Over the last 20 years, ADI has built more than 50 affordable housing projects in cities, including Los Angeles, Glendale, Anaheim, Fresno, Long Beach, Sacramento and San Diego.
Glendale officials, who have provided files and met with Pasternak in recent months, said they were shocked by the news.
"Obviously we are tremendously concerned about this, because all of the indications is this could be millions of dollars in fraud," said Glendale City Manager Jim Starbird.
Since 2005, ADI has built four projects in Glendale, and the city has committed $33.8 million to the projects through a combination of redevelopment dollars for affordable housing and the city's allotment of federal housing grants.
The Glendale City Council earlier this year approved a fifth ADI project, Central City Lights, which was set to break ground next month. That project has now been halted.
Starbird said the city's first priority is determining that the existing ADI buildings are safe. Of the three buildings that are occupied, 175 units are occupied. Another 70 units are nearly completed at the fourth building.
"(Pasternak) didn't have any specifics of things that would lead him to believe that any of our projects had any health and safety issues," Starbird said. "Out of an abundance of caution, I've asked our building safety and housing staff to do a quick review of both their construction plans and our inspections."
In his report to the court, Pasternak alleges that the firm inflated budget estimates and submitted fraudulent invoices and other doctored documents.
He cites several discrepancies stemming from invoices related to Glendale's $36.4 million Vassar City Lights project, which is near completion but has had work suspended during the current proceedings.
For example, an ADI's file shows the firm paid about $140,000 to a Corona-based drywall company, but then submitted the same invoice to Glendale officials for $738,500.
A final construction summary in Glendale's files shows a cost of $2.47 million for framing work, but a copy of the firm's contract with Sabra construction for the same work shows a cost of only $1.2 million.
It is unclear whether there are similar discrepancies on other Glendale projects, Starbird said. City officials are currently gathering records for a forensic audit to determine the extent of the alleged fraud.