Chinese developer agrees to pay $1 million in City Hall bribery and corruption case
The subsidiary of a China-based real estate company has agreed to pay $1.05 million to resolve a federal investigation into its involvement in the ongoing City Hall bribery and corruption scandal, federal prosecutors said Wednesday.
In a deal struck with the U.S. attorney’s affice in Los Angeles, Jia Yuan USA Co. will pay the penalty and continue cooperating with the federal government in its probe of Councilman José Huizar and other figures, according to a copy of the agreement. In exchange, the government agreed not to pursue criminal charges against the company.
In a statement, the U.S. attorney’s office said it had decided not to prosecute because company officials had taken responsibility for its conduct in a “timely” way, fired a real estate consultant who later pleaded guilty in the corruption probe and cooperated with investigators. The agreement does not prevent prosecutors from charging individuals who work at Jia Yuan USA or its Chinese parent company, Shenzhen Hazens.
Jia Yuan USA, based in Arcadia, was set up to redevelop the Luxe City Center Hotel in downtown Los Angeles, replacing the existing nine-story hotel with a much taller hotel and residential towers.
Huizar, as head of the City Council’s powerful planning committee, helped secure approval of the project, which was located in his district, after receiving benefits from the company and some of its employees, prosecutors said.
In the agreement, Jia Yuan admitted that Shenzhen Hazens partially paid for the Huizar family’s trip to China, covering such costs as transportation, meals and theme park tickets.
The developer also confirmed that a Jia Yuan employee had provided Huizar with Katy Perry concert tickets after he and former Deputy Mayor Ray Chan — identified in the filing as Individual 1 — helped resolve an issue at a Hazens hotel involving compliance with the Americans With Disabilities Act.
The three tickets were valued at $1,000, according to the agreement.
Chan’s attorney, Harland Braun, said Wednesday that his client was not involved in the alleged bribery scheme and had “nothing to do with anything corrupt.” Braun portrayed Chan, who worked for Mayor Eric Garcetti in 2016 and 2017, as a civil servant who was “stuck in the middle” between Huizar and the hotel developer.
Huizar has pleaded not guilty to racketeering, bribery and other federal charges. His attorney had no comment on the filing. A lawyer for Jia Yuan USA did not immediately respond.
The wide-ranging criminal probe has netted guilty pleas from Councilman Mitchell Englander, former Huizar aide George Esparza and Justin Jangwoo Kim, a former city planning commissioner who raised money for Huizar and others.
In its agreement, Jia Yuan also admitted providing in-kind campaign contributions to several U.S. political candidates by hosting reduced-cost fundraising events at the Luxe hotel. Some of those events took place at the direction of a foreign national barred from participating in U.S. elections, investigators said.
On three occasions, the hotel provided fundraising events for free, receiving payment only after the candidates became aware of the federal corruption probe, prosecutors said.
Although the candidates were not named, The Times reported last year that several politicians, including U.S. Rep. Judy Chu and Los Angeles City Council members Herb Wesson and Monica Rodriguez, held political fundraisers at the Luxe without paying the hotel for those services. All three said they never received invoices from the hotel and paid the bill after being contacted by The Times.
Jia Yuan employees also made campaign contributions to U.S. political candidates that were later reimbursed by the company at the direction of a foreign national, who was prohibited from participating in U.S. elections, prosecutors said.
Those candidates also were not named in the agreement. However, the document does provide some specifics on Huizar.
At one point, the agreement says, the councilman boasted in a text that his office told Garcetti’s staff to have the planning commission “calm down” when reviewing the hotel project. Planning commissioners, Huizar wrote, “throw a lot of junk at projects these days,” according to the agreement.
Jia Yuan USA also said Huizar attempted to get the company to make a $100,000 donation to a political action committee, or PAC, supporting his wife’s bid for City Council.
As L.A. officials battle the coronavirus pandemic, a corruption scandal has fueled mistrust in City Hall.
Huizar voted in June 2018 to approve the city’s development agreement for the Luxe project. Six days later, he wrote a text message to a consultant for Shenzhen Hazens saying he and the developer needed to finalize PAC “stuff,” according to the agreement.
Prosecutors described that message as an attempt by Huizar to lock down a donation for his wife.
Huizar raised the contribution issue again with the consultant a month later, according to the agreement. And he did again in October 2018, prosecutors said, telling the consultant they needed to “tie up some loose ends” on the Luxe.
Fuer Yuan, chairman of Shenzen Hazens, asked the company’s real estate consultant, George Chiang, whether such a contribution would be proper and said Chiang needed to determine whether such a move would be permitted, the company said in its agreement with federal prosecutors. Yuan ultimately opted not to provide the $100,000, prosecutors said.
Nevertheless, Chiang told Huizar that the company had agreed to make the donation, prosecutors said.
Chiang pleaded guilty in June to a racketeering charge. His sentencing is scheduled for February.
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