By Mark Gutglueck
San Bernardino Mayor John Valdivia’s actions in promoting certain developers over others, most recently with regard to the rejuvenation of the embattled county seat’s downtown core, has raised allegations and manifested evidence that he has been engaged in influence peddling involving bribes and kickbacks while engaged in his elected and official capacity.
The questions and suspicions about Valdivia’s connections to specific developmental interests come after what was represented as being an unbiased competition between eleven proponents to reclaim what was once the heart of the city’s commercial district.
Using his authority to coerce city staff, Valdivia arranged for no fewer than six of the competitors for the right to redevelop the now-defunct Carousel Mall to be eliminated from consideration, while simultaneously ensuring that the foreign-owned corporate entity which has entered into a reciprocally beneficial arrangement with him is provided with the inside track in the sweepstakes to reinvigorate the shuttered 43-acre site. A further evaluation process of the remaining five development teams offering their concepts of the future development of the property, following Valdivia’s interference, resulted in two of those companies being eliminated, and two merging their efforts in an effort to go toe-to-toe with the company Valdivia has formed a political alliance with.
On January 27, the city council, in a specially-scheduled study session Valdivia chaired, considered the makeover proposals for the mall being presented by the two remaining property development teams. During that study session recorded on video, Valdivia, aided by City Manager Robert Field, made misrepresentations about past city council action intended to confer the contract for the development project upon the foreign-owned firm that has provided him and his political machine with political assistance.
The January 27 study session during which Valdivia’s action took place came more than seven months after the indictment by federal authorities of Los Angeles City Councilman Jose Huizar on political corruption and racketeering charges relating to pay-to-play and bribery arrangements nearly indistinguishable to the activity engaged in by Valdivia. Of note is that a Chinese company which provided Huizar with gifts, accommodations and favors the U.S. Attorney maintains were tantamount to bribes is the same company for which Valdivia is front-ending in the competition to renovate the Carousel Mall site.
The similarities between Huizar and Valdivia are striking. In Los Angeles, the largest city in California, the second largest city in the United States and the 23rd largest city in the world, Huizar was shaking down developmental interests or had otherwise involved himself in circumstances through which real estate developers plied him with cash bribes and campaign donations in exchange for his making use of the influence and power he had at City Hall to manipulate the land use process to obtain approval for those donors’ high-rise development projects downtown.
In San Bernardino, the seat of and largest city in San Bernardino County, Valdivia has repeatedly used his official position and his influence over both the city council and city staff to orchestrate action that has directly benefited his political benefactors, who likewise find themselves in the position of needing the approval of the panel Valdivia heads – the San Bernardino City Council – to obtain official go-ahead for projects which they have millions of dollars invested in and from which they intend to turn profits in the tens of millions, or even scores of millions of dollars.
Moreover, Valdivia, just like Huizar, was provided with travel and lavish accommodations by businesses engaged with the municipality and adjunct governmental agencies he leads, a comparison of the charges filed against Huizar by federal prosecutors and state campaign and personal economic interest statements filed on Valdivia’s behalf with the State of California show.
This is not the first time that attention has been drawn to Valdivia involving himself in selling his services as an elected official to those willing pay him. Still, the blatant manner in which the mayor is currently militating for the company in question, Shanghai Construction Group, and his his nonchalant reliance upon City Manager Robert Field in doing so seems to have made a deeper impression on the public consciousness than his earlier transgressions. Inexplicably or perhaps because he has grown overconfident in his belief that local, state and federal law enforcement agencies are indifferent to nonviolent and less than clear-cut fringe criminality involving judgment calls by elected and public officials which may or may not involve subtle and nuanced conflicts of interest done out in the open, Valdivia made a misrepresentation in the course of the public study session last month that was at a variance to what had occurred at a previous public study session in October and which is clearly contradicted by the public record.
The questions now remaining are whether the city council as it is now composed will vote in the manner Valdivia is ushering them toward on March 3, when that panel is to vote on whether the city will accept the Shanghai Development Group’s proposal or that of its last two remaining and now-merged competitors in the Carousel Mall reclamation project and, if Shanghai Development Group does get the nod, whether the FBI and U.S. Justice Department, which have been sensitized to and are on the lookout for just such violations of the public trust that Valdivia is engaged in, will step in to hold Valdivia as accountable for his actions as they did in bringing Huizar to the bar of justice for his actions.
The Carousel Mall and its primary historic constituent, the Harris Building, are iconic San Bernardino landmarks.
