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  Switching Contracts
In This Section:

Irving Moskowitz and Hawaiian Gardens
by Jane Hunter

This is the first installment of the story of Irving Moskowitz and Hawaiian Gardens. Some of the quotations and documents were gathered in the preparation of a story for a local publication, which did not publish the work. This installment was written in 2000 and reflects the political situation at that time.

  The Story Of Irving Moskowitz
and Hawaiian Gardens

Casino Contracts Compared – DDA: Redevelopment Contract

Coalition Refutes Moskowitz Booklet
praising Moskowitz gambling operation
in ten-part graphic series
Neon beckons drivers on the 605 freeway to the white-domed casino in Hawaiian Gardens, a city with none of the romance of its name. The casino project, that was to lift from poverty the tiny city in southeast Los Angeles County, has instead brought crushing debts and heartache. Now, like the gamblers it hopes will save it, Hawaiian Gardens wagers on credit, some funded by the casino developer himself, Irving Moskowitz.

That's Irving Moskowitz, M.D., internationally prominent-enemy of Israeli-Palestinian peace and kingpin of Hawaiian Gardens. Before Moskowitz ventured into casino gambling, he made a fortune in the hospital business. His first venture in Hawaiian Gardens was the local hospital. Much of Moskowitz' local power derives from an enormous bingo hall he runs through his Irving I. Moskowitz Foundation.

This should be crunch time for the 72-year-old Moskowitz. A decision on his permanent casino license is imminent – just when the California Joint Legislative Audit Committee (JLAC) has launched a probe into Moskowitz's financial dealings with Hawaiian Gardens. But at City Hall they're saying the license, which must be approved by Attorney General Bill Lockyer, is a done deal.

How this can be is a puzzler, when, according to a news report , the JLAC is looking at the Hawaiian Gardens Community Redevelopment Agency 's financing of the casino. There are questions about whether the funding violates a state law forbidding investment of redevelopment funds in gambling ventures.

For months, the Coalition for Justice has been encouraging letters to Lockyer asking him not to grant Moskowitz a license. The letter campaign focused on the questionable use of redevelopment funds for the casino. Letter-writers also voiced concern about the Moskowitz Foundation's bingo operation exploitation of Latino "volunteer" workers to generate millions of dollars for organizations fighting Israeli-Palestinian peace far from Hawaiian Gardens.

    Moskowitz' casino under construcion in mid-1999

Tell-tale document found
But now the Coalition has obtained something that surely must give Lockyer pause: long-sought evidence supporting allegations that, moments before Hawaiian Gardens approved the agreement that governs the casino project, a Moskowitz-friendly draft was substituted for the official document.

The difference between the two documents is enormous. For starters, the substitute document knocked Moskowitz's good faith deposit down from $3 million to $25,000. But potentially even more expensive is some stealth language that could free Moskowitz from the casino tax specified in his city license – the revenue justifying the whole project and at least some of the pain it has caused. [Click here to see a .pdf document comparing the two agreements.]

Small cities are naturally attractive to would-be casino operators. But, for the most part the gambling moguls significantly bolster the cities' finances. This story is about how a little city of hard-working people has gone into debt to build a rich man a casino.

Kingpin of Hawaiian Gardens
It's hard not to notice the Moskowitz presence in Hawaiian Gardens, even if you manage to miss the large "Irving Moskowitz Little League" banner in the local ballfield. That's across from the Tri-City Regional Medical Center, which Moskowitz built in 1969, his first local venture. Not far off, the Hawaiian Gardens Food Bank, recipient of most of the bingo proceeds which Moskowitz spends in Hawaiian Gardens, gives out food and used clothes to the many impoverished families among Hawaiian Gardens' population of 14,800.

Abutting the hospital (and sharing its parking lot) stands the bingo hall, where signs remind players the operator is the Irving I. Moskowitz Foundation. Inside, tired-looking immigrant workers move between the long rows of players. They hand out dollar-a-game cards and pluck up bills for the Irving I. Moskowitz Foundation. The foundation sends millions of those bingo dollars to support the doctorís causes – most infamously, the purchase of homes in Palestinian neighborhoods of Jerusalem for occupation by right-wing Jewish opponents of Israeli-Palestinian peace. If he gets the casino going full tilt, Moskowitz could have not handfuls, but hundreds of millions to spend on derailing the peace process.

