Drayman Talks ADI

In an exclusive interview with Montrose Patch, Glendale City Councilman John Drayman, who has been repeatedly lambasted by the press and public for his ties to Advanced Development Investments, Inc., commented on the allegations against ADI and areas where the Council's paradigm needs to shift.

"The city of Glendale needs to be looking at the way it audits this kind of process," he said. The process in question is the way the city chooses and monitors companies hired to work on land development projects.

In the wake of ADI's downfall, the council is "in the process right now of changing the way [developer audits] will happen in the future because we have learned from that," Drayman said.

Last year ADI—coordinator of taxpayer-funded building projects that had business with Glendale to the tune of $33 million—came under investigation by federal prosecutors for allegedly bilking governments by overcharging on invoices.

The formerly reputable land development firm became embroiled in a divorce between its owners, Salim Karimi and Jannki Mithaiwala, leading a court-appointed official to represent the company. David Pasternak, the state court's receiver, reported activity that led federal authorities to open their investigation.

The Los Angeles Times reported in October that according to Pasternak, "ADI had 'virtually no financial records,' no general ledger, no balance sheet and no bank reconciliations. Working with forensic accountants he said he had discovered 'potential fraud and criminal activity.'" The receiver also discovered 400 ADI bank accounts, $600,000 in gold bullion and three cars attributed to the company, one of which was a Bentley.

In subsequent reporting, the newspaper linked Drayman and council colleagues to thousands of dollars in campaign contributions from companies and individuals linked to ADI. The Times also quoted subcontractors subpoenaed by the federal government who claimed ADI managers pressured them to donate money to Glendale candidates.

"The city of Glendale needs to keep a database of all subcontractors and vendors working on any city-subsidized project," Drayman suggested. "If we have a single dollar of city money in a project of any sort, whether it's a recreation center or a building project no matter how benign, we need to keep a record of who the vendors are who are working on that project so that elected officials have somewhere to go, something to check."

"The city does not keep such a database," explained Drayman, who has served one term on the city council. "Had there been a database, there would have been a way of checking." Drayman noted that Pasternak was the city's main source for a list of ADI subcontractors.

The councilman also called for "more sample auditing in terms of contacting the subcontractors directly before making payments."

Critics contend that members should heighten their awareness of the city's business associates and claim that campaign contributions are grease for the council's gears when it comes to project approvals such as ADI's work in Glendale.

In December, the Times and its subsidiary Glendale News-Press reported that Pasternak used the five-story Vassar Villas apartment project as an example of the company's allegedly commonplace scheme of overcharging governments: "Of the $24.7 million in construction costs reported by ADI, about $6.5 million was fraudulent, Pasternak alleged."

Drayman addressed hindsight assertions by "people who don't know the process, who don't know the companies, who aren't particularly aware of things—'oh, you should have checked their references.' Well, that's why we were using them, because we checked their references," he said.

ADI was "the most successful at getting funds from Sacramento to build affordable housing," said Drayman. "They were building in six other prominent cities in the state. Their projects all were coming in on time and on budget."

He described ADI as having "the reputation in the state of California of being the premier builder of affordable housing ... They were the most successful at getting the nine percent tax credits from the state that you need in order to build those projects. So, that's why they got positive votes [from the council on four projects from 2005 to 2009]."

Drayman said consultant Timothy Mulrenan and Madalyn Blake, former director of community development, advised members "to go for it" with regard to funding the Vassar Villas project. The final tally was a 2008 appropriation of $12.2 million and an additional $1.7 million a year later.

"Affordable housing is funded with some funds from the [federal] Department of Housing and Urban Development and mostly state tax credits," Drayman explained. "The state of California holds a competition twice every year for developers of affordable housing.

"Those that are the best projects as deemed ... by Sacramento go into a final round," he continued. "The cities that put the most local subsidy into their project have the best chance of getting the state tax credits."

, an opponent of Drayman's in the city council race, is among vocal, local critics who have steadily lambasted the incumbent for his role in ADI's network of influence.

"The Housing Authority members, also known as city council members, have taken thousands in campaign contributions from subcontractors of ADI," said Mohill, citing Times reportage.

"Drayman's 460 form shows campaign contributions he has received from subcontractors of ADI, including National Fire [Systems and Services], who is reported to have been an ADI subcontractor," the candidate said.

Documents available on the city's election website show Drayman received $9,000 in May 2007 from companies that have done work for ADI. According to the Times, ADI and its subcontractors gave more than $300,000 to Califorinia politicians within the last ten years.

"And then they vote millions of dollars for ADI housing projects behind closed doors," Mohill added about Glendale council members. "Mr. Drayman selected National Fire to be the general contractor for his condo revamp."

Stay with Patch; in a follow-up article, Drayman addresses his condo renovation, as well as his targeted response to media critics and Mohill.