Suit Accuses Lawndale Officials of Extortion

A Lawndale developer has filed a federal racketeering and conspiracy lawsuit against top city officials, charging that they extorted protection money from several builders.

In his 41-page suit, developer Jonathan Stein, a part-time lawyer, demands payment of $2 million in damages, plus as much as $10 million in punitive damages.

Stein accuses Mayor Harold E. Hofmann, Councilman Larry Rudolph, Planning Commission member Bruce McKee and former commission member Gary McDonald of forcing developers to pay fees to McDonald and his consulting firm to pave the way for city approval of their projects.

Defendants named in the suit, which has been filed in U.S. District Court, called Stein’s allegations ridiculous and politically motivated.

“This guy has got to be off his gourd,” Hofmann said. “This is plumb crazy. If it wasn’t so darned irritating, I could laugh.”

McDonald said he believes Stein’s lawsuit is “a publicity stunt.”

“It’s a joke,” McDonald said. “Mr. Stein is upset that I will not turn my head away from his violations of the law. . . . But I’m a firm believer in America and I believe justice will prevail. He’s going to regret filing a frivolous lawsuit.”

The suit--which charges the group with racketeering, civil rights violations, interference with business and economic relations and intentional infliction of emotional harm--also names the law firm Rutan & Tucker, which employs City Atty. David Aleshire.

Stein refused Thursday to discuss the suit.

In it, Stein outlines several incidents of alleged extortion, most involving McDonald, who is accused of approaching builders and offering his consulting services.

“McDonald represented that he controlled ‘three votes’ on the City Council, and that failure to use his consulting services would result in unspecified ‘trouble’ in gaining requisite approvals from the City Government for development of the project,” the suit says.

The suit claims that “the Rudolph Clique,” as it calls the alleged conspirators, had been friendly to Stein in the past, but became hostile earlier this year.

“On or about Jan. 23, 1991, the Rudolph Clique, fearful of Stein’s defection, decided to take vengeance on Stein by destroying his development business in Lawndale,” the suit said.

Stein, who has been building luxury condominiums in Lawndale for about four years, was one of the first developers to focus on the working-class city as a housing market for professionals.

The suit outlines a series of delays allegedly created by the defendants to block Stein’s continued construction of a four-unit condominium complex on 165th Street.

The most recent delay involves a complaint that a second-story balcony protrudes too far into a required setback area.

The City Council has ordered Stein to stop work and get a variance for the balcony, which has been built on top of an approved bay window, or tear the balcony off.

The suit charges that City Atty. Aleshire improperly told council members that they could force Stein to return to the Planning Commission to seek the variance.

Aleshire, however, said Thursday that he specifically advised against doing so because the council several years before had passed an ordinance allowing builders holding permits to continue construction if a problem was found after work had begun.

“If you look at the targets he’s picked and the manner in which he’s proceeded, it’s a totally political motivation to it, in my opinion,” Aleshire said. “It’s going to create a very confused situation in the city for a long period of time.”

Last month, Stein signed an agreement releasing the city from financial responsibility if he continues construction but ultimately fails to win a variance.

According to the lawsuit, Stein believes he was coerced into signing the agreement out of fear that he would not be allowed to continue construction.