LA Councilman Arrested in City Hall Corruption Probe

June 23, 2020 Updated: June 23, 2020

LOS ANGELES (CNS)—Los Angeles City Councilman Jose Huizar, the central figure in a five-year federal corruption probe targeting City Hall, was arrested June 23 at his Boyle Heights home for allegedly conspiring to accept roughly $1.5 million in bribes from developers trying to curry his favor.

Huizar, 51, made his initial federal court appearance on the afternoon of June 23 by videoconference from a downtown lockup before U.S. Magistrate Judge Paul L. Abrams, who ordered the councilman released on a $100,000 bond. He was not asked to enter a plea, but a July 20 arraignment and a July 14 preliminary hearing were both tentatively set.

According to the U.S. Attorney’s Office, Huizar was charged June 22 with a single count of conspiring to violate the Racketeer Influenced and Corrupt Organizations, or RICO, Act. The charge carries up to 20 years in federal prison.

U.S. Attorney Nick Hanna said the continuing probe has exposed “significant and blatant corruption” at Los Angeles’ landmark City Hall building.

“Unfortunately its [City Hall’s] grand exterior has concealed a cancer, a disease of elected officials and staff members breaking a series of laws in order to line their own pockets, maintain power, and keep open a spigot of illicit bribes and other benefits,” Hanna said. “All of this comes at the expense of the city’s 4 million residents, who simply want honest government, and law-abiding businesses who simply want a level playing field.

“The case lays out a sordid tale of how Mr. Huizar and his cronies sold themselves to the highest bidder, and in so doing, sold out the residents of this city,” he said.

Huizar’s attorney could not immediately be reached for comment.

Hours after his arrest, the Los Angeles City Council voted unanimously to immediately suspend Huizar, who has been on the council since 2005. According to the City Attorney’s Office, the council cannot unilaterally remove Huizar from office because he has not yet been convicted of a crime.

“While today’s announcement on the arrest of council member Huizar is not unexpected, the horrendous and disgusting allegations leveled against him and others have painted a dark cloud over our City government for a long time now,” said Council President Nury Martinez.

At the request of Martinez, Huizar had not been attending recent council meetings and agreed to limit his activities at City Hall, saying he did not want to be a “distraction” as the city dealt with the effects of the COVID-19 pandemic.

FBI Special Agent in Charge Voviette Morgan told reporters the investigation dated back to 2015, when Huizar was spotted cashing in a large amount of chips at a Las Vegas casino, allegedly provided to him by a developer. The origin of the investigation earned the probe the code name “Operation Casino Loyale.”

Morgan said Huizar was referred to by co-conspirators as the “boss” of a City Hall “family,” and he amassed so much power that a former deputy mayor suspected of helping originate the bribery scheme commented that if Huizar wouldn’t put a project on a meeting agenda, the development would never see the “light of day.”

Hanna said Huizar, as chairman of the council’s powerful Planning and Land Use Management (PLUM) Committee, “decided which projects lived, and which projects died.”

A 116-page court affidavit outlines wide-ranging allegations of bribery and favor-trading, including the exchange of large sums of cash in paper bags and liquor boxes, and hotel rooms provided to Huizar for sexual encounters with a mistress.

“In one scheme alone, a developer provided $500,000 in cash in brown paper bags,” Hanna said. “I can also tell that you that when Mr. Huizar’s residence was searched by the FBI in late 2018, the FBI found $129,000 in cash in a closet.”

Plea Agreements

Three weeks ago, the first of four defendants who have signed plea agreements with federal prosecutors formally entered a guilty plea in the ongoing “pay-to-play” public corruption probe. Justin Kim, a former City Hall fundraiser, pleaded guilty to a federal bribery charge for arranging a $500,000 bribe for Huizar.

Last month, former Huizar aide George Esparza agreed to plead guilty to one count of conspiring to violate the Racketeer Influenced and Corrupt Organization statute and has been cooperating in the years-long probe.

Also last month, real estate broker and development consultant George Chiang agreed to plead guilty to the same racketeering charge, admitting he was involved in a scheme in which a Chinese real estate company bribed a council member in exchange for help on a major development project. Details in that filing also made clear prosecutors were referring to Huizar.

