Opponents of Laguna Museum Merger Allege Fraud

LAGUNA BEACH —  Opponents of the Newport Harbor-Laguna Art Museum merger presented the Laguna Beach City Council on Tuesday with confidential documents that they say show trustees fraudulently engineered the merger.

“We suggest that no museum anywhere can be created on a foundation of fraud, deceit, arrogance and greed,” said Vern Spitaleri, president of Motivated Museum Members, the group filing suit to reverse the merger.

Before Laguna museum members ratified the merger last spring, trustees announced that the museum risked insolvency without a consolidation, and that a merger would not necessitate the Laguna museum’s closure.

But Motivated Museum Members have internal museum documents that they claim show the Laguna museum had a $226,615 surplus in August 1995. Members say the trustees’ real plan was to close that museum.

Furthermore, opponents said, an internal Newport Harbor memo indicates that that museum, not the Laguna museum, was having serious financial problems.

Before the meeting, Charles D. Martin, president of the consolidated Orange County Museum of Art, offered budget accounts that he said showed the Laguna museum actually had a deficit of about $52,000 during the period.

Opponents have “misread” the documents and taken them out of context, Martin said, reiterating that before the merger, the museum had been “dangerously close” to insolvency for two years.

Martin added that trustees publicly announced months before the members’ ratification that Newport Harbor had a $250,000 deficit and that it had been running deep deficits annually for the previous several years.

He has confirmed that trustees originally planned to close the Laguna site. But he said recently that trustees changed their minds after vociferous community opposition. In fact, trustees last year signed an agreement with another local group, Laguna Art Museum Heritage Corp., to keep the museum open for 80 years.

Heritage, which will help fund and program the Laguna museum, announced Tuesday that it is negotiating with OCMA to have some $1 million from the controversial sale of Paul Outerbridge Jr. photographs from the Laguna museum’s collection placed into a third-party trust.

The idea, which OCMA trustees have opposed, is to allow Heritage access to the funds to acquire or preserve art, Heritage spokesman Steve Josephson said. If the negotiations break down, Josephson said, Heritage will take legal action to achieve its goal.

Motivated Museum Members and OCMA trustees have a March 3 trial date, preceded by a Feb. 14 mandatory settlement conference. Informal settlement talks, which included the possibility of giving Heritage the ownership of the museum building in the near future, have left both sides far apart, they said Tuesday.