In November 1927, when San Bernardino’s population was little more than 22,000, Phillip, Herman and Arthur Harris, opened what was then the model of an ultramodern department store at the corner of Third and E streets.
The trio were the nephews of Leopold Harris, the founder of what was once the large Los Angeles-based clothing retail chain Harris & Frank.
The Harris brothers, beginning in 1905, had run a mercantile establishment in San Bernardino’s old Armory Building at 462 Third Street, between D and E Streets. In 1906, they relocated across Third Street near the same location. The first floor sold all hardware and groceries and the second floor was devoted to the store’s millinery and clothing departments. A store the Harris Brothers opened in Colton failed after an interim, but they had succeeded with a store built in Redlands in 1908.
The Harrises acquired property on Third Street east of E Street upon which they intended to construct the eventual flagship of their department store chain in 1919. It took several years for the building, known as the Harris Company, to be completed. It was intended to be, and was, an impressive edifice.
The 29-foot high main entrance archway was composed of Italian marble. The building’s doors were made of hammered copper. The exterior had alternating intricate stone and wrought iron ornamental grillwork, with the Harris coat-of-arms molded into the stonework.
The building itself was fireproof and comprised of a basement, first floor, mezzanine level, second floor, third floor and roof garden. It included all of the features of what was then a modern department store, including a tea room, lunch counter, beauty parlor and barber shop, a sit-down soda fountain, candies, stationery, and on the south side of the building on the ground floor, a grocery store called Sage’s Market. The southeast corner of the building had a staircase of colorful tiles, which led up to a second floor restaurant, the Café Madrid.
The store involved a layaway department and a gift wrapping window.
The Harris Brothers, were determined to make the department store, which went by the logo Harris’, the fashion center of the Inland Empire, and they became known as curators of fine clothing, shoes, hats and accessories. In addition to fitting rooms, the store had quarters for a seamstress to do alterations, and the final product would be picked up at the Dutch door to the seamstress’s shop or at the gift-wrapping window.
Fashion shows were a part of the store’s operations.
As the store matured, it was augmented with a fourth floor.
In the store’s lower or basement level was what was known as the Harris’ Budget Store.
On the first or street floor were departments for jewelry, costume jewelry, silverware, handbags, gloves, dress accessories, neckwear, hats, hosiery, cosmetics, notions, basic sportswear, campus debutante sportswear, women’s shoes, luggage, cameras and stationary, along with a luncheonette. The first floor also housed “The Men’s Store,” consisting of a men’s gift shop, men’s furnishings, men’s sport furnishings, men’s sportswear, men’s shoes, men’s clothing, boys’ furnishings, sporting goods, and a varsity shop with a university club.
In addition to the Café Madrid and the seamstress’s shop, the Mezzanine offered a book shop, record shop, candy counter, a service desk, beauty salon, optical department, hearing aids, a photographer’s studio and art needlework.
On the second floor were sportswear, dresses and a dress collection, formals, custom casuals, clothes for the individualist and young sophisticates, a designer’s room, a fur salon, a bridal salon, a showcase, coats, suits, popular dresses, a pin shop, millinery, lingerie, foundations, maternity shop, uniforms, a teen shop, junior dresses, junior sportswear, junior coats and junior suits.
On the third floor were domestics, bedding, curtains, draperies, lamps, furniture, dinnerware, China, glassware, giftware, flowers, housewares, appliances and small electrics along with a little girls’ shop, girls’ shop, little gents’ shop, toddlers’ wear, infants’ ware and children’s shoes.
The fourth floor was devoted to toys and games. It featured an auditorium and the personnel and executive offices.
In the separate but adjoining south building at 226 North E Street was the home furnishings center, furniture, carpets, rugs, appliances with a section devoted to Hoover appliances, a home planning center and television repair.
The Harris Company store provided lavish Christmas and Easter promotional displays, in some cases involving automation.
In 1947, the San Bernardino Harris Company store was the first building to incorporate what is today referred to generically as an escalator, one designed and built by the Smithtown, New York-based Peelle Company, which called its creation “the Motorstair,” as the Otis Elevator Company at that time held the patent on its own product, which was known by its copyrighted name escalator.
The company eventually grew to nine large department stores, which included stores in Bakersfield, Hemet, Indio, Moreno Valley, Palmdale, Redlands, Riverside and Victorville.
