For Immediate Distribution
June 23, 2020
Nicola T. Hanna
United States Attorney
Central District of California
Director of Media Relations
Los Angeles City Councilman Jose Huizar Arrested on
Federal RICO Charge that Alleges He Agreed to
Accept At Least $1.5 Million in Illicit Benefits
Case Alleges the Politician Operated a ‘Pay-to-Play’ Scheme in Which Real Estate Developers Funneled Cash and Other Benefits to Secure Favorable Treatment
LOS ANGELES – Special agents with the FBI this morning arrested Jose Huizar, an elected member of the Los Angeles City Council, on a federal racketeering charge that alleges he led a criminal enterprise that used his powerful position at City Hall to solicit and accept lucrative bribes and other financial benefits to enrich himself and his close associates in exchange for Huizar taking official actions favorable to the developers and others who financed and facilitated the bribes.
Huizar, 51, of Boyle Heights, was taken into custody at his home without incident and is expected to make his initial appearance this afternoon in United States District Court in downtown Los Angeles.
Huizar was arrested pursuant to a federal criminal complaint filed on June 22 and unsealed this morning. The complaint charges Huizar with one count of conspiring to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act and alleges that, as part of the criminal enterprise, he and his associates violated a series of laws, including bribery, honest services fraud, extortion and money laundering.
“This case pulled back the curtain on rampant corruption at City Hall,” said United States Attorney Nick Hanna. “Councilman Huizar violated the public trust to a staggering degree, allegedly soliciting and accepting hundreds of thousands of dollars in bribes from multiple sources over many years. Using the power of his office to approve or stall large building projects, Huizar worked through a web of other corrupt city officials, lobbyists, consultants and developers to line his pockets and maintain his hold on Council District 14, which he turned into a money-making criminal enterprise that shaped the development landscape in Los Angeles.”
“Mr. Huizar was busy enjoying the fruits of his alleged corruption while his criminal enterprise sold the city to the highest bidder behind the backs of taxpayers,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “As we continue to investigate this case, we urge residents, business owners and city employees to come forward with information about bribery and illegal practices in government. The FBI relies on the cooperation of others to build cases that successfully root out corruption in order to restore integrity in public office.”
Huizar has represented Council District 14 (CD-14), which includes downtown Los Angeles and its surrounding communities, since 2005. In addition to representing an area that has experienced a commercial real estate boom in recent years, Huizar for several years was chair of the city’s influential Planning and Land Use Management Committee, a position he lost after the FBI executed search warrants at his city offices and personal residence in November 2018. During the search of Huizar’s home, agents seized approximately $129,000 cash that was stashed in his closet.
“The federal investigation has revealed that Huizar operated a pay-to-play scheme in the City, utilizing and commodifying the powerful Council seat of CD-14, whereby he solicited and accepted financial benefits from international (primarily Chinese) and domestic developers with projects in the City in exchange for favorable official actions,” according to the affidavit in support of the criminal complaint.
The 116-page affidavit alleges that Huizar operated the “CD-14 Enterprise,” along with co-conspirator members, including “Individual 1,” a former general manager of the Los Angeles Department of Building and Safety and former deputy mayor; George Esparza, Huizar’s former special assistant; and real estate development consultant George Chiang. Members and associates of the criminal enterprise referred to Huizar as their “boss,” operated as a criminal organization, and worked together for common purposes, the complaint alleges. The CD-14 Enterprise allegedly had several objectives, including 1) enriching its members and associates through means that included bribery, extortion, and honest services fraud, 2) advancing its political goals and maintaining its control and authority, 3) concealing the enterprise’s financial activities, and 4) protecting the enterprise by concealing its activities and shielding the enterprise from detection by law enforcement, the city, and the public.
The CD-14 Enterprise was created in early 2013 by Huizar and Individual 1 “at a time when each of them faced significant threats to their political and professional careers,” according to the affidavit. Individual 1, who maintained close relationships with Chinese developers, introduced Huizar to “Chairman E,” a Chinese billionaire who runs a multinational development firm and who owns a hotel in Huizar’s district.
In 2014, Individual 1 facilitated an arrangement whereby Chairman E 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. In addition, Huizar directly and indirectly accepted cash and casino gambling chips on more than a dozen lavish trips to Las Vegas – trips that included rides on private jets and stays at luxurious casino villas, one of which cost over $38,000 per night. The complaint also alleges Huizar accepted a trip to Australia and other benefits from Chairman E. In exchange, Chairman E asked for a series of favors from Huizar over time.
