It has come to be a fundamental fact of pre-Olympic life that organizing committees inevitably find themselves in trouble. This axiom applies to Winter as well as to Summer Games, so it is no shock to find there are troubles aplenty in Lake Placid. For the past several months the little upstate New York community, the site of next February's Winter Olympics, has been beset with rumors of bungling and high jinks, even higher living and corruption.
A sampling of newspaper headlines indicates just a few of the problems: SUSPICIONS CLOUD LAKE PLACID, OLYMPIC PIPE CONTRACT PROBED, MAILING PERMIT REVOKED. There also has been speculation that the Games couldn't—and wouldn't—be held because the Lake Placid Olympic Organizing Committee is skating on financially thin ice. And there have been stories, notably from the Ottaway News Service—part of a Dow Jones subsidiary that serves 19 newspapers—concerning questionable bidding practices, cost overruns, a $6.6 million lawsuit filed by two direct-mail fund raisers alleging breach of contract and fraud by the LPOOC, and a suspect $800,000 insurance contract awarded without bidding to two nephews of one John M. Wilkins, who also happens to be a member of the Lake Placid Olympic executive committee and the chairman of its broadcast and marketing division.
All of the stories, and all the talk they generated, prompted U.S. authorities, who had shoveled $56 million into the Games, to announce that they would investigate the matter. But what they have done is add to the confusion. Last November, Harold Williams, deputy assistant secretary of the Department of Commerce, announced that his Economic Development Administration would look into possible criminal violations at Lake Placid. Several weeks ago Williams said that the EDA had concluded its investigation and that no criminal charges were likely to result. No sooner had Williams spoken than the Ottaway News Service released an internal memo, written by Guy W. Chamberlin Jr., the acting Inspector General at Commerce, in which he demanded an immediate "general across-the-board investigation" of "allegations of substantial irregularities" at Lake Placid.
With all this, it is time to put Lake Placid in perspective, which is fitting because the slogan of the local organizers in happier days was "The Olympics in Perspective."
January 15, 1979
•The games are going to be held. Action starts Feb. 13, 1980. Count on it.
•Yes, there is a cash-flow shortage for both construction ($17 million, including $2 million in overruns) and administration (take your pick of $4 million or $9 million).
•But according to Petr Spurney, the new $100,000-a-year hot-shot general manager for the LPOOC, "We have money on hand for all workers on jobs now. Construction is no crisis."
•The entire production—athletes, medals, bunting and all—will cost roughly $150 million, about half of it federal money. This is some $50 million over original estimates.
The troubles are largely self-inflicted. In fact, the Lake Placid saga is a sort of Norman Lear television series on skis, a classic tale of a small town anywhere. Lake Placid is a village of 3,000 nestled in the Adirondack Mountains, where everybody knows everybody else and/or is related (shades of Mary Hartman, Mary Hartman). Everybody talks. Telling it like it is, everybody blabs. "Anything I say in an executive committee meeting is known to the public in an hour," says Spurney, who regards leaks as an occupational hazard.
Scratching out a living in this federally designated depressed area isn't easy, and not everyone was (or is) for the 1980 Olympics. The 1932 Winter Games, which were held in Lake Placid, failed to pay off in lasting tourism or business, leaving the little town about as broke as ever, and nowadays many villagers get livid when they hear how much money some of the folks who work for the LPOOC are making. Publication of a confidential list of salaries in the Adirondack Enterprise caused an uproar. "One time these people were dedicated to promoting the Olympics heart and soul," says Matt Clark, the town clerk of North Elba, the most popular politician around (12 straight wins) and an Olympic critic. "Now there's money, and they want to be paid."
Take the case of George Christian Ortloff, who campaigned for village trustee last year and while doing so vowed that he wouldn't become involved with the LPOOC because "no man can serve two masters." Upon election, Ortloff and his wife took jobs with the LPOOC at $15,000 and $11,000 each. "Chris told me that his earlier campaign statement is his biggest problem now," says Spurney, "but then, he figured the Olympics were once in a lifetime."
