Four of the biggest Chinese investors in Los Angeles real estate have been named in an FBI investigation of possible bribery, kickbacks, extortion, and money laundering related to property deals in southern California’s largest city, according to a document seen by Mingtiandi and first uncovered by the Los Angeles Times.
Shanghai’s Greenland Group, Shenzhen Hazens, China Oceanwide Holdings and Shenzhen New World Group, were all named in a search warrant filed by the FBI and approved in US federal court last November, seeking access to email accounts belonging to Ray Chan, the former head of the Los Angeles Department of Building and Safety under Mayor Eric Garcetti, according to the document.
Chan has not been accused of any crime, however, the FBI is said to be seeking documents related to potential legal violations by Chan, a current city councilman and other authorities who played a role in “acquiring permits, licenses or other official city processes” related to projects in the Los Angeles area.
Checking Gmail Account for Details of Development Deals
The warrant asks Google to give the FBI access to Chan’s personal Gmail account to look for evidence of violations of federal law with regard to bribery and kickbacks, deprivation of honest services, extortion and money laundering, among other potential crimes.
The document specifically requests “All records relating to development projects in and around Los Angeles that related to foreign investors to include, but not limited to, Hazens, Greenland, Oceanwide and other foreign investors not yet identified.”
Together with Shenzhen New World, Hazens, Greenland Group and China Oceanwide have invested in Los Angeles area real estate projects valued at over $2.35 billion since 2010.
No Charges Filed Yet
The FBI investigation of Greenland, Oceanwide and Hazens is part of a broader probe of potential crimes centred around Los Angeles city councilman Jose Huizar, according to an account in the Los Angeles Times, who formerly chaired the council’s planning committee but has since been stripped of some of his positions of authority in the city government.
The investigation, which has been going on since at least July when the warrant was authorised, is looking into the activities of Huizar’s family, officials in the Los Angeles Department of Building and Safety and the Board of Public Works, in addition to Chan and Huizar.
No individuals or companies have been charged with crimes in the case to date, nor have they been formally accused of wrongdoing. The warrant was returned by the court in November, and the investigation is said to be ongoing.
Chan retired from the Department of Building and Safety in 2016, but served as Garcetti’s deputy mayor for economic development until leaving the administration in June 2017. Both Shenzhen New World chairman Huang Wei and Mason Situ, a general manager with Shenzhen Hazens, were named specifically in the warrant.
Chinese Development Giants Caught in Scandal
For Greenland Group, the FBI investigation is just the latest in a series of controversies surrounding its overseas investments. The Shanghai-based developer has invested in billions of dollars in development projects in the US, Canada, the UK, Australia and Southeast Asia, but has been rapidly selling off these projects in the last two years, after the Chinese government clamped down on outbound capital flows.
The top five mainland developer announced in mid-2013 that it had purchased the $1 billion Metropolis project in downtown Los Angeles, a mixed-use complex that includes hotels, offices and residential. During last year the company put up for sale both the Hotel Indigo in the complex, and a separate condo tower, seeking to raise around $730 million through separate tenders.
Beijing-based Oceanwide made its big LA play in 2014, when it acquired the Fig Central project in downtown Los Angeles, announcing the project across the street from the Staples Center as a $200 million deal. Since renamed Oceanwide Plaza, the complex topped out in April last year and includes condos, a Park Hyatt hotel and retail space.
Shenzhen Hazens bought a set of three Los Angeles area hotels starting in December 2013, indicating that the three projects combined were worth approximately $1 billion.
Shenzhen New World also invested in hotel projects, buying the Sheraton Universal Hotel in Universal City for $90 million in late 2010, the same year that it purchased what is now the LA Grand Hotel on Figueroa Street from GE Capital for $63 million. In June last year the company filed an application with the city government to redevelop the LA Grand into a 77-storey mixed-use skyscraper.