In a superseding indictment unsealed Nov. 30 that adds new details to the criminal case alleging a widespread corruption scheme led by former Los Angeles City Councilmember Jose Huizar, a federal grand jury has added five defendants, including former Los Angeles Deputy Mayor Raymond Chan, to the racketeering case that accuses Huizar and his close associates of illegally obtaining financial benefits from developers who, in exchange, sought favorable treatment on pending real estate development projects.
After being arrested in June pursuant to a criminal complaint, Huizar, 52, of Boyle Heights was charged in July in a 34-count indictment that alleged a conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act in which Huizar agreed to accept at least $1.5 million in illicit financial benefits.
That racketeering charge alleged 402 overt acts that Huizar and his co-conspirators committed to further their criminal enterprise, including bribery, honest services fraud, and money laundering. The 41-count superseding indictment unsealed Monday adds 50 overt acts to the RICO conspiracy count.
The racketeering charge now also charges Chan, who formerly was the general manager of the Los Angeles Department of Building and Safety and, more recently, was the city’s deputy mayor of economic development.
The five new defendants in the superseding indictment are:
? Raymond She Wah Chan, also known as She Wah Kwong, 64, of Monterey Park, identified in previous court filings as “Individual 1,” who is charged with RICO conspiracy, bribery, honest services fraud and lying to federal agents;
? Wei Huang, 55, a resident of Shenzhen, China, who also maintains a residence in San Marino, previously identified in court documents as “Chairman E,” who is the billionaire chairman and president of a global development company headquartered in China, and who faces charges of bribery, honest services fraud and Travel Act violations;
? Shen Zhen New World I, LLC, one of Huang’s U.S.-based companies, which acquired the L.A. Grand Hotel Downtown in 2011 for $90 million and planned to redevelop it into a 77-story tower, and which is named in the same counts as Huang;
? Dae Yong Lee, also known as David Lee, 56, of Bel Air, identified in prior court filings as “Developer C,” who is a developer with multiple properties in Los Angeles, and who is charged with bribery, honest services fraud and obstruction; and
? 940 Hill, LLC, a Lee-owned company that purchased a South Hill Street property in downtown Los Angeles in 2008 for $9 million and planned to redevelop it into a mixed-use development, and which is named in the same counts as Lee.
In addition to the RICO conspiracy charge, the indictment charges 14 counts of honest services wire fraud, two counts of honest services mail fraud, four counts of traveling interstate in aid of racketeering, nine counts of bribery, five counts of money laundering, one count of structuring cash deposits to conceal bribes, one count of making a false statement to a financial institution, one count of alteration of records in a federal investigation, two counts of making false statements to federal law enforcement, and one count of tax evasion.
Each of the defendants is charged in various counts. Huizar, for example, is charged in 34 of the 41 counts.
“The scope of corruption outlined in this indictment is staggering,” said U.S. Attorney Nick Hanna. “As the indictment alleges, Huizar, Chan and their network of associates repeatedly violated the public trust by soliciting and accepting numerous cash bribes and other financial benefits, turning Huizar’s City Council seat into a money-making criminal enterprise. Powerful developers, operating through well-connected lobbyists, eagerly participated in the schemes to get preferential treatment for their downtown projects.
“This detailed indictment, which lays bare these backroom deals, should prompt a serious discussion as to whether significant reforms are warranted in Los Angeles city government.”
“The charges announced today allege wholesale corruption and outline the way in which Huizar and Chan brokered their powerful positions to gain personally, politically and financially by selling to the highest bidders in a stunning betrayal of the Angelenos they swore an oath to serve,” said Kristi K. Johnson, the assistant director in charge of the FBI’s Los Angeles Field Office. “I’m proud of the investigators and prosecutors who investigated this case and methodically uncovered – then dismantled – abject corruption in one of America’s largest cities, with the shared goal of restoring trust in city government.”
The indictment alleges that Huizar and Chan operated the “CD-14 Enterprise,” named for City Council District 14, which Huizar represented from 2005 until this year. Other members of the conspiracy were George Esparza, Huizar’s former special assistant, and real estate development consultant George Chiang, each of whom pleaded guilty earlier this year to participating in the RICO conspiracy.
The indictment adds overt acts to the RICO conspiracy alleging that CD-14 Enterprise members illegally solicited political contributions by foreign nationals to help maintain the enterprise’s political power.
Among the numerous other corruption allegations, the indictment charges that Huizar illegally accepted more than $800,000 in benefits from Huang, mainly during luxury-laden gambling trips.
