It was an affair to remember, a swank black-tie gala for some 600 Hollywood luminaries and friends ready to open their wallets in November to help build a $45-million shrine spotlighting Tinseltown’s storied past.

Actors Laura Dern, Keith Carradine and Jeff Goldblum were at the Hollywood Palladium that evening, scattered among the celebrity throng munching catered salmon and mugging for the paparrazi.

Councilwoman Jackie Goldberg and other pols were drawn to the glamour and flash as well.

Yet, all the schmoozing and cocktail banter couldn’t muffle what some had already begun to worry about in private. A decade after it was conceived by an influential Valley-area lawmaker, the Hollywood Entertainment Museum project was in trouble.

“As long as the locusts don’t come, we’ll be fine,” Phyllis Caskey, the museum’s normally upbeat chief executive officer, said that evening of the project and its hometown.

In the 10 months since then, the locusts have gathered.

Hundreds of pages of public records and more than a dozen interviews show the following:

Despite consuming more than $1.4 million in public funds, the nonprofit organization behind the museum since 1985 has not moved a single shovel of dirt and has raised only a fraction of the project’s cost from private sources.

Officials are now lobbying city redevelopment leaders to forgive a $500,000 taxpayer loan spent trying to purchase a building they have abandoned.

Among other public funds, the museum convinced the MTA to pay $25,000 for a benefit cocktail party.

Caskey’s salary has been the group’s chief expense. She was paid $96,000 in 1993. The next year she made $85,000, in addition to a $6,600 car allowance, health insurance and other benefits.

On several occasions, museum officials overstated both their private fund-raising achievements and their progress in purchasing a permanent home. Now, instead of buying, they want to lease space in a retail complex – a decision that could cost them vital city support.

The group would not release its financial information for 1995.

How could a project touted by a powerhouse cast of politicians and entertainment figures – among them Carol Burnett, Jimmy Stewart, Debbie Reynolds and Richard Riordan – in the cradle of the world’s entertainment business fizzle?

Critics say the failure of the museum to move from blueprints to brick and mortar reads more like an urban tragedy than a happy-ending feature presentation. Mismanagement, they say, torpedoed the original plans, depriving the community of an economic boost.

“Hollywood is a dream factory and what the museum has produced is a fantasy that cost the public tens of thousands of dollars,” said John Walsh, chairman of a Hollywood community advisory group. “After ten years, this has been a yellow brick road to nowhere.”

After loaning the group $500,000, Los Angeles redevelopment officials who made the proposed facility their top priority are now having second thoughts about a pending loan because of HEM’s sluggish fund-raising record.

“It’s one thing to talk a good game, but they need to come up with the money,” said Shelby Sloan, a commissioner at the Community Redevelopment Agency. “We certainly won’t fund a fiasco.”

Defending their actions, Caskey and other museum brass contend their biggest mistake was being ambitious and that they were victimized by plunging real estate values, tight-fisted philanthropic giving and other misfortunes.

They still vow a Hollywood-themed museum will materialize, albeit a much smaller version of their original plan.

“You are going to be blown away by what comes about,” said Earl Lestz, HEM’s board chairman and president of Paramount Pictures Studio Group. “This could be the impetus for turning Hollywood around.”

Like a hot young actor tearing up the silver screen, the museum’s concept circa the mid-1980s seemed to have all the ingredients for fast-track success: impeccable timing, insider connections and a compelling delivery.

Drowning under a sea of tacky retail shops, degenerating office buildings and street crime, Hollywood Boulevard had lost its glitter and become a civic albatross. Public officials hell-bent on revitalization scurried for answers.

Enter David Roberti, the state Senate’s then-top lawmaker whose districts have encompassed the San Fernando Valley and Hollywood over the years.

Convinced a museum spotlighting the history of film, television and radio would be a tourism bonanza, he got Gov. George Deukmejian in late 1984 to free up $140,000 to study whether the project made fiscal sense.

The result was a resounding yes: The report concluded such an attraction would draw 1.4 million visitors and spur roughly $24 million in economic activity yearly.

