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Say It Ain’t So, Rick Caruso — How Billionaire Got Property Taxes Reduced on the Grove Shopping Center

EDITOR’S NOTE: Reporter Randy Economy and owner-publisher Brian Hews of the Los Cerritos Community Newspaper broke the story about the scandal in County Assessor John Noguez’s office nine months ago. They followed up in numerous articles on how wealthy  property owner’s were able to hire agents with influence to reduce their tax burden. Here is their latest article and a link to emails about billionaire Rick Caruso getting the tax on the Grove shopping center reduced.

By Randy Economy and Brian Hews

Embattled Los Angeles County Assessor John Noguez and his office assisted Los Angeles billionaire real estate mogul and potential mayoral candidate Rick Caruso with preferential treatment that resulted in massive property devaluations at one of the most profitable shopping and entertainment centers in the United States, Los Cerritos Community Newspaper has learned exclusively.

Caruso and his wife Tina donated thousands to two political campaign committees controlled by Noguez including the “Noguez for Assessor Committee 2010” and another to the “John Noguez for Assessor 2010 Attorney’s Fees Fund” in late 2010.

Caruso is one of the most powerful political figures in Los Angeles County and is currently strategizing to become an official candidate for Mayor of LA in the 2013 election.

Los Cerritos Community Newspaper obtained thousands of emails between Noguez and several property tax agents who are now under investigation in what law enforcement officials classify as the largest “political pay to play scheme” in the history of Los Angeles County.

LCCN has been investigating the activities of Noguez and several of his top senior staff members for the past year and has published more than 50 articles documenting massive “pay to play” schemes directed under the approval of Noguez. Since LCCN first began their investigation one lower level appraiser inside the Assessor’s office has been arrested on 60 counts of felony bribery and money laundering counts.

On Thursday, LCCN published several key emails and documents that show how entrenched property tax agents Dale Beckwith and Michael J. Schaaf (who also donated to Noguez’ campaign) were able to flex their political influence on behalf of Caruso that directly resulted in having several Grove parcels, with a 2012 value of $165 million, devalued.

The first case asked for a “Base Value Reduction” on all Grove properties. According to sources in the Assessor’s office, a BVR does not have to go through the appeals process, the properties can be revalued using what is called an “Assessor’s Correction”. One parcel, valued at $13,770,000, was reduced using this correction to $9,050,000, a 34.27% reduction.

Applying that percentage to all other properties would generate a $49 million refund. At a 1.25% tax rate the refund would amount to $612,000 per year.
A Base Value Reduction appeal allows the owner to go back in years and assume the new value. If Caruso owned the property for eight years he would realize a $4,896,000 refund. The rule also allows the carry forward of the reduced amount.

Caruso owns some of the most exclusive real estate in the United States. In Los Angeles County he owns the Encino Marketplace, the Americana at Brand in Glendale, the Grove, and Burton Place Retail Center in Los Angeles. Caruso is also planning to construct a new $500 million luxury resort and casino in Las Vegas, according to several media reports.

EMAIL TRAIL LINKS CARUSO REPS TO NOGUEZ

Emails obtained between Beckwith and Schaaf and members of the Assessor’s office, including Noguez, show a carefully thought out plan for the tax reductions at the Grove going back to 2009. Caruso gave authorization to both Beckwith and Schaaf to represent him on official business regarding his properties before the Assessor’s office, LCCN sources confirmed.

Noguez along with two of his past top appraisers Andrew Stephens and Mark McNeill from the Major Properties was specifically assigned to work with Beckwith and Schaaf on at least 10 different properties owned and controlled by Caruso.

Stephens and McNeill have been placed on “full paid leave” after at least 300 law enforcement officials raided 12 locations in two different states several months ago.

During a three-day period in September of 2009, Beckwith, Mc Neill, Stephens, Schaaf and Noguez communicated back in forth in a series of emails to set the plan for Caruso’s devaluations.

On Thursday, Los Cerritos Community Newspaper Publisher Brian Hews released several key emails and documents that illustrate how Noguez, Beckwith, Schaaf and others interacted in a “very blatant manner,” Hews said.

In one email conversation on September 3, 2009 Noguez notes: “Below are some of the active appeals that Michael (Schaaf) has for the Grove. Dale (Beckwith), are there any other numbers that you might have as the big reduction is really on your parcel? If so, please send them to Mr. (Mark) McNeill asap so we can get this scheduled (to be placed on the Property Appeals Assessment Board Agenda).”