In 1966 the advent of the Inland Center Mall began to draw the city’s and the outlying community’s customers away from downtown San Bernardino. In 1969, city officials gave go-ahead to the concept of rejuvenating the downtown area with a shopping mall, one which was to be fleshed out with three anchors – JC Penney, Montgomery Wards and the existing Harris’. In 1972, the two-floor Central City Mall opened with 52 stores. In 1973 an addition directly linked the mall to the Harris Company. That improvement involved tiles and wrought iron from Portugal to create a resplendent stairway and landing.
The intent was for the mall to expand in increments over the years, involving nearby or adjoining mid-rise buildings, eventual fourth, fifth and sixth anchors, as well as an urban park and an aerial tram.
While more modest improvements to the mall were made, and at one point the number of stores and shops it contained grew to 117, the mall never reached the heights once envisaged for it.
By the late 1970s, the mall was facing the challenge of local gangs having settled upon it as a hangout, particularly during the peak shopping hours of Friday night until Sunday. Management of the mall twice changed hands, and over the next decade city officials differed over how to go about rescuing the facility. In the late 1980s, a concerted effort by city officials, the mall’s owners, developers and outside investors was made to revitalize it. The resultant makeover included outfitting it with a 36-foot colorful carousel near one of the entrances at the bottom floor, artistic façades and trendy interior decoration, efforts to appeal to families, particularly with young children, and strategies to discourage gang activity in, at and around the mall and its parking lot. Rechristened the Carousel Mall, it experienced something of a resurgence, but that was only temporary. In 1994, the mall was dealt an irreparable blow when the U.S. Department of Defense closed Norton Air Force Base, which severely hampered San Bernardino economically.
In 1981, Spanish retailer El Corte Inglés, S.A. acquired the Harris Company and its nine stores.
Harris’ Department Store in San Bernardino by that point was yet stately but old fashioned rather than at the cutting edge of the retail industry. It was that adherence to the old ways that gave it its cachet.
In 1997, the Harris Company undertook a $27 million effort to update its nine-store chain. The City of San Bernardino, yet committed to keeping its downtown core alive, put up some money toward that renovation effort.
Upon the completion of those chainwide improvements, the Harris Company merged with Gottschalks in 1998, and the stores were initially renamed Harris-Gottschalks. Most of the original Harris’ stores eventually dropped the name Harris’, except the Bakersfield, Indio and Moreno Valley locations, which continued to operate under the Harris-Gottschalks name. The original Harris’ in downtown San Bernardino, which was in direct competition with the Gottschalks at the Inland Center Mall, was closed on January 31, 1999.
After the closure, ownership of the downtown San Bernardino Harris’ building remained with El Corte Inglés, S.A.
In 2001, Montgomery Ward went out of business, which entailed the closure of its San Bernardino store. JC Penney was left as the only anchor at the Carousel Mall, and it too closed out at the San Bernardino location in 2003. Still, gunning for survival, the mall’s owners at the time sought to apply a mixed-use concept to fill vacated retail space nearest the mall’s 3rd Street entrance.
On March 29, 2005 the San Bernardino County Board of Supervisors approved a ten-year lease agreement with two five-year options to extend for 28,892 square feet of office space at the Carousel Mall for use by its children and family services division. The original term of the lease was from September 1, 2005 through August 31, 2015. Other portions of the mall’s cavernous interior were filled with San Bernardino City School District offices.
LNR Property Corp. purchased the property in February 2006, declaring an intention to convert the existing structure into a high density residential and commercial project through tenant improvements. That effort stalled out, and in January 2008, LNR Corp sold all of the Carousel Mall property, minus the Harris Company building which remained in the possession of El Corte Inglés, S.A. and the JC Penney’s building which was owned by the San Manuel Band of Mission Indians, to Lynwood-based developer Placo San Bernardino LLC, for $23.5 million. Placo expressed serious designs on reinvigorating the mall and obtaining short-term financing to undertake improvements, signaling it was on a crash schedule to do just that. But that same year, CinemaStar shuttered its theater on the mall’s grounds.
Placo remained committed, however, refinancing its early short-term financing, with a $16.5 million loan from Center Bank.
In May 2010, with its plan stalled, Placo was failing to make its payments to Center Bank. The City of San Bernardino’s economic development agency swooped in and bought the property’s note and deed of trust from Center Bank for slightly over $13.1 million. The city, based on backroom discussions with county officials, had visions of filling large portions of the mall with county offices.