Six months later, Roberti convinced the Legislature and Deukmejian to approve $785,000 in seed money for such a project. A few weeks later he formed the nonprofit Hollywood Exposition Corp., with himself as chairman; former aide and then-Councilman Michael Woo secretary-treasurer; and his then-community liaison, Caskey, the museum’s top staffer.

The final state act played out around Christmastime 1985. The California Department of Commerce, the agency charged with overseeing the seed money, was cleared to prevent other nonprofit groups from bidding on the funds so it could be whisked to Roberti’s freshly created organization.

But the waiver short-circuited others interested in designing a entertainment-themed museum, including a plan by the prestigious Academy of Motion Pictures Arts & Science. Roberti, nonetheless, said it was the Commerce Department that sought the waiver.

“They came to us,” he said.

Mike Marando, a spokesman for that department, renamed the Trade and Commerce Agency, disputed that contention, saying records indicate Roberti’s office fully consulted with them in urging the exemption.

Locally, officials rejoiced. While Southern California boasted myriad visitor theme parks, from Disneyland and Magic Mountain to Universal Studios, the birthplace of the movie business was a wasteland, except for a few small, specialty museums focusing on Hollywood makeup techniques, wax figures and the like.

“People come here from all over the world but a lot of them don’t know what to do except go to Mann’s Chinese Theater and the Walk of Fame,” said Leron Gubler, executive director of the Hollywood Chamber of Commerce.

Out of the gates, Exposition Corp. executives thought they had discovered a perfect home at a mammoth commercial-retail complex that Indianapolis-based developer Melvin Simon wanted to wrap around the Chinese Theater on Hollywood Boulevard.

With a price some estimated in the $300 million range and plans for 675,000 square feet of new office and retail space, the Hollywood Promenade was touted as the vanguard of the area’s rejuvenation. And to sweeten the deal for museum officials – who were banking on private donations to finance their facility’s $60 million tab – Simon agreed to kick in $5 million to $10 million for HEM’s building and shell, project officials said.

If fund raising and other plans went smoothly, a Tinseltown shrine would open its doors in phases, starting in 1991. There would be exhibits from the “Silent Era” and other film periods, recordings of old Jack Benny shows, interactive computers and other elements, according to promotional materials.

But that dream slowly died.

Declining property values and a depressed economy, coupled with anti-redevelopment litigation in Hollywood, derailed the Promenade. By 1989, Caskey and her board were searching for a new museum locale.

Two years later they thought they had found it a few blocks to the east at the Pacific-Warner Theater, a venerable, 67-year-old structure built in the “Golden Age of the Movie Palace,” city records show. By renovating it and adding new space, the spot would only have slightly less exhibit room than their Simon proposal, a $45 million cost and an initial 1995 opening date, records show.

There was a new financial partner to boot: the Los Angeles taxpayer.

Just weeks before the city was bloodied by the April 1992 riots, the City Council approved a $3.5 million loan to help Roberti’s group – renamed the Hollywood Entertainment Museum – acquire the Pacific if a final deal could be struck. An additional $500,000 pre-development loan to subsidize planning and design work was another slice of the funding package cobbled together by Woo.

“The museum was taking a chance, but one worth taking,” said Woo, who left the HEM board to avoid a conflict-of-interest appearance.

Others civic leaders, among them Riordan, Council President John Ferraro and Woo’s successor, Goldberg, were also enthralled by the museum’s potential to spawn an urban comeback. Some penned glowing testimonials about it.

“It’s the only facility that will be able to bring back the Academy Awards, the Emmy Awards and the Grammy Awards to the Entertainment Capital of the world,” Goldberg wrote two years ago in a newspaper supplement.

The numbers were certainly there. According to HEM projections, their facility would attract 700,000 visitors annually while pumping $85 million into the local economy in direct and indirect spending. Construction alone would produce nearly 1,000 jobs, the report estimated.

But, like the Promenade concept, the museum’s Pacific deal has since faded into history.

In the meantime, Caskey has formally asked the redevelopment agency for forgiveness of the $500,000 pre-development loan due January 1 and for the transfer of the pending $3.5 million loan to a new site they hope to lease at a semi-deserted retail center just west of the Pacific.

