Alatorre Home Deal Received Array of Help

Los Angeles City Councilman Richard Alatorre, struggling to purchase a new home last year, received a wide range of help from associates of a businessman with a multimillion-dollar deal being championed at City Hall by the lawmaker, a Times investigation has found.

Along the way, Alatorre received an undisclosed payment of nearly $3,000 in an effort that allegedly included fabricating a real estate transaction to enhance the councilman’s financial stature with his bank, records and interviews disclose. He also was spared thousands of dollars in property losses through separate agreements.

The common denominator in these efforts was property investor Samuel S. Mevorach. While he and his friends were helping Alatorre, the councilman was pushing a $91-million city-backed purchase of Mevorach’s sprawling rental property, the Wyvernwood Garden Apartments, according to interviews and records.

When contacted by the newspaper, Alatorre and Mevorach failed to respond specifically to questions about their financial and personal ties, except to broadly insist that they have done nothing wrong.

At the time of the assistance, according to Mevorach associates, the councilman was having trouble securing a mortgage for a more spacious home because he was saddled with monthly payments on his condominium, which was worth less than what he owed.

To create an illusion of higher income for Alatorre, Mevorach and two associates produced a fictitious lease on the condo to make the lawmaker a better loan candidate, according to financial records and a key participant.

That participant, property investor Han Huskey, said he became the sham tenant in a plan designed to ensure the councilman’s continuing support of the Wyvernwood apartment deal--worth about $30 million to Mevorach.

“Sam Mevorach, my longtime friend, asked me if I could help him [and] his friend Richard Alatorre . . . to set up this lease agreement on the condo,” Huskey said. Mevorach, he said, “was in the middle of the transaction on the Wyvernwood. That was the whole reason he wanted to help.”

For authenticity, Huskey said he was asked to write a $2,800 check to the councilman, supposedly for the first and last months’ rent. Huskey said he was reimbursed in cash, on the spot, by yet another Mevorach associate.

Financial records reviewed by The Times disclose that Alatorre cashed the check the next day, Aug. 15, 1996, but failed to report the payment on his city conflict-of-interest forms.

And only days after that, with loan in hand, Alatorre and his wife, Angie, closed escrow on the $285,000 Eagle Rock home, nestled in the foothills below the Ventura Freeway.

When asked repeatedly for an interview to discuss the real estate transactions, Alatorre balked, saying in a written statement 11 days ago:

“The sale of my condominium and the purchase of my house in which I live do not relate in any way to my office, and any questions regarding them are obviously [an] unwarranted intrusion into personal matters. All relevant questions should be answered fully by my public reports.”

In another statement, delivered to The Times on Monday, the councilman said he had been advised by his lawyer not to respond to any inquiries. “I can only state that your ‘understanding’ of the nature of any transactions related to my real estate holdings are incorrect,” he said.

But in an interview earlier this year, the councilman downplayed his relationship with Mevorach. “He’s a businessman in my district,” Alatorre said. “I know him just like I know a lot of other people.”

Alatorre, who also is a powerful board member of the Metropolitan Transportation Authority, said his only purpose in pushing for the city-backed purchase of the Wyvernwood was to get the property rehabilitated under new management and provide badly needed housing for low-income residents.

“I don’t give a shit about Mevorach as much as I give a shit about getting the thing sold,” Alatorre said.

Under the plan, the apartment complex would be bought by a consortium of private and nonprofit groups, subsidized by a city-approved $15-million loan, tax credits and bonds.

Although Alatorre characterized Mevorach as a problematic landlord, City Hall records indicate that his office took no steps to seek enforcement actions against him.

Mevorach, for his part, said in a brief telephone interview that he has committed no improprieties.

“Everything I’ve done is aboveboard, and I feel I can prove it,” he said. “I’m not looking to hide anything.”

He referred additional comment to his attorney, who did not respond to a list of written questions. In a letter Monday, the attorney said his client’s statement of no wrongdoing “is a general answer to all your written questions.”

