Lois ‘Pay to play’ Frankel and Digital Domain

In 2006, a grand jury looked into alleged acts of “pay to play” by West Palm Beach city officials, most notably then-Mayor Lois Frankel. Recent events centering on the now defunct Digital Domain suggest that the jury panel disbanded far too soon — more work was coming down the pike.

Six years after escaping consequences for what sure looked like inappropriate conduct, Frankel’s actions are once again raising eyebrows. This time, the questions surround contributions given to her congressional campaign by a company that benefitted from her political support.

Support provided during Frankel’s “pay to play” days at the helm of West Palm Beach’s city government.

In January 2007, the grand jury concluded, “There was a perception of pay-to-playin which developers needed to pay to get projects moved forward.”

Frankel, in my opinion, dodged the bullet on that one. The jury panel found that developers, even those from out-state, seeking city contracts contributed heavily to Frankel’s political campaign.

Jump ahead a few years.

In 2009 and 2010, Digital Domain Media Group negotiated with the city of West Palm Beach for an incentive package to locate a digital animation school in the city.

Although a vetting process was initiated before approving any agreement, city officials clearly went through the motions and ignored what the investigation disclosed.

Chief among the warning signs was this: Digital Domain was audited in mid-2009 by the accounting firm Deloitte & Touche. The firm reported that Digital Domain’s heavy losses raised “substantial doubt about its ability to continue as a going concern.” This was similar to an assessment dated June 2006 and issued by PricewaterhouseCoopers, another accounting firm.

It wasn’t until a third firm, SingerLewak, entered the picture that Digital Domain miraculously received a clean bill of financial health. The disparity in conclusions between SingerLewak’s report and the two previous ones should have set off alarms.

Financial analyst and former Florida Rep. Carl Domino offered additional evidence. He warned both Frankel and City Commissioner Kimberly Mitchell — Digital Domain’s two biggest proponents — that “this was not a smart thing to do.” Domino’s warnings were based on a previous financial investigation he’d performed at the state level. He later said Frankel and Mitchell “had misled me and misinformed me and demeaned the work I had done.”

Frankel ignored the warnings and the city moved forward, apparently enamored with the idea of being associated with a high-tech arm of Hollywood. In November 2010, West Palm Beach officials agreed to a $10 million cash payment, a $15 million bond issue and the transfer of 2.4 acres of prime land adjacent to CityPlace to bring Digital Domain to the city.

Domino was right. This was not a smart thing to do. Last month Digital Domain closed its doors and declared bankruptcy.

Of course, there’s no crime in being stupid. If there were, most of us would have done at least a little time at some point in our lives. And if that was all there were to it, the story would end here. But like a bad soap opera, the story continues.

Three days after Digital Domain declared itself insolvent, Frankel announced that she would be turning over to charity $20,000 in cash contributions that Digital Domain made to her campaign. She’s the Democratic candidate for Florida’s 22nd Congressional District, running against Republican Adam Hasner.

This latest revelation begs a whole passel of questions. BizPac Review contacted Frankel’s campaign office to get some answers and was told by her communications director that he would get back to me by Monday. I’m still waiting, despite leaving subsequent voicemail and email messages.

All the questions I have eventually wind their way to one: After dodging the bullet just a few years earlier, why would Frankel even consider engaging in activity that could be perceived as improper, especially in the midst of all the warning bells Digital Domain raised?

It appears suspiciously like the $20,000 campaign contribution was offered in exchange for Frankel’s support. “Pay to play” and deja vu all over again. Even if she’s completely innocent — even if it’s all incredibly coincidental — is this the person we want representing Florida’s Congressional District 22?

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