Relations between Placo and the city had entirely broken down by that point. Placo, which claimed it was still intent on making a go of revitalizing the mall, said it was being undercut by the city, which was militating to tenantize it with county government offices. The city pressed Placo to pay it the $5 million difference between the amount it had paid for the mall and the amount of money loaned it by Center Bank with interest.
In 2011, there were 33 shops in the mall.
In April 2014, San Bernardino County signaled that it would not renew its lease on the space within the mall, and its children and family services division would leave the premises when its ten-year lease expired the following year.
In November 2014, its bridges burned with Placo, the city began looking for another operator of the mall which might lure tenants to locate there. Then-San Bernardino Mayor Carey Davis and then-San Bernardino City Manager Allen Parker sent a letter to more than 80 “development concerns” soliciting return letters of interest to the city relating to the mall. Those letters sought the developers’ vision of what could be done with the mall. Purposefully, city officials avoided providing any description of its own dictates or limitations with regard to the property, wanting to see what the development community’s conception of the potential of the property was. Fourteen developers responded to the proposal, all of whom presented ideas which then-Deputy City Manager Bill Manis said “had legs and could really run with this project.” Further evaluation continued and Manis said three of those, AECOM/Fransen, Tishman and Hunt and were deemed serious enough for him and then-Community Development Director Mark Persico to engage them in substantial dialogue.
By January 2015, there were 17 businesses remaining at the Carousel Mall, including four restaurants. Whatever prospect the city once felt it had of luring the county into locating its offices there had by that point faded. The prospect of having a public/private partnership loomed larger as a solution to the makeover of the mall property.
In November 2015, the City of San Bernardino, in a move sanctioned by its city council, entered into an exclusive negotiation agreement with AECOM, the Fransen Company and KB Homes to redevelop the Carousel Mall commercially, simultaneously intensifying the adjacent Theater Square and capping the effort with town homes/condominiums to be intersticed with the shopping opportunities. The aggressive step toward rejuvenation of the county seat appeared to be moving ahead rapidly. The following month, December 2015, the city council as it was then composed signed off on AECOM, the Fransen Company and KB Homes pushing full steam ahead with bringing in restaurant and third party developers and establishing town square street lights, utilities, signage and the extension of Third Street as a paseo, i.e. walkway by 2017, constructing 60 units of apartments that would “wrap” the existing mall building and be placed in front of the existing garage by 2018, begin filling tenant-improved spaces at the mall with neighborhood retail stores by 2019 and adding 35,000 square feet of retail operations, 275 townhomes and a charter school by 2020. According to Vaughan Davies, a principal in AECOM, the existing parking structure at the mall would remain intact. From the synergy that would be created by the development to be achieved by 2020 and the cultural draw of the adjacent Regal Cinemas and California Theatre in the downtown area, further development of the mall property would take on a life of its own and continue over the next decade until the area would a thriving example of a postmodern urban landscape, Davies prognosticated.
To facilitate the redevelopment plans for the mall, in November 2017 city officials arranged for, and the city council assented to, the exchange of 115 acres of vacant land in the foothills of the San Bernardino Mountains at the city’s extreme northeast end for the 2.48-acres JC Penney site on the mall property.
Despite the scintillating predictions by AECOM, the Fransen Company and KB Homes for the rejuvenation of downtown San Bernardino, none of what was spoken about in such glowing terms in November and December 2015 ever came about. A major hindrance was that given San Bernardino’s impoverished demographics, financing to undertake an effort of the magnitude envisioned by the city, AECOM, the Fransen Company and KB Homes was simply not forthcoming, as lending institutions were not willing to engage in that sort of risk.
In 2018, John Valdivia, who had been San Bernardino Third Ward Councilman since 2012, defeated Carey Davis in that year’s mayoral race.
Valdivia’s administration picked up where Davis’s had left off, pursuing the retransformation of the Carousel Mall property.