To drum up support for that move, museum patrons, including publishing magnate Hugh Hefner and comedian Norm Crosby, have blitzed the agency with letters in recent months,

But CRA officials are voicing their own sentiments about the museum’s third location change and the organization’s tepid fund raising.

In its five-year plan for Hollywood, the agency has earmarked more money for the museum than any other program, including senior housing, street improvements and transportation, records show.

Ironically, one of the latest skeptics is Dan Garcia, CRA chairman – and a former museum board member. Like others, he is concerned what collateral there would be on the $3.5 million if HEM’s leased attraction at the Hollywood Galaxy flops.

“If the agency is just providing money which is going to wind up in the hands of a landlord for rent, that is typically not the kind of transaction we would support,” said Garcia, a Warner Bros. executive.

Even Goldberg, who shepherded through the Council two 180-day extensions on the loan agreement, said she has her own doubts. “We don’t wave wands,” she said. “These are tax dollars.”

Citicorp, which owns the Galaxy and is negotiating with HEM on a 10-15 year lease in the bottom floor of the complex’s food court, declined comment. Caskey, though, said their proposed museum would eat up 33,000 square feet, contain two exhibit areas, an educational wing and could showcase coveted memorabilia, like the sets from “Star Trek” and “Cheers.”

Not only does the Galaxy sit in a less blighted part of Hollywood and have ample parking, she contends, but the museum’s plan there is more realistic than the grandiose visions mapped out for the Promenade and Pacific.

“We started this in the 1980s,” she said. “There wasn’t anything in L.A. that could not be done. It was as if we were saying, `San Francisco, we know about culture, too.’ This site is right for HEM in 1995-1996.”

In some ways, the museum’s quest for tens of millions of dollars in private donations was a derivation of the “Field of Dreams” phrase, “If you build it they will come.” For HEM brass, it became “If you plan it, the industry will finance it.”

But tax records show the museum’s effort to stockpile funds largely failed.

Excluding the state’s contributions, Caskey and her board have raised only $2.7 million between fiscal year 1986 and 1994 – six percent of what they needed to acquire for the Pacific site.

Major backers, some of them longtime board members, and smaller donations generated another $1.2 million during that period.

And not withstanding a $55,000 donation from Stephen Cannell Productions, many of the largest contributions have come from outside the movie world. Melvin Simons’s company, for instance, pitched in $888,000, consumer products maker Proctor & Gamble gave $100,000 and a Roberti campaign committee coughed up $13,000.

The star-studded galas brought in an additional $330,000 after expenses were deducted. One of the parties, though, only paid for itself, records show.

Three years ago, a Legacy Awards soiree brought in about $150,000. Yet two years later, museum officials reported on their taxes it cost them $160,949 to stage the event – the precise amount they said they raised.

Caskey, a 51-year-old Chatsworth resident, said that notation was an error, and that the museum in fact grossed $357,000 from the party. Without disclosing specifics, she conceded the November 1994 ceremony did not fare well.

Ex-museum fund-raiser Bob Coontz said the biggest problem with the money drive has been no permanent structure to link it to.

“Unfortunately, HEM has been seriously handicapped by its failure to identify and close on an appropriate site,” said Coontz, who left the organization late last year. “There are a lot of non-profit cultural groups out there fund raising.”

Former museum board member Bob Dowling, publisher and editor of the Hollywood Reporter, agreed, saying it’s opened a credibility gap.

“You don’t have a museum if you don’t have a site,” said Dowling. “I was disappointed by the lack of progress. I think everyone is . . . If promises have been made, it’s legitimate to ask whether they have been executed.”

For retired actress Marjorie Lord Volk, the fund-raising hurdles have a different hue: the non-involvement of industry moguls like Disney’s Michael Eisner and MCA’s Lew Wasserman in the trying philanthropic age that is the 1990s.

“In the old times we had businessmen and moviemakers, people like Samuel Goldwyn, they would care,” said Volk, an HEM board member who noted Tinseltown-themed facilities have sprouted in London and New York. “Now everyone is owned by big corporations. It’s very hard raising money.”

