Under the category of “who’s watching the henhouse”, federal prosecutors have launched an investigation into a prominent Los Angeles real estate developer of affordable housing projects. A number of California cities, including Los Angeles, Glendale, Anaheim, Fresno, Long Beach, Sacramento and San Diego, all channeled funds to Advanced Development and Investment, Inc. for more than 50 municipal-sponsored housing projects. According to a court-appointed receiver David Pasternak, over $650 million flowed through its checking accounts, even though the company had “virtually no financial records.”
Some $80 million is believed to have been transferred to personal accounts, including one in India. Other assets identified as part of the investigation include over $600,000 in gold bullion and three cars, including a Bentley. The company is said to have inflated budget estimates to qualify for more tax credits, and submitted fraudulent invoices and phony documents to cities for reimbursement. In addition, the company apparently made thousands of dollars of improper gifts and political contributions to various elected officials.
The discovery of the irregularities came to light beginning with a divorce proceeding involving the company’s former president, Salim Karimi, and Jannki Mithaiwala, the daughter of company founder Ajit Mithaiwala.