In another email from McNeill to both Schaaf and Noguez on that same morning of September 3, 2009, he writes: “Good morning all! That should work! Send me the apps guys.”

During that same morning Noguez messaged Mc Neill and Beckwith asking how the item was going to be placed before the Property Appeals Assessment Board and on what specific time and date in order to get approval on the reduction for the parcel: “Could we get you to see if Sylvia would let us do September 8, 2009 at 10:30 am? I could have the clerical work in Wednesday and be ready for the Sunday, September 13, 2009 update. This might mean we could get a corrected tax bill in time for the 1st installment for the taxpayers.”

Calls to Caruso, Schaff, and Beckwith were not returned. Beckwith has hung up the phone on Los Cerritos Community Newspaper in the past when asked about his involvement with Noguez and Caruso.

This entry was posted in 2013 Election, 2013 LA Elections, City Hall, Community Activists, Development/CRA, Hot Topics, Los Angeles. Bookmark the permalink.

19 Responses to Say It Ain’t So, Rick Caruso — How Billionaire Got Property Taxes Reduced on the Grove Shopping Center

  1. ex valley says:

    Sorry, boys and girls, but it seems that your dream candidate for mayor may be somewhat corrupt. But then again, stop worrying your pretty heads on who your next hiZzoner will be. It does not matter. The city is heading towards bankruptcy, it’s just a matter of time.
    Read this — available from amazon.

    Crazifornia: Tales from the Tarnished State – How California is Destroying Itself and Why it Matters to America (Paperback)
    Laer Pearce

    • LA Moderator says:

      Little early yet, to tarnish the teflon.

      This is like the LA Times declaring that USC should get the death penalty because another ASSessor ASSistant was running a side biddness glomming on whoever might become the next Reggie Bush.

      Certainly there was a culture of corruption that muckrakers will be digging through emails via the California Public Records Act.

      Certainly, there were a lot of homeowners who qualify for Decline-in-value reviews…I know (as my wife reminds me) that I have been remiss in seeking such relief, having had my home valued at purchase price which is worthy of “an analysis of market trends in Los Angeles County.”

      But this story is about commercial property. It’ll be interested to learn if this Base Value Reduction was the proactive work of the Assessor, or based on the requests of these agents.

      Guys like Caruso donate to everybody. They spread it around.

      Seeking specific favors? Or just garnering general good will? I for one try to do some due dilligence before I promote crooks.

      And so, is there quid quo pro between Caruso, Beckwith/Schaaf and Noguez’ crew, or culpibility for not waiting in line for the very valid process to follow appropriate controls and propriety.

      Either way, as the LCCN commentors advise Santos Kreimann to reverse the reduction, in an abundence of caution (and PR) Caruso needs to come out fast with mea culpa’s, and not just shrugg and say he didn’t know, or worse…ignore it, hoping it’ll blow over.

      So, the questions

  2. Teddy says:

    I do not know anyone who will vote for Caruso. Why? was the shrug
    I got from one person.

    Kevin James is the one.

  3. LOU says:

    What you have is some thin smoke, but no fire.
    Commercial property values in Southern California did decline in 2008. Some well over 30%. So what you have is that Rick Caruso hired several well-connected agents to undertake a legal process to reduce his property taxes. That’s about all you can say he did. The rest of the story is innuendo and spin.

  4. Ricardo says:

    And your point is? Don’t be so naive, if you expect to have a PERFECT human being RUN FOR MAYOR it aint going to happen. Having said that I and many others still believe CARUSO is still the one who can move this City forward.

    • Here come the BIG crooks says:

      Forward into a total cesspool. All they want to do is concentrate development on to their TOD’s in order to rip off the tax payers for hundreds of millions of dollars.

      The City would not be broke without the city council and the mayor looting the city treasury through various scam and cons. It’s called Accounting Control Fraud — like Enron, Equity Funding, the Mortgage Meltdown Down. They produce false data saying that everything is fine and then let their buddies loot the city treasury. That’s why we are allegedly broke.

      The best way to rob a bank is to own one and the best want to loot a city is to be a councilmember or mayor.

  5. Anonymous says:

    The county assessor rejected my appeal for a decline-in-value for my house in an area where property values have declined by more than 12%. In fact, the taxable value was raised. Taxes are for the small guy.

    • LA Moderator says:

      Good to know…er, sorry for you that is. But this mitigates my dropping the ball in not pursuing. We bought near the bottom, but paid more than market comps in the area. Guess that I can brag that I pay more than my ‘fair’ share when I run for Supevisor!

