Mayoral candidate Rick Caruso’s real estate empire poses potential conflicts of interest. Here is his project
In a bid to avoid conflicts of interest and allay potential voter concerns, billionaire developer Rick Caruso explained on Friday how his real estate company would operate without him if he won the mayoral race.
Caruso said he would put his company, which owns and operates billions of dollars in commercial properties in Southern California, in a blind trust and allow others to take the helm if he gets his job at the end of the year.
On Friday, he said his chief development officer, real estate veteran Corinne Verdery, would return to his role as chief executive of his namesake company Caruso if he is mayor. Caruso, 63, said he would be completely separate from operations and that Verdery would be in the best position to run the business even after he is gone.
“I will return to the company as executive chairman,” he said, “but she will continue as CEO.”
Caruso’s highly anticipated entry last week shook up a race that had been largely dominated by elected Democrats. Representative Karen Bass remains the apparent favorite in a field that also includes City Atty. Mike Feuer and board members Kevin de León and Joe Buscaino.
But within a week, Caruso’s political spending has already eclipsed that of the other leading candidates, with ad buys on local television networks.
Caruso, who has never run for public office, said as mayor he would not meddle in the affairs of his company under the rules of a blind trust, which aims to prevent a trustee such as Caruso to experience conflicts of interest between his business and his civic duties. . (Even though his company is in blind trust, Caruso should probably recuse himself from official questions about his holdings.)
“She has full authority to operate,” he said of Verdery. “There is no communication, no approval” with Caruso if he is mayor.
A series of recent corruption scandals have put increased scrutiny on the relationship between developers and Los Angeles City Hall. Over the past few years, a sweeping pay-to-play corruption investigation has resulted in guilty pleas from two real estate consultants, a lobbyist, a council aide and former councilman Mitchell Englander.
Jose Huizar, another former council member involved in the investigation, is awaiting trial for leading an extortion racket that rocked developers of prominent properties in downtown Los Angeles.
“We have a deeply corrupt city hall,” Caruso said.
Voters are acutely aware of the breach of trust between city leaders, said former Los Angeles councilman and supervisor Zev Yaroslavsky.
“What happened at the town hall in terms of corruption scandals is on everyone’s mind,” he said. “Who they hold responsible is another story.”
Yaroslavsky did not think voters would inherently distrust a developer candidate and noted that everyone has the potential for conflicts of interest, regardless of profession. In the veteran politician’s view, homelessness and crime are the biggest issues facing the city right now – and that’s what voters will be talking about at their kitchen tables.
Government ethics experts say there is nothing disqualifying about Caruso’s business holdings, as long as he properly discloses his financial interests and carefully follows protocol regarding potential conflicts as they arise.
“If there is anything specifically involving any of its properties, [such as] an order or a contract, he might have to disqualify himself,” Bob Stern, co-author of the 1974 State Political Reform Act and former general counsel for the California Fair Political Practices Commission, previously told The Times. “But if it’s just general development, he wouldn’t have to disqualify himself.”
Voters have not shied away from electing wealthy business leaders in the past, such as billionaire Michael Bloomberg, who served as mayor of New York for more than a decade.
Wealthy Los Angeles businessman Richard Riordan served two terms as the city’s mayor beginning in 1993. Riordan was fined $3,000 for violating conflict of interest laws of the state in 1996. The issue — which Riordan’s office called an honest and unintentional error — involved the then-mayor acting on matters involving the tenant of a downtown building he partially owned.
Earlier this week, Caruso filed a 94-page financial disclosure form that gave a window into his vast holdings, including stocks and real estate. Among his stock holdings which he values at over $1 million each are blue chip companies such as Amazon.com Inc., Apple Inc., Berkshire Hathaway Inc., Costco Wholesale Corp., Microsoft Corp. , Nike Inc., Johnson & Johnson, Kimberly Clark Corp. and Walt Disney Co.
Caruso said his company would not attempt to launch new real estate developments in Los Angeles if he was mayor, but added that Verdery, Caruso’s chief financial and revenue officer Jackie Levy and general counsel Ben Howell would continue. to develop its real estate portfolio. .
“I have every confidence in her not to just keep the business going,” he said. “My self-confidence needs to be increased” she.
Verdery said the growth could include building a swanky apartment tower near the Beverly Center in Los Angeles that has already been approved by the city. The 145-unit building above ground level at 333 La Cienega Blvd. was proposed in 2015.
Work on the tower could begin when apartment rentals, which have plummeted during the pandemic, resume, she said.
“As soon as the market meets us,” she said, “we will move forward on this project.”
The company may offer new mixed-use developments in other municipalities in Los Angeles County, she said. One of Caruso’s largest properties is Americana at Brand, a sprawling outdoor mall in Glendale that includes housing.
Other significant company properties include the Commons at Calabasas mall, luxury apartments at 8500 Burton Way in Los Angeles, and a former Masonic temple in Glendale that is now an office building.
Verdery joined the Caruso company in 2016 after serving as director of property development at NBCUniversal, where she oversaw a $1.6 billion development project that included the Wizarding World of Harry Potter, new sound stages and office space at Universal Studios and its adjoining theme park. .
At Caruso, she oversaw the development of the luxury resort Rosewood Miramar Beach in Montecito which opened in 2019 and Palisades Village, the company’s latest high-end outdoor retail complex completed the previous year.
Verdery grew up on the Hawaiian island of Oahu before going to high school in Orange County and college at USC, she said. She now lives in Sherman Oaks.
Caruso said he recruited her aggressively, citing her track record of approving and building complex real estate developments, including the Waldorf Astoria Hotel in Beverly Hills.
“It took me about 10 years to convince her to come with my business,” he said.
Former Verdery boss Jeff Shell, general manager of NBCUniversal, also praised his performance.
“Corinne is an extraordinary leader who has the rare combination of true vision and the ability to clearly articulate strategy, mobilize a team and execute flawlessly,” he said. “The impact she has had while leading our company’s multi-billion dollar project cannot be overstated.”