Still, in aggressively peddling their vision, museum executives have told supporters they had more headway than records and interviews show they actually had.

Lestz, the museum’s chairman and perhaps its most highly regarded industry champion, wrote to Hollywood businessman Jerry Sneiderman and others in February 1994 soliciting donations for one money-raising bid, documents show.

Called “Best Seat in the House,” the campaign was aimed at raising funds to help purchase and redesign the Pacific site, with contributors getting their names engraved on the seats in return. Riordan and his companion, Nancy Daly, each gave $5,000 for that drive, Caskey said. Carol Burnett, restaurateur Wolfgang Puck and other celebrities also contributed.

According to the Lestz letter, the campaign had “achieved nearly $1 million in donations in less than a month.” But HEM’s tax returns show they had just $341,000 in savings half a year later.

Asked to explain the difference, Caskey said they had won assurances for the $1 million but that the group stopped fund raising once the Pacific site acquisition appeared in jeopardy.

“The campaign was successful,” she added.

Even so, City Hall was honing in on HEM’s bank account.

In extending the loan agreement last year, the Council’s housing and redevelopment committee November noted the organization still needed $2.83 million for their share of the Pacific site. Because of that, they concluded “project feasibility cannot be determined.”

Bolstering that view, Garcia, the CRA chairman, said he was convinced the museum officials had a “substantial shortfall” that probably would have handcuffed them from purchasing the landmark. “It was too big a gap,” he said. “I wasn’t anxious to publicize because we could be in negotiations.”

Museum officials, nonetheless, believed, they would snap up the Pacific for $7 million. So confident were they that their newsletter trumpeted that sale figure, saying HEM had “reached final agreement” to buy the Pacific.

But Garcia, Goldberg and Pacific’s general counsel, Ira Levin, all say that statement comes as a surprise to them.

“There was never a final agreement,” said Levin.

According to him and others, the acquisition talks reached loggerheads when HEM agrued that the building’s value had plummeted. In making that case, museum negotiators pointed to still-declining real estate values and the damage inflicted on the structure by Metro Red Line tunneling under Hollywood Boulevard when parts of the thoroughfare sank in August 1994.

“It’s very, very simple,” said Lestz. “There was no way we could pay $7 million for a property the CRA appraised at $3.2 million.”

Redevelopment officials confirmed there was an appraisal and analysis of the Pacific building but can’t release its appraised value because of state confidentiality rules.

Meantime, an official with the California Department of Justice’s charitable trust section has his own questions about the museum’s financials.

Auditor Harold Statz said the group’s financial position is “weak,” in large part because of its low assets and fund raising.

“If you are serious about constructing a museum, you should have cash set aside, but they don’t,” said Statz, a 20-year department veteran. “They dont have a steady stream of income despite being in the same city as the major film studios and TV production centers.”

In fiscal year 1994, tax records show, HEM listed assets of $1.3 million — $200,000 less than four years earlier. By far the biggest asset was $933,000 in “deferred development costs.”

Museum officials said those costs are related to plans and schematics developed for the Pacific site that are transferable to the Galaxy. They could not provide more details.

On the other side of the ledger, the group listed $545,000 in liabilites last year, the lion’s share of it built on the half-million dollars they owe the CRA. The organization also had $341,000 in savings, an improvement over 1993 when savings had dwindled to $18,000.

But the largest expenditure has been Caskey’s salary, which amounted to $646,000 over nine years, records indicate. When she worked for Roberti, she said she made about $44,000 – $36,000 less than she was earning at HEM by 1988.

Another $48,000 has been spent on travel, tax returns indicate. Much of it financed Caskey trips to Europe and various U.S. cities to visit other museums and related conferences. Some of the money also went for her and staffer’s mileage, parking and related expenses.

Other costs include nearly $200,000 for legal bills, $211,000 for consultants and $26,000 for graphic design.

Board members and other supporters say Caskey deserves her salary package, praising her as an enthusiastic, driven leader who has weathered a stormy economy and two star-crossed developments deals.