One block up Carson Street from the bingo, amid shabby franchise food outlets and low-rent merchandisers, Moskowitz' poker casino sits far back behind a forbidding iron fence. Viewed up close, the casino's dazzle turns out to be lights playing on cinderblocks and a shiny white vinyl roof. Moskowitz operatives recently evicted and dismantled a popular donut shop that clung to the casino's perimeter (see photo at end of story).

Moskowitz lives in Miami Beach, letting his lawyers and his two Israeli sons-in-law do his legwork in Hawaiian Gardens. Nevertheless, those who've dealt with the retired physician say he's a control freak who keeps close watch on local developments. "He phones quite often, and he'll talk and talk," said former Hawaiian Gardens mayor and councilmember Kathleen Navejas, recalling the days before she and the doctor became political foes.

Lupe Cabrera, a member of the current city council who occasionally strays from the Moskowitz program, said in a 1999 interview that he expected Moskowitz to run someone against him, spending many times his own typical campaign budget of $2,000. "Two of the councilmembers elected [in March] were his people," said Cabrera, referring to Petra Prida and Leonard Chaidez, who, with Betty Schultze make up the current Moskowitz majority. "And," continued Cabrera, "he's grooming others to take my place." Cabrera, who was born in Hawaiian Gardens when the place was "nothing but a swamp," and who was president of the Chamber of Commerce in 1964, when the city incorporated, sighed. "There's a lot of good history – but ugly politics."

The Moskowitz casino project
An especially ugly spell of local politics began in 1993, with the development agreement for the project that eventually became Moskowitz' casino. Initially, Moskowitz approached city officials – in their dual roles as directors and staff of the Community Redevelopment Agency (CRA) – with a proposal to build a supermarket on the choice land on Carson Street, just off the 605 freeway. But, according to several former and current city officials, it was widely believed that the doctor really planned to use the site for a casino.

Indeed, in 1989 a member of the City Council wrote his colleagues a memo, saying "some of you are upset with the recent meeting I had with Dr. Moskowitz concerning the development of the 23-acre parcel at the northeast corner of Pioneer and Carson, adjacent to a parcel of land owned by the Redevelopment Agency. He wants a card casino on the property."

    Late December 1999: Moskowitz' casino nears completion

Moskowitz owned some of the land, but businesses were flourishing on additional parcels he wanted. So Moskowitz asked the CRA to condemn these and sell them to him, recounts Nelson Oliva, who was, at the time, the Hawaiian Gardens city manager, and therefore also the CRA's executive director. In interviews with the Coalition and this writer, Oliva told how the agency began drafting the deal, known in California as a "disposition and development agreement," or DDA.

According to Oliva, "One of the issues in negotiations over the DDA was that current property owners . . . [and their] tenants would be treated in a proper way. . . . Assurances were made that the city and agency would pay them the market value of the property and that their tenants would be treated in a professional way. They would be protected under the laws of California redevelopment, which provide certain assurances to tenants being displaced by redevelopment activity," said Oliva.

Six years later, several of those business owners have harrowing tales to tell about their eviction and their long wait, which continues, for the CRA to pay their relocation expenses so they can get back into business.

But no one knew, back in 1993, when the CRA board members (the city councilmembers wearing their CRA hats) approved the DDA, how things would turn out. Indeed, very few people even realized that the DDA that they passed was a different document than the DDA the CRA staff negotiated with the Moskowitz organization. That staff-written DDA was generous enough, with the agency charging Moskowitz only 50 percent--$2.75 millionóof what it paid to acquire the parcels of land.

A last-minute switch
As Oliva tells it, during an agency meeting, "there was a request by one of the members of the agency that the agency be allowed to go into closed emergency session." On a large conference table in the room where they gathered, Oliva continued, "was a stack of legal documents. When I went to review these documents – knowing that there was nothing in there prior to the meeting starting – I realized this was another DDA. Not the one that staff had prepared, not the one that had been hammered and negotiated with Beryl Weiner [Dr. Moskowitz' attorney] and the CRA attorneys and the city attorneys, but another DDA."

Oliva continued: "[Then city attorney] Graham Ritchey says, 'What's this? All of a sudden Dr. Moskowitz needs to have [changes]?' We asked them for time to read it," Oliva said. But that wasn't allowed. "Graham Ritchey was graciously allowed to grab a copy."

The CRA directors promised not to discuss the new document, but "to talk about something else," Oliva continued. When "they came out, Weiner has a box of documents and the vote is taken [to approve] their DDA."

Added Oliva: "It was conveyed to me by some of the members of the agency at the time that this was the agreement that Mr. Weiner and Mr. Moskowitz were comfortable with, and the project would still not be jeopardized. It would still be developed as talked about and discussed for almost a year."

