Glendale weighs affordable housing issues

Fraud allegations against ADI have raised a host of concerns.

October 21, 2010|By Melanie Hicken,
(File )

CITY HALL — As federal officials begin to investigate alleged fraud surrounding Advanced Development & Investment Inc., city officials are grappling with what it means for the dozens of low-income families hoping to move into the affordable housing developer's latest project.

ADI — under federal investigation for allegations that the firm's top officials transferred millions to personal accounts and bilked cities out of millions in taxpayer dollars — has built four projects in Glendale and received nearly $34 million in city assistance.

Allegations have been levied in Los Angeles County Superior Court that similar fraud was committed in cities across the state.

As Glendale officials continue to grapple with the implications of the investigation, officials are also working to draft safeguards to prevent any future fraud.

"We need to come up with ways to make sure we can keep a better eye on developers, assuming the allegations are true," said City Councilwoman Laura Friedman, not yet elected when the four current projects were approved.


The fraud allegations stem from a report by David Pasternak, a receiver appointed by a Los Angeles County Superior Court judge as part of a divorce proceeding involving the company's former president, Salim Karimi, and Jannki Mithaiwala, the daughter of company founder Ajit Mithaiwala.

Vassar City Lights, the developer's most recent development, was originally scheduled to open to residents this month. But final work on that project was put on hold indefinitely during Pasternak's initial investigation — leaving it 95% complete.

Pasternak said last week he is working with affected agencies and investors to try to get construction back up and running on current projects, but there was no timeline as to when that would happen, leaving hopeful residents of the Vassar project in the dark.

A management firm was in the process of interviewing winners of the Vassar affordable housing lottery to determine eligibility. A list of residents had not yet been finalized.

City officials this week notified the potential residents, many of whom have current leases of their own, that they now don't know when Vassar will be ready for move-ins.

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