A receiver for a defunct affordable housing developer under investigation by federal authorities has agreed to pay $165,000 for alleged fraudulent campaign donations made to a host of former and current city officials, it was announced last Friday.
The Ethics Commission charged the owners the housing development
company, Ajit Mithaiwala and Salim Karimi, with 33 counts of making
contributions under assumed names to candidates including Mayor Antonio
Villaraigosa, former Mayor James Hahn and Councilmen Tony Cardenas, Eric
Garcetti, José Huizar, Ed Reyes and Dennis Zine.
The executives of Advanced Development and Investment and Pacific
Housing Diversified, which are in receivership, are accused of funneling
$23,850 to the candidates. Mithaiwala and Karimi held political fundraisers at
ADI's offices and Karimi's home. Employees and family members were asked to
donate to campaigns and were then reimbursed for the contributions with cash
and checks. The alleged fraud took place between 1999 and 2009.
"This type of violation is considered to be one of the most serious
transgressions that the commission enforces against'' in order to avoid
corruption in decision making, Ethics Commission staff wrote in a report to the
Board of Ethics Commissioners.
Court-appointed receiver David Pasternak said Mithaiwala and Karimi were
believed to be in India, but their current whereabouts are unknown. Pasternak
is managing the men's receivership estate, which includes $30 million, a
Bentley and two BMWs.
Over the last two decades, Advanced Development and Investment was
involved in building 16 affordable housing projects in Los Angeles that
received about $32 million from the city, the Los Angeles Times reported in
Federal authorities are investigating the company's executives for
alleged tax evasion and fraud. The cities of Glendale and Los Angeles also
filed civil suits against the developers.
Villaraigosa received $7,500 from the companies, employees or relatives
of Mithaiwala and Karimi between 2001 and 2006. Villaraigosa spokesman Peter
Sanders declined to comment on the settlement. Cardenas received $3,500,
Garcetti, $500, Huizar, $1,500, Reyes $1,500 and Zine, $500.
Ethics Commission staff recommended the maximum penalty of $5,000 per
count. As part of the agreement, the two companies neither admit nor deny the
alleged campaign fraud.
According to a SCPR.org report on Monday, Huizar could face a $10,500 fine from the city's Ethics Commission for accepting the donations, as well as failing to send to the Ethics Commission an e-mail that was sent to thousands of campaign supporters.
Commissioners will vote on Thursday to officially impose the fine. Huizar has already released a statement saying he would pay the fine, according to SCPR.
Pasternak said the estate will pay outstanding tax debt before paying
for the ethics violations.
"At some point in the future there will likely be payment,'' Pasternak
said. "It may or may not be for the full amount.''
The terms of the settlement will go before the Ethics Commission's board
on Thursday for approval. If the four members on the five-member board—one
seat remains vacant—disapprove the agreement, a full hearing will be
scheduled, and the terms of the settlement would be void.