A Chinese real estate developer’s Los Angeles-based company has been fined $4 million for providing over $1 million in benefits to a corrupt City Councilman. The company, Shen Zhen New World I LLC, was sentenced to five years of probation and the maximum penalty under the law for its involvement in bribing then-Los Angeles City Councilman José Huizar. The benefits provided included luxury trips, a sham loan, cash, casino gambling chips, stays at luxury hotels, expensive meals, spa services, political contributions, and even prostitution services. The developer intended to influence Huizar’s actions in favor of the company’s 77-story skyscraper project. This case sheds light on the significant costs of public corruption and highlights the consequences for those involved.
Background of the case
The case revolves around a bribery scheme involving the Chinese real estate company, Shen Zhen New World I LLC, and corrupt city councilman, José Huizar. The company purchased the L.A. Grand Hotel in downtown Los Angeles in 2010 and sought city approval to redevelop the property into a 77-story skyscraper. Huizar, who was the chairman of the Planning and Land Use Management Committee, played a crucial role in the approval process.
Charges against the company and individuals involved
Shen Zhen New World I LLC was found guilty of three counts of honest service wire fraud, four counts of interstate and foreign travel in aid of bribery, and one count of bribery. The owner of the company, Wei Huang, is also charged in the case but remains a fugitive believed to be in China. José Huizar pleaded guilty to one count of racketeering conspiracy and one count of tax evasion. Other individuals involved in the case face charges including RICO conspiracy, bribery, and honest services fraud.
Sentencing and fines
Shen Zhen New World I LLC was sentenced to five years of probation and fined $4 million, the maximum penalty under the law. José Huizar’s sentencing hearing is scheduled for September 25, and Huizar has agreed to seek a sentence of no less than nine years in prison.
The Corrupt City Councilman
Introduction of José Huizar
José Huizar, a former city councilman, played a pivotal role in the bribery scheme. He was the representative of the 14th City Council District and the chairman of the Planning and Land Use Management Committee, overseeing major development projects in Los Angeles.
Huizar’s role in the city council
As the chairman of the PLUM Committee, Huizar had the power to influence the approval process of development projects in the city. His position gave him significant control over the fate of projects, including the Shen Zhen New World I LLC’s proposed redevelopment of the L.A. Grand Hotel.
Huizar’s involvement in the bribery scheme
From February 2013 to November 2018, Huizar received various benefits from Shen Zhen New World I LLC, including cash, luxury trips, stays at high-end hotels and casinos, and expensive meals. The company also provided Huizar with funds to settle a sexual harassment lawsuit. In exchange for these benefits, Huizar was expected to use his position to advance the L.A. Grand Hotel redevelopment project.
Shen Zhen New World I LLC
Introduction of the Chinese real estate company
Shen Zhen New World I LLC is a Chinese real estate company that purchased the L.A. Grand Hotel in 2010. The company is owned by Wei Huang, a billionaire Chinese real estate developer.
Purchase of L.A. Grand Hotel
In 2010, Shen Zhen New World I LLC acquired the L.A. Grand Hotel in downtown Los Angeles. The hotel was located in the 14th City Council District, which José Huizar represented at the time of the purchase.
Application for redevelopment
In June 2018, Shen Zhen New World I LLC submitted an application to the Los Angeles City Planning Department for the redevelopment of the L.A. Grand Hotel. The proposed project aimed to transform the hotel into a 77-story mixed-use skyscraper, which would have been the tallest structure west of the Mississippi River.
Bribery and Benefits
Details of the benefits given to Huizar
Shen Zhen New World I LLC provided Huizar with various benefits, including cash, casino gambling chips, flights on private jets and commercial airlines, stays at luxury Las Vegas hotels and casinos, expensive meals, spa services, prostitution services, and political contributions. Additionally, the company provided Huizar with a $600,000 collateral to confidentially settle a sexual harassment lawsuit.
Intentions behind providing the benefits
The benefits given to Huizar were intended to influence him to take official actions that would benefit the L.A. Grand Hotel redevelopment project. Shen Zhen New World I LLC expected Huizar to present motions and resolutions in city committees, vote on the project in the PLUM Committee and City Council, expedite the approval process, exert pressure on other officials, and enhance the reputation and marketability of Wei Huang.
Impact on the L.A. Grand Hotel project
The bribery scheme had a significant impact on the L.A. Grand Hotel redevelopment project. Huizar’s corrupt actions compromised the integrity of the approval process and created an unfair advantage for Shen Zhen New World I LLC. The scheme undermined public trust in the development process and raised questions about the legitimacy of the project.
