Down­town L.A. de­vel­op­ment is fo­cus of fed­eral in­ves­ti­ga­tion

War­rant in City Hall cor­rup­tion in­quiry names po­lit­i­cal fig­ures and Chi­nese firms be­hind huge projects.

Los Angeles Times - - FRONT PAGE - By Emily Alpert Reyes and David Zah­niser

The rapid trans­for­ma­tion of down­town Los An­ge­les’ sky­line is be­ing fu­eled in good mea­sure by huge in­vest­ments from Chi­nese com­pa­nies ea­ger to bur­nish their global brands and cap­i­tal­ize on L.A.’s real es­tate boom.

Now some of those projects have be­come a fo­cus of fed­eral agents seek­ing ev­i­dence of pos­si­ble bribery, ex­tor­tion, money laun­der­ing and other crimes as part of a cor­rup­tion in­ves­ti­ga­tion at City Hall.

Fed­eral in­ves­ti­ga­tors have cast a wide net for in­for­ma­tion about for­eign in­vest­ment in Los An­ge­les real es­tate de­vel­op­ment, ac­cord­ing to a search war­rant that names an ar­ray of po­lit­i­cal and busi­ness fig­ures.

Among those named are ex­ec­u­tives of Chi­nese firms bankrolling two am­bi­tious down­town projects that would re­sult in three new tow­ers on Figueroa Street. In­ves­ti­ga­tors are also seek­ing records about L.A. de­vel­op­ment projects in­volv­ing other for­eign in­vestors, in­clud­ing firms with largescale ho­tel and res­i­den­tial projects in down­town.

The war­rant does not say the FBI has gath­ered ev­i­dence of crim­i­nal ac­tiv­ity by any of the peo­ple or com­pa­nies named in the doc­u­ment. No one has been ar­rested or charged in the in­ves­ti­ga­tion.

The fed­eral in­ves­ti­ga­tion be­came pub­lic in Novem­ber, when FBI agents de­scended on the home and of­fices of Los An­ge­les City Coun­cil­man Jose Huizar, who rep­re­sents the vast ma­jor­ity of down­town. Since then, The Times has re­ported that in­ves­ti­ga­tors have sought records in­volv­ing a long­time lob­by­ist and a fundraiser

close to City Hall.

The war­rant, which was filed in fed­eral court in Novem­ber but re­viewed by The Times this week­end, sheds new light on the in­ves­ti­ga­tion and shows fed­eral in­ves­ti­ga­tors are seek­ing records re­lated to not only Huizar but also other City Hall of­fi­cials, in­clud­ing Coun­cil­man Cur­ren Price and cur­rent or for­mer aides to Huizar, Coun­cil Pres­i­dent Herb Wes­son and Mayor Eric Garcetti.

Un­til re­cently, Huizar headed the pow­er­ful coun­cil com­mit­tee that vets de­vel­op­ment projects. Price, in turn, heads a coun­cil com­mit­tee fo­cused on eco­nomic de­vel­op­ment, which re­views tax­payer sub­si­dies of­fered by the city to ho­tel de­vel­op­ers in and around down­town.

The war­rant is not the only sign of FBI in­ter­est in L.A. de­vel­op­ment.

In re­cent months, real es­tate de­vel­op­ers with projects in Huizar’s down­townto-Ea­gle Rock dis­trict have re­ceived fed­eral grand jury sub­poe­nas in­struct­ing them to turn over com­mu­ni­ca­tions with the coun­cil­man and dozens of cur­rent and for­mer Huizar staffers since 2013, ac­cord­ing to two sources fa­mil­iar with the FBI’s in­struc­tions.

