Federal prosecutors have launched an investigation into a prominent Los Angeles developer accused of bilking taxpayers out of millions of dollars, building potentially unsafe apartments and possibly making improper gifts to public officials.
Advanced Development and Investment Inc. has submitted fraudulent bills to cities for affordable housing projects, failed to keep proper records on more than $650 million that flowed through its checking accounts and transferred as much as $80 million to personal accounts — at least one in India — according to a court-appointed receiver's report on the company's activities.
The report was filed in Los Angeles County Superior Court...and was also turned over to the U.S. attorney's office and, at a hearing on Tuesday, receiver David Pasternak asked the court's permission to comply with subpoenas for records from a federal grand jury.
In his report, Pasternak indicated that ADI had "virtually no financial records," no general ledger, no balance sheet and no bank reconciliations. Working with forensic accountants, he said he had discovered "potential fraud and criminal activity." (Sounds like most L.A. non-profits approved for money by City Hall.)
Over the last 20 years, ADI has built more than 50 affordable housing projects in California in cities, including Los Angeles, Glendale, Anaheim, Fresno, Long Beach, Sacramento and San Diego.
In Los Angeles, city officials said ADI has built 16 projects at a total cost of $190 million, including $32 million from the city. The officials said they had no plans to dispatch inspectors because they have received no complaints. [Ever notice how nothing is ever filed against anything happening in Los Angeles as it goes bankrupt under fraud, waste and abuse. KEEP FOCUSING ON EVERY SMALL FISH, MAYBERRY CITY SURROUNDING L.A.!)
One project, southwest of downtown, has been put on hold because of concerns about the company. "We're still looking into it," said Douglas Guthrie, general manager of the Los Angeles Housing Department. (How much you wanna be that's all he ever keeps doing...LOOKING!)
Laura Chick, the former Los Angeles city controller and now state inspector general of federal stimulus funding, said she was appalled at the allegations." "It's not just potential misuse and abuse of significant amounts of public money," she said. "It's also messing with low-income housing that's so desperately needed." (As she did nothing as L.A. City Controller to address any of this type of abuse -- and will CONTINUE to do nothing but give quotes in the press saying how outraged she is. WHAT HAS SHE EVER DONE??? WHAT IMPROVEMENT HAS EVER ENSUED DUE TO HER ACTIONS AS A PAID OFFICIAL?)
Chick said she learned last week of the investigation (so I guess you didn't call for it), which involves an array of agencies, including the FBI. ADI had six projects that were slated to receive $10.7 million in stimulus funds, but none of that money has been released to the company, she said. (ONLY BECAUSE OF INEFFICIENCIES IN GETTING THE STIMULUS MONEY THROUGH THE PIPELINE. NOT CAUSE OF YOUR KNOWLEDGE OF THE PROBLEM!)
In court on Tuesday, Pasternak said his office had retained a company to physically examine several projects and had discovered construction defects and "substantial deferred maintenance." He said he will seek a structural analysis of at least one property to decide whether such analyses are warranted in other cases.
Some officials marveled that the potential fraud had come to light in the most mundane of civil proceedings. [See full article...ALL OF THIS came out into the light through a divorce hearing!)
"The divorce is the fuse that lit the bomb," Starbird said.
The document included allegations that the firm inflated its budget estimates for development projects to qualify for more tax credits, then submitted fraudulent invoices and doctored documents to cities. For instance, it cited a bill to the city of Glendale for $2.47 million for "framing" even though a subcontractor agreed to provide the service for $1.2 million.
It also found that the $80 million transferred to personal accounts was apparently not reported as income.
And it said the company may have made "improper gifts to public officials," who were not identified; extorted employees and subcontractors; and illegally reimbursed employees for political contributions.
ADI has made thousands of dollars in campaign contributions in Los Angeles. Employees of ADI have contributed at least $14,000 to candidates for office since 1999, including $3,500 to Mayor Antonio Villaraigosa, according to Ethics Commission records.
THIS IS AN EXCERPT OF FULL LA TIMES ARTICLE
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