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Fraud or Mistakes? 1601 N. Vine Office Project Goes Forward — Again

In a 90-minute hearing on the 1601 N. Vine St. office project, a City Council committee on Wednesday exonerated controversial developer Hal Katersky and blamed the Community Redevelopment Agency for the project’s “troubling” history.

With Alarcon walking out before the vote, Wesson, Reyes and Cardenas voted to approve the project and send it to the full City Council next week – the 13th time it has been on the Council agenda.

Disputing accusations his business dealings have been marked by numerous lawsuits, investigations and bankruptcy of a runaway film production studio in Albuquerque, Katersky portrayed himself as an innocent developer with a long history of success.

“We’ve done everything we’ve been asked to and we’ve spent $4 million to push this project forward,” Katersky told the Housing, Community and Economic Development Committee.

Attorney and Hollywood activist Richard MacNaughton (MacNaughton.pdf) laid out the case against Katersky and the CRA’s gift of $4.7 million to the developer.

He called for a full criminal investigation of possible fraud involved in how the property was sold by Ullman Investments to Katersky’s Pacifica Ventures in 2006 and then flipped a month later to the CRA for the same $5.45 million price. The deal called for the CRA to sell it back to Katersky for $825,000.

CD4 candidate Stephen Box questioned the project itself,  saying, “The last thing we need in Hollywood is more office space … the reason new office space has not been built for 30 years is because there is a glut … If this project were viable, it would take off on its own momentum.”

Echoing CRA Commissioner Madeline Janis, he called the project the “poster child for abolishment of the CRA.”

“This is an example of what’s wrong with the CRA, a call to action for a city prosecutor … to investigate the CRA. The people of Los Angeles are unrepresented in a situation like this.”

The critical question involving 1601 N. Vine involves separate appraisals by Katersky that put the property’s value as $5.45 million and the CRA’s own appraisal that placed the value as $4.08 million.

Without informing Katersky or the CRA Commission of their own appraisal, CRA staff went forward and paid the higher price and now claims it cannot find documents showing there was an attempt to reconcile the massive gap in appraisals,

An aide to Council President Eric Garcetti who is pushing for approval of the project acknowledged a “lack of transparency … and some problems” but insisted the only question is “whether it is viable.”

For his part, Wesson said how much he hates it when “when I hear the word fraud” and promised to “really vet this  …. The biggest mistake you can ever make in life is to feed a stray cat, you can never get rid of it … We want to get rid of this one way or another.”

Cardenas claimed he wasn’t going to vote to approve the project but accepted CRA staff’s admission that mistakes were made and that Katersky did nothing wrong and was going to submit documentation of what steps are being taken to make sure such problems “never happen again.”

Reyes called for a one-page summary for the full Council showing what public funds have been invested and what is going to be gained from the project.
In abstaining, Alarcon went a step further and called for “conservative and extremely conservative estimates” of the public benefits of the project.

“The most troubling thing is that CRA knew $4 million appraisal yet encouraged developer to pay $1.4 million without informing the developer or the board.  Somebody was interested in benefiting Mr. Ullman $1.4 million more than CRA appraisal.

“This is very troubling, may even be more than troubling.”

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9 Responses to Fraud or Mistakes? 1601 N. Vine Office Project Goes Forward — Again

  1. Anonymous says:

    This fraud will go forward now because the City Council wants to spend everything pending in the CRA to keep it out of the hands of the Governor.
    Brown should freeze all CRA spending, planned, pending, and up to and including all checks that haven’t cleared yet.

  2. Anonymous says:

    Any legislation to abolish the CRAs should be retroactive to the announcement of the Governor’s budget proposal. That way the games will be prevented.

  3. Scott Zwartz says:

    The committee was in dereliction of duty. When presented with credible evidence of fraud, it may not simply say, ‘I do not want to know about it.,” and then giving a multi-million dollar contract to one of the alleged perps.
    Prosecutors do not ask the criminal defendant, ‘Are you guilty,” and if he says, ‘No,” then dismiss the charges without conducting an investigation.
    Whoever is running against Cardenas should jump on this gross abdication of responsibility.

  4. Rick Abrams says:

    As for the CRA’s no longer accepting developer appraisals, that fell flat on its face. During the hearing the CRA used a new developer appraisal to subvert its own new re-appraisal and decided to use the developer’s two appraisals for the proper value and to over ride the CRA’s own appraisals.
    Are our councilmembers deaf? stupid? don’t care? At the same time the CRA was pledging never to do it again, they were doing it again.

  5. James McCuen says:

    The bottom line is that people will have to go outside of LA to root out corruption. At least there is now audio evidence of what happened since the Committee was recorded.
    The corruption in LA has gotten so bad that the politicians say and do things and don’t care – Are they stupid or pompous?
    They seem to feel immune because the sheriff left town a long time ago and no one is around to enforce the law.

  6. Anonymous says:

    Cardenas is very smart and educated, but he acted dumb on the day of the hearing when he took Katersky’s word and verbally exonerated him.
    I know its wrong to speculate, but perhaps a backroom deal was cut and the whole thing was scripted including the sugar-coating of Katersky.

  7. Wayne Katersky from Encino says:

    If Garcetti lets this go to a vote and it gets approved by the the full Clowncil, I’m joining the Katersky Family!
    I need the City to buy my home for what it appraised at last $933,500 THEN SELL IT BACK TO ME FOR $1.00 TO “DEVELOP IT” FOR 2 NEW HOUSES!!! I’ll take that deal!
    BOTTOM LINE: Garcetti will be the one who’ll be in Mr. Rizzo’s chair faking heart episodes to postpone HIS prelim hearing in a few years!! Let this Vine St. thing die “on the Vine” and be done with it.
    Council President Eric “frank” RIZZOGARCETTI has earned his new name.

  8. Anonymous says:

    If anyone thinks that Cooley will do anything about LA corruption, forget it. Too busy with Lindsey Lohans of the world or the money he wasted on that guy in Switzerland to get free publicity. We can make a difference at the ballot box by electing honest people. Less than two weeks left. Can we help canvass for them.

  9. Anonymous says:

    Cardenas:smart and educated? Really?
    Cardenas:arrogant, self-serving, deceitful, unethical, no shame, no honor.
    We deserve better.

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