Outcry over Sterling’s remarks renew focus on housing bias lawsuits

After the Mark Wilshire Towers changed hands, several building staffers showed up at Darryl Williams’ apartment one day with a woman who he said threatened to fine him for leaving two carts of his dirty laundry and other items in the hallway.

The encounter struck him as odd enough that he grabbed his video camera and asked her to affirm the introduction she made moments earlier.

“So you’re Miss Shelby from the Health Department?” Williams said in the video of their brief exchange in April 2003 at the Koreatown high-rise.

“Yes sir!” she shot back and then walked away, the videotape shows.

But the woman in the hallway was not “Miss Shelby,” health inspector. She was Shelly Sterling, wife of billionaire Donald Sterling, real estate baron and owner of the Los Angeles Clippers.

The video was submitted as evidence in a federal lawsuit filed against the Sterlings in 2003 by the nonprofit Housing Rights Center. In a statement to The Times, Shelly Sterling said she did not hear Williams’ question and “just answered a blanket ‘Yes sir’ to be polite.”

In recent weeks, she has sought to distance herself from her husband’s now-infamous remarks about blacks, insisting that she has never harbored such sentiments or discriminated against anyone.

But a review of two federal housing lawsuits against the Sterlings finds recurring allegations that she made derogatory remarks about minorities and that she also sought by subtler means, such as pretending to be a government inspector, to harass blacks, Latinos and families with children.

Sterling insists that the allegations are false and that she and her husband did “nothing wrong.” The Sterlings agreed to settle the cases for millions to avoid trial, but they explicitly denied any discriminatory behavior.

The lawsuits have taken on new relevance as NBA owners are to meet next week in New York to vote on whether to force the Sterlings to sell the team. The NBA commissioner has made one thing clear: He wants both Sterlings out.

In the interim, Shelly Sterling has tried to separate herself from the lawsuits while clinging to the hope of keeping an ownership stake in the Clippers. She has been entertaining bids for the franchise — which potential buyers say likely could go well above $1 billion — and she hasn’t publicly specified what role, if any, she would play after a sale.

“I do not doubt the sincerity of those calling for Mrs. Sterling to relinquish her legitimate co-ownership interest in the Los Angeles Clippers based on allegations and rumors that she supposedly exhibited racial animus in the past,” her attorney Pierce O’Donnell said in a statement. “But they are doing so in a rush to judgment and in error.”

He has described her as “the innocent estranged spouse.”

Allegations that Shelly Sterling impersonated health inspectors first surfaced in the Housing Rights Center lawsuit. The suit grew out of complaints that the Sterlings gave preference to Korean tenants and discriminated against other minorities and families with children at Los Angeles properties they owned.

The Justice Department lawsuit made similar allegations, including charges that the Sterlings or their employees at times tracked tenants’ race.

The lawsuits alleged a series of encounters over several years at different buildings. Taken together, the incidents formed a “pattern or practice of discrimination” based on race, national origin and familial status, the government claimed.

The Sterlings’ 2009 settlement with the Justice Department required them to pay a $100,000 civil penalty to the government and $2.65 million “to persons who were harmed by the defendants’ discriminatory practices.” It is the largest settlement ever in a race discrimination case brought by the government involving rental housing, according to the Justice Department.

To settle the Housing Rights Center lawsuit in 2005, the Sterlings paid sums to about 20 plaintiffs, mostly African American and Latino tenants, but the terms of the agreement were kept secret. A judge also ordered the Sterlings to pay nearly $5 million to the plaintiffs’ lawyers.

In her recent statement to The Times, Shelly Sterling, 79, denied that she ever posed as a health inspector or violated tenants’ rights and said she is “not a cruel or heartless landlord.”

“These allegations of racism are absolutely false,” she said. “Everybody is equal in my eyes.” Shelly Sterling added that she had worked hard to improve her family’s properties and help tenants.

“I do whatever is necessary to make our buildings better and our tenants happier,” she said.

In a deposition in the Housing Rights Center case, Dean Segal, a chief building engineer employed by the Sterlings, testified that while accompanying Shelly Sterling, he heard her tell Williams that she was a health inspector.

Segal, who was not a party to either lawsuit, said in his deposition that he recalled the conversation clearly, even though Shelly Sterling tried to convince him that he didn’t.

