Council Broadens Its Inquiry Into CRA

Alarmed by allegations of wrongdoing, the Los Angeles City Council on Tuesday expanded its inquiry into the troubled 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 set Dec. 15 as the date for a meeting with CRA administrator Jerry Scharlin, at which they also will discuss concerns that he hired a private investigator to look into his own agency.

Councilman Mark Ridley-Thomas formally proposed that the council assume direct control of the agency. He cited a city controller’s office audit that disclosed the overpayments.

“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 CRA’s problems have become too great to allow a part-time, mayoral-appointed board to continue overseeing the agency.

“It is no secret that the CRA’s recent history has been rife with turmoil,” Ridley-Thomas said.

The meeting with Scharlin was originally to focus on Los Angeles Times disclosures that the administrator had hired private investigative firm Discreet Intervention Inc. to probe allegations of financial impropriety when he took over the agency 15 months ago.

The controller’s audit cited Discreet’s work in lambasting the agency Monday, and Ridley-Thomas said he did not want to stop inquiries into the CRA, only assure that they are conducted properly.

During a long hearing, council members made clear they want to learn more, in a closed session, about the audit findings on the overpayments, which were turned over to prosecutors.

“We all want to understand what is occurring in the CRA,” Councilman Nick Pacheco said. “The information that Mr. [City Controller Rick] 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.”

Tuttle turned over the audit and a report by Discreet to the district attorney’s office Monday for a possible criminal investigation, saying the investigator’s report “suggests the possibility of questionable or unlawful activity” within the agency.

Councilman Nate Holden sought an explanation of whether Scharlin had authority to hire a private investigator without council and CRA board approval and 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.”

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Assistant City Atty. Leslie Brown has said the use of private investigators by department managers is unusual but appropriate in certain cases. Council members said they want an explanation of where the authority comes from and how it is regulated.

A union official representing CRA employees and managers told the council Tuesday that there is widespread “fear and outrage” over Scharlin’s decision to quietly hire a private investigator to look into agency operations.

In particular, invoices submitted by the private investigators for film development have some workers concerned that they were improperly put under photo surveillance, according to 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 [this] kind of private investigative powers over employees . . .”

Scharlin has said he hired the investigators after seeking advice from the city attorney’s office and later informed some CRA board members and representatives of Mayor Richard Riordan.

Scharlin was out of the office in meetings Tuesday, but spokesman Thomas Knox said, “To [Scharlin’s] knowledge, no surveillance of employees has taken place.”

However, Knox said he cannot explain the invoices for film developing.

Scharlin looks forward to meeting with the City Council to explain his actions, Knox said.

The council agreed to send the takeover motion to a committee for review, after some members said it should not be dealt with in an emergency action, as Ridley-Thomas proposed.