Was Mr. Appicello Involved in a Malicious Prosecution?

Update: The facts of this story were published on page 1 of the July 24, 2015 print and online editions [subscription required] of the Newport News Times.

The Facts

The story begins with the now infamous, Gerard Marcel Joseph Beaudoin II (aka Quentin G. Stanhope), an ex-bookkeeper , who recently pled guilty to 7 counts of aggravated theft and ID theft against some Lincoln City residents and St. Augustine members.

The City of Lincoln City contracted with Mr. Beaudoin to perform Transient Room Tax compliance audits. It is very troubling that Lincoln City required background checks on those wishing to volunteer to sit on committees, but did not have a policy to run background checks on contractors, at that time. Hopefully, they do now.

While auditing a vacation homeowner’s room tax records, Mr. Beaudoin (masquerading as Stanhope) harassed a Cutler City homeowner for several months, demanding documentation up to 7.5 years old. The homeowner provided everything that Beaudoin requested: guest registries, bank statements, and even tax returns. Beaudoin then demanded a “Quarterly Profit and Loss” (P&L) statement. The homeowner said she didn’t have this document.

Then, on August 15, 2014, the homeowner receives a citation and letter from (now retired) Lincoln City Code Enforcement Officer, Edward Blum. The citation was for $26,400 for failing to produce the Quarterly P&L. The homeowner goes to Court to plead not guilty, and a city staffer asks the homeowner to wait, and arranges for the homeowner to meet with City Attorney Richard Appicello. With this large fine over the homeowner’s head, the homeowner said that Mr. Appicello convinced her, “in the interest of justice”, to give up her vacation rental license, if he will forgo the fine. The homeowner did, in fact, comply.

The incredibly sad part of this story, is that this occurred during an already extremely stressful time in the homeowner’s life, as she was caring for her terminally ill husband at the time. She lost her husband on December 6th. Said the homeowner: “The City added a huge amount of stress to an already very difficult time. And yet, time marches on, and heals all wounds and wounds all heels, as my father would have said.”


As there was little to no probable cause in this case, there is strong evidence of a willful and malicious prosecution (ORS 156.280), and the homeowner has a strong case against the City.


There are five main issues with this case:

1. Applying a daily fine was not lawful

While Lincoln City’s current VRD laws have a “each day is a separate offense” clause, the room-tax ordinance (Chapter 3.04) does not. Therefore, it was not lawful for Mr. Appicello to threaten or demand more than $1,100 for a single offense, and is the strongest evidence of a malicious prosecution.

2. It was not lawful to demand records more than 5.5 years old

A lodging provider only needs to keep records for at most 5.5 years (see LCMC 3.04.170.D above). So the earliest records Mr. Appicello could have demanded in August 2014, was for February, 2009. Demanding records for 2007 and 2008 was unlawful, and is evidence of a malicious prosecution.

3. The proper fine amount was not applied

LCMC 3.04.170.C states:

C. Failure to Maintain Records. Any operator who fails to maintain records adequate to allow performance of a compliance review to verify accuracy shall pay a penalty in the amount of up to $1.00 per room per day for each day the records of the hotel are found to be inadequate by the tax administrator. The penalty imposed by the tax administrator may be appealed to the transient lodgings tax review committee by filing notice of appeal within 20 days after the serving or the mailing of the notice of the imposition of penalty.

By choosing to ignore the $1-a-day fine found above, and instead of the more punitive $1,100.00 fine in catch-all LCMC 3.04.240 statute, is simply more evidence of a malicious prosecution.

4. A quarterly Profit and Loss statement is not mentioned in the Municipal Code

A “Profit and Loss” (P&L) statement, is not specifically listed (or, for that matter, even hinted at) in the Municipal Code, as LCMC 3.04.170.B shows:

B. Records Required from Operators. Every operator shall keep an adequate system of accounting records of room sales sufficient to allow performance of a compliance review to verify accuracy. All records shall be retained by the operator for a period of five years and six months after they come into being. An adequate system of accounting records of room sales should typically include:
1. Registration cards;
2. Daily and/or monthly deposit and room rental summaries;
3. Adjustment to summaries, including, but not limited to, refunds, exempt rent and monthly rent;
4. Worksheets, showing computations for quarterly reports; and
5. General ledger records relating to gross and net rental receipts.

All other cities that we’ve checked have just a single sentence to describe the types of records that are required to be kept. For example, the text:

Every operator shall keep guest records of room sales and accounting books and records of the room sales.

or something similar, is used by Astoria, Bandon, Brookings, Cannon Beach, Clatsop County, Coos Bay, Florence, Garibaldi, Gearhart, Gold Beach, Lane County, Lincoln County, Manzanita, Nehalem, Newport, North Bend, Port Orford, Reedsport, Rockaway Beach, Seaside, Sisters, Tillamook, Tillamook County, Toledo, Waldport, Warrenton, and Yachats.

5. A quarterly profit and loss statement IS NOT required in a room tax audit

Both Randi Siller, of the Newport Finance Department, and Fred (no last name given), of the State Lodging Tax Unit confirmed that as a summary document, a Quarterly Profit and Loss statement has little, or nothing, to do with a room tax audit, and would not be required during an audit.


So, the fine, if anything, should have been $24, not $26,400. Demanding $26,400 in this case is damning evidence of a malicious prosecution (ORS 156.280).

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