Spurred by Audit, Council to Examine CRA Land Purchases

The Los Angeles City Council on Tuesday expanded its inquiry into the Community Redevelopment Agency to include the payment of $1.57 million more for properties than the agency’s own appraisals showed they were worth.

The council scheduled a Dec. 15 meeting with CRA head Jerry Scharlin to discuss the issue. City Controller Rick Tuttle’s office was highly critical of the apparent overpayment in an audit and turned the matter over to the Los Angeles County district attorney’s office. Tuttle said the matter “suggests the possibility of questionable or unlawful activity” within the agency.

In addition, Councilman Mark Ridley-Thomas proposed that the council assume direct control of the CRA.

“We are making decisions on huge sums of money without getting the proper information, and if we had oversight, perhaps we could get this corrected,” Ridley-Thomas said. With “the number of instances in which we are faced with allegations of corruption in the Police Department and now in the CRA, we have to do something about it.”

Ridley-Thomas said the redevelopment agency’s problems are too big for a part-time governing board appointed by the mayor. His proposal was referred to a committee for review.

The council had originally scheduled the meeting with Scharlin to discuss disclosures by The Times that he had hired a private investigative firm, Discreet Intervention Inc., to probe allegations of financial impropriety when he took over the agency 15 months ago.

Discreet’s investigation had been cited by the controller’s audit of the agency.

But during Tuesday’s hearing, council members went beyond the Discreet issue and turned to the substance of the controller’s report.

“We all want to understand what is occurring in the CRA,” said Councilman Nick Pacheco. “The information that [Tuttle] and Mr. Scharlin have been working on is very disturbing to all of us, in terms of what is not being disclosed when we do these transactions.”

Scharlin’s hiring of the detective agency will also be discussed by the council at the Dec. 15 meeting.

Councilman Nate Holden said the council must learn whether Scharlin could employ the detective agency without approval of the council and its own governing board. He wondered whether the probe violated employees’ rights to privacy.

“The general manager should not be able to do that on his own,” Holden said. “It’s scary. People’s rights could be violated.”

Assistant City Atty. Leslie Brown has said the use of private investigators by department managers is unusual but appropriate in certain cases.

A union official representing CRA employees and managers told the council there is widespread “fear and outrage” over the issue.

Some workers have said they fear they were improperly put under photo surveillance, said David Cochran, business representative for District Council 36 of the American Federation of State, County and Municipal Employees.

“We have gone to a virtual police state over there,” Cochran told the council. “It is frightening in the least that a new agency administrator could come in and have the discretion to have [that] kind of private investigative powers over employees.”

Scharlin was not available, but spokesman Thomas Knox said, “To his knowledge, no surveillance of employees has taken place.”

However, Knox said he cannot explain invoices for film developing uncovered by the detective agency.