April 22, 2011--Two sheriff's deputies sat conspicuously in the lobby of the Wilshire Hotel in Koreatown on Thursday. They were there to collect a multimillion-dollar debt.

In March, a Superior Court judge ordered the company that runs the hotel to pay the city of Los Angeles nearly $3.5 million for unpaid transit occupancy taxes, known as bed taxes.

City officials say the company, Majestic Towers, never paid up.

So they turned to the Los Angeles County Sheriff's Department, which serves court orders, to play debt collector.

Since Tuesday, several plainclothes sheriff's contract employees have been stationed at the hotel round the clock. Their orders: seize the cash that flows into hotel coffers.

Sheriff's spokesman Steve Whitmore said the department has already collected $40,000, which will be handed over to the city.

Whitmore said the department frequently collects debt for plaintiffs who have been granted monetary judgments in Superior Court.

According to City Atty. Carmen Trutanich, this is the first time the city has turned to the sheriff to help collect unpaid taxes. "This is a baby step that is long overdue," he said.

Towering over a crowded commercial stretch of Wilshire Boulevard, the 12-story Wilshire Hotel has a rooftop pool and $169-a-night rooms with floor-to-ceiling windows.

As guests went about their morning business Thursday, a hotel manager met with two of the sheriff's contractors, known as "keepers" and two uniformed deputies who had come to oversee the collecting operation.

At a table in the light-filled lobby, the manager handed over a money order for $16,000 to the authorities. The guests did not seem to notice.

The city says the debt collection will continue this way until Majestic Towers agrees to pay the full judgment.

The company's president, Leo Lee, did not return phone calls Thursday. Paul Birchall, general manager of the Wilshire Hotel, said Lee was out of the country.

This is not the first of the hotel's troubles.

Last year, the hotel, formerly the Wilshire Plaza Hotel, was ordered to pay more than $1.3 million by the National Labor Relations Board, which ruled that it had engaged in unfair labor practices during contract negotiations in 2007 with a hotel workers union.

The city's lawsuit originated last year with an audit by the Office of Finance.

According to the court complaint, the audit of hotel receipts records from December 2005 through April 2009 revealed that the company had underreported its bed taxes by several million dollars.

After the city won the judgment for nearly $3.5 million, it went to the sheriff's Court Services Division and asked for help collecting the money.

The Sheriff's Department charges $560 a day for each keeper it employs on debt collection cases, Whitmore said. So far, the city has paid the department $9,000.

Many of the keepers who are staking out the hotel are retired sheriff's deputies.

An employee at the hotel, who would speak only if not identified because she fears retribution from her bosses, said the keepers are "nice guys" who sit around the hotel lobby all day and night.

At the end of each of her shifts, she hands them a record of how much money she has collected and puts it into a vault, from which the keepers later collect it. Some money is left so the hotel can pay its staff.

The employee said guests have been less happy about the arrangement.

As part of the debt collection, she noted, the staff at the front desk, bar, restaurant and coffee shop have been instructed to take cash only.

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