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Chinese developer fined $4 million in LA City Hall bribery scheme

The judge imposed the maximum fine on the developer that was convicted of bribing former City Councilman José Huizar.

LOS ANGELES (CN) — A Chinese real estate developer was sentenced Friday to a $4 million fine and five years probation following its conviction of bribing former LA City Councilman José Huizar in exchange for his help navigating a planned 77-story project through the city's approval process.

U.S. District Judge John Walter imposed the biggest fine he could under the law against the U.S. subsidiary of Shen Zhen New World Group, saying the amount was "appropriate and necessary" while still a "drop in the bucket" for the company's billionaire owner and chairman Wei Huang, who would lose as much as $2 million on gambling trips to Las Vegas.

Huang, who was also charged by the Justice Department in the corruption scheme, hasn't returned to the U.S. from China since he was indicted and is considered a fugitive.

The U.S. subsidiary, which operates two hotels in the LA area, was convicted at trial in November of all eight counts it was charged with, including honest services wire fraud, interstate and foreign travel in aid of bribery, and bribery concerning programs receiving federal funds. The statutory maximum fine for each count is $500,000.

Richard Steingard, an attorney for Shen Zhen New World LLC, said after the sentencing that they will appeal.

Prosecutors with the U.S. attorney's office in LA accused Huang and his company of buying the help of Huizar, who was charged with running a sprawling pay-to-play scheme in downtown LA. Huang invited Huizar to as many as 19 all-expenses-paid gambling trips to Las Vegas between 2013 and 2018. They stayed in luxury suites, dined at the most expensive restaurants, and Huang gave more than $200,000 in casino chips to Huizar as well as his pick of prostitutes.

Huang also took Huizar on a one-week vacation to Australia, again on the developer's dime, and arranged a $600,000 loan for Huizar to settle a sexual harassment lawsuit ahead of his reelection campaign in 2015. In exchange, Huang sought Huizar's support redeveloping a hotel in downtown LA he had bought in 2010 into the largest skyscraper west of the Mississippi. Huang, a resident of Shenzhen, left the U.S. in 2018 after he got wind that the FBI was closing in on Huizar and hasn't returned to face the charges against him.

"The underlying investigation in this matter has revealed a culture of corruption in the city of Los Angeles that is fostered by the lucrative real estate development market, coupled with the unique discretionary power wielded by Los Angeles government officials over that market, allowing them disproportionate control over which development companies succeed and which fail," prosecutors said in their request for the maximum possible fine.

At Friday's sentencing, Walter imposed a string of conditions on the U.S. subsidiary, including the creation of an ethics and compliance program, during its five-year probation.

The judge noted the conditions were necessary because normally a company would get rid of the culprits behind illegal conduct, but in this case it's very unlikely Huang would give up control of his company. In addition, the judge said, Shen Zhen New World is still planning a $25 to $35 million renovation on the LA Grand Hotel, which is still used for a city program to house homeless people during the pandemic.

Huizar, 54, in January agreed to plead guilty to RICO conspiracy and tax evasion, rather than going on trial. As part of his plead deal, prosecutors won't seek more than 13 years in prison for the once rising star of the LA political scene, though it will be up to the judge how much time he'll have to serve. The maximum penalty he could face is 25 years — 20 for racketeering conspiracy and 5 years for tax evasion.

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Categories / Business, Criminal, Government, International

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