“ ‘You don’t remember. Think about it,’ ” Segal said she told him at the time.

“Did she say anything else after that?” one of the lawyers asked him.

“She said, ‘I don’t want to go to jail,’ ” Segal answered.

Sterling told The Times that she never made that comment and questioned the motives of Williams and other plaintiffs who accused her of impersonating inspectors.

“I have never posed as a health inspector to gain access to an apartment. Why should I?” she said. “I own the buildings, and since I do, I can enter any apartment after giving the occupant 24-hour notice. These allegations make no sense.”

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Through their Sterling Family Trust and Beverly Hills Properties, Shelly and Donald Sterling own and manage 140 buildings with 8,200 units, most in Los Angeles County. Many are high-rise structures, including the one in Koreatown where Williams lived.

Even after achieving great wealth, both of the Sterlings, by many accounts in court documents, remained involved in minute details of the properties they started acquiring decades ago.

The Housing Rights Center alleged in its 2003 lawsuit that the Sterlings changed the names of some of their buildings to include the word “Korean,” misrepresented the availability of apartments to other minorities in favor of Koreans and refused rent payments from some tenants in an effort to justify their evictions.

In a September 2004 deposition, Shelly Sterling described her role as overseeing the remodeling and upgrades of buildings. That included supervising work to make the properties “look prettier,” she said, and she did it “for pride of ownership.”

Sumner Davenport, a former property supervisor for the Sterlings, said in a 2004 deposition that Shelly Sterling relayed what she said were instructions from her husband to exclude certain minorities. At other times, Davenport testified, Shelly Sterling expressed the same preferences herself.

At one building, Davenport said in a sworn statement, two disabled tenants asked for the reinstallation of handrails that Shelly Sterling had ordered removed at an entrance.

Davenport said Shelly Sterling told her: “Tell them to move.”

In another declaration, Davenport said she witnessed Shelly Sterling routinely posing as a health department official or a member of the “City Inspector’s Office.”

“The purpose... was to gain entry into the tenants’ units to see how tenants lived and to determine which tenants she would like to evict,” Davenport testified.

During “numerous” visits, Davenport said in her declaration, Shelly Sterling had her photograph apartments and note the tenants’ ethnicity. After one such visit, Davenport added, Shelly Sterling disparaged black tenants.

“And when we left, she said, ‘See, [Mr.] Sterling is right, they do smell,’ ” Davenport testified.

Shelly Sterling said Davenport’s allegations were “all untrue.” She noted that Davenport had lost a sexual harassment lawsuit she filed against Donald Sterling in 2003 at a jury trial two years later.

The Justice Department submitted as evidence reports by Sterling employees that the government said tracked some tenants’ race. One such inspection report of the 691 S. Irolo St. building includes short notes for each apartment on such things as decor and needed repairs. It also mentions the race of tenants in 18 of the 49 apartments checked that day. One, for example, has “Black people” written next to “Caulking around bathtub.”

Documents filed by the Justice Department contained at least three other similar reports noting apartment conditions and some occupants’ ethnicity.

Thomas Brown and Karlene Henry, plaintiffs in the Housing Rights Center’s case, told The Times recently that they thought something was amiss when a group of women, including one who introduced herself as a health inspector, arrived to check their unit, which was one of the 49.

Suspicious because the inspector had no business cards or identification, Brown and Henry, who are both African American, pretended to film the inspection, they said in interviews.

The resulting inspection report, which is included in court files, listed a variety of issues, including plastic bags on the balcony, “Roaches, Mice and wood rats” and “apartment very cluttered.” Brown and Henry, who moved out long ago, said the report misrepresented actual conditions.

“They wanted us to get out of there,” Brown said. “There was a lot of harassment.”

He and Henry asserted that they later learned the “inspector” was Shelly Sterling when Henry saw her at a legal proceeding in the Housing Rights Center case. Shelly Sterling has consistently denied posing as an inspector.

The center also alleged that Shelly Sterling impersonated a city inspector on visits to Luis Portillo’s apartment at 411 S. Catalina St. in Koreatown. She sometimes showed up three times in a week, the center contended in its complaint, and often entered without knocking. The lawsuit accused Shelly Sterling of using profanity and threatening to evict Portillo and his children

In Shelly Sterling’s defense, one of her employees, property management director Philomena Wong, said in court papers that there “was never any policy or preferences” related to tenants’ race and that she never saw Shelly Sterling pose as a city inspector.

