FBI seeks wider probe of Los Angeles building department, confidential memo says

The FBI probe into corruption at the Los Angeles Department of Building and Safety has expanded beyond rank-and-file inspectors to include the supervisors who policed their work, according to the agency’s top executive.

In a confidential May 10 memo to Mayor Antonio Villaraigosa, General Manager Robert “Bud” Ovrom said FBI agents want to take their bribery investigation “as wide and as high as they can.” Because supervisors are included in the probe, city officials expect to determine if “illegal collaboration or poor supervisory skills” contributed to the misconduct, he wrote.

Two field inspectors have pleaded guilty to charges that they accepted bribes in exchange for building approvals. The city’s failure to detect those activities may have been, at least in part, the product of staffing cuts at his agency, Ovrom said in his memo, a copy of which was obtained by The Times.

With high-level managers leaving as part of the city’s early retirement program, the department was “not always providing adequate training” to their replacements, he wrote. “It is bad enough that these incidents happened,” Ovrom said. “It is perhaps even worse that our supervisors never caught this blatant illegal activity.”

The nine-page memo offers fresh details on the federal and city investigations and a rare insight into a city agency trying to manage a fast-growing scandal. The report was supposed to be confidential but was sent accidentally by Ovrom to hundreds of Building and Safety employees, The Times learned. The department declined to comment on the investigation.

The inspectors who pleaded guilty, Raoul Germain and Hugo Gonzalez, were assigned to territory in South Los Angeles. Two others were placed on administrative leave as a result of the city’s investigation, according to Ovrom’s memo: Frank Rojas, a plan check engineer in the department’s West Los Angeles office, and Samuel In, a code enforcement officer in the agency’s Koreatown office.

In, who worked for the city for 37 years, filed for retirement May 6, two days after he was placed on leave, Ovrom informed the mayor. The department planned to keep secret the reasons In was placed on leave, the memo said. “As far as we are concerned, he has retired and that is all we will ever tell the media,” Ovrom told Villaraigosa.

The Times attempted to reach In last week, but his voice mail was full. At In’s Glendale residence, his wife said her husband was out of town and she did not know when he would return. He told the paper four weeks ago that he was retiring and had not been placed on administrative leave. Rojas could not be reached for comment.

In addition to the four employees who were either arrested or placed on leave, the department is looking at 10 more Building and Safety workers, Ovrom wrote. The federal grand jury has already instructed the department to turn over personnel records for 12 current and former employees, including Germain and Gonzalez.

According to an FBI affidavit filed in April, an informant told investigators that bribes were “systemic” at Building and Safety and described giving cash, building materials and even a vacation in exchange for city approvals. FBI agents launched a wiretap operation in August, sending an undercover agent to job sites to pose as “Manny Gonzalez,” a construction contractor needing sign-offs from city inspectors.

In January, with the undercover sting operation in its sixth month, Building and Safety received an anonymous complaint about bribes at 52 construction sites, all of them in South Los Angeles.

The city’s internal investigation began after the anonymous letter was received. It could expand, Ovrom wrote, to private contractors and land use consultants who have “an unusually high working relationship” with certain Building and Safety employees. “It takes two to tango,” he wrote.

Ovrom also complained that since the FBI investigation was disclosed, the department had been “unsuccessful at staying in front of this story.”

Building and Safety lost many of its top supervisors in the wake of the city’s early retirement program, which slashed payroll costs by allowing 2,400 city employees to leave their jobs early with full pension benefits, 116 of them in Building and Safety.

“To the extent the problem is the result of poor supervisory skills, several factors probably contributed to that breakdown,” Ovrom wrote. “Perhaps the most glaring is that during the last three years the department’s workforce has been reduced by 150 positions.”

Deputy Mayor Sarah Sheahan said in a statement that “more money is not the panacea” for the department. Villaraigosa has already called on Ovrom to make a series of changes, including the resurrection of an internal investigations unit.

“If Mr. Ovrom has an issue with supervisors, we expect him to solve it,” Sheahan said. “The mayor expects every general manager to run a tight ship.”

david.zahniser@latimes.com