Politics & Government

Developer May Have Overcharged on Two Echo Park Low-Income Housing Projects

A lawsuit filed by the city of Los Angeles alleges that a developer overcharged for work at Hi-Fi's Figueroa Place and Echo Park's The Mediterranean.

Two Echo Park-area developments are among 15 low-income housing projects cited in a fraud lawsuit being brought by the City of Los Angeles against  developer Advanced Development and Investment Inc.

According to the lawsuit, which was  first reported by the LA Times,  ADI allegedly reported higher building costs than it actually incurred on $29 million dollars worth of projects. The developer is alleged to have pocketed the difference, as well as possibly getting hundreds of millions of dollars of tax credits through false and incomplete records.

Historic Filipinotown’s The Mediterranean and Echo Park’s Figueroa Place were both listed in the lawsuit as properties where ADI may have overbilled and falsified paperwork.

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The 26-unit Mediterranean is located at 1800-1812 West Temple. Figueroa Place, which has 34 units,  is at 1326 West Sunset Boulevard.

The lawsuit alleges that, on average,  ADI overcharged on its projects by 30 percent and sequestered these proceeds in bank accounts in India.

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The lawsuit includes several specific examples of overcharging at the Mediterranean, including billing $396,000 for framing that cost $50,000 and billing $43,7400 for ironwork that cost $1,945.

The city of Glendale  has also filed a lawsuit. The U.S. Attorney's office has launched an investigation.

The Times reporters also looked at campaign contributions by ADI to local officials. 

Councilman Ed Reyes, whose district has 18 ADI projects, got more than $18,000 between 2001 and 2004. Councilman Eric Garcetti got just $500, though the time period was not specificed.

Ironically, for those following the Dodgers’ financial woes carefully, the allegations come after a divorce-court-appointed receiver foundpotential "fraud" in ADI’s books.The divorce case involves ADI’s president Salim Karimi and the daughter of ADI’s founder.

To see the papers filed in the city of Los Angeles lawsuit, click here

Echo Park Patch will be following this story and will let you know when we have more details.

An earlier version of this story stated that the U.S. Attorney had filed a lawsuit. We regret the error.


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