John Elkington played his trump card last week, and after several years of innuendoes, rumors and charges, it’s hard to conclude anything except that he’s won the high-stakes game of money and reputation that characterized the $6.4 million argument about Beale Street management.
Memphis’s most respected accounting firm, Watkins and Uiberall, shredded a $750,000 “forensic audit” by Parente Randolph, the Philadelphia firm hired by City of Memphis, to prove that Mr. Elkington’s company, Performa Entertainment, owed the city millions. In a letter to John Ryder, receiver for Beale Street Historic District, Bill Watkins wrote: “It is my professional opinion that Parente Randolph’s report is not forensic, is not an audit, and its purpose is hard to discern.”
In other words, the conclusions by Parente Randolph were directed by city lawyers to justify their preconceived opinions. Those lawyers made more than $2.5 million as city government threw everything but the kitchen sink at Mr. Elkington to get him to fold and settle.
Error after Error
With the evidence presented in the Watkins Uiberall report, it’s clear that the tables have turned, and we hear that a settlement could be forthcoming shortly now that the Parente Randolph report has been discredited by local accountants who have represented Shelby County Government, Memphis Light, Gas & Water and almost every public entity in our community.
In his 42-page audit, Mr. Watkins surgically dissects the Parente Randolph report to the point that a high school bookkeeping student could see the errors made by the Philadelphia company. Not only did Parente Randolph make a math error of $279,036, but it considered well-known city events like the Beale Street New Year’s Eve Count-down as parties for Mr. Elkington. When asked why he thought it was the WMC-broadcast event was a private party, the accountant for Parente Randolph said he was told by Ricky Wilkins, attorney for the city in the case (and fired by Interim Mayor Myron Lowery).
“After devoting more than 200 hours to this review, it is my professional opinion that Parente Randolph’s report is seriously flawed,” said Mr. Watkins in his letter. “No money is missing. All money in question is accounted for and no money has been misappropriated.” He pointed out that besides the “serious” math error, Parente Randolph stated in its report that nearly $2.2 million received from Beale Street tenants from wristband sales should have been turned over to Performa Entertainment, Mr. Elkington’s company.
More of the Same from Herenton
“Beale Street Tenants’ Lease Agreements do not give Performa Entertainment any claim to the tenants’ revenues, and this $2.2 million of cover charges revenue was strictly revenue of Beale Street Tenants,” Mr. Watkins wrote. Meanwhile, Parente Randolph also disallowed marketing expenses by Performa although bringing customers to the street clearly was in the best interest of city government.
In conclusion, Mr. Watkins said that not only did Performa Entertainment not owe $6.4 million as alleged by City of Memphis, but that the management company had a cumulative loss of $1,455,555.
We predict that these facts will do little to deter former Memphis Mayor Willie W. Herenton’s rhetoric in his run against Congressman Steve Cohen, since the former mayor’s campaign is based totally on race-baiting. In announcing for the fun, prior to release of the Watkins Uiberall audit, Mr. Herenton said: “This so-called justice system of ours – they are about to send three black people to jail about dogs. But we’ve got a white man involved in Beale Street that a forensic analysis has revealed six million dollars is missing – six million dollars of your money is missing.”
Media Attention Span
His point was that F.B.I. investigations differ, depending on whether someone is white or black, but what he missed altogether was that there was never an F.B.I. investigation into Beale Street and no records were ever removed from Performa’s office by investigators. One thing about Beale Street is that rumors are as ubiquitous as beer sales, but in this case, it was one not only repeated in City Hall but by local news media.
Coverage by The Commercial Appeal of Mr. Watkins report reminded us about one of the harshest lessons of the media. It was little more than a year ago that Mayor Herenton’s allegations against Mr. Elkington shouted from the front page. This year, coverage of Mr. Elkington’s side was buried inside the newspaper, and even then, the follow-up article contained two errors – the amount of the dispute and the cost of the Parente Randolph audit.
