Eber: The Lennar Way 3

In San Fran the names of Shrimp Boy and Keith Jackson are well known and notorious.  Both are convicted criminals for bribery, illegal gun sales and more.  What is little known is their connection to a home builder, Lennar, one of the largest in the nation.

“On the political front Lennar paid almost a half million dollars over a four year period to well connected political consultant Keith Jackson.  One of his functions, other than his being a major fundraiser for San Francisco Mayor Ed Lee, was to liaison with a Nation of Islam group in Hunter’s Point.

Jackson, representing Lennar, also used his clout with Chinatown gangster Ray Shrimp Boy Chow for whom he also worked for as a consultant.  In addition, Jackson and Lennar had close ties with convicted felon ex State Senator Leland Yee, Deaf Butler, Nasty Mohamed, and a host of other sketchy characters.

The  entire Lennar-Keith Jackson connection fell apart after  2014 when an FBI Sting operation unfolded with Leland Lee, Shrimp Boy Chow, and Jackson eventually going to prison for racketeering, money laundering, murder for hire, arms sales, and several other major offenses. “

Lennar, for its part, says it knew nothing about the nefarious activities of their consultants.  That said, it is obvious that government needs to be more careful about those given contracts.  Should with the Maryland case or San Diego case be given contracts by government?  Is this just another case of relationships, rather than quality being the highest criteria?  Should the public know about all this—and why hasn’t it?

Pension money

The Lennar Way 3 by Richard Eber 

 

Richard Eber, California Political News and Views,  2/7/18

“The Lennar Way”, as it is known, has its roots going back to 1997 when Stuart Miller, son of co-founder Leonard Miller, took over the company from his Dad who was forced to retire due to health reasons.

Under the new leadership of CEO Miller and COO Jonathon the company quickly grew to eventually be the largest home builder in the United States.  Along the way there was considerable collateral damage of law suits and litigation involving their projects. In some cases the firm was willing to spend more money on attorney’s fees than what they were being sued for.

Most prominent in their legal team was famed attorney Daniel Petracelli who defended such notable clients as Jeffrey Skilling of Enron and Trump University.  In almost every instance, Lennar’s legal team was able to win cases by bombarding their advisories with a mountains of motions and depositions.  Eventually their adversaries had to quit for lack of funds to fight Lennar’s clever attorney’s

Utilizing what appeared to be similar litigation tactics, CEO Stuart Miller and his COO Jonathan Jaffe weren’t as successful in other venues.  In a Maryland lawsuit filed against Lennar, the company suffered a stunning defeat that is estimated to cost them over a quarter billion dollars to settle.

In this Maryland case, Lennar had agreed to purchase land to construct a large development of the kind they had become well known for. Because of the recession that struck starting in late 2006, Lennar attempted to change the terms they had previously agreed to with the Settlers Crossing Group.

Going to Federal Court, the giant home builder began their usual scorched-earth litigation process and tried to exhaust the resources of their adversary.  According to a Federal judge, Lennar made what were later ruled to be false claims, the judge determined they hired what were determined to be phony experts, and engaged in fraudulent concealment of key evidence.

The Maryland judge soon realized that Lennar had a national pattern and practice of engaging in fraud and breach of contract. He ordered the developer to produce a list of pending breach of contract and fraud law suits against them around the country.  They ended up produced an astonishing 157 page list that was tendered to the court.

Though this document was later sealed by the court at the request of Lennar, it showed a pattern of behavior on the part of them which has become a calling card of a company that will do just about anything to achieve their goals.

In the end, the Judge ruled against Lennar on all counts and ordered them to post a bond guaranteeing payment of the court’s award – over $225,000,000 plus interest when the case went on appeal.  This appeal has since gone against Lennar who has had to pay the award to the plaintiff and will also pay plus their legal fees and costs.

In another case that illustrates the Lennar Way, when the housing market turned sour in 2006, they were faced with a large amount of excess inventory in Ft. Myers Florida. To remedy this problem, they schemed to unlawfully obtain mortgage funding from federally-insured lenders.