“I have never heard her claim to be anything other than the owner of the buildings,” Wong testified.

Shelly Sterling’s interactions with children at her apartment buildings were another point of contention in the litigation.

At one building, Davenport said in court papers, Shelly Sterling asked her to call Child Protective Services when she noticed one tenant’s children playing by the pool.

“I do recall a couple of times tenants attempting to talk back to her and defend their children and she would start screaming at them that she was going to evict them,” Davenport said in a deposition.

One tenant testified that Shelly Sterling harassed his children at the Catalina Street building. He described an encounter in which she yelled at his youngest daughter as she rode her tricycle on the family’s patio — and then scolded another daughter who asked why.

“Mrs. Sterling commented very sarcastically, ‘Honey, this is a building. This is not a house,’ ” Antonio Montiel said in his 2009 deposition.

When Shelly Sterling visited the building, Montiel said, she often walked up to his family’s sliding-glass door, stood about three feet away and stared into the apartment. One such incident lasted five minutes; she never knocked or asked to come inside, Montiel said. The episodes frightened his children, he said.

In her statement to The Times, Shelly Sterling disputed all the accounts involving children.

“These allegations — that I somehow had something against children — are plainly absurd to anyone who knows me personally or visits our properties,” Shelly Sterling said. “Our buildings have plenty of families with children.”

In court filings, the government said the defendants rented to fewer African Americans and Latinos in Koreatown than the area’s demographics would indicate. In the first federal lawsuit, an expert witness for the Sterlings found that the percentage of Koreans was not disproportionate and was a function of market forces, not discrimination.

The Justice Department’s case included a declaration from Jong Yoon Kim, an assistant manager at the 455 S. Ardmore Ave. building in Koreatown.

According to the declaration, Kim recalled another manager saying: “Donald and Shelly Sterling preferred Korean tenants because Koreans are clean, do not wear shoes in the apartments and follow the rules.”

In sworn testimony in that case, longtime tenant Mayra Oliva, a Latina, said that after Donald Sterling bought her building at 455 S. Ardmore Ave., its name was changed to Wilshire Korean Towers and rented only to Koreans. She said Shelly Sterling pressured her family to move out.

“Ms. Sterling has been asking me how many people live in my apartment,” Oliva said. “When I told her there were five people, she told me I might have to move out soon. I told her all of my family was in the rental agreement.”

In February 2002, Oliva testified, she heard Shelly Sterling make racially derogatory remarks to a property manager and a maintenance worker.

“She said, ‘Oh, my God. This is so filthy. I can’t remodel my apartments the way that I want because Latinos are so filthy,’” Oliva said in a 2009 deposition.

Shelly Sterling denied ever saying this.

She told The Times that their properties welcome all tenants “as long as they qualify financially.”

“It doesn’t make any sense that we would turn away qualified prospective tenants. We are in the business of renting our units, not keeping them empty,” she said. “Our application process is color-blind and always has been.”

The 2009 consent order in the Justice Department case, described as “a compromise of disputed claims” and not an admission of liability by the Sterlings, set out required steps along with the monetary payments, which were made by their insurer.

The consent order barred the Sterlings from discriminating on the basis of race, national origin and familial status. It also mandated that they monitor their employees’ compliance with fair housing laws for three years. Employees involved with renting or showing properties were required to receive training in fair housing regulations.

The Sterlings were to notify the Justice Department if they sold or transferred any of the properties and provide written explanations to anyone whose rental application was rejected.

“The magnitude of this settlement should send a message to all landlords that we will vigorously pursue violations of the Fair Housing Act,” Assistant Atty. Gen. Thomas E. Perez said at the time.

Shelly Sterling told The Times that she and her husband were forced to settle the lawsuits by their insurers because of the potential cost of lengthy litigation.

Some people who sued the Sterlings said they were surprised at how much publicity Donald Sterling’s recent inflammatory comments have received — and how little notice was paid when they accused the couple of trying to force them from their homes. Others say that they welcome the renewed attention to issues they raised in the lawsuits.

“It’s not going to go away,” Thomas Brown said. “Too many people already know.”

kim.christensen@latimes.com

nathan.fenno@latimes.com