The Justice Department’s wide-ranging six-year federal investigation of a pay-to-play scheme run out of the office of former Los Angeles Councilman Jose Huizar won its first conviction in court on Monday.
Bel Air commercial real estate developer Dae Yong “David” Lee, 57, and a holding company he controlled were found guilty of three felonies: one count of honest services wire fraud, one count of bribery, and one count of falsification of records in federal investigations.
After a nine-day trial in U.S. District Court downtown, a jury found Lee guilty of paying Huizar a cash bribe in the amount of a half million-dollars to resolve a labor dispute that had threatened to thwart a high-rise condo development Lee had planned to build near DTLA’s Ace Hotel.
Feds say Lee later cooked the books, altering accounting and tax records to make the $500,000 bribe appear as a legitimate business expenditure to resolve a labor group’s appeal. U.S. District Judge John F. Walter scheduled a September 19 sentencing hearing where Lee will face a statutory maximum sentence of up to 50 years in prison and a maximum fine of $1.5 million.
Councilman Huizar was at the time the chairman of PLUM, the city’s Planning and Land Use Management Committee, at the time. That agency held sway over approval of many of the city’s most significant commercial and residential developments.
Two former Huizar associates have admitted to being part of the bribery scheme. Special assistant George Esparza pleaded guilty in July 2020 to one count of racketeering conspiracy. Fundraiser Justin Kim pleaded guilty in June 2020 to a federal bribery offense. The feds say both men are cooperating with the investigation and are scheduled to be sentenced in September.
Kim, a Los Angeles real estate appraiser who once served a stint on the city planning commission board, has admitted to shuttling hundreds of thousands of dollars in bribe money from the developer to Esparza. Esparza has admitted to stuffing $200,000 of the cash into a liquor box that he dropped off at his boss’s Boyle Heights residence in March 2017—the same month the appeal filed by the labor group was withdrawn.
The 33-year-old Esparza grew up in Huizar’s neighborhood. He started off as the councilman’s chauffeur and soon became his most trusted aide. He managed the Huizar family Christmas card list, met with developers seeking to do business in the district, and accompanied his boss on more than a dozen trips to casinos in Las Vegas and Australia between March 2013 and November 2018.
Defense attorney Ariel Neuman was unable to convince the jury that his client Lee had been duped by Kim into believing that the $500k was needed to pay legitimate fees to resolve the labor dispute.
“He thought he was paying a consulting fee,” Neuman told City News Service.
Meanwhile, Huizar and former Los Angeles Deputy Mayor Raymond Chan are scheduled to go to trial on federal racketeering conspiracy, bribery, honest services fraud and other charges on February 21, 2023. Attorneys for Huizar have said the councilman denies wrongdoing and characterized him as “an evangelist for robust development” in the downtown and East Side council district he represented from 2005 until 2020.
Prosecutors will argue Huizar, the alleged mastermind of the pay-to-play scheme, agreed to accept at least $1.5 million in bribes, amid dozens of additional federal criminal charges.
As Los Angeles reported two years ago, the councilman was equally popular with Chinese developers who were building skyscrapers downtown. In 2009, after the Chinese government loosened restrictions on outside investments, mainland Chinese real estate speculators lined up to put their stamp on the L.A. skyline, pumping billions of dollars into landmark projects to revitalize the city’s urban core.
For at least six years, federal investigators have been closely monitoring Huizar’s financial dealings with some of the wealthiest real estate developers in China. Since 2014, the feds believe that the councilman has received more than a million dollars in bribes from Chinese investors for his assistance in the approval of large-scale high-rise projects poised to extravagantly reshape the L.A. skyline. The alleged bribes have taken the form of cash, political contributions, concert and sports tickets, flights on private jets, stays at luxurious hotels, casino gambling chips, expensive meals, and spa services.
Authorities are gearing up for the next trial in this case on October 18. Chinese billionaire Wei Huang and his Chinese real estate development entity Shen Zhen New World are charged in connection with a quid pro quo in which they allegedly funneled $600,000 to help the councilman resolve a sexual harassment lawsuit in exchange for the councilman’s help gaining city approval to build a 77-story skyscraper in Huizar’s district.
Huang remains a fugitive, and is believed to be on the lam in China.
The feds’ interest in the councilman was sparked in 2016, when a Huizar assistant was caught converting thousands of Australian dollars to American dollars while evading bank reporting requirements during a lavish trip to a casino in the Land Down Under.
Federal agents raided Huizar’s home and offices in 2018, carting off stacks of paperwork. Soon after, his wife, Richelle Huizar, suspended her campaign to succeed her husband as the elected representative of his district. A year later, Huizar was stripped of his committee assignments. But the Los Angeles City Council did not suspend Councilman Huizar, until hours after his arrest on a federal racketeering charge on June 23, 2020.
Huizar is currently free on bond while awaiting trial.
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