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Assessor's office was off the radar

The corruption case involving John Noguez and others emerged in an L.A. County department that saw little scrutiny.

December 27, 2012|By Jack Dolan and Ruben Vives, Los Angeles Times
  • L.A. County Assessor John Noguez in court in October. Tall and handsome, with a game show host’s easy charm, he aimed to change how the office worked. Colleagues envisioned him as a state legislator one day, maybe a congressman.
L.A. County Assessor John Noguez in court in October. Tall and handsome,… (Barbara Davidson, Los Angeles…)

On his first day as a special assistant to Los Angeles County Assessor John Noguez, David Zoraster was surprised to see the methodical, data-driven process of property appraisal replaced with a system known within the office as "Let's Make a Deal."

One of Noguez's deputies ignored appraisals valuing the site of Hollywood's Old Spaghetti Factory site at $16 million to $18 million, and sided with the property owner's tax consultant — Ramin Salari, a prominent Noguez campaign fundraiser — who said the parcels were worth only $10.5 million.

A week later, Noguez dropped it to $7.8 million. The deals generated $427,000 in tax refunds for the owner and a substantial fee for Salari.

"I felt they gave away the farm," said Zoraster, when he resigned from the department after four months.

In October, prosecutors filed charges alleging what Zoraster and others in the office had suspected: The Old Spaghetti Factory was part of a massive bribery scheme. Noguez and at least one of his deputies took $460,000 from Salari in exchange for millions in tax cuts on dozens of properties, according to investigators.

So far Noguez, Salari and two former assessor's office employees have been charged in the alleged corruption.

As the details of the case have emerged through a yearlong Times investigation and in court documents, it remains unclear how such a scheme could have gone undetected. So many of the steps were carried out in plain sight, leaving witnesses and an extensive paper trail.

At least part of the answer lies in the obscurity the assessor's office, the lack of outside scrutiny and the sheer size of the property tax rolls, which make it difficult to detect reductions, even when they amount to hundreds of millions of dollars.

The Los Angeles County assessor oversees the nation's largest local tax roll — more than 2 million properties worth more than a trillion dollars. Even a slight reduction in the assessed value of a property can produce a windfall in tax savings for the owner for years to come.

Despite that power, few Angelenos could have named the county assessor before the Noguez scandal made headlines.

"I think I even voted for the guy," said one investigator from the district attorney's office working on the case, who spoke on background because he isn't authorized to address the media. "But honestly, who remembers?"

The last time the public showed active interest in the office was in the late 1980s. They weren't concerned about corruption; they were fighting off efforts by local politicians to boost their budgets by appointing assessors who would be more willing to raise property taxes.

In 1988, Californians overwhelmingly approved a state constitutional amendment requiring all county assessors to be elected.

Historically, the job has attracted low-key candidates, rank-and-file employees who worked their way up through the assessor's bureaucracy and, when the boss retired, ran for the agency's top job without much public attention.

Noguez aimed to change that. Tall and handsome, with a game show host's easy charm, he spent his evenings on the town, meeting with real estate industry groups. Colleagues envisioned him as a state legislator one day, maybe a congressman.

For his campaign, Noguez raised the kind of money that would impress Democratic Party bosses, whose support he would need if he chose to run for higher office.

He collected well over $1 million for a race in which his chief rival was a little-known Southeast Los Angeles County real estate agent who raised less than $50,000.

Much of Noguez's money came from business people — developers, big property owners, tax consultants — who had big tax bills. When Noguez won in November 2010, they got extraordinary access.

For most residential properties, the appraisal process is simple. The tax value is the price the house sold for and then goes up by no more than 2% every year.

Commercial property appraisal is more subjective. The assessor can reduce values based not only on the property value, but also on the profitability of the enterprise. Owners of idle factories or empty apartment buildings frequently ask for reductions.

Noguez set a new tone in the office, referring to high-profile property owners and campaign contributors as "family."

Shortly after Noguez's election, a low-level appraiser in the Sylmar office disagreed with a request from Salari, the tax consultant, to reduce the value of a North Hollywood apartment building from $44 million to $30 million.

Noguez sent two of his top deputies and Salari to the appraiser's office to complain. Noguez participated via speakerphone.

Noguez said in a February interview that he saw nothing wrong with sending a campaign contributor to the meeting: "We encourage the outside community to come in with general information and help us."

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