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1601 N. Vine: A Bill of Indictment for Fraud Against the People

On Wednesday, Herb Wesson’s City Council Committee approved the city’s gift of $4.7 million to developer Hal Katersky and his Pacifica Ventures company to build an office building at 1601 N. Vine St. in Hollywood, ignoring specific allegations of fraud against the people involving $1.45 million and whitewashing all the other problems linked to this troubling project.

This project is the poster child for all that’s wrong with the Community Redevelopment Agency and why it should be abolished. And more than that, it provides a window into the depths of City Hall’s corruption and why the city’s leadership has failed and must be replaced.

Attorney Richard MacNaughton and other Hollywood activists have dug deep into the record of the “Vinegate Scandal” and turned up the smoking gun: A CRA appraisal of the property for $4.08 million — $1.7 million lower than the developer’s own appraisal. CRA staff agreed to pay the developer’s asking price of $5.45 million in 2006 without ever telling the Board of Commissioners or the City Council of the lower appraisal.

The Council has put the project on its agenda more than a dozen times and once again it is on the agenda today but is expected to delay action until next week, allowing time for City Attorney Carmen Trutanich to determine whether the Council itself would become complicit in fraud if it knowingly approves the project without a full and thorough independent investigation of the evidence that has been revealed.

Activists have called on District Attorney Steve Cooley and the FBI to conduct a criminal investigation and MacNaughton  drafted after Wesson’s committee approved the deal what amounts to a bill of indictment for submission to the City Council.

With Jan Perry absent and Richard Alarcon ducking out just before the vote, Wesson, Tony Cardenas and Ed Reyes buried the past misdeeds as the fault of former CRA staffers, including the agency’s former head Cecilia Estalano.

They then green-lighted the project based solely on Katersky’s assertion that he is an innocent victim of CRA incompetence and his unequivocal denial of all allegations that have surfaced during the last eight months of controversy.

He insisted he is the still owner and operator of his runaway film production studio in Albuquerque despite bankruptcy proceedings and has no pending lawsuits against him, going so far as to assert there is not a single judgment against him or his firm among 30 lawsuits that have been filed.

Wesson’s Housing, Economic and Community Development Committee took him at his word, choosing instead to only question in the end whether the CRA had improved its policies.

You can listen to Katersky’s comments at the end of the hearing when questioned by Cardenas (Katersky-CRA.mp3) and listen to the full hearing here.

MacNaughton’s 13-page letter (MacNaughton2-23.pdf) to committee members, backed by various documents, begins under the heading “Council May Not Turn a Blind Eye To Fraud,” saying:
“Although this committee and the City Council itself are not the forums to conduct criminal investigations, when presented with proof of the elements of criminal conduct, the council may not turn away and say, “I do not want to deal with that.” By approving the deal, the committee has ratified the wrongdoing.”

“The Committee has not taken the time to review the documentation and the committee has undertaken no investigation. Asking the alleged perpetrators or their successors to provide evidence of their guilt seldom produces incriminating evidence. In this case, however, the citizens have forced the CRA to admit that in 2006 it withheld from the CRA Commission and from City Council the existence of the CRA $4 appraisal. The balance of the CRA’s January 2011 and February 2011 reports are at
best worthless and often misleading.”

He then goes on to examine Katersky’s role in flipping the property from Steve Ullman to the CRA, suggesting the developer’s statements to the committee were “evasive and disingenuous” based on documents at the time of the 2006 sale.

He cites bankruptcy records for the Albuquerque Studios and other court records involving Katersky in past and pending lawsuit to question his veracity.

“Rather than voting to give a multi-million deal to a man who could not be forthright even today, the committee had the duty to call for a criminal investigation,” MacNaughton concluded.

“Rather than obtaining answers, the committee ratified the prior and current wrongdoing. The best that can be said for a Committee member is that he had a conscious ignorance of the facts.”

This is not an isolated example of how the CRA and the City Council operate.

It has never been explained why this deal for an office building in a glutted office space market in Hollywood was ever worth one dime of the public’s money or how luring a couple of small entertainment companies from Burbank or Santa Monica will do anything to stimulate the regional economy.

It has never been explained why key documents disappeared, why procedures were violated, why former staffers were never interviewed about what really happened.

All we know is that Council President Eric Garcetti wants this project bad enough to risk his reputation on it and that whatever the Council President wants, he gets from other Council members — or else.

This is not a system of laws that serve the public interest but a system of back room deals that serve private interests.

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11 Responses to 1601 N. Vine: A Bill of Indictment for Fraud Against the People

  1. Herb Wesson chaired another charade, lining up numerous Katersky proponents. But never did he do any hard questioning.
    Of course, Herb loves the CRA because of his ability to hand out the pork, especially during his reelection campaign.

  2. Sandy Sand says:

    That’s what it’s going to take — an FBI investigation — indictments and perp walks before this City shapes up and flies right.
    Bankruptcy wouldn’t hurt either. It’s the only way to break unions’ — especially the DWP’s — stranglehold on taxpayers. Marie Antoinette said “let them eat cake”; I say let them partake of Social Security like all the rest of the working stiffs, and if they want extra retirement security, let the buy their own 404Ks.

