Tuesday, August 12, 2008



By Ron Kaye in RonKayeLA.com

August 12, 2008 -- If you want to understand how public corruption works, the standard maxim is follow the money, which usually leads you to how palms get greased, back room deals get made and the public gets screwed.

Take the case of downtown L.A.'s biggest property owner, Richard Meruelo, meruelo.jpgwho has turned his family's shop specializing in quinceanara and wedding dresses into a staggering fortune with control of millions of square feet and dozens of properties.

Every CRA-subsidized downtown project enhances Meruelo's holdings, every extra tax dollar generated by those developments that stays downtown adds value to him .

Is it any wonder then the Meruelo has invested heavily in City Hall politicians, particularly Antonio Villaraigosa.

Apart from tens of thousands of dollars spread around city political campaigns in recent years by himself, his family, his colleagues and employees, Meruelo was the biggest single contributor to independent expenditure efforts that backed Villaraigosa in 2005 -- $193,000.

Even as he was boosting Villaraigosa's campaign warchest, Meruelo swooped in and bought the Taylor Yard property out from under the LAUSD which had offered $27 million and was prepared to go nearly $3 million higher. The community had worked long and hard to find a location for the underserved students in the Glassell Park/Cypress Park area and Taylor Yard was the only possible site.

An eminent domain fight between Meruelo and LAUSD ensued and the Downtown News today in an extensive report by Ryan Vaillancourt says the King of Downtown will profit handsomely in just three years under a $50 million settlement with LAUSD.

"The previously unreported agreement was approved in a closed session meeting of the board of education by a 6 to 1 vote on June 17,:" the story says.

The lone holdout was East Valley board member, Tamar Galtazan, who objected to the price. The $50 million settlement does not sit well with some, including Tamar Galatzan, the only member of the board of education to vote against the agreement.

"This is a lot of money for a property that the district could have purchased years ago and the run-up in price is based on the developer speculating that if the district didn't buy it, he could put a huge development on it and make double his investment," she said.

So Meruelo buys the property for a mixed-use housing development as the real estate market is nearing the peak of a boom period and sells it when the market has crashed and housing market has dried up and makes a profit of $20 million or so.

And the return on his investment in politicians is even better by far. Maybe such contributions should be considered a legitimate business expense since there's nothing wrong with them under the city or state law; it's not even necessary to disclose what special interests like Meruelo are especially interested in even when they throw around six-figure donations.

Think about what was going on at the time.

LAUSD is trying to buy the property and in the middle of negotiations Meruelo puts in a better offer and the district is too slow and confused to counter or to seize the property by eminent domain.

For his part, Villaraigosa happily takes Meruelo's money even though he's running for mayor as the education czar, the candidate who is trying to take over the school board by electing a majority and take over the district directly through legislation.

But he has no qualms about Meruelo robbing the community of a badly-needed high school even as the Hahn campaign is raising ethical questions about the contributions.

The sad truth is this is how City Hall works all the time. These people aren't crooks. It's all legal because for all intents and purposes the only way a politician can get in trouble is by standing up in public, or getting trapped in a recording, admitting they did favors in exchange for money.

And that's a crime.

Ron Kaye L.A.

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