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Lawyer Alleges City Atty. Donor Deal

A contributor says in a letter that a top deputy offered to waive about $696,500 on a loan. A spokesman for Delgadillo denies claim.

November 24, 2005|Patrick McGreevy | Times Staff Writer

A lawyer who is a political donor to Los Angeles City Atty. Rocky Delgadillo contends in a recent letter that one of Delgadillo's top deputies offered to waive about $696,500 that the donor's client owes on a city loan.

Lance Robbins, who has been repeatedly accused by the city of operating slum buildings, wrote the letter to Delgadillo's deputy to acknowledge the offer.

A Delgadillo representative on Wednesday flatly denied that any settlement offer was made. And, hours after The Times inquired about the issue, city officials announced that the city attorney's office went to court to file a foreclosure action on the loan for the Lido apartments in Hollywood.

"This office made no settlement offer, and the city has been sued by borrower," said Jonathan Diamond, a spokesman for Delgadillo.

The city once described Robbins in a lawsuit as "one of Los Angeles' most notorious landlords." Between 1984 and 2000, the city filed 54 criminal and civil charges against him for 17 buildings that allegedly had serious health and safety violations -- the most actions against any landlord in the 25-year history of the city's Slum Housing Task Force.

Delgadillo has accepted $16,600 in political contributions from Robbins, his businesses, partners, relatives and associates to pay for campaigns and political expenses.

The Times reported in October that Delgadillo settled a city lawsuit against Robbins in 2002 for $1 million, even though the city originally said it was owed $3 million for delinquent utility bills.

Delgadillo denied that the 2002 settlement was a favor to a political supporter.

Robbins has a financial interest in the Lido, a 100-unit apartment building at 6500 Yucca St. He also serves as an attorney for principal owner Santa Rosa Marathon Corp. and the firm's president, Craig Dennis.

Dennis was notified by the city Housing Department on Sept. 7 that his firm was in default on $1.8 million in principal and $1.7 million in interest from three loans made to fix up the apartment building.

The five-story building, originally a hotel in the 1920s, is a Hollywood landmark. Its lobby was pictured on the Eagles' album "Hotel California."

The loans were made by the city Housing Department in exchange for a promise by Santa Rosa Marathon Corp. to provide apartments for tenants with low and moderate incomes.

The payment was due Sept. 1, according to the letter from Lynn Hansen, assistant general manager of the Housing Department.

In a Sept. 12 letter to Supervising City Atty. Peter Gutierrez that was obtained by The Times through the California Public Records Act, Robbins outlined a settlement offer he said Gutierrez made.

"Craig appreciates the offer you made of the city offering to accept 60% of the accrued interest, but finds it unacceptable," Robbins wrote.

Robbins countered by proposing to have Dennis pay the principal owed on the loans and to put $1 million in an escrow account subject to arbitration.

On Sept. 15, Deputy City Atty. Suzanne Spillane wrote back to Robbins, saying the Housing Department was rejecting his offer.

Diamond did not respond to questions seeking elaboration on his statement that the city attorney's office did not make a settlement offer.

However, Thomas A. Nitti, another attorney for Dennis, insisted Wednesday that the city attorney's office did make the offer to waive 40% of the interest the city says it is owed on the loans.

"My client stands by the letter," Nitti said. On behalf of Dennis, Nitti recently filed a lawsuit maintaining that the city has no right to interest on the loans because the loan agreements require only the principal to be paid if the loans are paid on time.

Diamond asserted in an e-mail that no settlement was offered.

"Staff attorneys at the city attorney's office are discussing all options with our client to aggressively enforce the covenants in the loan agreement and act in the best interests of the city, up to and including litigation," he wrote.

Two hours later, the Housing Department announced that the city attorney's office had filed for foreclosure on the property, seeking all $3,565,335 in principal and interest.

The foreclosure lawsuit names Robbins, Santa Rosa Marathon Corp. and Brick Investment Corp., a firm headed by Robbins' partner Stanley Treitel.

Brick Investment gave a $5,600 campaign contribution to Delgadillo's campaign for attorney general in April.

Other documents released by the city attorney's office indicate that Spillane was representing the city in talks on the loans, but that Robbins repeatedly went over her head by writing to Gutierrez, the supervising attorney for the office's real estate and economic development unit.

Robbins also copied his letters to Ann D'Amato, who is Delgadillo's chief of staff.

In addition, Treitel communicated directly with D'Amato and Gutierrez, writing to suggest an escrow account could be used to pay off the loans.

At one point, Spillane wrote to Robbins to tell him to direct future correspondence to her and her supervisor rather than to Gutierrez.

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