There also is the question of 31 official Olympic automobiles, donated by Ford, which some LPOOC staff members get to drive—and charge the gas on state credit cards. Let an Olympic car be parked outside a supermarket or, worse yet, a bar, and tongues wag from one end of the village to the other. Housing in Lake Placid has stirred more bitter comment. Needless to say, all of the 2,000 motel rooms in town have already been booked, and the International Olympic Committee has commandeered all of the Lake Placid Club, a gloomy warren of some 500 rooms. Athletes will be well housed, if not luxuriously, in quarters being built for the occasion. The press was to have been quartered in Plattsburgh, 50 miles down the road from Lake Placid, but Spurney says that situation is being reviewed. Olympic spectators will be far-flung, indeed. All of this has given birth to a mini boom in the rental of local houses. Residents are asking up to $25,000 for the use of their homes during February, and one gets the impression that when the Games start there won't be a local left in town.
"The moral issues are very, very severe," says Father William D. Hayes, rector of Lake Placid's St. Eustace Episcopal Church. "Everyone's trying to get their share of the dollar, and some people are trying to get their share of the dollar at the expense of their neighbors. The ideal of the Olympics in Perspective is a worthy one—but that ideal is not attainable in today's world. The ideals of Pete Rose are where we are today."
This growing sense of uneasiness is mixed with a strong dash of naivetè and a marked hostility toward outsiders, especially the press. The LPOOC executive director (at $22,000 per year), J. Bernard Fell, a local cop who became a Methodist minister and is known as "The Rev.," recently said, "If I could go back to 1974, there never would be an Olympic Games here. Good, respectable people are being lambasted. Dedicated volunteers are being dragged through the mire." To which Charles Carlson, a state Department of Transportation engineer who was on loan to the LPOOC until he was accused of "double dipping" on his expense account, moaned, "Oh, it's just been awful."
Trouble began to heat up last March when Norman Hess, a local attorney who was not only a member of the LPOOC but its counsel as well, was notified that he had been charged with failure to make timely filings of his 1973 and 1974 federal income-tax returns. Ordered to appear in court, Hess immediately contacted the LPOOC and submitted his resignation to spare the Winter Games adverse advance publicity. The resignation was accepted. Alas, news of the court action blanketed the Adirondacks. In August, Hess pleaded guilty to one of the counts. He was fined $10,000 and sentenced to 30 days in the Albany and Clinton County jails. The sentence was later reduced to 10 days, of which he served eight. Last week he was suspended from law practice for two years by the New York State Bar Association, and any time his name comes up now—which is like on the hour—his woes are tied to the tail of the LPOOC.
This only helps to fuel more rumors. According to local scuttlebutt, one staff member of the LPOOC was supposed to have received $80,000 under the table as a kickback on a contract. Everyone has heard the rumor, including Spurney, who investigated and says it isn't true. "The allegations will fly and continue to fly," Spurney says. "I've heard them all. Throughout the entire operation there has been nothing illegal or criminal to my knowledge."
Meanwhile the U.S. Commerce Department audited LPOOC expenses and further muddied matters by goofing on the name of Committeeman Arch Swinyer ($25,000 a year) so that it came out "A. Swinger." Either way, the Commerce auditors charged A. Swinger with excessive entertainment expenses. The audit also prompted news stories about first-class flights by committee members. The news stories originated with the Ottaway Service and appeared in the The Times Union of Albany and Plattsburgh's Press-Republican, among other papers; they were also picked up by Associated Press. But a check of the records shows that only one staff member flew first class, and that was because the plane's economy section was fully booked.
Another story had it that a member of the LPOOC switched from a $33 hotel room to one that cost $41. He did, indeed: the records show that he switched rooms because he was in New York City one night and Pittsburgh the next. The room in Pittsburgh cost more. The facts didn't catch up with these stories, but that doesn't cut any ice in a village where folks are eager to see—and to talk about—who's getting what slice of the Eskimo pie.