Of difficulty, however, is Valdivia’s propensity for seeking to convert matters that he deals with as a public official to his own financial advantage. It went without saying that any company or consortium willing to take on a project of the scale the Carousel Mall property redevelopment represented would need to have an immense cash flow, a portion of which could be used as political grease of the sort that could be diverted Valdivia’s way. Even before he had become mayor, as the City of San Bernardino was adopting to the reality of the 2016 passage of Proposition 64, which legalized the use and sale of marijuana for its intoxicative effect taken together with the passage the same year of Measure O, a city voter initiative allowing marijuana to be sold in the city, Valdivia began shaking down applicants for city business licenses and permits to operate cannabis-related shops or cultivation concerns. Upon his becoming mayor in December 2018, a much higher profile position than that of councilman, the degree to which he had merged his own personal financial and professional function with that of his status as an elected official became apparent. Thrown in stark relief was his company, AAdvantage Comm LLC, through which he served as a consultant to businesses looking to obtain project approval or obtain contracts or franchises with the governmental entities he heads, which include the City of San Bernardino and the San Bernardino International Airport Authority, a joint powers authority involving the cities of San Bernardino, Highland, Loma Linda, Colton and San Bernardino County engaged in managing the civilian use conversion of the former Norton Air Force Base into a publicly owned and operated aerodrome, as well as the Inland Valley Development Authority, a joint powers authority involving the cities of San Bernardino, Loma Linda, Colton and San Bernardino County devoted to the improvement of the property around the airport. From shortly after the time he was elected mayor, Valdivia was appointed the chairman or president or vice president of the two joint powers authorities. In addition to using his elected and appointed status to obtain lucrative consulting or representational work with companies, entities or individuals, Valdivia has engaged, using taxpayer funds, in extensive travel around California, the United States and internationally to interact with business interests. These junkets, which are ostensible efforts to interest companies in setting up operations in San Bernardino or in one fashion or another invest or participate in the local economy, have also been used by Valdivia to generate money or donations for himself, or make investments in his political future, as it were.
One area of the globe in which Valdivia has shown a particular interest is China. One Chinese company in particular that Valdivia has had considerable interaction with is SCG America.
SCG America is a subsidiary wholly owned by Shanghai Construction Group. SCG America, headquartered in New York City and with a California office in Garden Grove, has been involved for more than three decades in developing real estate in the United States. Shanghai Construction Group was the general contractor for the Chinese Embassy building in Washington, D.C. that opened in 2008. The company currently has billions of dollars invested in developed real estate, undeveloped real estate, ongoing development and asset management in the United States.
In 2019, when San Bernardino asked for redevelopment proposals for the Carousel Mall, SCG America was one of the eleven companies or consortia that responded to that request. When the city dismissed six of those parties interested in undertaking the redevelopment project without specifying how those half dozen proposals came up short, SCG America was one of the five remaining companies in the running. After three of those five were informed that their bids to oversee the mall site conversion did not meet the city’s expectations, again with no explanation of the rationale for their exclusion from further consideration, SCG America was still standing.
On January 27, the San Bernardino City Council held a special study session, one that was not physically convened in one location but which was instead conducted electronically in keeping with Governor Gavin Newsom’s mandated orders to avoid large public gatherings as a precaution against the spread of the coronavirus.
Representatives of SCG America previewed their vision for how the former mall property should be developed. Their plan called for a mixed-use development with 1,875 residential units, including studio apartments, larger apartments and townhomes, along with offices, a hotel, a food hall, restaurants with outdoor dining, a fitness center with yoga facilities, retail and professional shops, and open space. The only element of the existing mall that would be retained under the project, which is to be given the name “Galand,” would be what the presenters said was to be an open-air community hub.
The other proposal heard was from the consortium of New York City-based Renaissance Downtowns and Los Angeles-based ICO Real Estate, each of which was originally one the eleven separate competitors, but which are now working jointly. They offered an assurance that their plan is financially feasible in a way that SCG America’s is not. Their approach was one built in large measure on upping the size of the downtown makeover area from the 43 acres currently under consideration at the Carousel Mall site to closer to 300 acres and creating a waterway through the downtown area, accompanied by a riverwalk. An upscale residential and commercial zone would branch off of that centerpiece. The Renaissance Downtowns/ICO plan was less detailed with regard to the types of commercial and residential uses that would articulate with the plan, with the proviso that those eventually will be derived through resident input as the project proceeds. As presented, there appeared to be a possibility that the existing Harris Company edifice might be preserved and incorporated into the modernization effort throughout the entire downtown area. The plan called for seeking federal grants and a proliferation of rooftop gardens where produce for local restaurants would be cultivated, a close if not precise throwback to the rooftop garden the Harris brothers had included on the Harris building.
The city council held off on hearing input from the city’s residents until after the presentations from SCG America and Renaissance Downtowns/ICO were completed. Thereafter public input was heard. A total of 76 people weighed in with regard to the makeover project, with two hours ten minutes and 35 seconds devoted to public comments. City Clerk Geneva Rocha began playing recorded telephone messages from the public recorded prior to the meeting at three hours 19 minutes and ten seconds into the meeting. The final speaker concluded at the 5 hour 29 minute and 45 second point of the study session.