Ultimately, Chairman E provided over $800,000 in benefits to Huizar so that Huizar would assist Chairman E’s ambitious plans to redevelop his property in CD-14 and build the tallest building west of the Mississippi River, according to the affidavit.
In a second scheme, “Developer C” agreed to pay a $500,000 cash bribe to secure Huizar’s help in resolving a labor organization’s appeal of a major real estate development which, when resolved, would save the developer millions of dollars. After a middleman, Justin Jangwoo Kim, collected $500,000 cash from Developer C, Kim and Esparza decided to keep some of the money for themselves. Kim pleaded guilty on June 3 to bribery charges and admitted facilitating the bribe from Developer C.
A third major bribery scheme outlined in the affidavit involves “Company D,” another Chinese real estate firm that wanted to develop a large mixed-used project in CD-14. In exchange for Huizar’s support of the project, Company D agreed to hire Huizar “Associate 1” as a consultant to perform work – real estate reports that discussed development opportunities – that actually was completed by Chiang. The affidavit alleges that Company D also financed part of a Huizar family trip to China and agreed to contribute $100,000 to a political action committee that would benefit the campaign of Huizar’s close relative, who Huizar intended to replace him on the City Council after he was termed out in 2020.
Other developers made donations to two PACs that would benefit “Relative A-1’s” campaign in exchange for Huizar taking official action to support their projects, the complaint alleges. One series of donations was made by “Company M” and facilitated by “Executive M,” who allegedly furnished Huizar with opposition research against two female staffers who had sued Huizar for sexual harassment in 2018. With Huizar’s help, Company M was able to get final approval in the fall of 2018 to construct a 35-story project in the Arts District with “minimal” affordable housing units and union labor requirements that saved the company an estimated $14 million, the affidavit alleges. Company M later bragged to its employees that this was a “truly amazing” feat “in a wealthy opinionated hipster community,” according to the affidavit.
The complaint alleges a series of additional corrupt acts, including bribes to Huizar from “Businessperson A,” who wanted to develop business opportunities with Huizar’s help. Businessperson A allegedly provided Huizar a $10,000 monthly cash retainer, $10,000 worth of hotel accommodations on 21 separate occasions, and approximately $18,000 in lavish gifts that included suits, shoes and meals.
Huizar allegedly leveraged his official position to pressure developers to make donations to Relative A-1’s campaign to ensure Huizar’s continued influence in the city and to steer work towards companies linked to his associates, including the law firm that employed Relative A-1, regardless of any legitimate business need.
The complaint affidavit concludes by outlining Huizar’s concealment of illicit benefits, including by instructing his special assistant on how to avoid bank reporting requirements, using his family members to launder hundreds of thousands of dollars in bribes, making false statements on a bank loan application and failing to report his illicit benefits on tax returns and ethics disclosure forms. The complaint also alleges that Huizar engaged in obstructionist conduct, including attempting to influence other witnesses and lying to federal prosecutors and the FBI.
A criminal complaint 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 charge alleged in the complaint carries a statutory maximum sentence of 20 years in federal prison.
The cases against Huizar and his associates in the CD-14 Enterprise are being prosecuted by Assistant United States Attorney Mack E. Jenkins, Chief of the Public Corruption and Civil Rights Section, and Assistant United States Attorneys Veronica Dragalin and Melissa Mills, also of the Public Corruption and Civil Rights Section.
Huizar is the fifth person to be charged in the ongoing corruption investigation being conducted by the FBI and U.S. Attorney’s Office. The other four defendants have agreed to plead guilty.
Chiang is scheduled to plead guilty on June 26 before United States District Judge John F. Walter.
The court has yet to schedule a hearing for Esparza to plead guilty.
Kim is scheduled to be sentenced by Judge Walter on August 17.
Former Los Angeles City Councilman Mitchell Englander is scheduled to plead guilty on July 7 to charges of scheming to falsify material facts related to trips he took to Las Vegas and Palm Springs that were funded by Businessperson A.
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@example.com or to contact the FBI’s Los Angeles Field Office at (310) 477-6565.
NOTE: A copy of the complaint can be found above the dateline on the online version of the press release here.