The FBI is investigating an affordable-housing deal in which Los Angeles officials channeled $26 million to a development company officer who they knew was under criminal investigation for alleged misuse of public funds, city officials said Thursday.
The officer, David Rubin, was indicted last fall in New York for alleged bid rigging and fraud, charges unconnected to the L.A. project.
The $26 million went toward construction of a 92-unit apartment building near downtown L.A. for seniors, some of them homeless and disabled. Though ready for occupants, it has sat empty since December while many prospective tenants live in shelters or substandard housing.
The city's Housing Authority, concerned about irregularities in the deal, has refused to release money that would pay the tenants' rent. Without that rental income, the developer, Enhanced Affordable, could be forced into default. In turn, the city could be on the hook for millions of state and federal dollars that it helped arrange for the developer, City Controller Wendy Greuel said in an interview Thursday. She added that the way officials handled the deal "defies comprehension."
This is separate from the indictment that has already led to several guilty pleas for at least 3 CDR employees.
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