Alatorre asked to explain payments from developer now under scrutiny in fraud case
A court-appointed overseer in a massive housing fraud case is demanding that former city councilman-turned-political consultant Richard Alatorre explain nearly $1 million in payments he received from a developer accused of bilking Los Angeles and other entities of at least $134 million.
Attorney David Pasternak, the receiver in the case, said he has found scant records explaining what Alatorre did for the steady stream of payments he received between 2002 and 2010.
The politically connected firm at the heart of the scandal, Los Angeles-based Advanced Development and Investment, is under scrutiny from the FBI, the IRS and the U.S. attorney’s office. ADI also has been sued by the cities of Los Angeles and Glendale, which say the company inflated its bills for taxpayer-financed housing projects.
Alatorre, an influential former state Assembly member who served on the council from 1985 to 1999, was a registered ADI lobbyist from 2007 through last year. He raised part of the hundreds of thousands of dollars in campaign contributions ADI subcontractors gave to elected officials in Los Angeles and Sacramento, according to records and interviews.
Two years after he resigned from the City Council, Alatorre pleaded guilty to felony tax evasion for failing to report receiving nearly $42,000 in payments from people who sought political influence. Neither Alatorre nor elected officials in Los Angeles or Glendale have been implicated in wrongdoing in the ADI case.
In court documents filed this week, Pasternak said he could not find evidence of a written contract between ADI and Alatorre. He said he would, if necessary, recover any funds that had been misappropriated. “The only documentation that we have located regarding your services are accounting records referencing the very general term ‘consulting services,’ ” he wrote in a letter to Alatorre.
The information sought by Pasternak could shed light on how ADI was able to win tens of millions of dollars in subsidies for dozens of projects in Los Angeles and elsewhere. A federal grand jury has already instructed the head of the Los Angeles Housing Department to turn over records on ADI dating back to 2005.
Alatorre told The Times that he had not seen the receiver’s June 8 letter and therefore could not discuss it. “I’m not going to comment on something I haven’t seen,” he said.
FBI agents have questioned subcontractors about repairs done on the condo of a Glendale city councilman who voted to award more than $30 million for ADI projects. Alatorre publicly advocated on behalf of at least one ADI project in that city.
Pasternak has accused ADI of dramatically inflating its bills at various development projects, many of them in the city’s poorest neighborhoods. Many were also plagued by poor construction or substandard materials, he said.
William Carter, head deputy for City Atty. Carmen Trutanich, said he was concerned about Pasternak’s difficulty in finding documentation on the payments to Alatorre. Having a paper trail, he said, would make it easier for the city to pursue its case against the company. “That’s a lot of money to be paid without a written agreement,” he said.
Between 2006 and 2010, Alatorre helped raise $60,000 from ADI and its subcontractors for state Controller John Chiang, who serves on a panel that repeatedly provided millions of dollars in tax credits for ADI projects. Chiang placed those contributions in a separate account and has promised to give them back if wrongdoing is found.
Alatorre also arranged for ADI subcontractors and their relatives to give thousands of dollars to Los Angeles City Councilmen Ed Reyes and Richard Alarcon, according to records and interviews.
ADI paid Alatorre through an oral agreement, according to a report prepared last year by Dist. Atty. Steve Cooley after an investigation into Alatorre’s lobbying activities. Cooley’s office ultimately declined to file charges, saying Alatorre was an unregistered lobbyist but had not engaged in activities that amounted to a felony conspiracy.
Alatorre never signed a consulting contract with ADI, Cooley’s report said.
At the same time that he was helping ADI lobby city officials, Alatorre was also a consultant to the city’s housing authority, which manages low-income rental units for 60,000 needy families. That agency paid Alatorre $79,200 between August 2005 and April 2008 to handle political strategy, government affairs and union relations, spokesman Eric Brown said. Brown also said a written contract between his agency Alatorre does not exist.
An executive with one Los Angeles-based lobbying firm, who declined to be named for fear of offending Alatorre, said it would be unusual for a City Hall consultant to have no written agreement for services. “In 99% of the cases, we have a written contract that identifies the scope of work and the terms of payment for that work,” he said.
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