The lease gambit, according to records and interviews, wasn’t the only assistance the councilman received while shepherding Mevorach’s Wyvernwood sale through City Hall, where some officials were warning that the price was too high and built on questionable financial forecasts.

* Two Mevorach business associates tried to persuade Coast Federal Savings to reduce the amount Alatorre owed on his Monterey Hills condominium, which would make it easier to sell. The bank didn’t bite.

* After the Alatorres succeeded in obtaining a loan for their new home, a renter for the condo quickly appeared--the personal trainer of Mevorach’s longtime girlfriend. This provided Alatorre with a bona fide tenant to cover his mortgage costs while searching for a buyer.

* Several months later, that buyer materialized: a real estate appraiser with financial ties to Mevorach. He relieved the Alatorres of a sizable debt by assuming the condo’s mortgage payments shortly after obtaining a $100,000 real estate loan from the Wyvernwood’s owner.

* At the Alatorres’ new home, a top-to-bottom renovation was launched that included a tile roof costing more than $10,000. One contractor on the job said he was paid by someone other than the councilman or his wife, raising questions about who did pick up the tab.

Earlier this year, Alatorre agreed to pay $8,000 in state and local penalties for failing to fully disclose income in another matter and for improperly intervening with city regulators on behalf of an event-planning firm founded by his wife.

The events surrounding his condo and home raise new questions about whether the veteran Eastside councilman may have run afoul of federal banking statutes and political reform laws by possibly submitting fraudulent documents to a bank and by again failing to report income.

Relationship With Complex’s Owner

Mevorach, 63, is described by associates as an astute businessmen who has lent or invested millions of dollars in Los Angeles-area real estate. He lives in a stately Arcadia home and owns a number of racehorses.

Mevorach bought the 1,179-unit Wyvernwood complex in Boyle Heights in 1983. Built in the late 1930s with wide grassy belts between scattered apartment buildings, the 61-acre development once was a model of urban living. But gradually it slid into decay.

“The project has been milked,” said Gary Squier, who until his recent retirement headed the city Housing Department. “When [Mevorach] acquired it, it was in pretty good shape. He just has not put the dollars in.”

Mevorach was among the largest property owners in the 14th Council District when Alatorre was elected to represent the area in 1985. As such, the landlord joined a group of constituents who were granted visits by the councilman and whose calls were returned.

In 1993, when Alatorre and his wife helped launch a new children’s charity, the El Sereno Youth Development Corp., Mevorach joined the councilman’s head table at an elegant downtown fund-raiser honoring the lawmaker’s two decades in public office.

The next year, Alatorre was a featured guest and speaker at an elaborate, black-tie 60th birthday celebration for Mevorach at the Biltmore Hotel.

Their relationship has extended beyond charity events and social fetes.

In 1994, Alatorre tried to intervene when the district attorney’s office launched an investigation of Wyvernwood, where four children had contracted lead poisoning. The councilman summoned prosecutors to his office for a private meeting with the landlord, Mevorach.

“We need to establish better communication with the Wyvernwood Garden Apartments owner and management team,” the lawmaker wrote to Deputy Dist. Atty. Thomas A. Papageorge. “Please call my secretary . . . to schedule a meeting.”

Papageorge rejected the overture, saying the probe was confidential. “Such an action,” he wrote, “could jeopardize the successful resolution of the investigation.”

Although Alatorre earlier this year told The Times that he could not recall the letter, he did acknowledge approaching the county’s top prosecutor, Dist. Atty. Gil Garcetti.

“You know, I can’t afford for this thing to fall apart,” Alatorre recalled telling Garcetti. “It’s too damn important. I want the thing sold so we can get a reliable and good owner.”

Garcetti transferred the case to the city attorney’s office after the LA Weekly disclosed that his campaign had received $350 from Mevorach, posing a possible conflict of interest. The case remains under review.

By mid-1996, as the Alatorre-backed sale of the Wyvernwood shifted into high gear, so too did efforts to help the councilman move into a new home.

