On Tuesday, legislative subpoenas were approved for ADI's financial records and documents currently held by David Pasternak, a court-appointed receiver hired to guard the corporation's interests as its former president, Salim Karimi, and Jannki Mithaiwala, the daughter of company founder Ajit Mithaiwala, wade through a divorce.
State law gives housing authorities the power to issue subpoenas for books and records for local projects.
The full extent of the alleged fraud in Glendale is still unknown, officials said, but in one court filing, Pasternak pointed to millions in alleged fraud on a single project, Vassar City Lights on San Fernando Road. Of the $24.7 million in construction costs reported by ADI, about $6.5 million was fraudulent, Pasternak alleged.
"The whole point of this is to permit us to begin collecting information," Mayor Ara Najarian said Tuesday.
City officials said the move would help the city best represent itself, as opposed to simply relying on the potential criminal prosecution.
"At the end of the day you are subject to the desires and whims of the prosecutors handling that case," Chief Asst. City Atty. Mike Garcia said.
Last week, Najarian said city officials were preparing to pursue civil litigation in an attempt to recover any city funds that went toward allegedly inflated construction costs. The documents gained through the subpoenas would theoretically help Glendale build its legal case.
The City Council had already retained the law firm Burke, Williams and Sorenson with a fee cap of $50,000 to advise the city in dealing with the alleged fraud, but on Tuesday also increased its contract with Kane, Ballmer & Berkman by $90,000.
In the past five years, Glendale officials have committed nearly $34 million to ADI for four affordable housing developments in the city's San Fernando corridor.
They committed funds even after city housing officials raised concerns about the quality and rising costs of the most recent ADI project, Vassar City Lights, according to internal staff memos.
But council members contend they were unaware of the memos and that they could not have known that the contributions were tied to ADI subcontractors.