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Developer agrees to pay $165,000 to end L.A. ethics inquiry

A real estate development company that regularly received funds from Los Angeles officials to build affordable housing projects has agreed to pay $165,000 to end an Ethics Commission investigation into allegations of campaign money laundering.

Investigators with the Ethics Commission concluded that Advanced Development and Investment Inc. and its affiliated construction company, Pacific Housing Diversified, made 33 contributions totaling $23,850 under assumed names between 1999 and 2009. Advanced Development executives used cash and checks from  company accounts to improperly reimburse employees who had made the contributions, the agency found.

Reimbursement was typically provided "the same day the employee made a contribution in his or her name," the Ethics Commission report states. The commission did not find wrongdoing by the politicians who received the donations, a group that included Mayor Antonio Villaraigosa and a handful of candidates and council members.

Ethics officials said they launched their probe into Advanced Development in 2011 following reports in The Times on the company's campaign fundraising practices. The FBI, the Internal Revenue Service and the U.S. attorney's office also have been looking into allegations that the company engaged in financial wrongdoing.

The Times found that Advanced Development and its retinue of subcontractors had steered more than $400,000 to the political campaigns of candidates up and down the state, many of them in Los Angeles. Some of those subcontractors told The Times that they had been warned by the firm's managers that they would lose out on future construction contracts if they failed to make the political donations.

The Ethics Commission is scheduled to approve the fine Thursday. The agreement was signed by David Pasternak, the court-appointed receiver who was assigned to oversee Advanced Development in 2010 in the wake of a nasty divorce between two top officials at the company. That year, Pasternak reported that the federal investigators had been notified of "potential fraud and criminal activity" at the company's taxpayer funded projects, including systemic padding of construction invoices.

Los Angeles has provided the company with roughly $29 million in subsidies to build multi-story apartments in Lincoln Heights, Chinatown and other neighborhoods near downtown. Despite receiving taxpayer assistance from L.A. and other cities, its projects have developed a series of maintenance problems, including exposed wiring, cracked stucco and leaky roofs, windows and pipes.

Ethics Commission officials said Advanced Development's current management has been cooperative -- and plans to dissolve the company next year. The firm will pay the fine without admitting to or denying the allegations, according to the agreement.

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-- David Zahniser and Jessica Garrison

 
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