After more than a year of forensic accounting,selling property and fielding legal claims, the man in charge of liquidating the assets of an affordable housing developer that allegedly defrauded Glendale, Los Angeles and other cities has amassed roughly $37 million, including $612,000 in gold.
Even after the sell-off of assets belonging to Advanced Development and Investment Inc., there's still more money to collect — and possibly discover — to set aside for the legal claims piling up against the firm, according to the court-appointed receiver.
Nearly 40 lawsuits, including Glendale's, filed against ADI and its top officials have been rolled together in court.
Some of the money is also set aside for ADI's lenders, such as a group of banks that have taken over day-to-day operations of Glendale City Lights, a 68-unit apartment complex on San Fernando Road.
There's still an $85,000 Bentley to sell and tens of millions' worth of property, including homes and vacant land. An old BMW was recently sold for $5,000.
Since 2005, Glendale issued loans to ADI totaling $34 million for four affordable housing projects, including Glendale City Lights. In April 2011, the city filed a lawsuit in Los Angeles County Superior Court against the company for allegedly overcharging for construction work, falsifying invoices and engaging in other fraudulent activities.
Experts are still tabulating how much of Glendale's loans were pocketed by ADI, but they have uncovered some evidence of alleged overcharges. Glendale paid ADI's construction arm $1.5 million for drywall work, about $1.08 million more than ADI allegedly paid the subcontractor, according to court filings.
ADI didn't always account for its monetary transactions, and some of the firm's records have been destroyed or altered. Until David Pasternak, the court-appointed receiver, took over, ADI used Quicken, a simple personal finance tool, to manage $650 million.
At least one employee, Ajeet Shah, an accountant, has agreed to a proposed $40,000 settlement, according to the receiver's latest report filed last month in court. The company's chief financial officer, Ulhas Jain, can't be found, but may be living in India, according to court documents.
The city's case has been met with opposition from ADI officials, their family members, limited partnerships controlling ADI properties in Glendale and former employees. The wife of ADI's founder, Ajit Mithaiwala, tried to block the receivership in court, and the daughter won't let Pasternak enter her home to account for valuables.
A few months ago, the partnerships running Glendale's ADI projects said the city's recovery of funds, if any, should be cut due to its own negligence. They claimed in court filings that the city was aware of potential damages and failed to take precautions.
There have been several court hearings held regarding the Glendale case, most recently last week. But the end is nowhere in sight.
Another status conference is scheduled in Los Angeles for October. Pasternak said he had no idea how long it would take for him to finish his work.
“We're going to continue to press forward,” said city spokesman Tom Lorenz.
Finalizing past tax returns will be on the agenda for the next court hearing, said Pasternak, adding that the liabilities are substantial.
“Millions of dollars, according to our best belief,” he said.