gordon would be a valuable asset to his company, as long as Gordon's activities were closely monitored. Irell & Manella attorneys agreed to personally oversee Gordon's activities, Erickson insisted.

"(Gordon) was under the supervision of very trustworthy attorneys in the United States and Canada," Erickson said. "I was dependent upon them (Irell & Manella) and assumed they were watching over (Gordon)."

Irell & Manella refused to comment last week. But Gordon denied ever stealing any money from Erickson and insisted Irell & Manella was never hired to watch over him.

"I was convicted of a felony in 1980," Gordon conceded. "But that mistake has been more than paid for, and I'm not going to let Arthur drag me through the mud on this one."

Erickson was advised to put his L.A. company into Chapter 7 bankruptcy about six weeks ago, sources said. But he has been waiting until after the State of California issued him a $60,000 to $80,000 check for preliminary design work for a new performing arts facility planned for California Polytechnic State University in San Luis Obispo.

"We will not be issuing that check," stated Jon Regnier, assistant vice chancellor of physical operations for the California State University system. "We have been contacted by Mr. Erickson's consultants, and are now working with our lawyers to see how we can get those consultants paid, with permission from Mr. Erickson."

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