A former official of the Housing Authority of the City of Los Angeles and two of his brothers have been charged with engaging in an elaborate scheme to enrich themselves by steering contracts for construction projects at the city's housing projects.
Federal prosecutors allege that Victor Taracena, who supervised construction projects at the housing authority from 2003 to 2007, arranged for numerous contracts to be awarded to companies controlled by his brothers, Bennett A. Taracena and Diego L. Taracena.
After those firms received checks from the housing authority, they kicked back payments to Victor Taracena, according to a grand jury indictment unsealed Friday. Taracena, 41, wired at least $41,000 of that to a bank account in Guatemala, and one $8,000 payment specified that the money to Taracena was earmarked for the purchase of property there, the indictment said.
Contracts in the case were for design and construction of facilities to accommodate disabled people, such as wheelchair ramps, toilets and grab bars in city housing projects. In various instances, the housing authority appears to have overpaid for the services or paid twice for the same service.
"They deprived the city of Los Angeles of approximately $500,000 to $600,000 — money that was intended for poor, disabled people to renovate and improve their homes," Assistant U.S. Atty. Bayron T. Gilchrist said during Tuesday's arraignment hearing for two of the three defendants.
All three were charged with conspiracy and multiple counts of bribery.
The allegations against Victor Taracena were first detailed in a 2007 Los Angeles Times report, which described how he had directed nearly $800,000 in contracts to family members and three politically connected firms without competitive bidding or after rigged contests.
The housing authority sued the three brothers and received a $605,000 civil judgment in 2010. None of that money has been collected, said William Carter, chief deputy to City Atty. Carmen Trutanich.
Victor Taracena is in Guatemala and was described by federal prosecutors as a fugitive. His lawyer could not be reached for comment. But his father, Adolfo Taracena, said the allegations about his three sons are untrue — and said all of the contracts that were approved were signed off by top executives at the housing authority.
U.S. District Judge Charles F. Eick ordered Victor Taracena's two brothers held without bail, in part because of the family's ties to Guatemala, including property owned in that country.
The Times article found that Victor Taracena oversaw more than 150 contracts that went directly to companies his brothers created. It also found that seven other contracts worth $289,000 were awarded to politically connected firms that had ties to current or former L.A. City Council members from the Eastside.
Those firms won their contracts in bidding processes fraught with irregularities. Some of the losing bids came from companies whose principals said they had never actually bid on the projects but may have had their stationery used improperly.
The authority is responsible for providing housing to about 60,000 of the city's poorest families. Though governed by a commission appointed by Mayor Antonio Villaraigosa, the authority is a free-standing agency primarily funded by the federal government.
Defense attorney Alan Eisner, who represents 31-year-old Bennett Taracena, declined to discuss the specific charges but said his client should have been given the opportunity to post bail. Harvey Byron, who represented 36-year-old Diego Taracena at the hearing, described his client as an "upright citizen" but had no comment on the case itself.
Victor Taracena earned $104,000 annually at the housing authority until he was fired in 2007. At the time, he denied wrongdoing.
He joined the housing authority in August 2003, serving as a construction project manager with responsibility for bringing the city's 15-plus housing projects into compliance with the Americans With Disabilities Act. He was repeatedly promoted and by January 2006 placed in charge of all the authority's design and construction.
Shortly after he was hired, he began steering jobs to family-owned construction and design companies, according to contract files obtained under the California Public Records Act. County records suggest that the companies did not exist until they began receiving contracts.