There has been criticism of the Gilbane Building Co. of Providence, which the LPOOC retained to manage Olympic construction. Last November the Economic Development Administration refused to pay Gilbane $376,000 because the company wouldn't let the EDA inspect construction-test records. Ed Lewi, the public relations director for the LPOOC, then said that all the test records would be made available to the feds, but that they would not be made public because "those documents belong to a private business." After inspecting the records, the EDA last week paid Gilbane the money, even while their hassle continued to stir up talk.
More travail came when American Marketing Consultants, Inc. and Election Research and Management Associates, Inc., which had been retained to raise funds by direct-mail solicitation of the public, sued the LPOOC for breach of contract. The fund raisers also alleged that the LPOOC had withdrawn $330,000 from an escrow account that had been set aside in the Bank of Lake Placid to pay suppliers who sent premiums, such as wall plaques and glassware, to contributors. The two firms also asked $5 million in punitive damages from John M. Wilkins, chairman of the broadcast and marketing division of the LPOOC. A month before filing the suit, Wayne Bonney, president of American Marketing, wrote the LPOOC that his company had encountered such difficulty with Wilkins and his associates that he was advised to request that a court reporter be present to record further meetings. Moreover, Bonney also requested that an updated and unabridged English language dictionary be available "to settle any questions regarding words and their usage during the meetings."
Last month the two firms settled for 12¬¨¬®¬¨¢ on the dollar for themselves and 28¬¨¬®¬¨¢ on the dollar for most suppliers. This means, Bonney says, that his firm got 12¬¨¬®¬¨¢ for every dollar billed, and it settled because it needed the money. Still, Bonney regards the settlement as proving he was right in his charges. "The Lake Placid committee admitted they took money out of the escrow account improperly, in violation of the contract," he says. "They later replaced the money, which was acknowledgment that they had done wrong." After waiting for the settlement check from the LPOOC to clear, Bonney, who says he took the Olympic account as a labor of love, promised to do everything in his power to bring about a full and open investigation of the Lake Placid Games.
"I don't think anyone at Lake Placid is a thief," he says, "but the spirit in which the Lake Placid committee obtained the Olympics was one of pride, challenge and honor. Then, because of easy access to large amounts of money, the situation developed into mismanagement and perhaps unethical business decisions. I don't believe the Federal Government should give Lake Placid another dime until a complete investigation is held and all possible private avenues of funding are exhausted."
Settlement of the suit out of court got Wilkins and his committee off the hook for possible punitive damages, but the chairman has been the subject of considerable criticism for the LPOOC's so-called "wrap-up" insurance policy. The adage that there is no one with endurance like the man who sells insurance fits Wilkins perfectly. Wilkins, 56. has been in insurance and real estate in Lake Placid for 31 years, and in that time, he is proud to note, both of his businesses have become the biggest of their kind in the North Country. Wilkins has the reputation of being very shrewd, often to the point of arousing enmity. He agrees. "I've caught flak all my life," he says. "Why? Because I'm aggressive. I work damn hard. But I know—and the people who know me know—that I'm not a crook."
By his own account, Wilkins is a doer. He gets up early so he can finish first. A former member of the village board and a deputy mayor, he has been or is related by blood or marriage to five members of the LPOOC, including Ron MacKenzie, the 75-year-old president and 1936 Olympic bobsledder who died of a heart attack just before Christmas at the inauguration of the 70-meter jump, and Art Devlin, a local motel owner and a national ski-jump champion in the 1940s. Wilkins has been busy buying real estate in Lake Placid. "Buying it as fast as I can," he says. "People will go around saying that after the Olympic games are over, Wilkins will have another couple of million. Well, I hope I do. But it won't be by any dishonest means."
Also by his own account, Wilkins was a natural to take over the chairmanship of the broadcast and marketing division ($32,000 per). He recalls that, "When they appointed a chairman they said, 'We need a son of a bitch. Who's the worst son of a bitch here?' And they all looked at me."
