Lockyer, Chiang freeze money they got from developer
Two high-level state officials have frozen nearly $150,000 in campaign contributions raised for them by a low-income housing developer now accused of bilking government agencies.
State Treasurer Bill Lockyer and state Controller John Chiang said they have put the money into separate accounts while they await the outcome of a federal probe into Advanced Development and Investment Inc. The company has built dozens of subsidized apartment complexes up and down the state with taxpayer money.
The Times reported in October that federal prosecutors are investigating the company after receiving allegations that ADI had submitted fraudulent statements to city and state officials and may have built substandard housing. Lockyer and Chiang sit on a panel that awarded millions of dollars in tax credits to the firm to build more than 50 projects in Los Angeles, Glendale, Anaheim and other cities.
At the same time, the company and its subcontractors gave them and other officials more than $400,000 in campaign money, including at least $165,000 to candidates for office in Los Angeles, according to a Los Angeles Times review of the donations. Four of those subcontractors have told The Times they were pressured to make the campaign contributions and felt they would lose future jobs with the company if they refused.
Spokesmen for Lockyer and Chiang said that if the company is found to have committed wrongdoing, the two men will give the money back.
Meanwhile, Glendale City Council members said Wednesday that they are pursuing litigation against ADI to recover money they believe the company stole from that city. Council members also plan to issue subpoenas for records held by the company’s court-appointed receiver, David Pasternak, City Manager Jim Starbird said.
The Times reported Wednesday that Glendale council members awarded $14 million to ADI in 2008 and 2009 for a single project, Vassar City Lights, despite warnings from their own staff about the company’s budget estimates. Pasternak has alleged in separate court papers that ADI defrauded Glendale of up to $6.5 million on that project.
Money from ADI subcontractors and the subcontractors’ families made up nearly one of every four dollars received by the top four candidates in the 2009 Glendale council campaign, or just over $100,000.
Glendale has provided ADI more than $33 million for four projects since 2005. Council members deny they were influenced by the campaign money or even knew of the donors’ links to ADI.
A Times review of contributions found that ADI and its subcontractors repeated that pattern of giving in Sacramento and Los Angeles.
Lockyer, for example, has received nearly $86,000 from ADI subcontractors over the last four years, holding a fundraiser at the company’s offices in 2006 and another three years later at the San Marino home of ADI’s former president, Salim Karimi. Some of that money came from subcontractors who said they were pressured by ADI representatives.
One subcontractor, who would only speak if not identified by The Times because he feared retaliation from within the construction industry, said one ADI manager repeatedly demanded donations, saying the company needed to keep its “political people happy.”
“Then it was followed with: ‘If you want to continue to work with us, you’ve got to play by these rules.’ It was very direct,” said the subcontractor, whose company gave to Lockyer and to at least one member of the Los Angeles City Council.
Lawyers for top ADI executives denied that their clients did anything wrong. Lockyer spokesman Joe DeAnda said the state treasurer had no knowledge of any pressure on contributors and did not allow the donations to influence his decisions.
In Los Angeles, ADI received $29 million in subsidies for 15 projects and built dozens of other developments using state tax credits in neighborhoods such as South Los Angeles, Echo Park, Westlake and Historic Filipinotown. The company, its employees and its subcontractors gave repeatedly to city candidates between 1999 and 2009, including $28,000 to Mayor Antonio Villaraigosa.
Villaraigosa and four L.A. council members said the contributions had no effect on their decisions. Two said the subsidies were provided to ADI only after a competitive evaluation process.
In many cases, donations arrived before a council vote on an ADI project. For example, six current and former elected officials received contributions from ADI and its subcontractors in the 18 months before the 2005 vote on Yale Terrace, a 55-unit affordable project in Chinatown that received $4.9 million in city financial assistance.
Councilman Ed Reyes received $10,500 — 21 contributions of $500 each — from ADI subcontractors in June 2004, all of it reported on the same day. Councilwoman Janice Hahn received $6,000 from ADI subcontractors three months later. Villaraigosa, then a councilman running for mayor, took in $16,000.
Reyes, who received more than $18,000 from ADI and its subcontractors from 2001 to 2004, said he did not remember ever voting against a subsidy for ADI, which has built 18 projects in his district. But he said he has criticized some of the firm’s work, including one development in his district in which he said metal lath began to show through the stucco after one year.
The subsidies L.A. provided, which came on top of tax credits ADI got from the state, offered the city leverage to improve the quality of the design, Reyes added.
In Los Angeles, at least a portion of the contributions were arranged by ADI lobbyist Richard Alatorre, a former L.A. councilman who resigned in 1999 and later pleaded guilty to tax evasion.
Councilwoman Jan Perry, who received $9,250 from ADI subcontractors between 2004 and 2009, said she attended one fundraiser at ADI’s offices and had been lobbied both by Alatorre and the company’s founder, Ajit Mithaiwala. Both men complained about how competitive the process was for obtaining city housing funds, she said.
“I think they felt that there was some way I would be able to intervene, but I did not,” she said.