A receiver for a defunct affordable housing developer under investigation by federal authorities has agreed to pay $165,000 for alleged fraudulent campaign donations made to a host of former and current city officials, it was announced late last week.
The Ethics Commission charged the owners of a housing development company, Ajit Mithaiwala and Salim Karimi, with 33 counts of making contributions under assumed names to candidates including Mayor Antonio Villaraigosa, former Mayor James Hahn, Councilmen Tony Cardenas, Eric Garcetti, Jose Huizar, Ed Reyes and Dennis Zine.
The executives of Advanced Development and Investment and Pacific Housing Diversified, which are in receivership, are accused of funneling $23,850 to the candidates. Mithaiwala and Karimi held political fundraisers at ADI’s offices and Karimi’s home. Employees and family members were asked to donate to campaigns and were then reimbursed for the contributions with cash and checks. The alleged fraud took place between 1999 and 2009.
“This type of violation is considered to be one of the most serious transgressions that the commission enforces against” in order to avoid corruption in decision making, Ethics Commission staff wrote in a report to the Board of Ethics Commissioners.
Court-appointed receiver David Pasternak said Mithaiwala and Karimi were believed to be in India, but their current whereabouts are unknown. Pasternak is managing the men’s receivership estate, which includes $30 million, a Bentley and two BMWs.
Over the last two decades, Advanced Development and Investment was involved in building 16 affordable housing projects in Los Angeles that received about $32 million from the city, the Los Angeles Times reported in October 2010.
Federal authorities are investigating the company’s executives for alleged tax evasion and fraud. The cities of Glendale and Los Angeles also filed civil suits against the developers.
Villaraigosa received $7,500 from the companies, employees or relatives of Mithaiwala and Karimi between 2001 and 2006. Villaraigosa spokesman Peter Sanders declined to comment on the settlement. Cardenas received $3,500, Garcetti, $500, Huizar, $1,500, Reyes $1,500 and Zine, $500.
Ethics Commission staff recommended the maximum penalty of $5,000 per count. As part of the agreement, the two companies neither admit nor deny the alleged campaign fraud.
Pasternak said the estate will pay outstanding tax debt before paying for the ethics violations.
“At some point in the future there will likely be payment,” Pasternak said. “It may or may not be for the full amount.”
The terms of the settlement will go before the Ethics Commission’s board on Thursday for approval. If the four members on the five-member board — one seat remains vacant — disapprove the agreement, a full hearing will be scheduled, and the terms of the settlement would be void.