In addition, at Huizar’s and Chan’s request, and after Huizar had helped save Chan’s city position by helping to prevent a planned merger that would have eliminated Chan’s department, Huang also provided $600,000 in collateral to fund a settlement of a sexual harassment lawsuit filed against Huizar by a former CD-14 staffer, allegations that threatened his 2015 re-election campaign, according to the indictment.
At the time he provided these benefits, Huang was planning to redevelop the L.A. Grand Hotel into the tallest tower west of the Mississippi, which would require city approvals and Huizar’s help. When Chan was later interviewed by FBI agents about the lawsuit settlement, he allegedly lied about his participation in this secret payment arrangement and about his knowledge of Huang’s “asks” of Huizar.
Chan is also charged with multiple counts of bribery and honest services fraud for agreeing to accept, while he was deputy mayor, more than $100,000 from Chiang for official acts to benefit a project by Chinese developer Shenzhen Hazens.
Additionally, Chan is charged with facilitating a bribe agreement in which a Hazens domestic subsidiary, Jia Yuan USA Co., Inc., would make a $100,000 campaign contribution to a Huizar relative running for the CD-14 seat in exchange for Huizar’s votes to approve the project.
Last month, Jia Yuan, which was seeking to redevelop the Los Angeles Luxe City Center Hotel, paid $1,050,000 to resolve the government’s investigation into its conduct related to this case, which included bribery and illegal campaign contributions. Jia Yuan entered into a non-prosecution agreement, agreed to cooperate with the government’s investigation, and admitted to providing benefits to Huizar and his associates before Huizar voted to approve the Luxe Hotel project when the matter came before the city’s Planning and Land Use Management Committee, which Huizar chaired, and the City Council.
The indictment further alleges that Lee provided $500,000 in cash for Huizar and Esparza in exchange for Huizar’s help in resolving a labor organization appeal on the 940 Hill development project. Court documents allege that Lee provided bags of cash to Justin Jangwoo Kim, a Huizar fundraiser, to deliver to Huizar and Esparza. Kim admitted to facilitating the bribe from Lee and pleaded guilty to a federal bribery offense. Lee and 940 Hill are also charged with falsifying accounting and tax records to cover up the bribe.
Huizar pleaded not guilty in August to the charges in the initial indictment. He is expected to be arraigned on the superseding indictment on Dec. 7.
Chan and Lee have been directed to surrender to federal authorities, and were expected to be arraigned on the superseding indictment Tuesday afternoon in U.S. District Court in downtown Los Angeles.
940 Hill has been issued a summons to appear in U.S. District Court on Tuesday. Shen Zhen New World I has been issued a summons to appear Dec. 7. Huang and his counsel have been notified that Huang has been named in the superseding indictment and that the U.S. government has issued a warrant for his arrest.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The RICO conspiracy, honest services fraud, obstruction, and money laundering charges each carry a statutory maximum sentence of 20 years in federal prison. The charge of making false statements to a financial institution has a statutory maximum sentence of 30 years in prison. The bribery charges each carry a statutory maximum sentence of 10 years in federal prison. The charges of tax evasion, structuring, making false statements to law enforcement, and interstate travel in aid of racketeering have five-year maximum prison sentences.
Huizar is currently scheduled to go on trial on June 22.
With the charges against Chan, Huang and Lee, a total of nine individuals have been charged as a result of Operation “Casino Loyale,” the ongoing corruption investigation into Los Angeles City Hall being conducted by the FBI and the U.S. Attorney’s Office. Shen Zhen New World I and 940 Hill are the first corporate entities to be formally charged.
In addition to Esparza, Chiang and Kim, Morris Goldman, a longtime City Hall lobbyist, pleaded guilty to participating in a bribery scheme in which a developer agreed to make political donations in exchange for Huizar’s support of a project in the city’s Arts District. Goldman is scheduled to be sentenced on Aug. 23. Esparza is scheduled to be sentenced on Feb. 8, and sentencing hearings for Chiang and Kim are scheduled for Feb. 22.
Former Los Angeles City Councilmember Mitchell Englander pleaded guilty in July to charges of scheming to falsify material facts related to trips he took to Las Vegas and Palm Springs, during which he accepted cash and other benefits from a businessperson. Englander’s sentencing hearing is scheduled for Jan. 25.
The cases against Huizar, Chan and their associates in the CD-14 Enterprise are being prosecuted by Assistant U.S. Attorney Mack E. Jenkins, chief of the Public Corruption and Civil Rights Section, and Assistant U.S. Attorneys Veronica Dragalin and Melissa Mills, also of the Public Corruption and Civil Rights Section.
Any member of the public who has information related to this or any other public corruption matter in the City of Los Angeles is encouraged to send information to the FBI’s email tip line at [email protected] or to contact the FBI’s Los Angeles Field Office at (310) 477-6565.