Unmentioned was the fact that the city spent the equivalent of three cents on the tax rate trying to force Performa Entertainment to wave the white flag. Now, with a definitive audit, we hear that Mr. Elkington has signaled to city government and Mr. Ryder that he’s ready to settle and leave Beale Street. There are clear signals from the Wharton Administration that settlement is on the way, as the mayor himself mentioned to Greater Memphis Chamber last week.
Missing Proof
Our favorite notation in the report by Mr. Watkins: Mayor Herenton requested Performa Entertainment to host a pre-fight reception of his three-round fight with Joe Frazier and to host the opening event for National Black Mayors Convention. The tab was about $43,000, and Parente Randolph rejected expenses caused by the mayor himself.
In all, the Watkins audit listed 18 adjustments to the Parente Randolph report, and it clearly is fueling a new look at things by city government and Mr. Ryder. But if they need any further proof, they should read the deposition of Parente Randolph’s Paul Pocalyko, whose own words proved how unprofessional the report was from the beginning.
Two footnotes: One, we have been unable to find anyone who can give us the paperwork that shows how Parente Randolph was hired or what the firm gave as its scope of work to justify its $750,000 charge; and two, it is interesting how many times that Mayor Herenton turned to Philadelphia for his experts, whether it was to produce this badly flawed report or to justify the sale of Memphis Light, Gas & Water.
We can’t help but wonder if there are some favored Memphis firms doing city work in Philadelphia as part of a political give-and-take.
A Short Line
Mayor Herenton’s battle royal over Beale Street was made even more ironic by his praise for the street’s management over the years and the regular reports mailed to him regularly. We presume that looking at Beale Street today, it’s easy to think that Performa Entertainment has a good thing going on.
But then again, there weren’t exactly people lining up in 1982 when Mr. Elkington was chosen to revitalize the street. The before and after photos at the top of this post give an indication of how bleak the prospects were back then and what a folly he was seen to be undertaking.
At this point, it doesn’t sound like Mr. Elkington is expecting a thank you. But he’d surely settle for an apology.
This actually makes me physically ill, my stomach turned over. Why would anyone invest money or time in this city when even positive results (a lively Beale Street), are slandered by the leadership and local media?
Don’t listen to WW Herenton, don’t even ignore him.
This was the best outcome we could have hoped for. YAY!
Now let’s get that area to MAKE SOME MONEY, rent out the Pyramid, stop the hemorrhaging, overtaxing, and over-employing!
On to the MCS audit and inspection!
Like Anon, sorry to say but after all of Elkington’s grief dealing with a Herenton City Hall, who with any talent will want to take over Beale Street? That’s an operation that could fall apart really quickly without proper management.
Well, it may be an operation that has as it’s core mission a flawed context.
The reality it was created around may no longer exist, may never have, and that will spell failure if any plans based on that flawed matrix are acted upon.
I think it’s not so much a who as a what.
I have followed this terrible vendetta for the past several years. It makes me sick to see a discusting group of evil people try to destroy a fine, generous, and brilliant man. The cause has to be the GREED that is enveloping my nation.
In all due respect to Elkington, Performa, and Watkins (Elkington’s defense expert), this article is a travesty to the jurisprudence system, the Chancellory Court of Shelby County, and the Judge Harris.
The article appears to be a Press Release and written or guided by Elkington in his attempt to influence Public Opinion on the case versus properly arguing and presenting his facts (or opinions) before the Courts.
Shame on “Smart City Memphis” for publishing an article and issuing your media opinion on a matter in which you do not have all the facts, and even if you did, you are not qualified to discern the facts, truths, and render a proper legal ruling. Only the Chancellory Court of Shelby County and Judge Harris has that responsibility and authority.
Similarly, shame on the Commercial Appeal, the Memphis Daily News, and other media channels for also publishing stories or news broadcasts over the past two years whereby you prematurely used information from either the plaintiffs or defendants in this case. While a portion of prior articles only published facts perceived as news worthy, many stories did prematurely malign Elkington and Performa, and/or appeared to be politically motivated.
