Former L.A. building official alleges he was ousted after blowing whistle on fraud

The city of Los Angeles' Development Services Center, which houses the Department of Building and Safety.
(Jay L. Clendenin / Los Angeles Times)

A former official at the Los Angeles Department of Building and Safety alleges that he was ousted after raising concerns at the agency about a host of issues, including millions of dollars lost to fraud.

Steve Ongele, a former bureau chief with the building department, lodged a claim with the city seeking $1 million in damages, alleging that his termination was meant to send a message to other employees to “not report wrongdoing by the city and its employees or you will be fired.”

His claim mentions former department head Frank Bush and new chief Osama Younan, who supervised Ongele and replaced Bush after his retirement.

A Department of Building and Safety spokesman said the city does not comment on pending claims or litigation matters. Representatives for the city attorney and the mayor also declined to comment.


Bush, now retired, said in an email that the claim from Ongele was “full of inaccuracies, misrepresentations and bogus assumptions” without elaborating on what those inaccuracies were.

Ongele’s claims are tied to an earlier scandal that revolved around improper purchases and falsified invoices in the technology section of the agency, which procures and maintains computer software and equipment for the department.

The Times reported two years ago that the L.A. County district attorney was investigating the matter after the city quietly turned over its findings. As of Wednesday, the D.A.'s office said the matter was still under review.

Ongele alleged in his claim that, despite initial findings of a nearly $4-million loss to waste, fraud and other financial misconduct, his supervisor Younan instructed him to indicate that only $300,000 was misappropriated when he drafted a letter to the city controller alerting him to the issue.

It began with an investigation into bad workplace behavior: a high-level manager inside the Los Angeles Department of Building and Safety accused of yelling at his workers.

Ongele said in his claim that top officials in the department initially told an auditor from the city controller’s office that the fraud was limited to a few employees before Ongele phoned her and told her there was more to probe.

Among the other issues that investigators ultimately discovered, according to Ongele: Money was illegally transferred from the building department to the mayor’s office at the direction of Raymond Chan, the former building department chief who had become a deputy mayor.

Ongele alleged that as deputy mayor, Chan sought money from the building department for raises for his staff, an “unnecessary” marketing video to financially benefit one of his friends, and new furniture and computers — even though the special funds were meant to be used only for activities related to building permits and plan checks.

Ongele claimed that when he said there would be problems with spending those funds on the marketing video, Chan replied, “Remember, I am the deputy mayor.” The former bureau chief also complained that the video was not competitively bid.

Chan, who stopped working for the city three years ago, has been under scrutiny in an ongoing federal probe of City Hall corruption. Federal prosecutors have not charged Chan or even named him, but a search warrant and details in their public filings make clear that he is one of numerous people under investigation.

His attorney Harland Braun has said that Chan did nothing wrong. In addition, Braun stated that Ongele’s claims about the marketing video were “100% wrong” and that the contract did not have to be competitively bid.

“Was Chan wrong in promoting billions of dollars of investment in L.A. including the new Lucas museum?” Braun asked, referring to the Lucas Museum of Narrative Art, founded by filmmaker George Lucas, under construction in Exposition Park.

Ongele alleged that the final version of the audit was “watered down,” stripping out important findings such as $22 million being paid to unauthorized subcontractors. In his claim, he said he began to face hostility as his supervisors started to suspect he was sharing information with The Times about issues in the department.

The former official said he also raised concerns about a nearly $300-million surplus in a special fund at the department, which he attributed to “severely overcharging” customers, but was brushed off.

Ongele also said that when he refused to approve a refund claim, Younan asked him to reconsider because it was for a “friend of Chan” and then approved it himself. And Ongele claimed that before he was terminated, he raised concerns about Younan’s hiring of his own son through an illegal contract.

The former building official also said he was subjected to racial and age discrimination, including racist statements by then-department head Bush about Mexican immigrants and Asian city employees.

Bush, who retired in March and was replaced by Younan, said in an email that he had never discriminated against or harassed anyone in the department, nor had he retaliated against anyone for reporting alleged misconduct.

Claims are typically submitted to the city before a lawsuit is filed and are lodged to preserve the right to sue.