$2.8 Million in CRA Inventory Can’t Be Found

For five years, workers at the Los Angeles redevelopment agency have complained that public employees stole pianos, clothes and other merchandise from businesses that were bought by the city to make way for Staples Center.

An audit conducted for the district attorney’s office concluded that the agency had failed to account for where $2.8 million worth of goods had gone before the buildings were demolished.

Neither the district attorney’s office nor the Community Redevelopment Agency has determined what happened to the items. No charges have ever been filed, no employees disciplined.

Frustrated by the investigative dead ends, three CRA employees compiled their evidence and filed a whistle-blower complaint late last year with the Los Angeles Ethics Commission and city controller’s office.

“I know that people took stuff,” said one of the whistle-blowers, a CRA management employee. “The knowledge was very widespread here that people took stuff.”

The employees who filed the complaint did not want to be identified for fear of retaliation by their bosses.

They said in interviews that they thought some of the assets had been taken by CRA workers for use in their homes, businesses and churches.

The allegations stem from the CRA’s role in buying businesses on downtown land that was needed for the construction and operation of Staples Center, which opened in 1999.

The agency bought out 71 businesses with millions of dollars of inventory. The city had an agreement to leave all inventory in place and turn it over to the Staples Center developer. The plan called for the developer to sell the items at auction and use the proceeds to defray the city’s costs for clearing the property.

But an accounting firm hired by the CRA to investigate the allegations found that 14 of the buildings were empty when crews arrived to collect the furnishings for auction.

The firm, Thompson, Cobb, Bazilio & Associates, said in its 2002 report that it could not determine what had become of the inventory, which CRA appraisals valued at up to $2.8 million.

“No specific evidence could be located to verify if [assets] had been donated or was available for auction,” according to the audit, which the CRA commissioned at the request of the district attorney’s office.

One employee, who asked not to be identified for fear of prosecution and who was not part of the group that filed the ethics complaint, admitted in an interview having removed a water heater from one of the condemned buildings and installing it at home.

Gerardo Salazar, who owned a music store and school that were bought by the agency, said he had watched as a CRA supervisor directed employees to load a truck with pianos, keyboards, guitars and furniture from his businesses.

“She mentioned about donating to a church. I don’t know if she had city permission to do that,” Salazar said.

His Imperial Music Academy had $21,600 worth of assets, according to a CRA appraisal, including eight acoustic and electric guitars worth an average of $150 each, 23 keyboards, a drum set worth $800 and two pianos, each worth $1,000.

Other businesses for which assets could not be accounted included two motels, an auto repair shop, a copying business and a nightclub called the Flamingo Club, which had a 50-inch big screen television worth $1,700 new and a juke box worth $1,200 new.

Some employees of the agency reported to supervisors at the time that city workers were making off with merchandise, according to the whistle-blowers.

Those employees later took their complaints to the district attorney’s office. Investigators there closed their probe of the missing merchandise last April because they had found no evidence of criminal wrongdoing.

The whistle-blowers said they had filed complaints with the Ethics Commission and the city controller because they were dissatisfied with the district attorney’s inquiry. In particular, they were upset that investigators had not interviewed them or key merchants, including Salazar.

The deputy district attorney who handled the probe declined to comment on the complaints that key witnesses were not interviewed.

CRA Administrator Robert Ovrom, who took over the agency a year ago, said he had not read the Thompson report and was relying on the previous administration to have thoroughly looked into the allegations.

“Everything I have been told is that none of that resulted in any disciplinary action or prosecution,” Ovrom said. “If my predecessor and the DA reached that conclusion, I am comfortable with that.”