One key player in that effort was Frank J. Alderete, 55, a longtime friend of the councilman. Alderete once served as president of the Los Angeles County Board of Education and vice president of East Los Angeles College. He also has been involved in real estate transactions with Mevorach and helped the Wyvernwood owner lobby federal officials for housing subsidies.

Last year, Alderete participated in high-level, closed-door meetings on the Wyvernwood in Alatorre’s office.

During one, he defended the amount of money Mevorach was seeking, despite objections from housing executives, who would later note in memos that the city loan required an unprecedented commitment of future housing funds and that rental revenues from the property may have been overestimated.

While looking out for Mevorach’s interests, Alderete apparently was doing the same for the councilman. Yet another Mevorach associate, real estate agent Gary Hann, said he was enlisted.

“He asked me if I knew anything about trying to get a loan reduction,” Hann said of Alderete. The problem, Hann said, was that the councilman’s condo was “over-encumbered” by about $25,000, making it difficult to unload.

Hann said he advised Alderete that a formal request would have to be made to the bank--a document he said he later hand-delivered to Coast Federal Savings’ loan department. The letter was “from Mr. Alatorre,” Hann said. “Alderete gave it to me.”

Alderete refused repeated requests for comment. Coast officials also declined to say whether they were approached by anyone representing Alatorre. They did say, however, that the councilman’s mortgage was not reduced.

Although he has never dealt directly with the councilman, Hann said, he has known Mevorach for nearly 20 years. He said Mevorach was aware of the approaches made to the bank.

Hann declined to elaborate.

Condo Problem Is Resolved

With the loan-reduction plan nixed, a new tack was pursued, one infused with a sense of urgency because the Alatorres already had submitted a bid on the new house. The idea was to prepare a lease showing that the condominium was no longer a drain on Alatorre as he sought to obtain a $253,000 loan for the new home, complete with swimming pool.

The point man was 48-year-old Han Huskey.

Huskey has owned and operated large rental properties financed by Mevorach, including the Cecil Hotel near downtown’s skid row, records show. Huskey also was billed with Mevorach as one of the top donors to the Alatorre-inspired El Sereno youth charity. Since then, the two men have had a falling out over financial dealings.

Huskey said that in the summer of 1996, Mevorach asked him if he would be interested in buying the councilman’s condo so the lawmaker could upgrade into a new home. It didn’t take long for Huskey to figure out that the property was seriously “upside-down,” a bad investment.

When Huskey passed on the deal, he said Mevorach came back with another idea. All he had to do was sign a one-year lease and write a check to the councilman that could be represented to the bank as payment for the first and last months’ rent.

A few days later, “in the middle of the night,” Huskey said, real estate agent Hann appeared at his San Marino home. In his hand was the fictitious paperwork. “The boss wants to get this done right away,” Huskey quoted Hann as saying.

Typed on two standard lease forms were the names of the councilman and his wife. Huskey said he added his name as the lessee and wrote a $2,800 check, payable to Richard Alatorre. On the spot, Huskey said, Hann reimbursed him with 28 $100 bills.

“The cash was from Mevorach,” Huskey said. “Gary [Hann] told me that. And that was the understanding I had from Sam.”

Several days later, Huskey said, Mevorach expressed his personal gratitude, acknowledging that the lease and check would “definitely help him [in] helping Alatorre.”

Despite Huskey’s account, Hann said he was not involved in the lease effort. “I didn’t have a role in that,” he said, adding later, “I’ve done nothing wrong.”

Although bank officials declined to say what, if any, paperwork was submitted with the councilman’s loan application, this much is clear: The check, bearing what appears to be Alatorre’s endorsement, was cashed at Wells Fargo Bank, where the councilman has an account, records and interviews with bank sources disclose.

And only days after that, the Alatorres were the owners of the $285,000 Eagle Rock home they had sought for months. They promptly launched a $20,000 renovation.

They added a washroom. They moved walls. They crowned their new place with a $12,000 red tile roof. The contractor on that job said he was paid by someone else.

