D.A. Investigating Car Dealer, Development Loan

In a case fraught with potentially troublesome political implications, prosecutors have served search warrants on the city-sponsored Los Angeles Community Development Bank and the prominent owner of four car dealerships as part of a probe into allegations of fraud.

A court affidavit filed by the district attorney’s office indicates that the investigation is focusing on allegations that automobile dealer Marc J. Spizzirri embezzled more than $750,000 from his partners in Downtown Family Ford and misspent more than $1 million in loan funds from the Los Angeles Community Development Bank, which the city set up after the 1992 riots to rebuild the inner city.

“It’s an ongoing investigation,” said Deputy Dist. Atty. Allan Fork of the district attorney’s major fraud section.

Under search warrants served June 25 on Spizzirri’s home and businesses in Seattle, Whittier and Los Angeles, investigators seized a large volume of financial records, court documents indicate.

County investigators are looking into allegations that Spizzirri, 42, used money from a $1.6-million government loan--provided so he could expand his downtown dealership--to build a batting cage at his home and to renovate another car dealership he owns in Montebello, outside the empowerment zone area served by Los Angeles’ anti-poverty bank, the affidavit said.

James Steele, an attorney for Spizzirri, said in court records that the allegations are “patently false” and that the criminal investigation is politically motivated retribution against Spizzirri, who sued the city and developers of the Los Angeles Staples Center for using condemnation proceedings to acquire land for the arena. Spizzirri alleges that the officials had promised to help him acquire the same land for his business.

Spizzirri claims in court documents that he bought the downtown dealership in mid-1996 and obtained the government loan based on pledges from top aides to Mayor Richard Riordan and the Community Redevelopment Agency.

The city officials told him the proposed sports arena would not need the dealership property or surrounding parcels, which Spizzirri wanted to acquire as part of an expansion to make the dealership viable, according to the car dealer.

Spizzirri said that he planned to spend the loan money to expand the downtown dealership and that top Riordan aides promised to smooth the way for him to acquire neighboring parcels using city condemnation powers.

But two former partners of Spizzirri in the dealership have told investigators that the businessman had different plans. Steven and Marci Vickers, who owned 49% of the dealership, told investigators that Spizzirri claimed in 1997 that they all could benefit financially from a city proposal for the owners of the Kings hockey team to build a sports arena near the dealership. The Staples Center is nearly completed.

Spizzirri allegedly told the Vickerses that if the arena needed the dealership’s land, “the city may take us out on a condemnation proceeding,” according to an affidavit filed by district attorney’s investigator Brian D. O’Reilly in support of the search warrants.

“Spizzirri said in that case ‘they (the Vickerses and himself) could build a new store and walk away without repaying any loans received from the city of Los Angeles because of the condemnation proceedings,’ ” the affidavit says.

The Vickerses told investigators that Spizzirri claimed to have “an inside man” named Rocky in Riordan’s office who “could push for the condemnation proceedings,” the affidavit says.

In a separate lawsuit, Spizzirri has charged that senior mayoral advisor Steven Soboroff and Deputy Mayor Rockard “Rocky” Delgadillo and others had promised to help him acquire the disputed land.

“Soboroff assured Spizzirri that if the [adjacent] property could not be acquired conventionally, condemnation was available,” the lawsuit says.

Instead, Spizzirri said city officials double-crossed him in favor of the arena developers.

Knowing that they needed his property for the arena project, city officials still encouraged him to buy land around the arena so it would not fall into the hands of other developers competing with the arena builders to construct a hotel and entertainment complex next to the Staples Center, Spizzirri charged.

Delgadillo declined comment, but Soboroff, who has mayoral ambitions, said Spizzirri’s charges that he promised to help him acquire property near the arena are “without merit.”

“I don’t have authority to make those kinds of statements and I don’t make statements I don’t have authority to make,” Soboroff said.

Judge Refuses to Dismiss Case

The city attorney’s office also denies that there was any enforceable deal with Spizzirri.

But Superior Court Judge John Shook refused June 16 to dismiss the lawsuit against Soboroff and other city officials, citing evidence that city officials provided assurances concerning Spizzirri’s ability to buy an adjacent property from Obayashi Corp.

“Plaintiff’s reliance on defendants’ representations was reasonable in light of defendants’ apparently superior knowledge of what the city could do or in fact would do for plaintiff regarding the Obayashi property,” Shook concluded.

Even so, Spizzirri’s attorney recently sought to have the case dismissed as a temporary measure, saying that the pending criminal investigation would hinder Spizzirri’s ability to openly give depositions and evidence in the civil matter.

Spizzirri is well known at City Hall, having received four commendations from the City Council. He and his wife gave Delgadillo more than $200 worth of china and Waterford crystal as wedding presents in 1998.

Sources said Delgadillo did push for the Community Redevelopment Agency to reach a resolution with Spizzirri.

However, a confidential report to the City Council by Deputy City Atty. Marjorie Hamano Currier in May said the city should not meet Spizzirri’s demands of either forgiving the government bank loans or paying him $2.1 million.

Spizzirri attorney Steele said in court papers filed in connection with the suit that he saw his client’s estranged business partners meeting with attorneys for the Staples Center and that the former partners are now helping investigators in the criminal probe. “A reasonable inference may be drawn that the defendants in this [civil] case were able to muster sufficient clout to initiate the alleged criminal investigation,” Steele alleged.

But O’Reilly of the district attorney’s office said in his affidavit that there is evidence that much of the government loan money did not go to renovating the downtown dealership in which Spizzirri was the majority owner, but instead went to “remodel his car dealership in Montebello.”

Bank officials told investigators that they “would not fund a loan to any business located outside one of the empowerment zones, including Montebello,” the affidavit says.