In November 2018, federal agents served search warrants at Huizar’s City Hall and field offices, along with his home, as part of the investigation. Huizar was chairman of the PLUM Committee at the time.

The bribery scheme involving Kim began in 2016 when a labor group filed an appeal claiming a developer’s proposed residential high-rise project violated the California Environmental Quality Act. The developer contacted Kim in hopes of gaining Huizar’s support, court papers indicate.

According to the U.S. Attorney’s Office, the unnamed council member and developer negotiated a $500,000 payment, and in early 2017, the developer gave Kim $400,000 in cash inside a paper bag to deliver to the council member. Kim kept some cash for himself for acting as a go-between, then delivered the money to a staff member to pass along to Huizar, court papers indicate.

Prosecutors allege the developer later paid the other $100,000 when the appeal was resolved, but Kim kept the money for himself.

Court documents filed in connection with Esparza’s plea agreement contend that his elected-official boss received more than $1 million in payments and financial benefits from a Chinese developer looking to build a 77- story skyscraper in Huizar’s district.

Prosecutors allege in court papers that the developer took Esparza and Huizar on more than a dozen trips to Las Vegas between 2014 and 2017 and provided them with “flights on private jets, hotel rooms, spa services, meals, alcohol, prostitution/escort services and casino gambling chips.” The court papers allege the council member received a total of more than $200,000 in casino chips during the trips.

Prosecutors also contend the developer bankrolled a January 2016 trip to Australia with Esparza and the council member. The court papers cite text messages between Esparza and the council member following the Australia and Las Vegas trips, detailing efforts to cover up the payments and expenses they received from the developer.

Prosecutors also contend in the papers the developer—with Esparza’s knowledge—secured $600,000 in collateral so the council member could obtain a $570,000 bank loan to settle a sexual harassment lawsuit filed against the elected official in 2013 by a former employee.

Huizar was sued in 2013 for alleged sexual harassment by former aide Francine Godoy. The married Huizar later claimed the two had a consensual affair. The lawsuit was settled in 2014, but the terms were never disclosed.

A date has not yet been set for Esparza to enter his guilty plea. Chiang is expected to plead guilty on June 25.

Prosecutors contend that yet another Chinese developer looking to build a project in Huizar’s district bankrolled a trip to China for the councilman and his family, then later donated $100,000 to a political action committee on behalf of one of Huizar’s relatives seeking to replace him when he is termed out of office this year. The relative isn’t named in court papers, but Huizar’s wife, Richelle, was actively campaigning for the seat until she dropped out of the race following the FBI searches.

Federal authorities also contend that various other developers donated to political action committees in support of his wife’s campaign, in exchange for Huizar’s support of their projects. According to the U.S. Attorney’s office, one of those developers also conducted “opposition research” on two female staffers who had sued Huizar for sexual harassment. That developer later received approval to build a 35-story project in the Arts District with “minimal” affordable housing units and union labor requirements, saving the company an estimated $14 million, prosecutors said.

Prosecutors also contend that Huizar was receiving $10,000 monthly cash retainers from an unnamed businessman interested in facilitating various business opportunities.

That businessman also allegedly provided Huizar with $10,000 worth of hotel accommodations on 21 different occasions in early 2017, along with $18,000 in gifts including suits, shoes, and meals. The court papers state that Huizar would use the hotel rooms “for discreet encounters with a woman with whom he was having an affair.”

The criminal complaint also alleges that Huizar conspired with others involved in the scheme in an effort to get them to lie to federal prosecutors and the FBI during the probe.

The federal investigation has been a dark cloud over City Hall for the past two years. In March, former City Councilman Mitch Englander separately agreed to plead guilty to scheming to falsify facts in a probe of his acceptance of cash and other gifts from a businessman—the same one accused of bribing Huizar. He is expected to formally enter his plea on July 7.

“Our goal is to return the power to the people,” the FBI’s Morgan said, “and restore honest services to the city.”

 

By Fred Shuster