Those de­vel­op­ers also have been told to pro­vide in- for­ma­tion on any con­tri­bu­tions they have made to Huizar’s re­elec­tion bid, his of­fice­holder com­mit­tee, any le­gal de­fense fund or his alma mater, Bishop Mora Sale­sian High School, the sources said. The sub­poe­nas also seek in­for­ma­tion on any do­na­tions made to two po­lit­i­cal com­mit­tees with ties to Huizar — Com­mu­nity Sup­port PAC and Fam­i­lies for a Bet­ter Los An­ge­les.

De­vel­op­ers in Huizar’s dis­trict also have been in­structed to pro­vide in­for­ma­tion on any gifts, meals, trips, va­ca­tions, flights, event tick­ets or rounds of golf they have pro­vided to Huizar, his staff or any other coun­cil mem­ber, the sources said.

Among the in­for­ma­tion sought in the war­rant were records re­lated to trips to Las Ve­gas and stays at four ho­tels, in­clud­ing the Palazzo and Cae­sars Palace. The doc­u­ment does not ex­plain why in­ves­ti­ga­tors want them.

De­pend­ing on where it goes, the FBI in­ves­ti­ga­tion could spur An­ge­lenos to de­mand re­forms of real es­tate de­vel­op­ment and cam­paign con­tri­bu­tions and gifts at City Hall, said Kathay Feng, who was un­til re­cently the head of Cal­i­for­nia Com­mon Cause, a watch­dog group that mon­i­tors ethics and money in pol­i­tics.

“Peo­ple al­ready have a level of skep­ti­cism about how City Hall de­ci­sions are made around ma­jor de­vel­op­ment projects,” she said.

In the war­rant, agents sought in­for­ma­tion from Google about a Gmail ac­count tied to Ray Chan, a for­mer deputy mayor for eco­nomic de­vel­op­ment for Garcetti who once headed the city build­ing depart­ment and has worked since then as a con­sul­tant. Agents said they were look­ing for ev­i­dence re­lated to an in­ves­ti­ga­tion into bribery, ex­tor­tion, money laun­der­ing and other crimes that could in­volve more than a dozen peo­ple.

Among those named were two ex­ec­u­tives linked to Shen­zhen New World Group, a Chi­nese com­pany that has un­veiled plans to re­de­velop the L.A. Grand Ho­tel down­town with a 77story tower and build a 31story ho­tel near Uni­ver­sal Stu­dios.

The Times was un­able to reach Wei Huang, pres­i­dent of Shen­zhen New World Group, and Ricky Zheng, who was iden­ti­fied in state cam­paign con­tri­bu­tion records as a Shen­zhen New World LLC ex­ec­u­tive. Be­sides ev­i­dence of any pos­si­ble crimes in­volv­ing the two men, the fed­eral war­rant sought records re­lat­ing to Shen­zhen New World Group and two of its ho­tels.

The war­rant, first re­ported by Ge­orge Wash­ing­ton Univer­sity coun­tert­er­ror­ism ex­pert Sea­mus Hughes, also named Fuer Yuan, founder of an­other com­pany called Shen­zhen Hazens. In 2017, the City Coun­cil ap­proved a Shen­zhen Hazens project on Figueroa Street, al­low­ing the de­vel­oper to de­mol­ish the nine-story Luxe City Cen­ter Ho­tel and re­place it with two sky­scrapers, one for a ho­tel, the other for con­do­mini­ums.

As part of the ap­proval process, the de­vel­oper signed an agree­ment to con­trib­ute to ini­tia­tives long backed by Huizar, in­clud­ing $750,000 to sup­port a planned down­town street­car and $550,000 to the ef­fort to re­vi­tal­ize the Broad­way cor­ri­dor.

In­ves­ti­ga­tors asked in the war­rant about the Luxe Ho­tel and Ge­orge Chi­ang, who city records in­di­cate was in­volved with the sky­scraper project. David Chaiken, a com­pany at­tor­ney, told The Times that Shen­zhen Hazens was un­able to share any in­for­ma­tion about its ac­tiv­i­ties or the in­ves­ti­ga­tion.