Shortly prior to the public input, three hours 11 minutes and 35 seconds into the workshop, City Manager Robert Field offered what he said was “a brief update on the demolition process.
“We have basically completed the solicitation document to hire an architect to do what is called a bridging document,” Field said. “We’re going to treat the demolition project essentially – kind of sounds counterintuitive – but like a design build. We will hire a team that will be charged with designing the demolition process and completing and concluding it. So, that will be coming back to the council shortly. If anyone on the city council has any questions of me…”
At that point, 3 hours, 12 minutes and 11 seconds into the video of the study session, the mayor broke in. “Mr. City Manager, the demolition was so ordered beginning on or about the latter part of October 2020,” Valdivia stated. “Does that conclude your remarks regarding the demolition phase?”
“It does, yes,” Field responded.
That discussion related to the demolition of the structures on the Carousel Mall property.
In actuality, in October 2020 no such order by the council was made.
Indeed, Valdivia was militating on behalf of SCG America by attempting to slip into the public record an insinuation he knew to be untrue.
Valdivia’s reference was to a previous study session held by the city council on October 28, 2020. At that meeting, no order or direction to demolish the structures on the mall property was made.
Six days after that, on November 3, a municipal election corresponding with the Presidential General Election was held in which two of the then-serving council members, Henry Nickel and Jim Mulvihill, were defeated, respectively, by Ben Christmas-Reynoso and Damon Alexander. Eight months previously, in the March 3 municipal election corresponding to the California Presidential Primary election, another city council member whose term did not expire until December, Councilwoman Bessine Richard, was defeated by Kimberly Calvin. Thus, serving on the council on January 27 were three new members of the council – Christmas-Reynoso, Alexander and Calvin – who were not in attendance at the October 28 study session. Valdivia’s statement on January 27 that the demolition of the structures on the Carousel Mall property had been authorized in October was a prevarication intended to mislead the council’s three newest members into believing the city had already made a commitment to action that would benefit SCG America in its competition with Renaissance Downtowns/ICO.
Field, who implicitly and explicitly understood that what the mayor said was not accurate, neglected to set the record straight, going along with Valdivia’s attempt at deception.
Dr. Treasure Ortiz, a San Bernardino resident who ran for Third Ward councilwoman in a special election held in 2019 and who is being pushed by some residents toward a run for mayor in 2022, said she has “concerns about the misrepresentations that were made by the mayor, the city manager and SCG America to perpetrate misappropriation of funds and pay-to-play corruption during the January 27 study session. I know that numerous residents throughout all wards have expressed their concerns about the lies, attempt to misappropriate and the corruption, and have asked for a special meeting to be called so everything can be addressed publicly before the council’s March 3 vote on who is to get the mall redevelopment contract. More information has come to light regarding the mayor’s inappropriate behavior/promotion of SCG America to members of the community, city staff and council prior to the January 27 meeting and his personal and financial ties to SCG America and another major developer who was involved in the bribery scheme of LA Councilman Jose Huizar.”
Ortiz continued, “At the end of the presentation portion of the meeting on January 27, 2021, the mayor and city manager blatantly lied and tried to deceive the council about the $10 million demolition of the Carousel Mall. This was not a misspeak, accident or just getting ahead of ourselves. This was an attempt to misappropriate $10 million in public funds. Mayor Valdivia presented the demolition as ‘so ordered’ on or about the latter part of October 2020 and Robert Field agreed, but that is absolutely false. The meeting Valdivia was referring to was actually a study session held on October 28, 2020.”
Ortiz said “Valdivia stated during the October 28 recorded study session discussion was only to take place and no action was going to be taken; and no vote was taken. The city manager did note that after the new year he would come back with information on grant funding that may help offset the cost of demolition if the council was to go in that direction. There was no agreement for a bridging document or request for proposals [for the demolition]. Since October 28, no discussion of demolition has been agenized.”
Ortiz continued, “It is my understanding that the city manager has yet to correct what was said and state the demolition was not ‘so ordered.’ Nor has he tried to clarify why he did not tell the truth. The city manager’s willingness to collude with the mayor and deceive the council and the public in order to move forward an unapproved taxpayer funded project is illegal and will not be tolerated.”
Ortiz opined that Field’s action in backing Valdivia in the attempt to load the dice in favor SCG America is as serious of a violation of the public trust as that of the mayor.
“When a city manager goes out of his way to perpetrate this level of dishonesty and illegal activity, he has shown he cannot be trusted to manage the city any further,” she said.
