The Anaheim Chamber of Commerce – an entity that was a central figure in the city’s 2022 corruption scandal – is suing the controversial tourism bureau, Visit Anaheim, for ending a contract state auditors concluded last year was entered into improperly.
The over 100-year-old chamber that almost shuttered its doors earlier this year filed a lawsuit last Thursday demanding over $7 million dollars from Visit Anaheim, alleging they wrongfully ended their contract because of political pressure amid fallout in a corruption scandal.
“The Chamber’s work has consistently advanced Anaheim’s economic base, created jobs, and given voice to a diverse and evolving business population,” reads the complaint filed on July 24.
“Its exclusion by Visit Anaheim in 2023 represents not only a breach of contract, but a rupture of one of the most enduring public-private partnerships in Anaheim’s history, which was motivated by political convenience, internal pressure, and institutional self-interest.”
To read the full complaint, click here.
It stems from a subcontract Visit Anaheim entered into in 2010 with the Chamber to promote the Disneyland resort area using public tourism tax dollars that state auditors would later determine was done without the city’s permission.
Auditors also alleged the chamber used those dollars to lobby elected officials – something the money was not allowed to be used for.
Visit Anaheim CEO Mike Waterman said in a Wednesday morning email that they have not been formally served the lawsuit.
“As a result, we have not had the opportunity to review any official claims or legal documents regarding this matter,” reads Waterman’s statement. “We will continue to monitor any developments and respond appropriately as the situation unfolds.”
The complaint marks a widening rift in the relationship between the chamber and the tourism bureau, who for years were closely aligned and shared the same building.
But that all began changing in 2022 when FBI agents alleged that Disneyland Resort interests held undue influence over Anaheim city hall.
In recent years, both entities have tried to reorganize themselves in the wake of one of the largest corruption scandals in recent history to rock OC, with the chamber announcing this year they would be rebranding under new leadership and staying out of politics.
[Read: Disneyland Resort Interests Are Reorganizing in Anaheim After Corruption Scandal]
Anaheim Chamber of Commerce’s new CEO Dara Maleki said the dispute over the contract termination has been going on for two years and the loss of the contract has been a big hit to their revenue stream.
He also said that Visit Anaheim has been left with “tons of public funds” while the Chamber has been left with nothing in the wake of the corruption scandal as new leadership tries to rebuild and reform the organization to support small business.
“There’s a bit of injustice there and we’re seeking to correct some of these wrongs,” Maleki said in a Tuesday evening interview. “It’s hard to build back when the city and an organization that you helped build turns their back on you.”
Anaheim City Council members did not respond to requests for comment Wednesday morning.
State Audit Raises Flags, A Chamber Rebuilds
Visit Anaheim’s money comes from the Anaheim Tourism Improvement District, which is funded by an additional 2% tax on hotel rooms.
The tourism bureau gets 75% of that money and is supposed to secure bookings at the city-owned convention center and boost hotel stays through advertising. The other 25% is placed in a separate fund allocated for transportation needs in the resort area.
In their complaint, chamber officials argue they played a “particularly critical role” in creating the city’s tourist improvement district that would go on to raise tens of millions of dollars annually.
City officials contracted with Visit Anaheim in 2010 to use most of that tax revenue to promote the resort area and conventions.
In 2010, Visit Anaheim entered into a subcontract with the chamber following the creation of the improvement district, giving them 3.5% of the money annually to promote the tourism and convention industry and Disneyland resort area hotels.
Chamber leaders argue in the complaint they used the money for “neighborhood outreach events, workforce and industry roundtables, regional economic development strategies and hospitality sector advocacy.”
But last year, state auditors raised red flags about how the chamber was using the money they got in the subcontract.
Auditors said in a 2024 report that the chamber improperly spent tourism dollars to lobby elected officials as well as used tourism dollars for years to support its preferred candidates through a political action committee
They concluded Visit Anaheim was improperly subcontracting with the Anaheim Chamber of Commerce without the city’s permission because city officials failed to oversee the tourism bureau’s expenditures.
