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Chinese developer goes on trial in LA City Hall bribery scandal

The fugitive, billionaire developer is accused of providing luxury suites, casino chips and prostitutes for former LA City Councilmember José Huizar.

LOS ANGELES (CN) — A Chinese real-estate developer went on trial over allegations it bribed former Los Angeles City Councilmember José Huizar in exchange for his help with a planned mega development in downtown LA.

Shen Zhen New World I LLC, a U.S. business entity owned by Chinese billionaire Wei Huang, is the second defendant to be tried in the sprawling corruption scandal involving Huizar, who the government claims misused his power on the city council and as chair of the city's influential Planning and Land Use Management Committee to solicit payoffs from developers that sought approval for projects in Huizar's downtown district.

Huang, who was also indicted but hasn't come to the U.S. to face charges, allegedly invited Huizar and one of his aides to 20 all-expenses-paid trips to Las Vegas, between February 2013 and November 2018, which included flights on private jets, luxury hotel accommodations, casino chips and cash, as well as spa and escort services. Huang also allegedly provided Huizar with a $600,000 loan to help him settle a sexual harassment lawsuit by an aide that threatened to undermine his reelection in 2015.

According to the government, Huang was planning to redevelop the L.A. Grand Hotel in downtown LA into the tallest tower west of the Mississippi, which would have required city approvals and Huizar’s help. Szen Zhen New World has denied that anything it provided to Huizar and his aide was intended to influence his decision making with respect to their redevelopment project.

In June, a federal jury found Los Angeles real-estate investor and developer Dae Yong Lee guilty of bribing Huizar in the first trial stemming from the Justice Department's takedown of a widespread pay-to-play corruption scheme centered around the former councilman and his cronies. Huizar is scheduled to go on trial early next year.

Huizar and his former aide George Esparza, who has pleaded guilty to racketeering and is cooperating with the prosecution, received as much as $1 million worth of luxury trips to Australia, Las Vegas and Pebble Beach, California from Huang, Assistant U.S. Attorney Patrick Castañeda told the jury Thursday in his opening statement. On their first Las Vegas trip, Huang provided Huizar and Esparza with a line of prostitutes to pick from, the prosecutor said.

Huang, the chairman of Shen Zhen New World Group, created the U.S. subsidiary in 2010 to purchase the unassuming L.A. Grand Hotel for $63 million. He intended to redevelop the 13-floor hotel into 77-floor complex that would add 600 hotel rooms and more than 200 condos. In early 2013, the developer was introduced to Huizar as the go-to guy to help his plans along and soon thereafter Huang invited Huizar to join him on a first trip to Las Vegas.

"You will not see Wei Huang's dream skyscraper towering over Los Angeles," Castañeda told the jury. "Because what happened in Vegas didn't stay in Vegas."

The FBI got wind of Huizar's Las Vegas shindigs after a July 2015 trip, when the Palazzo Hotel researched Huizar and learned that he was an LA councilman. This made him a "politically exposed person" required to fill out forms to show he's gambling with his own money and not the government's.

When a Palazzo employee asked Huizar to fill out the required paperwork, he declined and was escorted out of the hotel's gambling area. He left $17,800 in chips he had gotten from Huang at the high-rollers parlor where they had been gambling. Las Vegas Sands, the owner of the Palazzo, then alerted the bureau that Huizar had been a frequent guest of Huang at the hotel in 2014 and 2015 and that Huizar had received about $79,000 in gambling chips from the Chinese billionaire.

The FBI obtained a search warrant the following year that eventually led to the indictment of Huizar and Huang in 2020. The Chinese billionaire had already left the U.S. shortly after the FBI searched Huizar's home and office in December 2018 where they found stacks of cash. He's now considered a fugitive, Castañeda said.

Richard Steingard, one of the lawyers representing Shen Zhen New World, said in his opening statement that the company doesn't deny the trips and entertainment it provided to Huizar.

"This can sound troubling — we admit that upfront," Steingard said. "But if this were a case about optics, we wouldn't be here."

According to the lawyer, Huang had been going to Las Vegas on a regular basis years before he got introduced to Huizar and had built up a reputation as a "big whale" or high roller, who would gamble away as much as $1 million on a single day and who was a valued guest of the casinos. To keep him coming back, and lose more money, the hotels provided him with perks, such as free luxury suites, private jets and expensive meals and liquor, according to Steingard.

Moreover, the lawyer said, Huang would visit Las Vegas with large groups of guests and "stake the table" so that his guests would gamble with chips he provided for them and kept their winnings if they were lucky. When Huizar got invited, he received the same generosity that Huang had provided to his other guests, most of which was paid for by the hotels, not by Huang, Steingard said.

As for the $600,000 loan, the developer only posted the collateral with the bank so that Huizar could take out a loan and settle the harassment lawsuit, according to the lawyer. The transaction was fully documented and vetted by a lawyer to make sure it was legal, Steingard said, and it wasn't a gift and had nothing to do with the L.A. Grand Hotel redevelopment.

In fact, according to Steingard, there was no need to bribe anyone to get the project approved because when the idea for the redevelopment was first presented to LA city leaders in 2016, everyone loved it. There was no evidence that Huang ever asked for anything of consequence from Huizar related to the project, the attorney said.

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Categories / Criminal, Government, Regional, Trials

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