Couple will settle rental bias case for $2.7 million

Los Angeles Clippers owner and real estate mogul Donald T. Sterling and his wife, Rochelle, have agreed to a record settlement of more than $2.7-million regarding allegations that they discriminated against African Americans, Latinos and families with children at scores of apartment buildings they own in and around Los Angeles.

The settlement, which must be approved by U.S. District Judge Dale S. Fischer, is the largest ever obtained by the Justice Department in a housing discrimination case involving apartment rentals, officials said.

If approved, the settlement also would resolve a pair of related lawsuits by former tenants who alleged that they were discriminated against because of their race when they lived in one of the Sterlings’ buildings.

Under the agreement, the Sterlings’ insurers would pay $2.625 million to a fund for people who were allegedly harmed by their discriminatory practices, officials said.

How many former tenants would receive money has not yet been determined, a Justice Department spokesman said. The proposed agreement also requires a $100,000 penalty to be paid to the government.

“The magnitude of this settlement demonstrates our commitment to vigorously prosecute violations of the Fair Housing Act,” Thomas E. Perez, head of the Justice Department’s Civil Rights Division, said in a statement.

“With tight mortgage credit and rising foreclosures, it is more important than ever that minorities not face discrimination when renting apartments,” Perez said.

Bob Platt, the Sterlings’ longtime attorney, said the couple decided to settle the case to avoid what they believed would be the far more costly expense of continued litigation.

“My clients vehemently and unequivocally deny that anyone was discriminated against,” Platt said in a statement. He said they maintained “a zero tolerance policy prohibiting all forms of housing discrimination.”

The Justice Department, Platt said, “could not prove a single violation of the Fair Housing Act.”

Under a 23-page “proposed consent order” that has been submitted to Fischer for her approval, the agreement is described as “a compromise of disputed claims . . . not to be construed as an admission of liability.”

A spokesman for the Justice Department declined to comment on Platt’s characterization of the case.

The Justice Department sued the Sterlings three years ago, accusing them of favoring Korean tenants while seeking to exclude blacks, Latinos and renters with children. Through their family trust and Beverly Hills Properties, the Sterlings own and manage about 120 apartment buildings with about 5,000 units in Los Angeles County, according to the Justice Department.

In court filings, Justice Department lawyers contend that the Sterlings made statements “indicating that African Americans and Hispanics were not desirable tenants and that they preferred Korean tenants” to occupy buildings they had purchased in Koreatown.

Had the case gone to trial, an expert hired by the government would have testified that an analysis of the Sterlings’ rental practices in Koreatown revealed that they rented to far fewer African Americans and Latinos than would be expected based on the demographics in the area, according to government attorneys.

Platt said a defense expert would have testified that dozens of other comparable buildings in the area had the same percentage of Korean tenants.

Since 2002, Platt said, there has been a dramatic increase in the number of blacks and Latinos and families with children living in the Sterlings’ properties.

“What the government did was go ‘fire, aim, ready,’ ” he said. “They filed the suit, then they started their investigation.”

The proposed settlement also would resolve lawsuits filed by two couples who lived in the Sterling Ambassador Towers on Irolo Street in Los Angeles. One couple was African American, the other biracial. Both had small children.

Both families said property managers at the building used racial slurs against them and reneged on the terms of their rental agreements.

Darrell and Mary Rhodes said they moved into the building in 2004. The couple said their apartment came with a small yard that could be accessed from their terrace and that, they were told, was exclusively for their use.

Suddenly, they said, workers cut off water to the area, removed the dirt, grass and plants and blocked access to the yard with iron bars.

Kevin Tyrell and his wife, Karen, said they moved out of the building after living there for 18 years when they were subjected to similar treatment.

Platt said that the dirt and grass and plants were removed from the yard and that it was cemented over and replaced with AstroTurf because water had been pooling in the area and leaking into a subterranean garage. He said the tenants were never denied access to the area.

As part of the settlement, the Sterlings would be required to pay for an independent contractor to monitor their employees’ compliance with the Fair Housing Act over the next three years. The results of the tests would be reported to the Sterlings and to the government.

The allegations in the government’s case are similar to those in a 2003 lawsuit filed by the nonprofit Housing Rights Center on behalf of about 20 mostly black and Latino tenants or prospective tenants.

According to that suit, the Sterlings told members of their staff that they did not like to rent to African Americans or Latinos and made racial slurs about both groups.

U.S. District Judge A. Howard Matz ordered the Sterlings to stop using such words as “Asian” and “Korean” in the names of their buildings, as they had done when they changed the name of their Mark Wilshire Towers to Korean World Towers.

Such wording, Matz wrote, could be interpreted as a coded message to potential renters: “Koreans and Korean Americans are welcome and preferred. Others are not.” The case resulted in a confidential settlement in 2005.

Platt, who represented the Sterlings in that case too, called the allegations regarding racial discrimination “absurd.”

“The shame of this is if lies are repeated often enough, some people may actually believe them,” he said.

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scott.glover@latimes.com