The war­rant said in­ves­ti­ga­tors sought ev­i­dence of pos­si­ble crimes in­volv­ing City Hall fig­ures in ad­di­tion to Huizar, in­clud­ing his plan­ning deputy, Shawn Kuk, and his for­mer aide Ge­orge Es­parza; Price; Deron Wil­liams, chief of staff to Wes­son; Joel Jac­into, a Garcetti ap­pointee who serves on the city’s Board of Pub­lic Works; and Chan him­self.

Garcetti spokesman Alex Comisar de­clined to com­ment on Jac­into or Chan. He said no one in the mayor’s of­fice has re­ceived a fed­eral sub­poena or a less for­mal re­quest for in­for­ma­tion from the FBI.

Es­parza said in an email that he left Huizar’s of­fice a year ago be­cause he was “pro­foundly un­com­fort­able with some of Huizar’s prac­tices and con­duct.”

“As Huizar’s spe­cial as­sis­tant, I was in one of the best po­si­tions to see how the coun­cil mem­ber wielded his po­lit­i­cal power in ways in which, while he ap­par­ently had nor­mal­ized, I did not feel aligned with how I wanted to live my po­lit­i­cal and per­sonal life,” wrote Es­parza, who now works as chief of staff to Assem­bly­woman Wendy Car­rillo (DLos An­ge­les).

“So I got out be­fore I be­came col­lat­eral dam­age,” he con­tin­ued. “And I took steps to pro­tect my­self. Now I work for some­one that does it the right way.”

Es­parza did not di­rectly an­swer ques­tions from The Times about whether he ob­served, or par­tic­i­pated in, any un­law­ful acts.

At­tor­neys for Huizar said he is fo­cused on serv­ing his con­stituents but did not ad­dress the con­tent of the war­rant.

Kuk, who han­dles de­vel­op­ment is­sues for Huizar, de­clined to com­ment. Price and Jac­into said they were un­aware of the war­rant when con­tacted by The Times on Satur­day. Ed John­son, as­sis­tant chief deputy to Wes­son, said Sun­day that fed­eral in­ves­ti­ga­tors had not con­tacted their of­fice about “any of this.”

Chan, the for­mer Garcetti deputy, de­clined to com­ment in Novem­ber about whether he had re­ceived a sub­poena. At the time, he said he was a con­sul­tant work­ing for CCC In­vest­ment Group, a com­pany that listed Ge­orge Chi­ang as its ex­ec­u­tive di­rec­tor in a state fil­ing. Chi­ang had no com­ment, re­fer­ring ques­tions to his lawyer, and Chan did not re­spond to mes­sages left by The Times.

In­ves­ti­ga­tors also asked in the war­rant for any records from the Gmail ac­count re­lated to projects with for­eign in­vestors, in­clud­ing Hazens, Ocean­wide and Green­land.

Green­land is de­vel­op­ing the Me­trop­o­lis project down­town along the 110 Free­way. More than four years ago, Huizar and the rest of the City Coun­cil voted to grant as much as $18.7 mil­lion in fi­nan­cial aid to the Ho­tel Indigo, which is part of the project.

Ocean­wide is de­vel­op­ing two tow­ers across from Sta­ples Cen­ter that would in­clude hun­dreds of con­do­mini­ums and a Park Hy­att ho­tel.

The war­rant sought records for projects that Huizar, his staff and other named in­di­vid­u­als helped to get city per­mits or other ap­provals, as well as records of fundrais­ing for cam­paigns and other causes.

Katie Falken­berg L.A. Times

THE PROBE came to light in Novem­ber when FBI agents de­scended on the home and of­fices of Coun­cil­man Jose Huizar.

Gensler

SHEN­ZHEN HAZENS, a Chi­nese de­vel­oper named in a fed­eral search war­rant, plans to de­mol­ish the Luxe City Cen­ter Ho­tel and re­place it with two sky­scrapers.

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