    • Here come the BIG crooks says:

      Duh! and you figured this out, when???

  6. Tyndon Clusters says:

    Sodom, meet Gomorrah….LA is a cesspool of corruption and electing a slimeball to oversee it is just asking for trouble.

    I am a lifelong Dem and will vote for Kevin James.

  7. Anonymous says:

    Caruso has made his money with government help, no different from what AEG has done. No billionaire has made money without corrupt complicit government officials like our Mayor, Jan Perry , Garcetti & the City Hall gang. So, he is on equal footing on the corruption scale with the others running for Mayor. The clean guy is Kevin James who needs a large infusion of campaign donations. Can we get Riordan to part with a million or so.

  8. Here come the BIG crooks says:

    Los Angeles City Hall is a criminal enterprise

    But almost on one does anything. One exception is HUNC, Hollywood United Neighborhood council, who called for a Federal Grand Jury into Garcetti’s machinations concerning the LAFD and the CRA and the city budget in general.

    Who else has taken the time to write to the US Atty and express the need for a Federal Investigation? Do you really think that Kevin James will be able to do anything as long as the corrupt City Council remains? The mayor has very little power — most the power is with the City Council which votes unanimously over 99% of the time — that’s the definition of a criminal enterprise.

    If the council wants to clean up LA, councilmembers such as Garcetti, Wesson, Reyes could help Angelenos by confessing now and walking up to Folsom for 10 to 20 years.

    • anonymoure says:

      agree with assessment “criminal enterprise”…
      Council & Mayor are essentially gangsters…racketeers…
      an honest Mayor cannot co-exist with corrupt Council..
      as the saying goes…a corrupted people
      do not care about corrupt politicians…
      and corrupted politicians
      do not care about organized crime….
      it will get worse…prepare to suffer…
      p.s. add Alarcon & Cardenas to the list…

    • anonymous says:

      agree with assessment “criminal enterprise”…
      Council & Mayor are acting like gangster-racketeers…
      as the saying goes…a corrupted people
      do not care about corrupt politicians
      and corrupted politicians
      do not care about organized crime…
      it will get worse…prepare to suffer…
      p.s. add Alarcon & Cardenas to the Folsom list…
      & blog moderator, please do not censor this comment…

  9. Anonymous says:

    To 1:02 p.m.– “:The mayor has very little power”—–Not true. He appoints scumbags like Logrande to head the Planning Department who rubberstamp each & every development project that harm communities. Logrande was on record today calling the AEG project the crown jewel of LA. The Mayor appoints all the mindless Commisioners like Roschen & his gang who further sanctify each & every development project as the best thing that happened to LA. An honest Mayor would appoint honest Department heads and Commisioners. The City Council has a say, which has never been exercised under Garcetti & his gang. As for Wesson, he is a frightening example of why every Sacramento wannabe Councilmember should never be elected.

  10. ex valley says:

    Sorry to curb your enthusiasm for Kevin James but he has virtually no chance of getting elected. Probably wont even be in a runoff
    He has No money and No name recognition.
    Plus he identifies himself as a republican and you know how far will it get you in LA.

    The 10-12% that vote in mayoral elections will go either for garcetti (almost a latino, supports gay marriage, green jobs, etc etc) or gruel (first woman mayor Yey !). Or if Caruso decides to spend millions, he will buy it like Bloomsberg.

    LA has no tradition of shaking things up and going for anybody who is not an incumbent or has tons of money like reardon.

  11. LAISCORRUPT says:

    Caruso is done. Kevin James will win. If you don’t think he can, you aren’t doing your part and you’re clearly not following the news.

  12. Ricardo says:

    Gracetti has pissed off a lot of people on the Eastside and other Latino communities pretending to be one. He needed a map to find Boyle Heights. All of a sudden he’s wants to play the race card. The crooks gave AEG their stadium on a silver platter without even asking the tough questions. When ever the Mayor or another politician attends an event or candidate panel stop being so damn weak ass and stop kissing their asses and boo them or groan to make it known we’re not happy. I want to throw up when I see people clap for these corrupt politicians at events or meetings.

  13. Anonymous says:

    @Here come the BIG crooks says:
    September 28, 2012 at 1:07 pm

    “Forward into a total cesspool. All they want to do is concentrate development on to their TOD’s in order to rip off the tax payers for hundreds of millions of dollars”.

    MTA awarded another 6.4 million dollars to the Planning Department in addition to the 3.2 million awarded earlier to study/increase density at TODs. Our Measure R sales tax money at work to make our lives more miserable.

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