Navejas, a councilmember at the time, confirmed Oliva's account. "That's true, and we all voted for it," she said. "Because Moskowitz called and called and there was so much pressure, we asked staff to step out."

Asked if he recalls the DDA's being switched, Ritchey said he was reluctant to probe old history because "I left Hawaiian Gardens under friendly circumstances." He said, "I don't recall if that was the case."

Julia Sylva, who succeeded Ritchey, said the switch was possible. Two years ago, in a letter to Weiner, Sylva put it more strongly: The DDA, she wrote, "appears to be an incongruous and hastily drafted document."

Lupe Cabrera described the DDA as "put together by the doctor's attorney."

"Absolutely not!" said Weiner, when asked to comment on the alleged switch.

However, when the Coalition for Justice obtained a copy of the original DDA and compared it, line for line, with the substitute that became the official DDA, several stark differences jumped off the pages. For starters, the good faith deposit required of Moskowitz was reduced from $3 million to $25,000!
[Click here to see the relevant page in the DDA in .pdf format.]

Where the original DDA said the CRA would deliver the site to Moskowitz in an "as is" condition and the parties would split the cost of removing hazardous substances, the substitute DDA required the CRA to take responsibility for hazardous substances on the site.

Potentially more serious is some language added to the substitute DDA that appears to allow Moskowitz to challenge the casino revenue tax established in 1995. This language says, "[N]either the Agency nor the City of Hawaiian Gardens may at any time designate . . . [any] property or business located at or near the Site on property now owned or hereafter acquired by Redeveloper [Moskowitz], for greater tax assessments or treatment (including, but not limited to, business license or other taxes) that established for all other properties or businesses within the City of Hawaiian Gardens, nor may any such taxes, assessments or treatment (including, but not limited to, business license or other taxes) be hereafter increased by any percentage greater than such increases for all other properties and businesses within the City of Hawaiian Gardens ."
[Click here to see this page of the revised DDA; the key text is in red.]

Potentially devastating language
That may be pretty tame boilerplate language for a supermarket development. But a casino, with all the potential crime, blight, congestion and stigma it brings a city, is expected to bring millions of dollars to the municipal coffers of those cities willing to tolerate it. The ordinance permitting the casino, which Hawaiian Gardens voters passed in 1995, specified a tax rate of between 10 percent and 13.2 percent of the casino's gross receipts.

Just now, Moskowitz would probably not want to invoke that little clause. He recently loaned the city $3.5 million, to be paid back (interest first) out of casino revenues. But once the city pays down the loan, it might be confronted with the devastating prospect of giving the casino a free ride. Compare it to Atlantic City paying Donald Trump to establish casinos.

The substitute DDA also had an attachment calling for the city or the CRA to be responsible for any improvements on and off the site, noted Oliva. "Those improvements could be curbs, gutters, redesign of streets, traffic lights, parking lot improvements. Anything the city or agency would impose as a condition of development on the developer. Obviously," he said, "this appeared to be a very done deal due to some very strong lobbying efforts behind the staff's and technicians' backs. There was very little we could do."

The original DDA obtained by the Coalition refers to attachments, although they are not attached, so it is impossible to verify that these conditions were absent in that document.

Although no one ever formally challenged the DDA's validity, suspicion over the document never diminished. In 1999, the Moskowitz organization prevailed on the city council and the CRA to call a special (and especially inconvenient) early-morning meeting to approve a "Certificate of Estoppel," a formal, legalistic avowal of the DDA's authenticity.

An amendment to the DDA passed in 1994, heaped even more expenses onto taxpayers. Where previously the DDA had the agency and Moskowitz sharing the costs of evicting the existing businesses on the site, the amendment obliged the CRA "to bear all costs, expenses, damages and liabilities incurred by Redeveloper [Moskowitz]."

Additionally, the amendment committed the agency to hire Beryl Weiner's law firm to represent the agency and Moskowitz in the eminent domain cases against the businesses. The hourly fees for Weiner and other attorneys in his firm were specified in the amendment, as was the agency's statement that it was willing to tolerate any potential conflict of interest Weiner's representation might entail.

Whether or not Moskowitz and Weiner were laying the groundwork for the casino, when, in 1995, they made their intentions clear, the contractual foundation was beautifully prepared. By contrast, the public process that followed was surpassingly ugly, featuring recall elections, lawsuits and pain that has yet to be assuaged.

