CORRUPTIONISM-Accounting Control Fraud occurs when people in high positions such as a CEO and other company executives or a mayor and a city council subvert the organization and commit fraud for personal gain. With the help of Judge Richard Fruin, the City of Los Angeles is being looted by a group of criminals who are engaged in this activity.
Using Accounting Control Fraud, the mayor and city council are intentionally subverting the city’s processes by means of false data and other misinformation for personal benefit. Mere mistakes are not fraud.
California Civil Code, § 1572 says certain factors equal fraud:
1) False statement which the city official knows is false or the city official has no reason to believe is true
2) The concealing of fact(s) which mislead the public as to the real situation
3) The false statement is intentionally made
As Judge Allan Goodman ruled in January 2014 in the Hollywood Community Plan (HCP) case, the City intentionally told the public materially false information that subverted the law. The HCP case was a CEQA action (Calif. Environmental Quality Act) and it was not a fraud action. Thus, Judge Goodman could not officially rule that the city officials had violated Civil Code § 1572. Judge Goodman’s January 2014 decision did, however, provide a sound basis for the District Attorney to move ahead, but the District Attorney habitually looks the other way when presented evidence of criminal behavior by the mayor and city council.
The Motive Behind Accounting Control Fraud
Whether it is a corporation like Enron or a city like Los Angeles, the people in charge are motivated to loot the corporation or city for personal gain. The benefit to the city officials can be a two-step process. (1) The city uses fraud to justify giving a developer millions of dollars, and (2) the developer uses the Citizens United Case to support the mayor’s run to be President or a councilmember’s re-election or if he or she has been termed out, to finance his or her race for another seat, e.g. a former mayor’s desire to be governor. Due to the Citizens United case, however, the kick-backs are secret.
Accounting Control Fraud in the Hollywood Community Plan
The entire 2012 update to the Hollywood Community Plan is an example of Accounting Control Fraud. The HCP was based on materially false population data to justify the construction of high rises in Hollywood. Not only does the city then give money to the developers, but large apartment complexes make tons more money for the developers. Based on actual data, projects like the Palladium, Crossroads, and a multitude of infil projects would be rejected as harming the environment and our quality of life. Judge James Chalfant rejected, for example, The Millennium Towers Project because it was based on misleading traffic data. Rather than use CalTrans data, the city had invented misleading data to deny traffic congestion.
When the San Francisco’s Millennium’s condos list prices run from minimum list price of $2,399,000 to a maximum of $4,995,000, one sees how much money is involved in constructing a 12-story building rather than a 3-story building. Thus, a fraudulent HCP means hundreds of millions of dollars for developers and the politicos. San Francisco with its Leaning Tower of Millennium is learning how dangerous it is to rely on fatally flawed data.
The Fraud Continues Unabated
The fraud continues. Civil Code, § 1572 shows that the Garcetti Administration is perpetrating Accounting Control Fraud today. Fraud can be “the concealing of fact(s) which mislead the public as to the real situation.”
In April 2016, the City released the new Notice of Preparation (NOP) for the next update to the Hollywood Community Plan (HCP2) and it is based on fraud. The NOP states that its Hollywood population data, (206,000 people in 2016) was “based on SCAG estimates (RTP 2016).” That was materially false. The SCAG RTP 2016 had no population data for Hollywood.
While Mayor Garcetti publicly declares the need to update the community plans, he refuses to update the Hollywood Community Plan. After the NOP in April 2016, there is no Draft Environmental Impact Report (DEIR) for the Hollywood Community Plan. We are more than four years after Judge Goodman’s January 2014 decision and Mayor Garcetti is committing fraud by intentionally concealing the true population data for Hollywood (Civil Code, § 1572 (3) suppression of acts). If he were to release a Draft EIR for the HCP2, then the public would have the legal right to correct his deceptions.
Los Angeles is Being Seriously Harmed
Accounting Control Fraud is not a victimless crime. Part of the criminal enterprise entails the destruction of thousands of poor people’s homes. The city could have discouraged the destruction of rent-controlled units by not approving spot upzoning. Spot upzoning refers to the city’s allowing developers to construct projects that are illegal under the city’s codes and specific plans. Without a guarantee that the property will be upzoned, developers would not buy rent-controlled properties. In a non-corrupt system, the developers could end up owning and operating rent-controlled property rather than constructing million-dollar condos.
The Garcetti Administration’s Accounting Control Fraud will bankrupt the city. We are being conned into squandering hundreds of billions of our tax dollars on fixed rail mass transit which people are increasingly refusing to use. The payments on the $102 billion for rapid transit are likely to be $200 billion and the annual deficit should be at least $8 billion per year for operating and maintenance expenses. The LA City budget itself is $8 billion per year. The Garcetti Administration not only conceals the true costs of giving billions of dollars to the mass transit construction companies, but it hides the fact that these fixed railed projects only last about 30 years. Thus, LA will have to start replacing its current fixed rail like the Hollywood Subway by 2022. It opened in 1993 which means it will be breaking down within the next five years.
Accounting Control Fraud is killing Los Angeles as a viable city. When the city ceases to function, the politicos and developers will move elsewhere.
(Richard Lee Abrams is a Los Angeles attorney and a CityWatch contributor. He can be reached at: Rickleeabrams@Gmail.com. Abrams views are his own and do not necessarily reflect the views of CityWatch.) Edited for CityWatch by Linda Abrams.