LOS ANGELES (CN) — A Los Angeles real estate developer accused of bribing a former city councilman doesn't want a jury to hear about the $4.2 million in cash the FBI found and seized at his office in an unrelated money laundering investigation.
Dae Yong Lee, a.k.a. David Lee, is scheduled to go on trial next month on charges of paying former Councilman José Huizar $500,000 in cash in 2017 in exchange for Huizar's help resolving a labor union challenge to Lee's proposed 20-story condominium project in downtown LA. Lee is the first defendant to go on trial in the sprawling corruption scandal surrounding Huizar and his associates.
Lee's attorney Ariel Neuman argued at a hearing Friday that it would be "unduly prejudicial" to let the jury hear about, and see photos of, the 2014 search of his client's office during an investigation in which he was never charged. The raid of Lee's office was part of a large-scale sweep of businesses in the downtown Fashion District — where Lee operated a wholesale fashion accessories business — targeting "black market peso exchange" schemes used to launder money for Mexican drug cartels.
U.S. District Judge John Walter deferred ruling on Lee's bid to exclude the evidence and asked for additional briefing on the issue because he said it wasn't clear what evidence the prosecution actually wanted to introduce at trial.
It might be relevant, according to the judge, that Lee told the FBI in 2014 that he did about 15% to 20% of his business in cash because, according to prosecutors, he countered Huizar's demand for $1.2 million to resolve the union's challenge with a $500,000 cash offer — indicating his experience with using cash to negotiate a lower purported bribe.
"Mr. Lee is a savvy, sophisticated businessman," Walter said. "He knew what he was doing."
The government didn't return the $4.2 million to Lee until last year, prompting the judge to question whether he had received any interest on it.
Lee had bought a one-story downtown warehouse and retail property in 2008 for about $10 million, according to court filings. By 2019, when he had secured the entitlements to build a mixed-use retail and residential development on the site, the property was appraised at $31.5 million. Lee, though his 940 Hill LLC, a nominal defendant in the case, still owns the building but work hasn't started on the proposed development.
Walter also deferred a ruling on Lee's request to keep the jury from hearing about the 2019 appraisal, which the government claims provided him with a motive to pay the purported bribe to Huizar. But according to his lawyers, Lee didn't know at the time of the alleged bribe in 2017 what the property would be worth in 2019 and, beyond that, the increased value of the site couldn't be solely attributed to the entitlements but is also due to the general downtown LA real estate market.
The 940 S. Hill Street property is located in the South Park area of downtown LA, which has seen a development boom of high-end residential buildings over the past 20 years, driven by overseas investments and a renewed interest in the neighborhood by young, affluent renters and buyers.
The judge denied Lee's request to prevent the prosecution from using iPhone notes, audio recordings, and notes on napkins by former Huizar aide George Esparza, who pleaded guilty to his role in the bribery conspiracy and is a cooperating witness for the government.
Esparza transported the cash he got through an intermediary, Justin Kim, from Lee and held on to it for Huizar. He stored some of the cash in a box for a tequila bottle and took photographs of the banknotes spread out on his bed, with napkin notes, one of which said "Giving him cash from Justin Kim for Olympic & Hill project. No unions."
Kim, a politically connected real estate consultant, has also pleaded guilty and is expected to testify for the prosecution.
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