A brutal campaign
In the months leading up to the special referendum on the casino, Moskowitz started pumping significant amounts of bingo proceeds into the city, through foundations under his control. The bingo money underwrote a significant portion of the city's expenses including a municipal police force, established to replace the county sheriff's contract services. (It's difficult to say exactly how much of the city's budget Moskowitz subsidized, because the city skipped a few years of budget writing.)

The casino referendum sparked lawsuits, recall elections and enduring bitterness. Over the course of two weeks – and several emergency City Council meetings – in August 1995, Nelson Oliva and City Attorney Maurice O'Shea were fired (O'Shea pre-empting the axe by quitting), Navejas was served with a recall, the casino measure went on the ballot and the DDA was amended to drop the language that specified a supermarket.

Oliva says he'd been arguing with Beryl Weiner that there should be a new deal – not an amendment – because the basic nature of the project had changed. Such a deal should require "that $3 million should be put back," said Oliva, referring to the good faith deposit, whittled down in the substitute DDA. A redrawn deal should also require Moskowitz to pay for all the site improvements and half the eminent domain costs. "If it was gaming" that Moskowitz was planning as the redevelopment project, Oliva said he told Weiner, "taxpayers shouldn't subsidize any of it."

Oliva remembers his last negotiating session with Weiner, on August 7 th , a Monday. The next night, there was a regular City Council meeting with a routine agenda. But, Oliva said, before the end of the meeting, Mayor Robert Canada "started passing out the agenda for a 24-hour notice emergency meeting." On that agenda was the "firing of the city attorney, firing of the administrator and the agency attorney." Oliva said he cautioned the members that Canada's agenda hadn't been prepared by city clerk, but "was prepared by someone off staff and faxed in, so the council should be sure its actions were legal." But "at the Wednesday meeting, I was terminated. They retained Mr. Ritchey [the CRA's attorney] for five months, and after frustration, he resigned."

The project, concluded Oliva, had become " a full gambling casino."

For reasons that have never become clear, the amendment to the DDA, passed on August 15, 1995, did not explicitly state that the project was to be a card club, as California casinos are called. Instead, it was simply called "a commercial development of between 50,000 to 80,000 square feet."

Moskowitz may ultimately come to regret those vague words, which may cost him, retroactively, the CRA subsidy. One of Hawaiian Gardens' own State Assembly representatives, Alan Lowenthal, announced last year that he would investigate whether the agency's spending on Moskowitz's casino was illegal under 1996 legislation called the " Isenberg Amendment ." That measure prohibits spending redevelopment agency funds on gambling establishments contracted after April 1, 1996. Lowenthal, who represents about 70 percent of Hawaiian Gardens and chairs the Assembly Housing and Redevelopment Committee, said in an interview with this writer: "My sense is that amendment was written for Hawaiian Gardens."

Moskowitz attorney Beryl Weiner argues that city voters authorized the casino in a November 1995 referendum. Others say the first explicit mention of a casino came long after the cutoff date. Lowenthal said that "there are serious questions" involved and, if he finds the agency used funds illegally, "I would be compelled to act. No one is above the law." The investigation launched last fall by the State of California's Joint Legislative Audit Committee may also scrutinize the use of agency funds for the casino.

Beginning in the fraught month of August 1995, Navejas, Oliva and their allies, backed by three big area casinos, filed a series of lawsuits against Moskowitz, the city and the agency. (The three casinos were the Commerce Club, the Bicycle Club and Hollywood Park, the latter of which tried to apply for a Hawaiian Gardens casino license but was rejected.) Their first action sought to block the referendum and they persuaded a Superior Court judge to order the measure off the ballot because of fraudulent petition gathering practices. However, an appeals panel put it back on.

Next, the group sued to block construction of the casino and punish Moskowitz and the city for alleged illegalities in the referendum and the granting of the casino's business license (which doesn't expire until 2021).

They complained that the special meeting at which three pro-Moskowitz councilmembers fired Oliva and forced O'Shea's resignation was illegal. Their complaint contended that the two were fired "because they refused to accede blindly to the . . . demands and plans of Moskowitz. . ." for the casino referendum.

The lawsuit alleged that "City workers were permitted to campaign for the initiative. . . on city time and using city vehicles and other resources; campaign posters were permitted to be plastered on city property, including posting at City Hall."

