The L.A. Housing Department Get Busted for Corruption

by Tony Chavira

A disconcerting L.A. Times report:

The FBI is investigating an affordable-housing deal in which Los Angeles officials channeled $26 million to a developer who they knew was under criminal investigation for alleged misuse of public funds, city officials said Thursday.

The developer, David Rubin, was indicted last fall in New York for alleged bid-rigging and fraud, charges unconnected to the L.A. project.

The $26 million went toward construction of a 92-unit apartment building near downtown L.A. for disabled homeless seniors. It has sat empty since October while its prospective tenants live in shelters or substandard housing.

The city's Housing Authority, concerned about irregularities in the deal, has refused to release money that would pay the tenants' rent. Without that rental income, the developer could be forced into default. In turn, the city could be on the hook for millions of state and federal dollars that it helped arrange for the developer, City Controller Wendy Greuel said in an interview Thursday. [...]

The controversial deal came to light in an audit released by Greuel's office. FBI agents have requested notes and documents gathered during the audit, the controller's office said.The audit found that in 2008, Housing Department officials "blatantly disregarded information that ... one of the partners was under federal investigation."

Officials "then chose not to share this information with the city attorney or other stakeholders," Greuel said in a letter to Mayor Antonio Villaraigosa and other city leaders.

What the hell, Housing Department?!  Are you complete idiots who don't do any background research into any of the money you give away or are you trying to be connected to Rubin?!  When the city of L.A. is desperately trying to stay afloat and the Department of Water and Power are actually calling shots because they have the $20 million that can save the city (yup, compared to the $26 that's already gone into this affordable senior housing project--although the city'll probably need closer to $70 million from the DWP when all is said and done), potential corruption like this looks like serious bullshit.  I'm not typically for a comprehensive departmental gutting, but if there's even an inkling that Housing Department Officials knew what was going on here (or were involved), I think it would be apropos for just about everyone at their level to get taken down. 

A total shift of management to people who actually care about affordable housing might be the way to go for once. 

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