Restaurateur Named by Gates Faces Eviction

Malibu real estate developer Tony Regan said Thursday that he will try to evict the operators of Splash restaurant in the wake of accusations by Los Angeles Police Chief Daryl F. Gates that the chic eatery is a “front” for a drug-money laundering operation.

Splash, on the beach near Point Dume in Malibu, is managed by Ron Lorenzo, whom Gates identified Wednesday as a “suspected organized crime figure.” Lorenzo, who often greets diners when they enter the restaurant, declined comment.

“I was very, very shocked, to say the least,” said Regan, who leases the property to the restaurant. “At the moment, I’d like to go in and sweep the place clean.”

Regan’s attorney, Allan Besbris, said he is researching whether there are grounds to evict the restaurant’s operators, possibly for late payments or for using the premises for businesses other than specified in the lease. The five-year lease calls for payments of $7,000 a month, Regan said.

Splash was one of five Los Angeles area businesses, including the ZZZZ Best carpet-cleaning company, named by Gates as part of the laundering scheme. He also said nine people, including ZZZZ Best founder Barry Minkow and several suspected organized crime figures, are targets of a three-month police investigation.

“These individuals own or control or work at legitimate or ‘front’ businesses,” the chief said.

Los Angeles Police Department spokesman Cmdr. William Booth said Thursday that it will be “a few weeks” before any arrests.

First, Booth said, investigators have to sort through material collected from Wednesday’s police searches of homes and offices of individuals believed to be involved in the case.

Police investigators, he said, have been meeting with officials of the California attorney general’s office to determine whether the case will be prosecuted in federal or state courts.

Splash, at 6800 Westwood Beach Road, is trendy and expensive even by Malibu standards. Its parking lot at night is usually filled with high-priced cars and limousines.

Secluded and casually elegant, Splash is a favorite with the movie set.

Gates said Wednesday that the money-laundering investigation began in March after Lorenzo was arrested on a fugitive warrant from New Jersey. Police have not given details of that case.

Lorenzo, 41, is listed as secretary of Scouse Corp., a company started in 1985 that runs the restaurant, according to a financial report from Dun & Bradstreet, a business research firm. The report estimated that the restaurant, which has 26 employees, would have $635,000 in sales in 1987.

Richard Bauer, a Beverly Hills attorney who represents the restaurant, said the extensive publicity surrounding the case is not likely to hurt business.

‘It Won’t Suffer’

“I’m sure it won’t suffer,” he said “The restaurant is too well known and too well liked.”

Another company described by Gates as a drug-money laundering operation was Art Auctions Inc., a subsidiary of Los Angeles-based Art World Industries. Company officials were not available for comment.

“Frankly, they’re in shock and waiting for the dust to settle,” company attorney Stephen F. Moeller said. “Frankly, we think Chief Gates was shooting from the hip without checking the facts.”

Art World Industries operations include an art-related book publishing arm and its auction branch, which holds art sales throughout the world, Moeller said.

Spokesmen for the firms under investigation admitted that they have some business connections. Minkow bought a 10% share of Art World Industries last year as part of a private sale of stock that Maurice Rind of Encino helped arrange and which raised “several million dollars,” Moeller said. Rind, who once served time in federal prison for securities fraud, also was identified by Gates as part of the laundering scheme.

“All Minkow and the other investors did was put money into the company,” Moeller said. “They didn’t take any money out” as part of a drug-money laundering scheme.

Helped With Auctions

Sources close to Splash said Art Auction helped the restaurant hold two auctions in the last year to raise money for charity by selling art reproductions for $1,000 to $1,500 each.

Minkow resigned last week as president of ZZZZ Best, which on Wednesday sought bankruptcy protection. In three bankruptcy court filings, ZZZZ Best, its parent company and a subsidiary listed a total of $36 million in debts to more than 400 creditors, ranging from two major Southern California banks to the law firm handling its bankruptcy filings.

The two banks, however, disputed information in the filings.

ZZZZ Bests’s Nevada-based parent company listed assets of $20.8 million and said its only liability was a $7-million unsecured line of credit from Union Bank in Los Angeles. But Union Bank spokeswoman Susan Murdy said the bank’s term loan to ZZZZ Best was secured, although she declined to detail the collateral involved.

Accuracy of Filing Disputed

First Interstate Bank similarly disputed the accuracy of ZZZZ Best’s filing that lists it as an unsecured creditor with a claim of $1.9 million. First Interstate spokesman John Popovich said “the credit was extended on a secured basis,” but he also declined to elaborate.

The law firm Hughes, Hubbard & Reed, which filed ZZZZ Best’s bankruptcy court papers, was listed as an unsecured creditor with a $117,753 claim.

Times staff writer James F. Peltz also contributed to this story.