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Builder got millions from Glendale despite concerns about project

ADI has built apartment complexes subsidized by public agencies across the state. The firm, which faces fraud allegations, and its subcontractors have donated generously to politicians.

December 29, 2010|By Jessica Garrison, Melanie Hicken and David Zahniser, Los Angeles Times

Glendale's housing manager was blunt with his concerns about giving a prominent developer $12.2 million to build low-income housing near the city's downtown.

"I strongly recommend … not funding this project at anywhere near the level currently being requested," Mike Fortney wrote in an April 2008 letter to his boss.

Glendale City Council members awarded the money anyway. The following year, they paid an additional $1.7 million for the project, dubbed Vassar City Lights, a five-story stucco building on San Fernando Road.

The beneficiary of that vote was Advanced Development and Investment Inc., a Los Angeles-based developer that for two decades prospered in part by carefully cultivating the political process. The company has built apartment complexes subsidized by public agencies across the state, including more than 40 in Chinatown, Echo Park and other Los Angeles neighborhoods.

Now, the firm faces allegations that it defrauded government agencies and may have built potentially unsafe housing for the poor. In recent years, ADI has repeatedly persuaded officials in Glendale, Los Angeles, Sacramento and elsewhere to hand over millions of dollars to complete its projects — even after concerns were raised about cost or quality.

As its projects were being approved, ADI made tens of thousands of dollars in campaign contributions to California politicians. Far larger amounts — more than $300,000 over the last decade, according to a Los Angeles Times analysis of campaign contribution records — came, not directly from ADI, but from the little-known drywallers, electricians and other subcontractors retained by the company to construct its buildings.

ADI is currently the subject of a federal investigation in which at least three of its subcontractors have recently received subpoenas.

Four subcontractors told The Times that they were pressured to give to politicians and felt they risked losing future work with ADI if they said no.

"They pressured you hard," said Everett Freeman, owner of Freeman Lath and Plaster in Lancaster, who added that he severed his ties with ADI, in part out of frustration with their demands for campaign contributions.

Once Freeman Lath and Plaster received work from ADI, company officials made it clear that "they expected everyone to contribute" to chosen candidates, he said. "It was insinuated that basically if you didn't go along with their little program, you wouldn't get the work."

In Glendale, where the city has paid ADI more than $33 million over the last five years, ADI subcontractors flooded council members with campaign contributions. In the two years leading up to the 2009 council election, nearly one of every four dollars received by the top four candidates for the council — more than $100,000 in total — came from those companies, their employees and those employees' relatives. Collectively those donations outstripped any other known source in the race.

State law prohibits companies such as ADI from contributing more than $250 to council members who serve on Glendale's housing authority board when the firms have financial business pending before that board. In addition, Glendale council members are barred from accepting campaign contributions of more than $250 from companies that are seeking contracts or other business from the board. The board is made up of all the council members and two other people.

The U.S. attorney's office declined to comment on its investigation. Lawyers for Ajit Mithaiwala, who founded ADI more than two decades ago, and Salim Karimi, who was recently fired as the company's president, said their clients deny the allegations.

"Salim Karimi has not done anything wrong at any time. He was never involved in anything that was unethical, unprofessional or illegal," said his attorney, Thomas Mesereau.

Details of the federal investigation are unknown, but the subcontractors known to have been subpoenaed each did work on the home of a Glendale City Council member, John Drayman, who, as a member of the Glendale Housing Authority board, has voted to approve several ADI projects.

Drayman acknowledged having hired an ADI subcontractor, Glendale-based National Fire Systems and Services, to renovate his condominium last summer. National Fire, in turn, hired at least six other ADI subcontractors, according to a list Drayman provided.

He said he picked National Fire in part because the company had agreed to let him pay over a period of months, a plan that he acknowledged was "not the norm" for a home renovation. Some of the subcontractors said they still have not been paid for their work.

Drayman said he had been referred to National Fire by an ADI manager, Khachik Zargarian, whom he identified as a longtime friend. But Drayman said he had no idea at the time that National Fire or the other companies were connected to ADI.

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