Developer fined $4 million for bribing former L.A. Councilmember Jose Huizar
A Chinese real estate company was fined $4 million Friday for the lavish bribes that its owner paid former Los Angeles City Councilmember Jose Huizar as it sought approval to build a downtown skyscraper.
U.S. District Judge John F. Walter, who has presided over a series of City Hall graft cases, bemoaned "the crushing weight of corruption" as he imposed the sentence on Shen Zhen New World I.
Its billionaire owner, Wei Huang, is "more than capable," Walter said, of resorting to payoffs once again as he seeks to redevelop the company's L.A. Grand Hotel at West 3rd and Figueroa streets.
"This is a serious offense which in my view requires a substantial sentence," Walter said.
The company is an arm of Huang's giant Chinese real estate firm, Shenzhen New World Group, which also owns the Sheraton Universal hotel.
At the subsidiary's criminal trial last fall, witnesses detailed more than $1 million in bribes that Huang paid Huizar, much of it through all-expense-paid jaunts to Las Vegas, including private jet flights, presidential suites, hundreds of thousands of dollars in casino chips for games in high-roller lounges, top-tier restaurant meals and the services of prostitutes.
The developer was seeking city approval to build a 77-story skyscraper at the site of the L.A. Grand. It was never built.
Huizar, a council member from 2005 to 2020, is awaiting sentencing after pleading guilty in January to racketeering and tax evasion. He admitted extorting at least $1.5 million in bribes from Huang and other developers of property in his former downtown and Eastside district.
Huang, a Chinese citizen who owns a house in San Marino, used to be a frequent visitor to the United States, but has not returned since he learned of the FBI's corruption investigation in 2018. Huang was charged with bribery and fraud in 2020; prosecutors consider him a fugitive.
In his absence, Shen Zhen New World I was put on trial last fall, giving Huang what prosecutors described in court papers as "a free preview of the government's case" against him. The jury found the company guilty of five counts of bribery and three counts of wire fraud.
In court papers, prosecutors lamented the "culture of corruption" in Los Angeles. They urged Walter to impose the maximum $4-million fine "to protect the public from further crimes" by Huang's company, saying it would be "just a drop in the bucket" for a developer who routinely bet that much on a weekend's casino visits.
"This five-year bribery scheme was brazen, devised and carried out with impunity by the sole owner and highest authority for the company — Chairman Huang — with the help of his employees and associates acting under his direction," they wrote.
Attorneys for Shen Zhen New World I had recommended a fine in the range of $1 million to $2 million. They reminded Walter that two other developers implicated in Huizar's extortion racket had reached deals with prosecutors to pay fines of no more than $1.2 million apiece.
They also sought credit for the company's participation in a city program to provide rooms for homeless people at the L.A. Grand.
"This has been a big deal for the city, there's no doubt about it," Richard Steingard, an attorney for the company, told Walter at the sentencing.
Assistant U.S. Atty. Susan S. Har acknowledged the cause was "honorable," but suggested it was not "purely altruistic" since it produced revenue for the company at a time when hotels were struggling to survive high vacancies during the COVID-19 pandemic.
In addition to the fine, Walter put Shen Zhen New World I on probation for five years, requiring the company to open its books to government review, adopt an ethics code and publicize its conviction on the company's website.
This story originally appeared in Los Angeles Times.