Mayoral candidate Rick Caruso’s real estate empire poses possible conflicts of interest. Here’s his plan
In a bid to avoid conflicts of interest and allay possible voter concerns, billionaire developer Rick Caruso shed light Friday on how his real estate company would operate without him should he win the race for mayor.
Caruso has said that he will put his company, which owns and operates billions of dollars’ worth of commercial properties in Southern California, into a blind trust and allow others to take the helm if he achieves office at the end of the year.
On Friday, he said his chief development officer, veteran real estate executive Corinne Verdery, will take over his role as chief executive of his eponymously named company Caruso if he is mayor. Caruso, 63, said that he would be completely divorced from operations and that Verdery would be best-suited to run the company even after he was out of office.
“I will come back to the company as executive chair,” he said, “but she is going to continue on as CEO.”
Caruso’s much-anticipated entrance last week shook up a race that had been largely dominated by Democratic elected officials. Rep. Karen Bass remains the apparent front-runner in a field that also includes City Atty. Mike Feuer and Councilmembers Kevin de León and Joe Buscaino.
But in a week’s time, Caruso’s political spending has already dwarfed that of the other leading candidates, with ad buys across the local TV networks.
Rick Caruso has considered running for L.A. mayor before but has never jumped in. For this year’s race, he promises a “final decision shortly.”
Caruso, who has never run for public office, said as mayor he would not dabble in his company’s affairs under the rules of a blind trust, which is intended to prevent a trustor such as Caruso from experiencing conflicts of interest between his business and civic duties. (Even if his business is in a blind trust, Caruso would still probably have to recuse himself from official matters involving his holdings.)
“She has full authority to operate,” he said of Verdery. “There’s no communication, no approval” with Caruso if he is mayor.
A series of recent corruption scandals have put increased scrutiny on the relationship between developers and L.A. City Hall. Over the last few years, a far-reaching “pay to play” corruption probe has yielded guilty pleas from two real estate consultants, a lobbyist, a council aide and former city Councilmember Mitchell Englander.
Jose Huizar, another former councilmember embroiled in the probe, awaits trial on charges of running an extortion racket that shook down developers of top-tier properties in downtown Los Angeles.
“We’ve got a City Hall that is deep with corruption,” Caruso said.
Voters are keenly aware of the breach of trust among city leadership, said Zev Yaroslavsky, a former L.A. councilmember and supervisor.
“What’s gone on in City Hall in terms of corruption scandals is on everybody’s mind,” he said. “Who they hold accountable for that is a different story.”
Yaroslavsky didn’t think that voters would be inherently wary of a developer candidate and noted that everyone has the potential for conflicts of interest, regardless of their profession. In the veteran politician’s view, homelessness and crime are the biggest issues facing the city right now — and that’s what voters will be talking about at their kitchen tables.
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Government ethics experts say that there is nothing disqualifying about Caruso’s business holdings, so long as he properly discloses his financial interests and carefully follows protocol around potential conflicts as they arise.
“If there’s anything specifically involving one of his properties, [such as] an ordinance or a contract, he might have to disqualify himself,” Bob Stern, co-author of the state’s 1974 Political Reform Act and former general counsel for the California Fair Political Practices Commission, previously told The Times. “But if it’s just generally dealing with development, he wouldn’t have to disqualify himself.”
Voters have not shied away from electing wealthy business executives in the past, such as billionaire Michael Bloomberg, who served as mayor of New York for more than a decade.
Affluent Los Angeles businessman Richard Riordan served two terms as the city’s mayor starting in 1993. Riordan paid a $3,000 fine for violating the state’s conflict-of-interest law in 1996. The issue — which Riordan’s office called an inadvertent, honest mistake — involved the then-mayor acting on matters regarding the tenant of a downtown building he partially owned.
Caruso earlier this week filed a 94-page financial disclosure form that gave a window into his vast holdings including stock and real estate. Among his stock holdings he valued at more than $1 million each are such blue chippers as Amazon.com Inc., Apple Inc., Berkshire Hathaway Inc., Costco Wholesale Corp., Microsoft Corp., Nike Inc., Johnson & Johnson, Kimberly Clark Corp. and Walt Disney Co.
Caruso has said that his company will not attempt to launch any new real estate developments in Los Angeles if he is mayor, but added that Verdery, Caruso Chief Financial and Revenue Officer Jackie Levy, and General Counsel Ben Howell would continue to expand its property portfolio.
“I have every confidence in her to not just maintain the company,” he said. “My confidence in her is to grow” it.
Verdery said growth might include building a swanky apartment tower near the Beverly Center in Los Angeles that has already been approved by the city. The building with 145 units above ground-level retail at 333 La Cienega Blvd. was proposed in 2015.
Work on the tower could begin when apartment leasing, which has dipped during the pandemic, picks up, she said.
“As soon as the market meets us,” she said, “we will get moving on that project.”
The company may propose new mixed-use developments in other municipalities in Los Angeles County, she said. One of Caruso’s largest properties is Americana at Brand, a sprawling outdoor shopping center in Glendale that includes housing.
Other prominent company properties include the Commons at Calabasas shopping center, luxury apartments at 8500 Burton Way in Los Angeles and a former Masonic Temple in Glendale that is now an office building.
In a quiet garden at the Rosewood Miramar Beach resort in Montecito is a white marble statue of the Buddha, laughing while four small children clamber up his side.
Verdery joined the Caruso company in 2016 after serving as chief real estate development officer at NBCUniversal, where she oversaw a $1.6-billion development project that included the Wizarding World of Harry Potter, new sound stages and new offices at Universal Studios and its adjoining theme park.
At Caruso, she oversaw the development of the Rosewood Miramar Beach luxury resort in Montecito that opened in 2019 and Palisades Village, the company’s latest upscale outdoor shopping complex in Pacific Palisades completed the year before.
Verdery grew up on the Hawaiian island of Oahu before attending high school in Orange County and college at USC, she said. She now lives in Sherman Oaks.
Caruso said he aggressively recruited her, citing her record of getting complex real estate developments including the Waldorf Astoria hotel in Beverly Hills approved and built.
“It took me about 10 years to convince her to come with my company,” he said.
Verdery’s former boss Jeff Shell, chief executive of NBCUniversal, also praised her performance.
“Corinne is an extraordinary leader who has the rare combination of true vision, and the ability to clearly articulate a strategy, mobilize a team and execute flawlessly,” he said. “The impact she had while leading our company’s multibillion-dollar project cannot be overstated.”
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