Article: News-Enterprise, July 12, 2000

Coalition for Justice in Hawaiian Gardens and Jerusalem

The News-Enterprise
July 12, 2000

State Indicates Wrongdoings in
Hawaiian Gardens Casino Deal

By KATHY LEE SCOTT

Described as an "example of what can go wrong," the State Joint Legislative Audit Committee reported on the two decades' debacle involving the City of Hawaiian Gardens' Redevelopment Agency and the casino being built on Carson Street.

Assemblymember Scott Wildman chaired the joint committee that researched the history of how Dr. Irving Moskowitz and his Cerritos Gardens General Hospital Company allegedly bilked the agency of millions of dollars of taxpayer money to get a gambling establishment built in the city.

THE BEGINNINGS
After its incorporation in 1964, the city council formed a Community Redevelopment Agency in 1969 that covered the entire nine-tenths of a square mile city.

The agency, in early 1982, began its redevelopment efforts with the 23-acre site at Pioneer Boulevard and Carson Street. It contained a few businesses and vacant land owned by CGG Hospital Company and Moskowitz. While several of the business owners were agreeable to working with the agency, Moskowitz was not.

When the agency tried to acquire his land through eminent domain, he filed a lawsuit, ultimately persuading the agency to withdraw its attempts, allowing him to develop his parcels. The first agreement between the two parties in 1982 was thwarted because Moskowitz failed to produce any drawings or plans. According to the JLAC report, "Moskowitz's intentions to build a gambling operation . . . which was illegal at the time, became evident."

It took almost three years before Moskowitz submitted a set of site plans when he asked to get an extension to negotiate a disposition and development agreement.

DELAYS, LAWSUITS
In January 1987, six months after another attempt to condemn Moskowitz's property, the agency filed an eminent domain action to acquire Moskowitz's property.

Moskowitz sued the city and agency for racketeering, conspiracy, fraud, malicious intent and violation of his constitutional and civic rights. According to the JLAC report, Moskowitz then claimed "no public assistance is required to improve this property." Yet, earlier, he claimed "the only way this property can be developed properly is by the city making a contribution to the developer."

PLANS, AGREEMENT
In August 1988, the property owner proposed a development that included a restaurant, hotel, entertainment center, three mixed retail areas, two anchor retail areas, a food specialty section, a corner retail section, child care, a bingo hall, an open-air market area and senior housing. Yet nothing began on the site through 1989, when Moskowitz bought another parcel. The agency again faced the situation of having a "stubborn" property owner acquiring more of the site and not having enough money of its own to fight any lawsuits or to start the project.

Consequently, the agency agreed to sell the property it owned at the site to Moskowitz. In August 1992, Moskowitz asked the agency to acquire the remaining acreage at the site on his behalf, claiming he needed all the property for the proposed development, and that the remaining property owners refused to sell. The agency and property owner began to negotiate a disposition and development agreement, but when the agency's version of the DDA reversed much of the responsibility and risk back to Moskowitz, he promptly pulled out of the agreement, leaving the agency dealing with only three property owners - the very ones Moskowitz wanted to buy out.

In March 1993, he apparently threatened the agency with no development unless the agency acquired the three parcels. He allegedly pushed the agency to adopt a revised DDA, under which the agency would be responsible for 50 percent of the acquisition and relocation costs and all of the infrastructure improvements.

Additionally, Moskowitz did not deliver his version of the DDA until right before the agency's meeting, then demanded it approve it the following day. Such action, according to the report, would violate state law requiring public hearings and notification.

The agency further violated the law when it held a special, closed meeting in May 1993 to consider the DDA. However, according to the JLAC report, the agency members were given Moskowitz's version of the DDA.

STATE CODE VIOLATIONS
The members were advised that they could not hold a closed meeting on a contract with a developer, and they agreed to only discuss condemnation during the session, without any staff present. (According to the report, a mandated audio recording "machine appears to have been stopped.") In open session, the members approved Moskowitz's version of the DDA, without debate or taking public comment.

In 1994, Moskowitz asked for an amendment to the DDA that would eliminate his obligation to pay his share of relocation costs for the businesses now leaving the site and to permit his removing tenants whenever he chose. Additionally, the amendment eliminated any liability by Moskowitz for delays in developing the site caused by property owners' fights against his acquiring their land.

ATTORNEY PROBLEMS
When Lakewood Suzuki and Downen's Garden Center sued the agency, Moskowitz' attorney, Beryl Weiner, mysteriously became counsel for the agency in the cases. According to the JLAC report, neither party has ever produced a retainer agreement between the agency and Weiner. Such dual representation constitutes a violation of state bar rules, the report concluded.

During this, Moskowitz asked for a second DDA amendment in June 1995 that extended the deadline for him to present a plan; added five more parcels using the agency's condemnation power; and changed the plan from a food and drug establishment to a commercial one.

At a June 1995 agency meeting, the JLAC contends Weiner made false statements to the board about Moskowitz's need to obtain more property and how difficult it was for him to attract businesses to the site. The amendment would expose the agency to more lawsuits, according to Graham Ritchie, the agency's counselor, and again would relieve Moskowitz of any financial burden to obtain property. The agency approved the amendment in August 1995.

GAMBLING CAMPAIGN
According to the report, Moskowitz used fear tactics, as well as city staff, to intimidate 57 percent of the 6,000 voters to approve a city ordinance authorizing gambling within city limits at the November 1995 election. A citizen's group, Committee Against Card Club Associations, tried to combat the well-financed campaign, and Moskowitz filed a lawsuit against the nonprofit group in July 1996, which it settled because the group had no funds to defend itself.

It was during this year, according to the JLAC, that Moskowitz began to contribute around $200,000 a month to the city, through two nonprofit organizations, the Hawaiian Gardens Police and Public Safety and the Hawaiian Gardens Education foundations, both of which were "wholly dependent on the Irving I. Moskowitz Foundation."

The arrangement was formalized with a March 1999 agreement that gave the card club a 15-percent "offset" of the monthly license fee in excess of $200,000 until the club generates $4 million in revenues per month. Once it generates that minimum amount, according to the agreement, the club would receive a 17.5-percent offset on the monthly license $200,000 fee.

FINDINGS
The JLAC concluded:

-- Through negligence and malfeasance, the agency and city violated state law;

-- Moskowitz has obtained redevelopment funds to subsidize his gaming establishment, in direct violation of redevelopment law;

-- The agency has assisted a private landowner to purchase and assemble land for the gaming operation;

-- The agency has eliminated viable commercial entities on the site while helping Moskowitz; and

-- The project violates state laws.

RECOMMENDATIONS
The JLAC recommended the following actions, among others:

-- The redeveloper (Moskowitz) should reimburse all subsidies and fees to the agency;

-- The state attorney general should help the agency recover public monies that subsidized the development;

-- Local, state and federal law enforcement agencies should investigate for criminal activities in relation to the project; and

-- The legislature should create a body to guide local redevelopment
agencies with critical issues.

Further reports exploring all sides of these issues will appear in the weeks to come.

Copyright 2000, The News-Enterprise.
For education and discussion only. Not for commerical use.