Other Defendants and Charges
Introduction of other individuals involved in the case
Aside from Shen Zhen New World I LLC and José Huizar, there are other individuals involved in the case. These include Dae Yong Lee, Raymond She Wah Chan, George Chiang, Justin Jangwoo Kim, George Esparza, Morris Roland Goldman, and Salvador Huizar.
Charges against them
The individuals face various charges related to corruption, including racketeering conspiracy, tax evasion, bribery, and honest services fraud. Each defendant’s involvement in the case has different circumstances and allegations.
Sentencing dates and outcomes
The sentencing hearings for the other defendants are scheduled separately. Huizar’s sentencing is set for September 25. The outcomes of the other defendants’ sentencing hearings are yet to be determined.
Investigation and Prosecution
Role of the FBI in investigating the case
The FBI played a crucial role in investigating the bribery scheme involving Shen Zhen New World I LLC and José Huizar. The investigation required extensive resources and efforts to uncover the corrupt activities and gather evidence against the defendants.
Prosecution team and their roles
The prosecution team consisted of Assistant United States Attorney Mack E. Jenkins, Chief of the Criminal Division, Assistant United States Attorneys Susan S. Har and J. Jamari Buxton of the Public Corruption and Civil Rights Section, and Assistant United States Attorney Patrick Castañeda of the International Narcotics, Money Laundering, and Racketeering Section. Each member of the team had specific responsibilities in presenting the case and representing the interests of the United States.
Evidence presented in the trial
During the 11-day trial, the prosecution presented evidence that showcased the corrupt actions of Shen Zhen New World I LLC and José Huizar. This evidence included financial records, witness testimonies, documentation of benefits provided to Huizar, and communications between the defendants.
Judge’s Remarks and Sentencing
Judge John F. Walter’s comments on the case
Judge John F. Walter, who presided over the case, made remarks highlighting the “crushing costs of public corruption.” He emphasized the detrimental impact of corruption on society and the importance of holding individuals and companies accountable for their actions.
Sentencing of Shen Zhen New World I LLC
Shen Zhen New World I LLC was sentenced to five years of probation for its involvement in the bribery scheme. The company was also fined $4 million, the maximum penalty allowed by law.
Maximum penalty imposed
The sentencing of Shen Zhen New World I LLC and the maximum penalty imposed sends a strong message about the consequences of public corruption. It serves as a deterrent for individuals and companies who may be tempted to engage in similar illegal activities in the future.
Impact of Public Corruption
Discussion on the costs of public corruption
Public corruption comes at a significant cost to society. It undermines the integrity of governmental institutions, erodes public trust, and diverts public resources away from their intended purposes. The case involving Shen Zhen New World I LLC and José Huizar exemplifies the high price that society pays when corruption goes unchecked.
Effects on the community and trust in government
The corrupt actions of individuals like Huizar and the companies involved have a profound impact on the community. They create a sense of disillusionment and cynicism among the public, eroding trust in government and its ability to serve the best interests of the people. Restoring that trust requires addressing corruption and holding accountable those who engage in such activities.
Efforts to combat corruption
The case serves as a reminder of the importance of ongoing efforts to combat corruption. It highlights the need for robust investigative agencies like the FBI, dedicated prosecutors, and a justice system that holds individuals and organizations accountable for their actions. Through enforcement, transparency, and ethical governance, steps can be taken to reduce the prevalence and impact of corruption in society.
Significance of the Case
Implications for Chinese real estate developers in LA
The case has implications for Chinese real estate developers operating in Los Angeles. It underscores the importance of conducting business in a lawful and ethical manner, reinforcing the message that bribery and corruption will not be tolerated. It may result in increased scrutiny and regulatory measures for Chinese real estate companies seeking to invest in the city.
Deterrence of corruption in city council
The prosecution and sentencing of José Huizar and Shen Zhen New World I LLC send a strong message of deterrence to other city council members and developers. It serves as a reminder that engaging in corrupt practices will have severe consequences, both personally and for the companies involved. The case reinforces the importance of upholding the integrity of public office and the fiduciary duty to act in the best interests of the community.
Lessons learned from the case
The case highlights several lessons that can be learned from the corrupt practices exposed. It emphasizes the need for transparency and accountability in government processes, including the approval and oversight of development projects. It also illustrates the importance of robust enforcement mechanisms and collaboration between law enforcement agencies to uncover and prosecute public corruption cases.
In conclusion, the case involving Shen Zhen New World I LLC and José Huizar serves as a stark reminder of the damaging effects of public corruption. The bribery scheme undermined the integrity of the development approval process and eroded public trust in government. The sentencing and fines imposed demonstrate the commitment to holding individuals and companies accountable for their actions. The case also highlights the importance of transparency, accountability, and ethical governance in combating corruption and fostering public trust.