'Indirect bribes' fueled corruption at City Hall, feds say

May 2, 2021 5:30 AM PT

When the U.S. attorney’s corruption case targeting Los Angeles City Hall first broke into view, much of the public’s attention focused on vivid descriptions of cash bribes, escort services and lavish trips to Las Vegas.

But as the investigation has unspooled over the past year, federal prosecutors have laid out another, less sensational set of allegations: that a deputy mayor-turned-real estate consultant worked to arrange “indirect bribes” for city officials by routing the money through those officials’ family members.

Prosecutors brought an indictment alleging that former Deputy Mayor Raymond Chan, while working for downtown developers, set up a job for the family member of a city commissioner; had his company hire a relative of a City Council aide; and proposed a fake consulting contract with another city staffer’s mother.

Such job offers, even modest ones, were a way of greasing the wheels of the city bureaucracy, prosecutors allege.

Experts say indirect bribes can be more difficult to uncover than a typical quid pro quo in which someone gives money directly to a government official. Prosecutors also may face greater difficulties in court in proving that such circuitous financial arrangements violate the law, said former federal prosecutor Brian T. Kelly.

“A jury can easily understand that the politician is corrupt if he’s putting cash in his pocket,” said Kelly, who is now a defense lawyer with Nixon Peabody LLP and is not connected to the case. “Sometimes it’s more difficult for the jury to understand that the politician is getting a benefit if the money is going to some company that a family member is connected to.”

A lawyer for Chan says his client is innocent and that he intends to prove it at trial.

In the City Hall corruption case, the indirect bribes were allegedly offered to figures who were lesser known than Chan or Councilman Jose Huizar, both of whom have pleaded not guilty to bribery, racketeering and other charges. One was a political appointee of Mayor Eric Garcetti. Another was an aide to Huizar. A third worked for a council member whose identity remains secret.

Chan, who was working for downtown developers, believed those three officials could help clear the way for his clients’ projects at City Hall, according to the federal indictment.

The indirect bribe schemes described in the federal indictment are far from straightforward. In one example, prosecutors accuse Chan of directing a businessman who sold high-end cabinets to hire a relative of Joel Jacinto, one of Garcetti’s appointees on the Board of Public Works, according to the indictment and city records.

That businessman had been looking to get his products into downtown high-rises, prosecutors said. Federal investigators have not publicly named the businessman, saying he had been cooperating with the FBI. However, The Times identified him last year as Andy Wang, based on statements made by prosecutors in court.

Chan had been working as a real estate consultant on a plan to demolish the Luxe City Center in downtown Los Angeles and replace it with new hotel and residential towers. He viewed Jacinto as someone with influence over that project at City Hall, according to details in the indictment.

Jacinto worked closely with the city’s Bureau of Engineering, which issues certain construction permits to real estate developers. While his relative worked for Wang, Jacinto received requests from Chan and his business partners to step in and help the Luxe with the city’s permitting process, according to the indictment.

Jacinto, who quit the public works board in 2019, also is not named in the indictment. However, emails sent to and from Jacinto show that he is the city commissioner mentioned by prosecutors. Those emails, obtained by The Times through a public records request, feature the same dates and wording as emails mentioned in the indictment.

Neither Jacinto nor his lawyer responded to inquiries from The Times. Wang could not be reached for comment. Neither has been arrested or publicly charged.

‘He got zero’

The charges against Chan, a Monterey Park resident, are part of the larger case against Huizar, who stepped down last year. Prosecutors have accused Chan and Huizar of orchestrating a pay-to-play scheme in which financial benefits were traded for “official acts” to help real estate projects.

Harland Braun, Chan’s attorney, argued that prosecutors are wrongly portraying Chan’s ordinary business activities as federal crimes. Chan recommended people for various jobs while working as a consultant, Braun said. However, those activities do not come close to the definition of a bribe under federal law, he said.

Prosecutors’ case against Chan will fall apart, Braun said, because they lack evidence of a quid pro quo.

“They have my client on tape. They’ve got all his business records. They know whether he got anything, and he got zero,” he said.

Financial benefits for family members are a familiar phenomenon in corruption cases, said John P. Pelissero, senior scholar in government at the Markkula Center for Applied Ethics at Santa Clara University. Even if the money does not go directly to the public official, those payments can constitute a misuse of that official’s position, he said.

Because indirect bribes are “a step removed” from an official, defense attorneys may be able to present a wider range of explanations for why someone was paid, said Jennifer Williams, a former federal prosecutor who is now a partner at Summa LLP.

If a bribe doesn’t go directly to a public official, Williams said, “the question becomes, ‘How could this be intended to influence an official act?’”