More pointedly, Ortiz said, “SCG America and their representative, Ms. Jennifer Pang, willingly and openly lied about never soliciting an elected official from our city. The mayor and Councilman Juan Figueroa went and met with SCG America at their main office in October 2019. We know this because the mayor posted a picture of himself and Juan with the SCG America team, consisting of Winfred Zhang, Qi Zang & Jennifer Pang, to his social media accounts. The mayor’s post states that they were talking about development in our city.”
Ortiz referenced the indictment of Los Angeles Councilman Joe Huizar, comparing his actions to those of Valdivia.
SCG America was the developer of Perla on Broadway, a 450 unit luxury condominium project in Downtown Los Angeles completed in 2020 that was mentioned in Huizar’s indictment. SCG America Vice President Qi Wang, with whom, despite Pang’s denials, Valdivia and Figueroa met in 2019, was also the executive vice president of the SCG America subsidiary company called Broadway Elite LLC, which managed the Perla on Broadway project. In the FBI’s investigation into Jose Huizer, it was found that Huizar used what the U.S. Department of Justice referred to as “corruption political action committees” to launder his larger bribes.
“One of these so-called corruption political action committees was ‘Families for a Better Los Angeles,’” Ortiz said. “In that committee’s campaign disclosure 460 Form filing on May 9, 2019, it shows a $25,000 contribution from Broadway Elite LLC. Qi Wang and other employees of Broadway Elite LLC also donated directly to the campaigns of Jose Huizar and his wife Richelle Huizar.”
Huizar regularly was provided accommodations at several Chinese-owned hotels in the Los Angeles/Southern California area. In October 2020, Jia Yuan USA Co., Inc. the Arcadia-based subsidiary of the Chinese company Shenzhen Hazens, agreed to pay $1,050,000 as part of a non-prosecution agreement with the U.S, Department of Justice to resolve an investigation into the company’s conduct with public officials in the City of Los Angeles, which included bribery, honest services fraud, and foreign and conduit campaign contributions violations. Jia Yuan USA Co., Inc. was created by Shenzhen Hazens to acquire, operate and redevelop the Los Angeles Luxe City Center Hotel, which it purchased in 2014 for more than $100 million. Illegal activity involving Jia Yuan USA Co., Inc. and several U.S. politicians was uncovered by the FBI as a part of the investigation into Huizar. That activity included Jia Yuan employees making campaign contributions to several U.S. political candidates, some of whom were later reimbursed by the company at the direction of a foreign national, who was prohibited from participating in U.S. elections; Jia Yuan USA Co., Inc.’s providing in-kind contributions to several U.S. political candidates by hosting reduced-cost fundraising events at the Luxe Hotel, some of which took place at the direction of a foreign national who was prohibited from participating in U.S. elections; Jia Yuan USA Co., Inc.’s payment of indirect bribe payments to politicians; Jia Yuan USA Co., Inc.’s coordination or orchestration of trips by U.S. politicians to China, the expenses for which were wholly or partially defrayed or subsidized by Shenzhen Hazens.
Valdivia is one of those U.S. politicians Jia Yuan USA Co., Inc. was illicitly influencing.
Valdivia’s California Form 460s, i.e., his campaign fund disclosure documents, obtained by the Sentinel show that on at least two occasions in 2019, Valdiva made use of the Luxe City Center Hotel for meetings or fundraising activity, with his campaign paying what looked to be drastically reduced rates for those accommodations.
Documentation also shows that Valdivia’s campaign covered the $904.45 cost of using Intercontinental Hotel Group’s hotel accommodations on at least five occasions, for meetings and fundraising events, well below what would normally be charged to a member of the public or a company for using those facilities. Further documentation obtained by the Sentinel shows that DKN Hotels on December 29, 2020 defrayed for Valdivia the $3,000 cost of holding a pre-New Year’s Eve 2020/21 fundraiser gala at one of its hotels. At that liquor-lubricated event, Valdivia brought in tens of thousands of dollars to finance his future campaigns. DKN Hotels and Intercontinental Hotel Group, through a multitude of cutouts, are linked to SCG America.
The apparent effort by SCG America to launder money to Valdivia through his campaign while he is attempting to manipulate the city council to approve giving SCG America go-ahead to redevelop the Carousel Mall property, Oriz said, “is extremely disconcerting to see.” Pointing to “the case of Jose Huizar that is ongoing with companies and people that our mayor is involved with” Ortiz said, “Any connection to corruption must be looked at and addressed.”