Fortunately, the guilt or innocence of any party, including Elkington, is not decided by politics, the media, how well you are liked or disliked, but based on facts and the testimonies of qualified and respected experts.
My objection to this article, does not mean I object to the content of the story. Much of it appears to be “right on” and much appears to be highly truthful. Mr. Watkins and his firm are indeed highly respected CPA’s. They have issued an expert opinion and properly disputed aspects of the case, and in so doing, they have correctly brought to the forefront potential issues, errors, and perhap inaccurate or biased opinions in the plaintiffs expert opinion that was issued by Parente Randolph and Paul Pocalyko.
Many with knowledge of this case, knew or perceived the Parente Randolph report’s claim of $6.4 million in misapproriated funds was grossly overstepping the truth of the actual claims. Does that mean the entire report is bogus and inccurate? No, Maybe, or Yes; or better put, the only party who has the responsibility to discern the Truth is the Court!
Mr. Watkin’s opinion is very credible and highly respected. Does that mean his opinion is the better of the two? Perhaps. Does that mean he is correct? No. Does that mean it speaks the Truth and nothing but the Truth. No, as he in less than 200 hours, he probably does not know the details of the facts and truths. The answer is it is only a credible opinion, aspects which may be supported by facts.
The sad issue for everyone, including Elkigton, are the Truths may never be known, unless this case proceeds to a Trial. The only competent venue to discern what are mis-guided opinions (from either side) and what is the Truth is a Court of Law.
In my opinion, this entire case is a travesty of justice and also a complete and misguided waste of taxpayer funds. On one hand, I applaud former Mayor Herrenton for his actions to launch a full investigation on the improper accounting of Performa’s Beale Street lease, yet in all due respect, he should have done that in 1992. While the Truth is priceless, spending in excess of $2.5MM with Wilkins, $750,000 on an “expert opinion”, plus the enormous man-years of assigned City personnel and attorneys on this case is an aboration of tax payer resources. Conversely, as anyone who has ever dealt with Elkington knows, he is a “pro” in dancing the “Beale Street Shuffle”, manipulations, deceit, bold face lies, misappropriation of funds, self-serving actions … while he most often convinces you he is honest and means well … even when you know otherwise. As one of the early leaders in the pre-Beale Street days said “John can convince you the world is flat, even when you know otherwise”. The attributes of a super salesman are admirable and made Beale Street successful. Yet, the negative attributes are those of a misguided person, who still believes today he owns Beale Street.
So with 20/20 Hindsight, Herrenton could have corected these issues in 1992, without spending $3-4 million. Conversely, had Elkngton honestly and openly cooperated, and been willing to properly account and report the terms of his lease, this entire matter would have never required the waste of taxpayer resources.
As others, I have respect for what Elkington accomplished and the obstacles he overcame in making Beale Street successful. I do not have respect for his ability to manage business affairs. Most know he sees things through rose colored glasses. Most know he cannot effectively manage a business, much less manage a budget or provide proper accounting.
I concur with Watkins the $6.4 million claim by the City is grossly incorrect. I disagree that Elkington is owed $1.5 million. If it should be remotely correct he is owed anything, the money was never his … as he used OPM (other people’s money). Or maybe, he got the funds from Richard Rossie (his former attorney, who stole from others)!
Most likely Elkington owes very little (in comparison) and in turn he is due nothing.
While after all the legal efforts and costs, many in Memphis would like to know the truth from the Court … perhaps the best for the City of Memphis and Mayor Wharton is a fair settlement of the case.
Whether by the Court or by a settlement, the City of Memphis needs to get this matter resolved … and let’s move on in life and begin rebuilding the image and succcess of Beale Street, downtown Memphis, and our overall comunity.
It’s called a blog- they can write, discern or comment on anything they want.