“It wasn’t Alatorre. I know that for sure. Or his wife,” said Michael Dalifor of Circle City Roofing in Norco. “One of our builders” set up the job, he said, declining to identify who made the referral or details of the payment.

In late 1996, as the renovations neared completion and the Alatorres were getting ready to move in, the couple was confronted with the task of finding a real tenant for the condominium on which they still were making mortgage payments.

Enter Erica Roberg, the personal trainer of Mevorach’s longtime girlfriend. She moved in after agreeing to pay the Alatorres $1,400 a month, the same amount specified on the fake lease.

During a short telephone conversation, Roberg said she learned of the property through “word of mouth. . . . A client said a friend of a friend” had a condo for rent. When asked if Mevorach or his girlfriend had played a part, she said she could not recall and hung up.

In all, Roberg paid the Alatorres an estimated $2,000 or more in the final months of 1996--money the councilman again did not report, as required by law, on his public economic disclosure forms.

The Fate of the Wyvernwood

With the Alatorres ensconced in their newly remodeled home in early 1997 and the financial burdens eased on the condo, the Wyvernwood deal began picking up steam--with the councilman’s help.

According to documents obtained under the California Public Records Act, Alatorre received an “Urgent!” note from his chief of staff complaining that housing officials were “very noncommittal” about a taxpayer subsidy for the Wyvernwood sale. The officials “even suggested” that Mevorach drop his price, the memo added.

“Let’s set up ASAP meeting,” Alatorre’s chief of staff recommended.

That meeting was convened within days. Although records of the session do not specify exactly what transpired, they do show the result: Housing officials were directed by their supervisor to develop a “road map for Councilman Alatorre to follow” in winning approval of the Wyvernwood deal and in overcoming “political fallout” from other council members.

“Alatorre wanted a deal done. . . . He wanted this [Wyvernwood] thorn out of his side,” recalled ex-housing chief Squier.

He also wanted to be completely free of his condo. The $1,400 rental payments may have covered the mortgage but not the taxes, insurance and homeowners association fees.

Finding a buyer would not be easy, especially since similar units in the building were selling for tens of thousands of dollars less than what the Alatorres still owed on the condo they purchased for about $280,000.

But by spring of this year, an eager buyer appeared, even though the property was not on the market at the time. His name was William Chu, a real estate appraiser who has worked for Mevorach. In fact, just weeks earlier, Chu finalized a $100,000 real estate loan from Mevorach on another property, records show.

Chu offered to assume the Alatorres’ costly mortgage, a sweet proposition for the councilman because the loan exceeded the value of the property and other units in the building were cheaper.

Chu, who said in an interview that he did not previously know the Alatorres, explained that he was steered to the property by a friend he refused to name. He said that by simply putting $10,000 down and assuming the remaining mortgage debt, he was able to buy a home cheaply.

Insisting that Mevorach had nothing to do with the transaction, he did acknowledge consulting with him before moving forward.

“I want to buy it,” he recalled telling Mevorach, who he said responded: “Do what you want to do.”

In a subsequent interview at his Rosemead office, when Chu was pressed again about Mevorach’s possible involvement, he asked to be left alone. “I don’t want to lie,” he said.

Five weeks after Chu bought the condo, Alatorre appeared before the City Council’s Housing and Community Redevelopment Committee, of which he is an influential member. He offered a motion urging his colleagues to get on board with the Wyvernwood purchase.

The committee and the full council voted in favor of the deal in June, deciding that, despite some lingering concerns, the goal of providing affordable housing was important enough to outweigh the risks.

But within two months, records show, the transaction had begun unraveling: The major private-sector investor backed out, concerned about costs associated with lead contamination problems.

So for the moment, Mevorach and Alatorre are awaiting the Wyvernwood’s sale--a “showcase” between public and private interests, as the councilman once described it.

“The quicker we can move,” he said, “the better off the city is going to be.”

Times librarian Janet Lundblad helped research this article.