A real estate developer was sentenced July 21 to 72 months in federal prison for paying a $500,000 cash bribe to then-Los Angeles City Councilmember José Huizar and his special assistant in exchange for their help in resolving a labor organization’s appeal of the developer’s Downtown L.A. development project.
Dae Yong Lee, a.k.a. “David Lee,” 58, of Bel Air was sentenced by U.S. District Judge John F. Walter, who also ordered him to pay a $750,000 fine, the maximum permitted by law.
At the sentencing hearing, Judge Walter highlighted why significant sentences are important for deterrence in white collar crimes, saying such defendants “don’t think they will get caught, don’t think they will get charged, and don’t think they will face significant terms of imprisonment.”
Walter further said that Lee “readily accepted and exploited” Huizar’s corrupt offer and showed a “lack of remorse and arrogance” in recorded telephone conversations when discussing his crimes. Lee’s “only regret is that he got caught,” the judge said.
Walter also sentenced 940 Hill LLC, a Lee-controlled, Los Angeles-based company, to five years of probation and ordered it to pay the statutory maximum fine of $1.5 million, as well as the cost of prosecuting the case, along with requiring it to enact variance compliance measures to prevent future criminal activity.
At the conclusion of a nine-day trial in June 2022, a federal jury found Lee and 940 Hill LLC each guilty of one count of honest services wire fraud, one count of bribery, and one count of falsification of records in federal investigations.
Lee, a commercial real estate developer, was the majority owner and managing member of 940 Hill LLC and was planning to build a mixed-use development located at 940 S. Hill St. in Downtown Los Angeles, which was in Huizar’s 14th Council District. The development was to include 14,000 square feet of commercial space and more than 200 residential units.
In August 2016, after a labor organization filed an appeal that prevented the 940 Hill project from progressing through the city’s approval process, Lee called Justin Jangwoo Kim, a Huizar fundraiser, to request Huizar’s help in resolving the appeal. At the time, Huizar chaired the city’s Planning and Land Use Management (PLUM) Committee, a body that oversaw many of the city’s most significant commercial and residential projects.
In September 2016, George Esparza, then Huizar’s special assistant, informed Kim that Huizar would not help the 940 Hill project for free and would require a financial benefit. In 2017, after several months of bribe negotiations, Lee agreed to provide $500,000 in cash to Huizar and Esparza. Lee then made three payments of cash through Kim over a series of months, including in a paper bag, which Esparza then transferred to a liquor box to show to Huizar.
Two years after paying the bribe, 940 Hill LLC was served with a federal grand jury subpoena from the U.S. Attorney’s Office for records relating to Huizar, and, in response, Lee and 940 Hill LLC obstructed justice by making false entries in the company’s accounting records and then submitting false state and federal tax returns, which categorized the $500,000 bribe as a legitimate business expenditure for resolving the labor organization appeal.
“Despite enjoying a life of privilege and abundance, Lee wanted more,” prosecutors argued in a sentencing memorandum. “But instead of earning it, he wanted a guaranteed shortcut to circumvent the city process and silence community opponents threatening to thwart his attempts to expand his substantial real estate empire.”
Kim pleaded guilty in June 2020 to a federal bribery offense. Esparza pleaded guilty in July 2020 to one count of racketeering conspiracy. Both men, who are cooperating with the investigation, testified against Lee at trial and are scheduled to be sentenced in October.
Huizar pleaded guilty on Jan. 20 to one count of conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act and one count of tax evasion. His sentencing hearing is scheduled for Dec. 15. Huizar has agreed to seek a sentence of no less than nine years in prison, and prosecutors have agreed to recommend a sentence of no more than 13 years in prison.
In May, Walter sentenced real estate development company Shen Zhen New World I LLC to five years of probation and the statutory maximum financial penalty of $4 million for its conduct in Huizar’s pay-to-play scheme, including providing more than $1 million in benefits to Huizar – among them, luxury trips to Las Vegas and a sham loan to settle a sexual harassment lawsuit filed against Huizar – in exchange for approval to build a 77-story skyscraper.
Former Deputy Mayor Raymond Chan is scheduled for a re-trial on March 12, 2024, on federal charges alleging he conspired to violate the RICO Act, and that he agreed to accept, while he was deputy mayor, more than $100,000 for official acts to benefit a project by a Chinese real estate developer. Chan also is charged with lying to federal investigators in this public corruption case.
The FBI investigated this matter.
Assistant U.S. Attorney Mack E. Jenkins, chief of the Criminal Division, and Assistant U.S. Attorney Cassie D. Palmer of the Public Corruption and Civil Rights Section prosecuted these defendants.