LOS ANGELES – A real estate development consultant has agreed to plead guilty to a federal racketeering offense for playing a lead role in what's been described as a "pay-to-play" scheme involving city officials and real estate developers.
In a plea agreement filed in federal court Wednesday, George Chiang, 41, a real estate broker and development consultant based in Granada Hills, was charged with participating in a Racketeer Influenced and Corrupt Organization (RICO) conspiracy.
Prosecutors say that conspiracy involved an unnamed City Council member and his close associates demanding cash, luxury hotel stays, gambling chips, and escort services.
In his plea agreement, Chiang agreed to cooperate with the federal investigation. His attorney, Stanley Friedman, offered Spectrum News 1 the following statement via e-mail:
"Mr. Chiang regrets his conduct, has agreed to plead guilty and cooperate in the investigation being conducted by the United States Attorney’s Office and the FBI. Mr. Chiang recognizes the gravity of his conduct and has offered his cooperation to law enforcement authorities."
According to federal investigators, Chiang met someone referred to as Individual 1, who had been working for the city for nearly 30 years and was a high ranking official at the L.A. Department of Building and Safety. Public records and a 2018 search warrant make it clear Individual 1 is likely Raymond Chan, former Deputy Mayor for Economic Development.
Calls to Chan by Spectrum News 1 went unanswered.
Court documents say “Individual 1” wanted to ensure the success of Chinese projects in Los Angeles and wanted to bring Chiang in as a consultant on DTLA development. Chiang was told he would be introduced to important city officials.
In 2014, Chiang became a close ally of “Councilmember A,” who served on both the powerful PLUM (Planning and Land Use Management) and Economic Development Committees. Details in federal filings have made clear the unnamed council member is Councilman Jose Huizar of District 14.
Court documents say during this time, Chiang also developed a close business relationship with Justin Kim, a political fundraiser for the councilman who agreed to plead guilty in March to facilitating a $500,000 bribe from a real estate developer to the councilman involving a property at 940 South Hill in DTLA.
In 2017, Chiang and Individual 1 reportedly formed a real estate consulting and brokerage firm together called “CCC Investment” to share the profits of their alleged scheme.
Federal investigators say this was all part of an elaborate criminal enterprise aimed at advancing the political authority of “Councilmember A,” elevating the public official’s associates and ensuring the continuation of his stronghold in the city by helping his relative get elected to that seat when his term expired.
Spectrum News 1 has previously reported that Huizar’s wife, Richelle, launched a campaign to run for his seat in 2020 but withdrew from the race when the FBI raided the Huizar residences and his City Hall office.
Court documents say the councilmember’s criminal enterprise, which had jurisdiction over a large number of development projects going through the city’s approval process, conspired with one another to facilitate bribes and political contributions from developers to ensure those projects moved forward.
In one example of the alleged bribery scheme, Chiang reportedly tried to help secure a $100,000 contribution to a political PAC for the councilmember’s relative in exchange for helping benefit “Company D” with “Project D,” which was moving through the development process and finally approved on December 5, 2017.
THE LUXE HOTEL
Publicly available records show “Project D” is likely the $700 million proposed redevelopment of the Luxe City Center Hotel on 1020 Figueroa Street proposed by China-based Shenzen Hazens in Councilman Huizar’s district.
Renderings from the architects found on the LA City Planning website, reveal plans for two towers. One would replace the Luxe with a much taller W Hotel and the other would have more than 40 floors and 435 condos, in addition to a large parking garage and 80,000 square feet of retail space.
Federal investigators say Chiang worked for “Project D” as a paid consultant and introduced the councilman to the chairman and general manager of that company.
Court documents allege Chiang also helped funnel $66,000 to the councilmember via one of Chiang’s consulting companies in exchange for pushing “Project D” forward in the approval process.
“Individual 1,” who became Deputy Mayor during the alleged criminal enterprise, reportedly strategized with Chiang to ensure a consulting firm called Synergy, created by Chiang, took over navigating the whole city approval process for “Project D.” Synergy secured a lucrative consulting contract that included a monthly retainer for $35,000 a month, and the contract was later modified to include three big bonus payouts totaling $435,000, according to federal investigators.
The court filings go on to reveal that in 2017 alone, the developers paid Synergy $772,536 in consulting fees and bonuses for “Project D.”
Messages left with the development company and the city planning officials who were listed in public records overseeing the approval of the Luxe Hotel have not been returned. The project appears to be stalled with no building permits obtained yet through LA Building and Safety.
FOREIGN INVESTMENT TRANSFORMING LOS ANGELES
Ernesto Pantoja is a labor relations director for Local 300, one of the largest construction unions in Southern California and says he’s been tracking the Luxe Hotel ever since it went through the city’s approval process.
Pantoja grew up in Los Angeles and has seen the city’s skyline from the Local 300 Headquarters in Pico-Union transformed by massive skyscraper developments in recent years.
“I never would have imagined seeing as many high-rises as we’re seeing. It’s finally looking like a real metropolis,” Pantoja said.
Some of the biggest projects, including the billion-dollar Oceanwide Plaza (currently stalled), the Metropolis, and the Luxe Hotel City Center’s redevelopment were proposed and backed by foreign developers from China.
Sometimes those development companies have translated to work for Local 300, others haven’t.
“Nine times out of 10 it’s not a good thing for us. When you have outside influences coming in to build these type of projects it’s almost like the red carpet is rolled out. You expect money to get spent, which is great, right? You want this kind of money you want this kind of development. But you toss aside various issues that are related to the local community. For us that’s mostly work,” Pantoja said.
In the case of Luxe Hotel’s massive plans for new construction, Local 300 said it didn’t get a seat at the table.
“Of course we felt left out, that’s a lot of work for our members. Just look at how many floors you got on these,” Pantoja said. “That’s a lot of work for our laborers.”
Spectrum News 1 pulled the PLUM Committee audio file from December 5, 2017 when the Luxe Hotel project was approved by the council members led by the former chair of PLUM, Councilman Huizar. During the public comment section, most of the statements in support of the project were made by construction union groups and members of a union coalition called Creed LA, which has close ties to city officials.
But the massive construction labor union, Local 300, is not a member of Creed LA and was not among the unions offered the chance to work on the proposed project.
We reached out to the union members who spoke during the PLUM meeting. Most didn’t respond. Those who did had no comment on the project or were unaware of its status. Creed LA, which has faced scrutiny over another development probed by the FBI on Hill Street, never responded.
Hearing that Luxe is one of the subjects of the federal probe into alleged public corruption disheartens Pantoja. He said he has never met with the developer behind the Luxe project or with the real estate consultant, George Chiang.
As part of his role with Local 300 and as a registered lobbyist for the City of LA, he said he worked hard to advocate for many of the council members with his union and fought for officials like Huizar to land their seats.
“When you fight to get somebody elected that you think represents who you are and comes from the same background you do, and then to kind of see it go differently, it’s disappointing,” Pantoja said.
If Pantoja had a say in the future of downtown development, he said he would like to see more transparency and more local investment energizing the community.
“Who are you leaving behind to bring in that money? Well people like us, local community members affordable housing. Our members live in this area but by the time we’re done they’re going to be gentrified out,” Pantoja said.