Los Angeles City Hall observers have been waiting more than a year to learn what, if anything, would come out of the ongoing federal corruption investigation into city officials and real estate developers.
On Monday, the feds issued their first indictment and it’s a doozy. The case only adds to the longstanding perception that L.A. City Hall is tainted by cozy relationships and pay-to-play politics.
Former Councilman Mitch Englander, who resigned at the end of 2018, was charged with obstructing an investigation into his activities, which the Justice Department alleges included accepting cash, female escort services, hotel rooms and expensive meals from a businessman during trips to Las Vegas and Palm Springs. After FBI agents began asking questions, prosecutors claim, Englander lied and schemed to cover up his misdeeds.
The indictment reads like a seedy novel. The tale it tells starts with a lavish trip to Las Vegas in June 2017, courtesy of a businessman involved in major development projects who wanted to increase his business in the city.
According to the indictment, Englander traveled to Vegas with the businessman, a top aide, another city staffer, a lobbyist and a real estate developer. Councilman John Lee — who was Englander’s chief of staff at the time of the Vegas trip and was elected to the seat last year — has acknowledged he was on the trip, but said he wasn’t aware of anything illegal and has cooperated with investigators.
Here is what prosecutors allege happened in Vegas:
At the hotel, Englander, Lee and the others were treated like VIPs. They were wined and dined. Englander was given $1,000 in casino chips to gamble with. In the casino bathroom, Englander took an envelope containing $10,000 in cash from the businessman. The businessman also bought $24,000 worth of alcoholic beverages for the group at a nightclub; the developer spent $10,000 more. After they returned to the hotel, the businessman told Englander he was ordering female escorts for the group, whom he paid $300 to $400 in cash for their services.
Almost two weeks later, prosecutors allege, Englander met up with the businessman again — this time at a golf tournament in Palm Springs — and took an envelope containing $5,000. Later that month, according to the indictment, Englander arranged for the businessman to pitch his services to a different developer who was a friend of the councilman’s.
Needless to say, Englander did not report the cash or freebies prosecutors accuse him of accepting on his annual financial disclosure forms.
Federal authorities reached out to Englander within a few months of his trips. Later, prosecutors allege, Englander repeatedly contacted the businessman, including meeting with him in the councilman’s car, and instructed him how to lie to the feds; unbeknownst to the councilman, the businessman had already begun cooperating with agents.
Envelopes of cash exchanged in bathrooms. Hookers in Vegas. Conspiratorial meetings in cars. These allegations are sleazy, and they may be just the first chapter.
FBI agents raided the offices and home of Councilman Jose Huizar in Nov. 2018. A search warrant suggested the raid was part of a broader investigation into an array of potential crimes, including money laundering, bribery and extortion. The warrant named a who’s who of City Hall power brokers, including Huizar, Councilman Curren Price, an aide to Councilman Herb Wesson, one of Mayor Eric Garcetti’s appointees and his former deputy mayor for economic development.
None of those figures have been accused of crimes, but federal officials described the Englander indictment as part of “an ongoing public corruption investigation.” City Hall should be worried.
Generations of Los Angeles leaders have fostered a corrupt political culture in the city, centered on real estate development. It’s well-known that the mayor and individual council members wield tremendous influence over development decisions, so developers and business interests spend heavily to curry favor with those in power. Is it any coincidence that the three council members whose names have been cited in the investigation — Englander, Huizar and Price — all served on the City Council’s Planning and Land-Use Committee? This committee calls the shots on the city’s most important real estate policies and development projects.
Over the years, in response to various pay-to-play scandals, L.A. elected officials have dabbled in ethics reforms. They often say they want to eliminate the appearance of corruption. They never concede that there might be actual corruption in their midst, or that their extraordinary influence over development decisions can breed corruption. Los Angeles has to fundamentally change how real estate developments are approved and land-use decisions are made. The city needs clear rules for officials and developers, and it needs modern land-use plans that allow developers to build housing and commercial projects to meet the city’s need for homes and jobs — without having to buy their way into the council’s good graces.