"Because of the concerns raised by you," the board wrote, "we engaged our auditors to perform a special review of 1099s and W-2s issued for the past two years to [Mittelman, Bock, Delgado, and Peyser]. Additionally they reviewed that the types of payments identified by you were consistent with the underlying employment and/or contractual agreements. We believe, based on this work, that our overall tax posture is in compliance with IRS rules and regulations."

As for the abuse of funds alleged by former business office employees, trustees said executives did in fact use American Express cards issued by the Playhouse for personal travel, goods, and services in the past, but had paid back all the money - at some point - through payroll deductions. And beginning two years ago, the policy of allowing such personal use of business credit cards had been discontinued. Contrary to the claims of former employees, cash loans were never extended to senior executives, the trustees claimed. Any misperception was probably created by accounting terminology used to describe cash advances. "Playhouse funds that were given to employees as cash advances for business purposes were listed as `loans' until such time as payment was made," the board wrote. "Some time ago, the accounting method was changed, and such items are no longer listed as `loans.'"

Jordan Bock's travel and shopping sprees, and the Grove Isle massage billed to education director Judith Delgado, are examples of personal credit card charges that were paid back, the trustees said. The $500 jacket purchased at Romanoff was used in a production of The Roar of the Greasepaint, the Smell of the Crowd, and was paid for directly by the Playhouse. The $1372 bill from the Door Store was generated by "several pieces of furniture...for use in the artists' housing within the Playhouse building," the board wrote.

Stan Martin, a certified public accountant who heads the board's five-member finance committee, says he does recall meeting with several employees who had complaints about management practices at the Playhouse. "I took it very seriously," Martin recalls. "We talked to our auditors, and made inquiries, and basically didn't think there was much to it." Martin's response echoes the contention of other trustees and of Mittelman - that representatives of the accounting firm Coopers & Lybrand would have brought any financial improprieties to the attention of board members during its annual audit of Playhouse records. Trustees also emphasize that finance committee members review Playhouse financial statements each month. But Chris Kawolsky, a former general manager, says Martin's brief inquiry into the allegations had only one effect - it caused Mittelman to call a staff meeting at which he admonished other employees against complaining directly to board members about Playhouse policy.

Mittelman admonished employees for complaining to board members about Playhouse policy.

Part Three
Mittelman and his supporters on the board of trustees say they believe spite, envy, and an incomplete knowledge of Mittelman's and other executives' employment contracts have prompted the accusations from former employees. That the Playhouse paid $900 each month to Jordan Bock's late father, Max Bock, may have raised the eyebrows of business office employees, but in fact it served the purposes of efficiency: the younger Bock was given a $900-per-month housing allowance as part of his compensation package, and his father happened to be his landlord. Similarly, staffers may not have understood why the Playhouse for years paid $500 per month to associate producer Lynne Peyser toward rent in New Jersey, plus another $1000 per month toward her Grove Isle apartment in Miami. The explanation, say trustees, is that one room of Peyser's New Jersey residence was used as an adjunct office by the theater to house an answering machine and hold occasional casting sessions for New York-based actors. (The Playhouse recently closed its New York-area office.)

Mittelman is quick to acknowledge that the financial affairs of the Playhouse were far from orderly during the mid- and late-1980s. Sloppy bookkeeping may sometimes have given the appearance of impropriety, he says, but this was never intentional. Furthermore, the office has been cleaned up in the past two years, Mittelman claims. "There is no current employee in the business office who was here in April 1989," he points out. "Why is that? They weren't good enough, quite frankly. They didn't get it, they weren't able to keep up as the volume of work increased.

"Keep in mind we are just now getting fully computerized," Mittelman adds. "We've instituted what I consider to be the current state-of-the-art - albeit a pain in the ass - accounting process. It's very good for the institution, and very important for the responsibility we have to the public and public funds. It would be fair to say that [Playhouse bookkeeping practices] at a certain point in time, were vague - but never dishonest."

Mittelman, in characteristic colorful style, suggests his detractors find something better to do. "I don't know how it is in your business, but the arts are full of what we call the yenta squad - it's a Jewish expression for people sitting around kvetching," he says in a thick New York accent. "You know this expression: `It's not enough for me to succeed - you have to fail, too.'"

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