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Beverly Hills developer faces federal bribery charge in L.A. County lease deal

Beverly Hills developer faces federal bribery charge in L.A. County lease deal
A real estate developer is facing a federal bribery charge in a case involving property at 12000 Hawthorne Blvd. in Hawthorne. Prosecutors say the developer gave bribes in exchange for a 10-year lease at the site. (CoStar)

A Beverly Hills real estate developer was arrested Wednesday on a felony charge of bribing a Los Angeles County employee in exchange for a government lease worth $45 million, federal law enforcement officials said.

Arman Gabaee, 57, provided the employee about $1,000 a month over a six-year period in exchange for leases, nonpublic information and other benefits, according to the criminal complaint filed last week.

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Prosecutors also say Gabaee, known professionally as Arman Gabay, made offers to purchase the county employee a residence in Santa Rosa for nearly $1.1 million. Those offers were aimed at persuading the employee to sign off on a 10-year lease for the county's Department of Public Social Services at a Gabaee property in Hawthorne, the complaint said.

Gabaee viewed the Northern California property as "leverage to get the employee's assistance obtaining the $45-million county lease," prosecutors said.

Sachi A. Hamai, the county's chief executive, said in a statement that she and other officials are "deeply troubled" by the allegations.

"While we cannot comment on the specifics of this pending case, we can say emphatically that we expect our employees to adhere to the highest standards of ethical behavior as they conduct the public's business," she said. "Anything less is a betrayal of the public trust and will not be tolerated."

Gabaee appeared in federal court Wednesday and was released after posting $1-million bail. His attorney, Thomas O'Brien, said he had not received any evidence from the government that would allow him to "analyze the truth of these allegations."

"At this point, I have no further comment," he said.

Arraignment is set for June 12. If convicted, Gabaee faces up to 10 years in prison, prosecutors said.

Gabaee is co-founder and managing partner of Charles Co., a Hollywood-based real estate firm that develops projects across the region. In addition, one of his companies, M & A Gabaee, has leases with the county for offices in Pasadena, El Monte and elsewhere.

Investigators say Gabaee began giving cash payments to the county employee, who handled leases and other real estate matters, in approximately 2010 or 2011. Prosecutors contend that after the bribe payments began, the employee began running "interference" between Gabaee and county departments that leased space from him, helping out with such issues as building repairs.

Prosecutors said Gabaee had been seeking a new lease at 12000 Hawthorne Blvd. in Hawthorne, a property that had been leased by the county for more than a decade.

In 2011, the county Board of Supervisors signed off on a five-year lease renewal for the site, extending the rental agreement to 2017. At the time, county officials were using the location for welfare fraud investigations and other purposes.

In 2016, the county employee began cooperating with the FBI, agreeing to record conversations with Gabaee and others, the complaint states.

The employee acknowledged accepting "numerous bribe payments from Gabaee and others," as well as committing — or attempting to commit — tax fraud and bankruptcy fraud, the document says. The employee also wants federal officials to consider that cooperation when they address "certain illegal acts" the witness has committed.

FBI agents secretly recorded at least nine phone calls between Gabaee and the county employee, who is not named in the complaint and is identified only as "Cooperating Witness 1." Agents also recorded at least eight in-person meetings between the two and intercepted several phone calls by Gabaee to other people.

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At one breakfast meeting, Gabaee expressed concern that there were cameras "all over the … place," according to the complaint. At another, he warned the county employee that he might have to speak with a high-ranking elected official about securing the long-term lease in Hawthorne, the document states.

The complaint did not identify the elected official.

FBI agents also recorded Gabaee discussing efforts to purchase a home in Northern California for the county employee. In April 2017, prosecutors said, Gabaee identified a 3,000-square-foot house on more than eight acres in Santa Rosa wine country, making an offer for $1,065,000.

That same month, federal agents intercepted a call in which the county employee told Gabaee that "Hawthorne can move forward," according to the complaint.

"I'm gonna move forward with the 10-year" — a reference to the duration of the lease, the document states.

According to investigators, Gabaee was grateful to hear the news, telling the county employee, "I can't thank you enough."

The lease drawn up by the employee called for the county to pay a base monthly rent of $324,120, with the potential for yearly increases. After telling the employee he had signed an offer on the Santa Rosa property, Gabaee began asking about more favorable terms for the rental agreement, including a commitment from the county to cover janitorial and utility costs.

Not long after Gabaee received a copy of the proposed lease, FBI agents approached him and told him they were aware of the alleged bribe, according to the complaint. Gabaee's offer on the Santa Rosa property was withdrawn "within hours," the document says.

County Supervisor Janice Hahn said the allegations, if true, are "a reprehensible case of corruption and a betrayal of public trust."

At the county, "we have no room for individuals only looking to enrich themselves on the public's dime," she said in a statement.

Hamai, the county CEO, said that before learning of the federal investigation, county officials had launched "extensive reviews" of leasing practices, which have resulted in new policies. The county initially held off on taking any personnel actions, she said, to avoid interfering with the federal investigation.

"Eventually, based on the county's own investigation, the county moved to terminate one employee, who resigned in lieu of termination in August 2017," she said.

Twitter: @DavidZahniser

Twitter: @adamelmahrek

UPDATES:

8:15 p.m.: This article was updated with comments from Los Angeles County officials and additional details from the complaint.

This article was originally published at 3:50 p.m.

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