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LA developer found guilty of bribery in City Hall corruption trial

David Lee is the first defendant convicted by a jury in the sprawling bribery scheme surrounding former City Council Member Huizar.

LOS ANGELES (CN) — A jury on Monday found a Los Angeles real estate investor and developer guilty of bribing former LA City Council Member José Huizar in the first trial over the federal takedown of a widespread pay-to-play corruption scheme centered around Huizar and his cronies.

The jury found Dae Yong Lee, aka David Lee, and his business, 940 Hill LLC, guilty of bribery, honest services fraud, and obstructing the government investigation. Lee, 57, faces up to 20 years in prison.

Lee has denied knowing that the $500,000 cash he paid to a middleman in 2017 was used to bribe the former City Council member. His lawyer, Ariel Neuman, told the jury that the middleman, a political consultant who helped Korean-American business owners in their dealings with city officials and who was a key government witness, lied to the FBI and on the stand when he testified that Lee knew the money was going to Huizar.

Neuman said Lee intends to appeal the verdict.

"We are disappointed in the jury's verdict," Neuman said. "We believe the evidence showed that Mr. Lee was a victim of other people’s fraud." 

Huizar, 53, served as downtown LA’s representative on the City Council from 2005 to 2020, a period that saw an unprecedented development boom in the area with foreign money pouring into ambitious residential and hotel projects. He also chaired the city’s influential Planning and Land Use Management Committee until November 2018, when the FBI raided his offices and home.

Lee was tried separately from Huizar and another real-estate developer accused of bribing the politician to avoid the risk the jury might convict him for the wrongdoing of other. The trial for the other developer, China's Shen Zhen New World, whose billionaire chairman allegedly spent more than $800,000 on gambling trips to Las Vegas for Huizar and his entourage and provided Huizar with $259,000 in gambling chips, is scheduled for October. Huizar faces trial in February 2023.

Assistant U.S. Attorney Mack Jenkins, who heads the public corruption and civil rights section at the U.S. attorney's office in LA and who was the lead prosecutor at Lee's trial, said he was happy the jury vindicated their investigation and was persuaded by the testimony of their two cooperating witnesses who may also testify at the other trials.

"These are challenging cases," Jenkins said. "It's a rare to have two witnesses that can give an insider view of a bribery scheme."

According to the government, Huizar and his cohorts sought a $1.2 million bribe from Lee in 2017 to resolve an appeal by a the Coalition of Responsible Equitable Economic Development, or Creed LA, to a city agency’s approval of Lee’s project to replace a one-story commercial building with a 20-story, mixed-use development that was to include more than 200 apartments and 14,000 square feet of retail space. The project was valued at $120 million, according to the government.

Creed LA represents labor interests and challenges the city's approval of major construction projects in the hope that it can negotiate a project-labor agreement with the developer that ensures union workers get hired. Such agreements can drive construction costs up by as much as 30% and, according to the prosecution, this motivated Lee to look for an alternative solution to resolve the Creed appeal other than a lengthy fight before various city agencies.

Rather than negotiating face to face, Lee and Huizar used two intermediaries: Huizar’s special assistant George Esparza and Justin Kim, the political consultant who also was a fundraiser for Huizar within the downtown LA's Korean business community. Esparza and Kim both pleaded guilty to their roles in the bribery scheme and testified for the government.

Under cross-examination by Neuman, the executive director of Creed LA confessed the organization's challenge to the city's approval of Lee's development was basically a template and that it wasn't based on an expert or legal evaluation of the decision. In fact, according to the director's testimony, the group drops the vast majority of its appeals because it tends to lose them.

In a recorded conversation made when Kim had started to cooperate with the FBI, Lee and Kim discuss that they were "played" by Huizar for the $500,000 bribe.

In 2019, when the FBI subpoenaed Lee's business for financial records, Lee told his main assistant to record the $500,000 payment as a loan he made to the business for entitlement expenses. The two minority investors in 940 Hills testified, one in court and one by stipulation, that they were in the dark about the $500,000 payment and loan to the company.

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