‘Brothers’ at City Hall

Jacinto was picked by Garcetti to serve on the public works board in 2015. He communicated regularly with Chan while Chan was running the Department of Building and Safety and later when Chan was serving as Garcetti’s deputy mayor over business development. The two were friendly, calling each other “brother” and cracking jokes in emails.

In April 2018, Chan told Wang, the businessman who sold home furnishing products to real estate developers, that Jacinto needed money, according to the indictment and other public records. He explained to Wang, then working secretly with the FBI, that Jacinto would be able to help Wang and Chan with their businesses, according to details in the indictment.

Chan said the more money Wang could provide to Jacinto’s relative, “the better,” prosecutors allege.

Between June 2018 and November 2018, Wang paid that relative more than $16,000 in consulting fees, according to the indictment. Prosecutors have not identified the relative. However, an email obtained by The Times through a public records request indicates that Jacinto’s wife, Ave Jacinto, worked in 2018 for a company headed by Wang.

While those payments were being made, Chan and a business partner asked Jacinto to keep helping them with the Luxe, prosecutors said.

Jia Yuan, the company developing the Luxe, agreed last year to pay a penalty of over $1 million in the federal probe. Although the company admitted lavishing gifts on Huizar, it did not mention the indirect bribe allegations involving Chan.

Ave Jacinto, reached at her home, confirmed she had worked at one of Wang’s companies but declined to comment further.

‘Nothing wrong or illegal’

Prosecutors said Chan also sought to arrange consulting fees for an aide to Huizar, who represented a wide swath of downtown Los Angeles. Chan told Wang that the staffer could help them, since he saw “more projects than anybody,” according to information in the indictment.

At one point, prosecutors allege, Chan proposed sending money through a fake consulting contract set up with the Huizar aide’s mother. Months later, Chan suggested that Wang route payment through a company belonging to the Huizar aide’s brother.

Jose Huizar walks next to two people outside the courthouse

Chan met with the aide, identified in the indictment as “City Staffer A-2,” in Pasadena to discuss that idea, prosecutors said. Under Chan’s proposal, Wang would pay the aide to provide him with introductions to real estate developers, according to information in the indictment.

Prosecutors have not named the aide. However, a city official later identified the staffer as Shawn Kuk, Huizar’s longtime deputy for planning and development issues, according to correspondence obtained by The Times through a public records request.

Huizar was succeeded in October by Councilman Kevin de León, who retained Kuk on a short-term basis. After Chan was charged, The Times contacted de León’s office to ask if Kuk was City Staffer A-2.

Hours later, de León chief of staff Jennifer Barraza posed that question to Kuk, according to an email she wrote describing her phone conversation. Kuk responded by saying that City Staffer A-2 “did nothing wrong or illegal and that he has spent thousands of dollars on attorneys to try to clear his name,” Barraza wrote.

“He then told me that he was in fact staffer A-2 and he believes he did nothing wrong,” Barraza wrote to a city personnel official.

Kuk was put on paid administrative leave later that day and left his job permanently on Dec. 13. His attorney, Pio Kim, said the indictment does not allege that Kuk or his family members received any payments.

That “should tell any reader of the indictment my client was not involved in any wrongdoing,” the attorney said in an email.

Kim declined to say whether Kuk is City Staffer A-2, saying it would be inappropriate since he is helping prosecutors.

A mystery aide

Federal authorities say Chan targeted yet another political aide, working to arrange consulting work for that aide’s relative. For now, the specifics are shrouded in mystery.

As a private consultant, prosecutors said, Chan talked with the aide — named in the indictment as “City Staffer D” — about plans to redevelop the Luxe. The staffer worked for a politician identified in the indictment as “Councilmember D,” an elected official viewed by Chan as having influence over the Luxe project.

In 2017, the Luxe project was headed to the planning commission for a vote. Chan asked City Staffer D to contact Garcetti’s office about applying pressure on commissioners to approve the project, prosecutors said.

Five days later, according to the indictment, Chan met with an unnamed relative of the aide to discuss a consulting agreement. By the end of the month, Chan’s company had offered that relative a four-month consulting deal, the indictment said.

The relative received $2,000 from the firm over a three-month period, prosecutors allege.

In addition to the indirect bribe allegations, prosecutors have accused Chan of accepting tens of thousands of dollars from a real estate consultant in exchange for “official acts” he performed for the Luxe project while he was deputy mayor.

Braun, his attorney, said that money was a signing bonus with a private company.

“He didn’t get paid for anything he did as deputy mayor,” the lawyer said. “It’s ridiculous. Let them prove it.”