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Los Angeles Times

Friday June 10, 2011

Subcontractor Says L.A. Affordable-Housing Funds Were Diverted To Remodel Glendale Councilman's Home

The allegation involves Advanced Development & Investment, which has been accused by its own overseer of defrauding L.A., Glendale and other agencies of $134 million as it built subsidized housing.
By Melanie Hicken, David Zahniser and Jessica Garrison, Los Angeles Times

A contractor told the FBI that he was paid for renovations on a Glendale city councilman's condo partly from funds devoted to Manitou Vistas II, an L.A. affordable-housing development. (Bob Chamberlin / Los Angeles Times / June 9, 2011)

Money intended for the construction of a Los Angeles affordable-housing project instead was diverted to pay for a high-end renovation of a Glendale city councilman's condominium, according to a subcontractor who worked on both jobs.

Ronald Chamberlain, owner of D & A Coating & Restoration of Fullerton, told The Times the FBI took records involving his work at the home of John Drayman, who lost his reelection bid for the Glendale City Council in April. He said agents also questioned him about Drayman.

The allegation is the latest in the growing scandal involving Advanced Development & Investment, an affordable-housing developer accused by its own court-appointed overseer of defrauding Los Angeles, Glendale and other government agencies of at least $134 million as it built dozens of subsidized apartment buildings for low-income families. Construction and maintenance problems have since been identified at many of those projects.

Drayman voted between 2007 and 2011 to provide $30.6 million in subsidies to three ADI projects in Glendale, one of which was never built. By Chamberlain's account, his company performed roughly $8,000 worth of work on Drayman's home at the direction of an ADI manager.

Chamberlain said he relayed the account he gave The Times to the FBI. He said half of his company's work, or roughly $4,000, was paid from an account devoted to Manitou Vistas II, a 21-unit apartment complex built in Lincoln Heights with $1.5 million in financial assistance from the city of Los Angeles. He also estimated the total remodeling cost on Drayman's condominium was $200,000.

"I was told not to submit any paperwork — no invoices, no emails with [Drayman's] address on them — that they would take care of it later," Chamberlain said. Chamberlain said ADI failed to pay him $150,000 he was owed on various jobs, which contributed to the demise of his company.

A second subcontractor, who declined to be named out of fear of angering federal investigators, said he also met with FBI agents to discuss the Drayman remodel. Lawyers for former ADI executives have repeatedly denied wrongdoing.

Federal investigators have spent months looking into ADI, which built 55 projects up and down the state over the last two decades, the vast majority of them in Los Angeles. In November, a federal grand jury instructed the city's housing department to produce documents on ADI dating back to 2005. The FBI declined to comment.

Drayman did not respond to an interview request from The Times. But in previous interviews, he said he had no idea that the subcontractors who performed work at his home were connected to ADI.

By Chamberlain's account, Drayman personally met with ADI's in-house design manager, Beth Navarette, on the job site "almost every day." "I don't know how he couldn't have known. I mean, Beth has been with ADI forever," he said. Drayman has said he did not know at the time that Navarette worked for ADI. Navarette has not responded to previous interview requests, and attempts to reach her late Thursday were unsuccessful.

A report on Manitou Vistas II prepared for David Pasternak, the court-appointed overseer of ADI, found that the company had overstated its costs for the project by $2 million. In a separate report, inspectors retained by Pasternak found that the building, despite being relatively new, had developed maintenance problems, including cracks on outdoor decks and walls, which left the structure vulnerable to water damage and mold, according to court documents. "Stucco is cracking in many areas of the building due to improper construction techniques and/or poor quality of construction materials used," the report said.

Larry Gross, executive director of the renters' rights group Coalition For Economic Survival, said all of the allegations surrounding ADI should serve as a "wakeup call" for city decision makers. "This is a clear indication that the city of L.A. needs better oversight on how this money is being used," he said. "Maybe we should look at confiscating [Drayman's] condo and turning it into affordable housing," he added.

D & A Coating was one of at least eight ADI subcontractors that worked on Drayman's 1,460-square-foot condominium. Chamberlain said his company refinished the condo's balcony decks and repaired exterior stucco walls.

Chamberlain said former ADI manager Khachik Zargarian, known by the nickname "K," told him to work on Drayman's home. Zargarian described the project as involving a "very special friend" of the company, according to Chamberlain's account.

Chamberlain also said that when investigators began looking at ADI last year, Zargarian advised him to say that he had been paid by Glendale-based National Fire Systems & Services, a frequent ADI subcontractor. Drayman has repeatedly identified that company as his general contractor. "K said if I got questioned on this at all, to tell them that National paid me," Chamberlain said. "I didn't feel too cool about that, so I told the FBI the truth when they asked me."

Zargarian refused to comment on ADI, saying he had already talked to the authorities.

Mike Thomassian, president of National Fire, said he had not received any invoices from Chamberlain for the Drayman condominium. He also said his company was the general contractor on the remodeling project and had "no information and knowledge" about payments from Manitou Vistas II.

After the condominium work was completed, National Fire placed a lien on Drayman's home, saying he still owed $98,222. Glendale officials have been seeking to determine whether Drayman underreported the value of the renovations in permits, which list the work at $30,000.

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