“The (museum) is going to happen, and it’s going to happen after a lot of hard knocks,” said Roberti, who left office in December. “And Phyllis is great. She’s got the dynamism, the enthusiasm and stick-to-it-ness against great odds few people have.”

Critics see it differently, blistering Caskey as ineffective and unable to make good on promises to erect an anchor development project for Hollywood.

“It was like a make-work situation for Phyllis. She has never come near expectations,” said Michael Kellerman, a longtime Hollywood entrepreneur. “The entertainment museum is sort of a joke. A lot of people who backed it are embarrassed now, though they won’t admit it.”

One state official, asked how Sacramento sees viewed museum project, called it “pure pork barrel.”

Then there’s Caskey’s former assistant, Bonnie McCourt. She said she resigned after about a year working for HEM around 1993 because she was so upset about the way the organization was run. In particular, McCourt said, donated memorabilia like a mask used by comedian Ernie Kovacs was stored inappropriately.

“It was in with a pile of junk. It wasn’t protected,” said McCourt, who left in 1993. “The disregard for this collection was outrageous.”

Caskey said she would not respond to that allegation and said her memorabilia has been properly stored.

While they trolled for greenbacks from the corporate boardrooms to high-brow Tinseltown affairs, museum organizer’s had one thing on their side: good connections.

One of Caskey’s brothers, Jerome Gross, for example, is director of engineering at CRA and, according to records, has been active to some extent with his sister’s project.

His relationship to her was noted in agency documents that concluded there was no conflict-of-interest since he has “not been involved” in any decision related to the museum or the loan package.

But in July 1994, Gross wrote and initialed a memo to the CRA’s real estate director that discussed some of the environmental problems at the Pacific Theater site, records show. In February, he also received an agency letter to Caskey discussing the financial, engineering and other documents Caskey needed to provide CRA.

Despite that paperwork, Gross said he has kept an arms-length distance from the museum and that his aides handle issues related to it.

“My participation on any decision influencing this has been nil,” he said.

At last June’s Legacy Awards, meanwhile, an organization called the Hollywood Leadership Alliance picked up honors for its role raising money for police computers and other community deeds. Unknown to many, Caskey and her husband were founding members in that small federation, meaning they won an award from an organization Caskey leads.

In addition, Paramount Pictures has won the award five consecutive years, even though one of its executives, Lestz, has been a longtime HEM board member.

Caskey said she sees no problem with those overlapping ties since the recipients are chosen by celebrity or media “jurors” who don’t work for her.

Caskey’s husband, Marshall, a prominent area attorney, himself has been involved, albeit indirectly. He was chairman of a 15-member citizens committee monitoring subway construction and making recommendations how to spend $27.7 million in mitigation funds, said MTA spokesman Steve Chesser.

The transit agency used $25,000 from those coffers to sponsor the cocktail party that preceeded the museum’s November 1994 awards gala, and another $700 to buy an full-page color advertisement in the group’s newsletter.

Phyllis Caskey said she solicited the party money from the Metropolitan Transportation Authority’s marketing department, and that the transit agency used the event to promote Metro Rail. It was subway construction, ironically, that helped derail the Pacific deal.

Marshall Caskey added he doesn’t remember ever voting on the $25,000 appropriation and said he would have not have participated if it did.

“I would have recused myself if it came up,” he said.

On other fronts, Garcia said he feels free to vote on the loan issue because he left the HEM board about two years ago. However, commissioner Christine Essel said through a spokeswoman she will abstain from voting to avoid the appearance of conflict of interest.

Essel is a vice president of planning, development and public affairs at Paramount, and her boss is Lestz.

Besides the transit money, the museum has also received $10,000 from the hotel tax sent to the Los Angeles Convention and Visitors Bureau; the president of that organization, George Kirkland, is a museum board member.

HEM several years back also won another $75,000 from the redevelopment agency for a “Windows-on-Hollywood” program that displayed film and recording industry memorabilia in the front of retail shops.

In hindsight, Garcia said he believes one of the museum’s fundamental flaws was its political creation – hatched without a visible support from the same executives HEM officials hoped to wring millions of dollars from.

“The studio heads were not involved,” he said. “They had not blessed it because there was was really nothing to bless.”