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LA developer is first to go on trial in City Hall corruption scandal

David Lee is accused of bribing a former LA city councilmember at the heart of a sprawling corruption scheme.

LOS ANGELES (CN) — A real-estate developer became the first person to go on trial in a sprawling federal takedown of a pay-to-play corruption scheme operated by a former LA city councilmember and his entourage.

Dae Yong Lee, aka David Lee, is accused of funneling $500,000 in cash to former LA city council member José Huizar, whose district included downtown LA, in exchange for help resolving a labor union coalition’s challenge to Lee’s proposed mixed-use development. Lee was arrested in 2020 and is charged with bribery, honest services fraud and obstruction of justice through falsifying evidence. The fraud and obstruction charges carry a maximum possible sentence of 20 years in prison.

Lee is being tried separately from Huizar to avoid the risk of a jury convicting him based on the wrongdoing of other defendants. Another developer accused of bribing Huizar, China-based Shenzhen New World, will also be tried separately.

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.

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 that sought 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.

Creed LA, in essence a coalition of labor unions, typically brings these kind of challenges to force developers into hiring union labor, Assistant U.S. Attorney Cassie Palmer told the jurors in her opening statement Tuesday. To avoid having their projects tied up for years in litigation, developers can negotiate a labor agreement with the unions that can cost them millions of dollars, Palmer said.

Another way was to enlist the assistance of José Huizar, according to Palmer, because he was close to the unions and his vote carried a lot of weight given that the project was in his council district.

“His vote mattered,” Palmer said. “They needed José Huizar on their side.”

Lee and Huizar didn’t negotiate face-to-face, but used two intermediaries: Huizar’s special assistant George Esparza and Justin Kim, a political consultant and fundraiser who worked with Korean-American business owners in LA that needed help interacting with the local government. Both Esparza and Kim have pleaded guilty to their role in the bribery scheme and are expected to testify for the government.

After Huizar sought a $1.2-million bribe, Lee countered with a $500,000 cash offer, which Huizar accepted. Shortly after the first $200,000 payment was made, the Creed LA appeal was abruptly dropped, according to Palmer. Kim passed the cash on to Esparza, who took photographs of it with notes on napkins and stored some of it in a liquor box for Huizar.

Ariel Neuman, Lee’s attorney, said in his opening statement that Lee never intended the $500,000 as a bribe but that he thought it was a consulting fee for Kim to help resolve the Creed LA appeal. The only evidence that Lee thought to bribe Huizar comes from Kim, a convicted liar, Neuman told the jurors.

“There’s no evidence to corroborate what Justin Kim is going to tell you,” Neuman said. “The only evidence are the words of a convicted felon.”

Lee, Neuman told the jury, is an immigrant from Korea by way of Brazil who made his fortune with a fashion accessory business he started with his mother in downtown LA. He invested his earnings in real estate, including the proposed development of 940 South Hill, which he acquired with other investors, according to Neuman.

When Creed LA challenged the approval of the project, Lee turned to Kim because he was the go-to political consultant for Korean-American business owners, and Lee needed a consultant to negotiate with Creed LA, Neuman said. There was no evidence that Lee knew what Kim had done with the money he gave him, according to Neuman.

The first government witness called Tuesday was FBI Special Agent Andrew Civetti, who was involved in the investigation of Huizar. Civetti testified that investigators weren’t aware of Lee and his Hill Street development until they started executing search warrants and Esparza agreed to cooperate. On one of his phones, they found photos he took of the cash that Kim had passed on to him from Lee.

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