In addition to regularly filing California Form 460s delineating political contributions and the spending of that money, elected officials in California are required to fill out Form 700 documents, statements of economic interest, showing income and assets those officials are receiving and possess.
Like all politicians, Valdivia is supposed to list the sources of income he is receiving. In a clever use of sleight of hand, Valdivia lists his business, AAdvantage Comm LLC, for which he gives “consulting” as the general description of the business, without specifying whence AAdvantage Comm draws its income. On the document he indicates an annual income of between $10,001 and $100,000 into AAdvntage Comm LLC, but does not disclose from whom the money originated. It is therefore impossible to know whether Valdivia received any income or payments from Shanghai Construction Group or SCE America.
Valdivia, in filling out his most recently posted annual Form 700 document, which was filed with the city clerk at 58 seconds after 10:56 am on May 29, 2020, acknowledged having traveled to Zhenjiang Jiangsu, China on July 19, 2019 and having returned on July 27, 2019, with $2,361 the cost of the trip having been defrayed by “Zhenjiang People’s Government of the Overseas Chinese Affairs Office.” The Form 700 describes the $2,361 as a gift covering “travel expenses during official government travel” and that the “Trip to China consisted of representation of the City of San Bernardino and San Bernardino International Airport Authority. Events attributed in this schedule were in attendance in the official capacity as mayor of City of San Bernardino and/or president of the SBIAA [the San Bernardino International Airport Authority].”
Of note is that in December 2019, in two installments of $10,000 each on December 17 and December 31, some two months after Valdivia’s and Figueroa’s meeting with Winfred Zhang, Qi Zang & Jennifer Pang of SCG America which Pang during the January 27 study session falsely denied took place, Valdivia’s electioneering fund was provided with $20,000 by Alexandria Zagha of Corona. On November 7, 2019, Figueroa received $5,000 from Zagha. In Valdivia’s Form 460, Zagha is described as an “underwriter” with “Old Republic.” In Figueroa’s Form 460, she is described as a “recruiter” with “Hire On.” Sources have suggested that Zagha is a cutout or laundering vehicle for funds originating with SCG America.
Ortiz said, “When looking at the Mayor’s 460s, his hotel lodgings and visits, connection to developers from China, trips to China and the Department of Justice’s report on the type of bribes and non-reported gifts Huizar received, one could easily interchange the name Jose Huizar with John Valdivia in the report findings. He is staying and visiting the same hotels that the Department of Justice reported were used by Shenzen Hazen to bribe Huizar and other elected officials. The hotels offered a place to hold meetings, fundraisers, and enjoy stays, all at discounted rates or no cost. Some of these hotels are also owned by partners of SCG America.”
She continued, “Mayor Valdivia has been known for his pay-to-play antics and has demonstrated his willingness to intercede on a political contributor’s behalf with his influence on certain council members and his power to veto. A letter from the city attorney’s office was read during a January 2019 council meeting stating that the actions of John Valdivia put the city in the position of potential litigation. We are now facing multiple lawsuits because of his behavior and not addressing his connection and Councilman Figueroa’s to SCG America may bring about another.”
Saying “It was my understanding that no one in the city was to show support for any developer under consideration for the downtown redevelopment project, nor were the two developers to promote their project publicly prior to the January 27 presentation to the council,” Ortiz observed, “It has been revealed that the mayor was openly sharing the promo video of SCG America to anyone who had the misfortune of passing by his office, including city staff, council members and residents. Why was this allowed? Why hasn’t this been disclosed? If the mayor had no ties to SCG America, why is he out publicly promoting that company on city time, in his official capacity as mayor? Why didn’t he speak up and say that he and Juan Figueroa have a relationship with SCG America? What is he hiding? And more importantly, what is he set to personally gain with this relationship and a potential $800 million dollar project up for bid in his city?”
The Sentinel through multiple phone calls to both Valdivia’s and Field’s offices at City Hall and emails sent to both sought responses to Ortiz’s statements regarding their action on January 27, and an explanation as to why Valdivia misrepresented that the city council last October had authorized the demolition of the structures at the Carousel Mall. The Sentinel sought from Field why he did not correct the mayor’s misrepresentation to prevent the three new members of the city council from assuming the city is committed to the complete removal of the structures on the former mall grounds. Neither the mayor nor the city manager responded to those inquiries and Valdivia spurned a request from the Sentinel to explain his relationship to SCG America.
By Mark Gutglueck