Charles Co. Executive Will Plead Guilty To Bribing LA County Official
A real estate developer with projects across the greater Los Angeles area is set to plead guilty to charges that he bribed a Los Angeles County official over several years in an attempt to secure lucrative government leases and contracts, including one for $45M, the U.S. attorney's office announced today.
Developer Arman Gabaee, known professionally as Arman Gabay, is co-founder of the Hollywood-based development firm Charles Co. and was its co-managing partner at the time of the alleged bribery. It is unclear if he continues to hold that position.
The U.S. attorney's office claims that from at least 2011 through April 2017, Gabaee paid a county official named Thomas M. Shepos "bribes and kickbacks of approximately $1,000 per month in exchange for county leases, preferential contract terms, non-public information and other benefits." Shepos was employed by the county's real estate division and played a role in awarding real estate contracts.
From December 2016 to April 2017, Gabaee allegedly paid Shepos $6K in cash. At the start of this period, Shepos began cooperating with the FBI and recording their meetings.
The largest bribe, according to federal officials, was related to one of Charles Co.'s most high-profile projects: the redevelopment of the Hawthorne Mall, a dead mall in the city of the same name that has been vacant since 1999.
In 2016, Charles Co. was moving forward with a $500M plan to transform what was once described as a "ramshackle haven for feral cats and vagrants" into 600 residential units, 500K SF of retail, 800K SF of office space and nearly 5,900 parking spots.
The following year, Gabaee reportedly offered to buy Shepos a $1.1M house in Northern California in exchange for Shepos signing onto a 10-year, $45M lease for county departments to rent office space at the redeveloped mall. Gabaee went as far as making two offers on the house, but he withdrew the final offer when FBI agents informed him they knew about his bribes to Shepos, the U.S. attorney's office said in a statement.
Gabaee was arrested on charges related to these bribes in 2018. Gabaee has agreed to plead guilty to one count of bribery, which carries a maximum sentence of 10 years in federal prison, the U.S. attorney's office said. His attorney, Mark Geragos, was not immediately available for comment.
Despite the ongoing bribery charges, Charles Co. has been busy over the last two or so years. In 2020, Gabaee and his brother, Charles Co. co-founder Mark Gabaee, won a lawsuit against the city over the denial of approvals for their District Square project in South LA's Crenshaw neighborhood. An area planning commission had rejected the project, citing, among other things, Arman Gabaee's arrest on bribery charges. The project had received $26.2M in federal loans and grants and, because the project is unbuilt, defaulted on them. The developers owed $6.3M as of 2020.
Charles Co. was active last year, buying an $80M office portfolio in Pasadena, selling an office and industrial property in El Monte, and working to double the office space in its project in West Hollywood's Melrose Triangle.
