Zuma Dogg's "Zuma Times" blog has been covering the story of how the biggest landlord in Los Angeles, Meruelo Maddux (Downtown's biggest property owning fish, and biggest campaign contributor to Los Angeles Mayor Antonio Villaraigosa when he was elected in 2005) has declared bankruptcy.
Now Wall Street Journal is covering the Meruelo Maddux downtown developer debacle. IT'S BIG KIDDIES. And Zuma Times has heard from inside sources that when the banks have to come in to take over, and starts looking into the books, they just might find massive fraud, as we have seen with Enron and Bernie Madoff. Look for someone to go to jail over this. Almost forgot that Meruelo Maddux's American Apparel factory whose slogan is, "Made in Downtown L.A." (by non-documented workers) is also part of this mess. So unfortunatley, we may see even more illegal immigrants out of work now. If so, have them call their mentor Antonio Villaraigrosa for a job at city hall. He's always willing to help out any undocumented workers.
And in possibly related matters, it was announced last week that the City of Los Angeles pension and retirement fund (LACER) lost $7 billion in the stock market, last year, and Zuma Dogg says if you look into the bad LACER investments, you may find LACER was strong-armed into investing in loser Downtown development projects like Related Cos., Grand Ave Project (that is still yet to get moving forward due to money problems); and perhaps Meruelo Maddux projects, as well. Zuma Dogg made so much noise over LACERS investment into Grand Ave Project, they DID indeed eventually pull out of that project, whether it was because of my noise, or not. Point is, ZD said it was shady and risky for LACER pension money to be invested in, and LACER agreed, and now the biggest real estate landlord and operator of the Villaraigosa-friendly "American Apparel/Legalize L.A." has gone bankrupt, and I would bet every penny in Vegas you will find the money went out the back door, and in this down economy, there wasn't Wall Street money pouring in anymore to cover the "front-end loaded management" contacts and flat-out fraud. One Los Angeles City Councilmember tells Zuma Dogg that the City of Los Angeles is tied in with some CRA (Community Redevelopment Agency) projects that are funded with taxpayer money. So those investments are probably down the drain.
Here's what Zuma Dogg would like to know: The city doesn't manage these portfolios, themselves. They hire Wall Street investment firms to manage the accounts. LACER is supposed to stick with high-quality, investment grade, investments. Not this risky Wall Street stuff that all went "belly up" with all the fraud, waste and abuse, and not in shady, specualtive land deals, that as you can see ended up in bankruptcy, because this economy can't handle the profit pilferage any longer. How much money, if any, did the people running these portfolios contribute to Villaraigosa to get the accounts. How much of the portfolio was "out on a limb" with risky investments as opposed to "investment grade" and did the managers walk off with bonuses after losing $7 billion in a year?
Now, the problem is that the City of Los Angeles is legally required to pay full LACER benefits, and it was announced that the city will be paying 56% of every dollar toward this bailout starting by 2012.
Click here for video of Zuma Dogg addressing this issue before Los Angeles City Council.
AND NOW, The WSJ, much more shallow take.
From WALL STREET JOURNAL
By Eric Morath
The factory behind American Apparel’s “Made in Downtown LA” slogan is in bankruptcy. The Alameda Square development in downtown Los Angeles, home to clothing maker American Apparel Inc.’s headquarters and factory, was among the 40 properties that developer Meruelo Maddux Properties put into bankruptcy Friday.
The factory is the focal point of the cotton-clad company’s “Legalize LA” campaign. The company, which prides itself on manufacturing its hipster-friendly t-shirts and leggings in the U.S., is a vocal advocate for a path to legalization for California’s undocumented workers. Politicians, including Los Angeles Mayor Antonio Villaraigosa, have used the factory as a backdrop to talk about legalization.
An American Apparel spokesman declined to comment on Meruelo Maddux’s bankruptcy filing. The Los Angles developer said Friday that its financial reorganization won’t affect its tenants.
In additional to American Apparel, Alameda Square is also home to the Alameda Produce Market and Meruelo Maddux’s headquarters.
FYI from ZD's email inbox: Zuma,
Just as an FYI, Maddeux doesn't operate or have anything to do with
American Apparel's factory outside of being the owner. American
Apparel is a tenant and Muereulo Maddux is the landlord. Their
bankruptcy might eventually change who the company's rent goes to or
whether the property comes on the market, but it has no relationship
to the financials of AA.
NOTE: Los Angeles Downtown News is also covering the Meruelo Maddux situation HERE.