Stratospheric campaign spending
The lawsuit also complained of Moskowitz' huge personal expenditure on the special election held on the casino referendum. The infusion of cash was one of the factors prompting persistent questions about the validity of the election, which legalized casino gambling in Hawaiian Gardens. Indeed, according to campaign spending reports, Moskowitz pumped $561,000 into the contest, gaining the votes of 965 of the 1687 who went to the polls. Most of the money was given directly to individual Hawaiian Gardens residents, in amounts ranging from $100 to several thousand dollars.

During the referendum, allege the plaintiffs, "[s]ome of the proponents. . . .received thousands of dollars" from Moskowitz and his Cerritos Gardens General Hospital Company (which is the landlord for the casino, the bingo and the hospital). Recipients of Moskowitz campaign largesse included the wife of a city councilmember and several city workers, one of whom, Fred Licon, collected $11,733.15 for campaign work; a Patty Licon at the same address given for Fred got $5,300. In a sworn statement in an unrelated lawsuit, Moskowitz describes Fred Licon as "an employee of the City and during off-hours, he works at one of my projects." During the voting, the suit alleged, casino supporters challenged many voters and told others they weren't on the voter lists.

In July 1997, Navejas and her allies won a reported settlement of $281,383 from Moskowitz and undisclosed cash payments from the city and agency. In a letter, Sylva, the ex-city attorney, mentions the city's obligation for $100,000 in legal fees to the plaintiffs' attorney's firm for the case. In return for the settlement, the plaintiffs had to drop their claims of illegalities surrounding the casino referendum and the DDA.

An internal city document used in the settlement talks shows that city lawyers believed that, if the case went to trial, Hawaiian Gardens might be found guilty of several of the plaintiffs' allegations, including violating laws governing open meetings, elections, redevelopment and using public funds for partisan purposes. The document estimated that a trial might result in potential liability and costs amounting to more than $5 million. Plus, it notes, the city could lose $5 million a year in card club revenue during litigation that prevented the casino from operating. (The city's budget is currently around $4 million a year.)

While the lawsuit moved through the system, Navejas mounted recall elections against two Moskowitz loyalists on the council, knocking out one. But in the same election, Moskowitz won his recall of Navejas. In 1997, Moskowitz reported spending $16,925.00 on the recall of Navejas' ally Rene Flores, which also succeeded.

    December 1999: Workers board up building, as Moskowitz' casino evicts popular donut stand.
     A contractor subsequently leveled the building without the required asbestos procedures,
     prompting the Coalition to seek an investigation
[see the Coalition's News Release – Jan. 5 2000.]

Moskowitz hired gang members to stump for recall votes against Navejas, according to several sources. An Israeli TV crew interviewed one of the recall workers, who called himself "Boxer" and said Moskowitz had paid him and his relatives $1,000 each. "Boxer. That's his street name," said Nelson Oliva, who added that, as city manager, he "had a good working relationship" with local gang members – good enough to keep municipal property graffiti-free. "Boxer was one of the main players in the Hawaiian Gardens street gang," said Oliva.

Cabrera confirmed that Moskowitz "of course" used members of the local street gang as election workers. "A lot of these guys were felons, and they couldn't work for the casino. But they were okay for campaigning. I've heard they pay them $7 an hour." He added: "One of the kids [Moskowitz] hired is in jail" for killing a black youth during a period of Latino-African-American strife. According to one source, anti-card club campaigners hired security staff for protection against Moskowitz's precinct walkers.

Navejas says she previously employed some of the same the same young men as part of a bingo-funded gang diversion program – until she fell out with Moskowitz and he stopped the money. Then, she says, he bought the building that housed the program and took her name off it. It stands empty today. "Four years later and he leaves the lights on every night," she said. The program, which provided a range of services to at-risk kids and their families never resumed. "He's very good at playing psychological warfare," said Navejas.

Perhaps the cruelest blow was the one dealt by the arm of the law against Navejas and her ex-husband the day before the casino referendum. As volunteers, the two had been running the community food bank, which in the days of harmony, enjoyed Moskowitz' funding. On that November morning, Navejas recalls, investigators from the Los Angeles District Attorney's office swooped down on both their houses.

The story went out to the media that Carlos Navejas had embezzled money from the food bank. (Such allegations are not usually leaked, much less made formally, by a disinterested third party with a puckish sense of timing.) No charges were ever brought. Indeed, no embezzlement was ever alleged. But the DA ignored repeated appeals to formally close the case and return seized documents.

[Click here to see a .pdf of the Coalition's News Release Regarding the Changed Agreements]
  View all news reports
© 2003 the Coalition for Justice in Hawaiian Gardens and Jerusalem