Wilkins' chairmanship did not prevent his insurance firm, Wilkins Agency, Inc., from bidding on Olympic insurance. The agency outbid competitors for the liability and fidelity policies but lost on hospitalization—which prompts Wilkins to say, "I guess that's a point in our favor." After construction contracts were awarded. Wilkins and his nephew, Robert Damp (who, along with his brother Edward, works for Uncle John's agency), and Norm Hess drafted the legal specifications for the so-called "wrap-up" policy. In everyday language, this policy would cover any accident anywhere involving the Lake Placid Olympics. "If you have an electrician, a plumber or a steelworker. and he falls down a hole, did he trip over the wire left by an electrician or land on the pipe left by a plumber?" Wilkins says. "With a wrap-up policy, there's no argument over who pays."
According to Wilkins. the Economic Development Administration decided that it wanted a wrap-up policy for the Games and, he says, "We immediately made a proposal—we meaning the Wilkins Agency, Inc. The EDA rejected it because of a conflict of interest, because I own Wilkins Agency 100%. I'm just as ambitious as any other businessman, so I said to the EDA that I would resign from the Olympic committee. They said that wouldn't work, either. The fact that you were a member of the board would still make it a conflict of interest." With Wilkins unable to write the wrap-up, Bob and Ed Damp, both experienced insurance men ("These are not two jerks off the street," says Uncle John), came up with a separate corporation, Placid Management Limited, to bid for the policy. "EDA investigated them, me, and approved their proposal and approved them and approved their corporation," says Wilkins. "The corporation is owned 50% by Robert Damp and 50% by Edward Damp and zero by me."
Unlike the other policies, however, this one wasn't put out to bid. "Why, I don't know," says Wilkins. Published reports say that the brothers Damp stand to make $200,000 profit on the $800,000 contract. "Grossly inaccurate," says Wilkins of the figure, although he refuses to supply the correct one himself. When news of the policy became known, there were cries of nepotism. The Rev. Fell responded. "There is a lot of nepotism. We are proud of our nepotism up in the hill country. We need our relatives. The Lord knows there are a lot of them, and we are proud of it." He also pointed out that the Lake Placid committee had made all of this abundantly clear two years ago when members had appeared before a House subcommittee to seek funds. "Congress understood that completely," the Rev. recently told the Boston Globe. "When we testified before the committee, that was one of the things that we alluded to with a great deal of pride. That we had husbands and wives and sons and daughters all involved. And we were congratulated by Congressman Rooney that we did."
Ramon Lopez, the project general manager for Gilbane Building, agrees with Fell's assessment. "If you're staying in a motel here, chances are a committee member owns it." he says. "If you go out to eat, a committee member probably owns the restaurant."
Although the word nepotism is derived from nephew, Wilkins says no nepotism really is involved because "the government's rule on nepotism is father, mother, son, daughter, sister, and if the relationship is beyond that point, it's not nepotism."
Spurney, who took over the new general manager's position at Lake Placid in early November just as the insurance case was heating up, calls that deal "unfortunate." The EDA investigated the case and found no conflict of interest, but Spurney makes it obvious that the episode would not have occurred had he been in charge.
Spurney is a no-nonsense aeronautical engineer who moved from international air shows into what he calls "event management," in which professional management is incorporated with community desires. He says that he saved the Spokane Expo in 1974 and the Freedom Train after that. In full command at Lake Placid, Spurney has been paring costs—he says he has trimmed $10 million from the administration budget—and he is attempting to restore public, corporate and government confidence in the Lake Placid Olympics. He is certain that the Games will come off and that this will indeed be an Olympics in Perspective. At a press conference last week Spurney announced that the government has kicked in an additional $1.5 million toward construction cost overruns, bringing that particular budget gap down to a "firm" $17 million. Spurney also pegged prospective revenues from fund raising and ticket sales at $41 million.
Wilkins promptly disagreed. The revenues would turn out to be more like $46 million, he said, not including ticket sales. Asked at the conference why he thought Spurney was downgrading his efforts, Wilkins allowed that. "If you are going to be a dragon slayer, you've got to find a dragon."
As Spurney sees it. the troubles at Lake Placid have largely been of Lake Placid. "Lake Placid was the committee and the committee was Lake Placid." he says. "One of the statements around here is that, 'We have met the enemy, and he is us.' "