[Read: CA Auditors Lambast Anaheim’s Tourism Bureau, Find Improper Tax Dollar Spending]
Auditors also said the tourism bureau never needed a $6.5 million bailout they got from the city to advertise the Disneyland Resort when the tourism industry was shut down indefinitely at the onset of the COVID-19 pandemic.
The audit into Visit Anaheim’s finances came after city hired investigators with the JL Group alleged that $1.5 million of that bailout was improperly diverted by Visit Anaheim to an Anaheim Chamber of Commerce-controlled nonprofit as part of a conspiracy.
Maleki, who sits on the city’s Housing and Community Development Commission, said Visit Anaheim did not need permission from the city to subcontract with the chamber, but would have needed permission to move the bailout dollars and the two have been conflated.
“We’re talking about two very specific contracts, and governing documents that were completely separate, and I think both the public and I think even the Council were misconstrued on what that looked like,” he said.
The city’s original 2010 agreement with Visit Anaheim did require the tourism bureau to get written permission to subcontract with a group to promote tourism and advertise the convention center.
Maleki also said Todd Ament, the former CEO of the Chamber at the center of the scandal who pleaded guilty to federal charges, is long gone and that the chamber itself was one of Ament’s victims.
“He was the one who removed money and moved it into a different consultant, outside of the purview of staff, outside of the purview of the board,” Maleki said, adding they are pursuing a restitution claim against Ament for $1.2 million.
“He’s not walking away scot free from our organization, we will continue to pursue it just like we’re doing this.”
Maleki also said in a follow up email that the Chamber’s board of directors voted on a resolution in May to dissolve its political action committee – which was a big spender in city elections, backing resort-friendly candidates.
Meanwhile, Visit Anaheim executives agreed earlier this year to pay the city $3 million back from the bailout after refusing to do so for years while still maintaining they properly used the money.
[Read: Tourism Bureau to Repay Anaheim $3 Million From Controversial Pandemic Bailout]
In May, city officials voted on a new one year contract with Visit Anaheim that requires the tourism bureau to show how many conventions they’ve booked and track where they spend public tourism dollars following recommendations from auditors.
[Read: Anaheim Institutes New Oversight on Tourism Bureau After Searing State Audit]
The contract came ahead of city officials filling a roughly $64 million budget gap with one-time revenue sources to pass a balanced budget after hotel tax revenues came in 11% less than expected.
A ‘Symbiotic’ Relationship Sours
The Anaheim Chamber of Commerce’s lawsuit states that for over a decade the chamber enjoyed a “symbiotic” relationship with Visit Anaheim.
That is until the city commissioned corruption probe report by JL Group investigators came out in 2023 – the second probe into corruption in Anaheim within a two-year period.
According to the complaint, once the JL Group report came out, the contract between the Chamber and Visit Anaheim ended abruptly – cutting off public tourism tax dollars from the Chamber of Commerce they say they needed to meet their financial obligations.
“The termination of the Funding Agreement occurred shortly after the JL Group’s report was released in July 2023 and amid a shifting political climate,” reads the complaint.
“(The Chamber) contends that the termination was not motivated by actual cause under the contract, but by political expediency, greed, scapegoating, and pressure from external stakeholders, including the California State Auditor and members of Anaheim’s elected leadership.”
The complaint says the scrutiny sparked by the report led Visit Anaheim officials to no longer view their relationship with the chamber as symbiotic but rather a political liability – “and elected to unilaterally sever its relationship to protect itself from reputational harm.”
Anaheim Chamber of Commerce CEO Maleki said the chamber and Visit Anaheim no longer have a relationship.
“We moved out of that building two months ago,” he said. “I don’t think they’re here to rebuild the chamber. I think their intentions are to replace it.”
“We ultimately want a place to be able to operate. I think there’s a place for the chamber. I think there’s a place for Visit Anaheim.”
Editor’s note: Ashleigh Aitken’s father, Wylie Aitken, chairs Voice of OC’s board of directors.
Hosam Elattar is a Voice of OC reporter. Contact him at helattar@voiceofoc.org or on Twitter @ElattarHosam.