By Michael E. Miller
By Allie Conti
By David Villano
By Jose D. Duran
By Michael E. Miller
By Allie Conti
By Kyle Swenson
By Luther Campbell
Several former Playhouse employees claim that during the late 1980s, the Playhouse routinely failed to file annual Internal Revenue Service tax forms for various types of executive income, such as housing allowances, consulting fees, and bonuses. By not reporting the amounts to the federal government via IRS Forms 1099 or on W-2 wage statements, the ex-employees speculate, Mittelman and other top executives positioned themselves to avoid paying taxes on a substantial portion of their incomes. Three former Playhouse business managers say they expressed concern about these practices to executives or trustees on at least three occasions, but claim their worries were glossed over. (Further, since 1987 the Playhouse has regularly failed to report its ongoing use of professional lobbyists on disclosure forms required of nonprofit corporations.)
"I think we all feared having some governmental person or body come in and do some big audit, and then our names be on something," says Montserrat Paradelo, who worked as business office administrator from November 1988 to February 1990. "How much could they hold me accountable? That was always the big fear."
Merle Dowling, a former RKO Pictures executive who served as general manager and director of institutional development from July 1988 to March 1989, says she repeatedly asked Jordan Bock, when he was general manager, to assist her in filling out tax forms on his monthly housing allowances, but that Bock refused. (Bock, who served variously as general manager, fund raiser, and associate producer, and is employed by the Playhouse as a consultant, did not respond to telephone calls seeking comment for this article.) "I became concerned, when preparing year-end reports, that 1099s were not being issued to various individuals receiving sums in excess of $600, as they should have been," Dowling says. "When I moved down here, I was excited about the prospect of working with the Playhouse. I quickly became disillusioned upon discovering that the administration's version of nonprofit regional theater was ethically different from what I knew through both considerable training and experience."
Chris Kawolsky, a former general manager, says he left the Playhouse for a lower-paying job in March 1990 because he was troubled by many of the theater's business and personnel policies. Like Dowling, Kawolsky says he tried on several occasions to prod executives into supplying a more thorough accounting of their expenses and income. At one point, he claims, Jordan Bock explained how disarray in the business office worked to Bock's advantage: the appearance of disorganization made Playhouse finance committee members loath to ask detailed questions of Bock, believing he would be unable to answer them readily.
More generally, ex-employees claim Mittelman and a small clique of fellow executives frequently used funds from the nonprofit, taxpayer-supported Playhouse for their personal vacations and shopping trips, extended themselves interest-free loans from Playhouse coffers, and flaunted their expense-account lifestyles before their underpaid employees. (One business office staffer during the 1989-90 season recalls Bock bragging about a ring the staffer later discovered had been purchased with Playhouse money. "Here we are not getting raises," says the former staffer, who requested anonymity. "We can barely afford to pay the actors. I don't care if he's paying the money back or not. Can you imagine me asking the Playhouse for a car loan?")
Playhouse financial records from April 1989 show Mittelman's wife, Playhouse education director Judith Delgado, getting a $40 massage at the posh Grove Isle Club. They show Mittelman receiving a $200 disbursement recorded as a "cash loan." They show Bock, with whom Mittelman worked at the Whole Theater in New Jersey and brought to Miami in 1985, spending more than $2000 on clothing, shoes, and services at Bloomingdale's in Miami, Saks Fifth Avenue in Palm Beach, Gucci at Bal Harbour, and the Marquesa Hotel in Key West. (The same records show only one $750 repayment on Bock's Playhouse American Express account during a one-year period.) Receipts from November 1989 also show the Playhouse picking up the tab for a $500 red leather jacket purchased at Romanoff, a fancy Grove boutique, and for $1372 in furniture purchased at the Door Store.
Dave Ormstedt, a specialist in public-charities ethics who works with the state attorney general's office in Hartford, Connecticut, calls the practice of extending de facto interest-free loans via Playhouse executive credit cards "highly questionable.... I can't think of any justification for it," says Ormstedt.
After considering a request to review Playhouse tax documents and other financial records, trustees said they would not allow New Times to independently confirm whether various types of executive income had been reported via IRS Forms 1099 or through W-2 statements. This decision, according to Playhouse board secretary Maurice Weiner, was based on an attorney's advice that disclosing such tax documents would be illegal. However, John Schnellmann, an IRS spokesman in Fort Lauderdale, says he knows "of no IRS law that would prohibit a private entity from releasing that kind of information." Board chairman Judith Weiser and finance committee chairman Stan Martin said they thought sharing financial information with the press risked setting a precedent other Miami arts institutions might feel compelled to follow.
Playhouse trustees did volunteer to conduct their own review of executive-income reporting practices, and also to examine several incidents in which Mittelman, Bock, Delgado, and associate producer Lynne Peyser appeared to have used Playhouse funds for personal expenditures or received interest-free cash loans from Playhouse accounts. A written response issued by the board on March 2 contradicts the statements of former Playhouse business office employees, and claims that ancillary executive income such as housing and transportation allowances, bonuses, and consulting fees were in fact properly reported to the IRS. But the response failed to address most of the time period in question, the years from 1985 to 1989. Trustees were willing to produce limited financial information for the past two years only - a period during which, by the trustees' own acknowledgement, a new manager had been hired to reorganize the business office.