Chinese Company’s Arcadia Subsidiary to Pay More Than $1M in L.A. City Hall Bribery Case

AChinese company’s Arcadia subsidiary, established to redevelop a downtown LosAngeles hotel, has agreed to pay $1,050,000 to resolve an investigation intothe company’s conduct with public officials in the City of Los Angeles,including bribery, honest services fraud, and foreign and conduit campaigncontributions.

Athree-year non-prosecution agreement (NPA) with Jia Yuan USA Co., Inc. is thelatest development in the ongoing investigation into a wide-ranging“pay-to-play” scheme in which developers bribed Los Angeles city officials tosecure official acts to benefit their real estate projects.

TheChina-based Shenzhen Hazens established Jia Yuan to acquire, operate andredevelop the Los Angeles Luxe City Center Hotel, which it purchased in 2014for more than $100 million. Jia Yuan “planned a massive redevelopment thatwould include retail space, residential units, and hotel rooms, valued atapproximately $700 million,” according to a “statement of facts” accompanyingthe NPA.

TheNPA was executed on Oct. 5 and announced Oct. 7 by United States Attorney NickHanna and FBI Assistant Director in Charge Kristi Koons Johnson.

Underthe NPA, Jia Yuan will pay the monetary penalty within two weeks and willcontinue to cooperate with the FBI’s ongoing public corruption probe. The NPAalso requires the cooperation of Jia Yuan’s parent company, as well as otherHazens subsidiaries in the Los Angeles-area.

TheNPA details several reasons why the government agreed not to prosecute thecompany for three years, as long as it refrains from any criminal conduct.Those reasons include the company’s timely acceptance of responsibility for itsconduct; remedial measures, including terminating George Chiang as a consultantand improving its compliance program; robust and timely cooperation with theinvestigation, which included proactively providing the government with recordslocated in China and in the personal possession of its chairman, as well asmaking the chairman available for an interview while he was located outside thereach of U.S. law enforcement; and agreeing to continue to cooperate with theUnited States Attorney’s office and the FBI as the agencies continue toinvestigate and prosecute cases that may touch upon the company’s conduct.

The statement of facts outlines Jia Yuan’s conduct in relation to former Los Angeles City Councilmember Jose Huizar, who faces a trial in June on a 34-count racketeering indictment, and real estate development consultant George Chiang, who is scheduled to be sentenced in February after pleading guilty earlier this year to participating in a Huizar-led racketeering enterprise.

Inthe statement of facts, Jia Yuan admits a series of acts, including:

• AJia Yuan employee provided Katy Perry concert tickets to Huizar soon afterHuizar and “Individual 1” – previously identified as the city’s deputy mayorfor economic development – intervened in a compliance issue at a Hazens-ownedhotel.
• JiaYuan employees made campaign contributions to several U.S. politicalcandidates, some of which were later reimbursed by the company at the directionof a foreign national, who was prohibited from participating in U.S. elections.
• JiaYuan provided in-kind contributions to several U.S. political candidates byhosting reduced-cost fundraising events at the Luxe Hotel, some of which tookplace at the direction of a foreign national who was prohibited fromparticipating in U.S. elections.
• Thechairman of the Hazens companies facilitated an introduction that resulted in acontract that paid indirect bribe payments to Huizar, who, in his officialcapacity, introduced and voted on a motion to benefit the Luxe Hotel project.
• Chiangorganized a Huizar family trip to China that Hazens partially subsidized.

Afterreceiving all of these benefits, Huizar voted to approve the Luxe Hotel projectbefore the city’s Planning and Land Use Management Committee, which he chaireduntil shortly after federal agents executed search warrants at his BoyleHeights home and city offices in November 2018.

Thestatement of facts also details how Chiang and Individual 1 asked the Hazenschairman on several occasions to make a $100,000 contribution to a politicalaction committee established to benefit a Huizar relative who was planning torun for his City Council seat. While the chairman did not authorize thedonation, Chiang told Huizar that Hazens would make the $100,000 donation,which prompted Huizar to take additional officials acts to approve the LuxeHotel project.

TheNPA does not preclude or limit the investigation or prosecution of individuals,including any current or former Jia Yuan officer, employee or agent.

Thematter involving Jia Yuan and the criminal cases stemming from theinvestigation are being handled by Assistant United States Attorney Mack E.Jenkins, Chief of the Public Corruption and Civil Rights Section, and AssistantUnited States Attorneys Veronica Dragalin and Melissa J. Mills, also of thePublic Corruption and Civil Rights Section.

Any member of the public who has information related to this investigation or any other public corruption matter in the City of Los Angeles is encouraged to send information to the FBI’s email tip line at pctips-losangeles@fbi.gov or to contact the FBI’s Los Angeles Field Office at (310) 477-6565.

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