  3. Scott Zwartz says:

    The silver lining is that the Housing Cmte made absolutely clear that the FBI Has to step in. Despite mounting calls from different people that the City request an FBI investigation, there was no response. Although the frauds had been clear for months, it was hoped that the City would have the integrity to ask for an independent criminal investigation. After Feb 23rd Committee meeting, it is clear that the City will move ahead ignoring the evidence.
    When the investigation begins, the FBI should also focus on whether the basic way the council conducts business is not a violation of the RICO Act. When a 15 member city council votes together more than 99% of the time, the decisions are not being made in public, but instead the decisions have been worked out in advance behind the scenes in back room deals. That behavior makes the entire City Council a Racketeer Influenced and Corrupt Organization, 18 USC 1961-1968.

  4. Anonymous says:

    Yes, this is a very good issue to kill Garcetti’s chances of being Mayor. We simply cannot have further “public service” from an elected official who leads a City Council approval of documented fraud.
    This act will confirm that political corruption for the benefit of real estate developers and political cowering to the slimebags who run the police, fire, DWP, and SEIU unions is how the City of Los Angeles operates.
    Go ahead Eric. Please lead a City Council approval of known fraud upon the public treasury. Show the people how your office will not fix their pothole but you will fix a multi-millionaire’s participation in fraud.
    If this approval goes through — immediately after the vote — the activists of this City should organize a public march right out of the Spring Street door of City Hall (press conference on the steps) and march to the Federal Offices to demand an FBI investigation and Department of Justice prosecution of those involved in this fraud. Give the television and radio stations in town a reason to broadcast a media friendly march of the people in uprising against a clueless City Hall. What better way to promote Operation Clean Sweep?

  5. Rick Abrams says:

    City Council begins at 11:00 today and not 10:00. Thus, we can listen via Channel 35 or the web feed to see what is done about VineGate.
    I doubt Garcetti’s hubris is so great as to allow a vote on VineGate after announcing that it was off calendar. Also, the Comte gave CRA until next week to provide an additional whitewash.
    Instead, Ron Kaye’s article shows that the Housing Cmte obtained evidence that Katersky testified falsely at the Feb 23rd hearing about all the lawsuits being concluded.

  6. Rick Abrams says:

    Item #5, 1601 N Vine, was continued by the Council until March 4, 2011

  7. Anonymous says:

    Not on CRA, but on the Mayor. He was on TV last night holding his pre-Oscar bash at the tax payer owned mansion in Hancock Park. Two questions. Who pays for this? Second, how can the Mayor ask for an eight foot fence around the property, which he doesn’t own.

  8. Anonymous says:

    Highly recommend Zuma Dogg’s site. Don’t know who feeds him the info., but it is great stuff.

  9. Wayne "Katersky" from Encino says:

    The council votes AUTOMATICALLY. Thus, one they go to their desk and check in, every time the City Clerk “calls the roll” each desk in the Horseshoe AUTOMATICALly VOTES ‘Aye’ UNLESS the Clownmember gets back to their seat before a vote and depresses the yes, which then goes “No.”
    These bastards are actually voting “present” for “Aye” because they walk around the Chamber and go back and eat and talk and make deals all while RizzoGarcetti (his new name) conducts the chirades we call “council meetings.”
    RizzoGarcetti came up with the automatic yes voting machines to move things along for the ocrruption that gets them elected.
    Our City’s legal counsel Carmen “Gaga” Trutanich
    will obviously be telling our 15 Council Clowns that if their chair votes FOR THEM AUTOMATICALLY WITHOUT THEM “KNOWING ABOUT IT” THAT THIS MAY EXHONERATE THEM IF A TRIAL LATER OCCURS OR OTHER INVESTIGATION. It’s called “Plausible Deniability.” The problem is, that the Clownmembers have been caught in that scam and it’s been noted at meetings that their chairs vote for them yes automatically, so that’s not going to fly.
    So Gaga will probably meet with AEG and DWP executives and their lawyers and see how the Vine St. project can be “saved.” They’re great at getting things done with 99% of the people against it.
    As for Cooley, he’s busy busting his dream girl Lindsay Lohan for a non-theft of a necklage a store let her walk out with KNOWINGLY. There isn’t a jury in America that should do anything but vote “not Guilty” so she can walk out of there free and clear and put the finishing touches on Steve’s failure to watch L.A. County’s rotten City Officials and crooks who have devistated hundreds of thousands of taxpayers.

  10. James says:

    I appreciate that Wayne from Encino was able to get adopted by Katersky.
    But getting back to reality, I agree with Wayne. Cooley doesn’t touch hot potatoes, he just goes after the small potatoes like Bell and only after the LA Times picked up the story, one year after the cops finked on Bell.

  11. Anonymous says:

    The problem is David Demejerian. Malfeasance in office and David sees nothing to prosecute as a crime.

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