To do so, Lennar was accused by the FDIC of submitting false appraisals, creating straw buyers; false occupancy certificates while paying huge kick backs to the straw buyers. These charges came out in their litigation with the FDIC over these fraudulently obtained loans.

This Fort Myers scam never went to trial as Lennar ended up settling the complaint just prior to when the court proceedings were to begin.  Nevertheless it showed to what extend their executives will go to obtain their objectives and what type of activities they are willing to participate in.

Influencing decision makers who determine land use questions have been an important part of the Lennar arsenal of gaining contracts. Their business record in California offers vivid illustrations of this pattern.

In San Diego, Lennar was caught red handed paying off Center City Development Corp head Nancy Graham for favorable rulings on the proposed Ballpark Village Project. At the same time she failed to mention on her disclosure form for CCDC that she received a large undisclosed payment from a Lennar subsidiary in Florida.

Graham ended up having to resign her post in San Diego and accepted a fine for her conflict of interest with Lennar.  However, as will be explained in this series of articles, the Graham case is not an isolated instance.  In virtually all of Lennar’s dealings in California, including their bankrupt subsidiary LandSource, there is a pattern of corruption that typifies their business model.

A prime example of this is the foothold Lennar has gained in San Francisco the last 20 years winning projects at Hunters Point Naval Shipyard, Treasure Island, and now at what was once Candlestick Park.

In building their empire on the City by the Bay, Stuart Miller made an astute choice hiring well connected Ghana native Kofi Bonner to run his operation.   Among his earlier accomplishments, Bonner served as Interim City Manager for the city of Oakland and had several high positions in San Francisco government under the reign of his mentor Willie Brown.  He then became Executive Vice President and Chief Administrative Officer for the Cleveland Browns football serving with his friend Carmen Policy (of 49er fame)

Moving up Lennar’s ranks, Bonner presently serves as President of their subsidiary Five Point Holdings.  In gaining a foothold in the complicated San Francisco market, Bonner followed the coattails of Willie Brown whom he previously served under in many rolls.

Gaining political influence in San Francisco did not end with Bonner’s employment. .In winning the contract for the lucrative Hunters Point project, Lennar hired then House Speaker Nancy Pelosi’s nephew Lawrence to be the “head of acquisitions”.

In addition Lennar helped finance construction with the close co-operation of Willie Brown and Bonner.  Brown’s firm Golden Gate Partners (later Golden Gate Global) with partner Steven Kay,  sold Eb-5 visas (green cards) mostly to wealthy Chinese businessmen who paid a cool million dollars for this service.

For this privilege Brown’s company loaned Lennar the amount of what was raised from sales under the EB5 program.  Since only a small proportion of the loans to Lennar had collateral attached to them, the profit on these EB-5 sales was enormous.

The fix was in, but producing tangible results was another matter.  Building planned low income house has always been a problem for Lennar with converted military base contracts.

Thus far after two decades, they have yet to build more than 10% of the promised less lucrative low income units in either San Francisco or at Mare Island. It could because of the small profit margins in constructing affordable housing.

A major factor in the slow development of these large projects in San Francisco has been the problems with local citizens groups, environmentalists, and obtaining the property where some 12,000 units of housing are to be built. Aggravating Lennar’s difficulties is making areas of development free of toxic and radioactive contaminants left behind by the Navy.

On the political front Lennar paid almost a half million dollars over a four year period to well connected political consultant Keith Jackson.  One of his functions, other than his being a major fundraiser for San Francisco Mayor Ed Lee, was to liaison with a Nation of Islam group in Hunter’s Point.

Jackson, representing Lennar, also used his clout with Chinatown gangster Ray Shrimp Boy Chow for whom he also worked for as a consultant.  In addition, Jackson and Lennar had close ties with convicted felon ex State Senator Leland Yee, Deaf Butler, Nasty Mohamed, and a host of other sketchy characters.

The  entire Lennar-Keith Jackson connection fell apart after  2014 when an FBI Sting operation unfolded with Leland Lee, Shrimp Boy Chow, and Jackson eventually going to prison for racketeering, money laundering, murder for hire, arms sales, and several other major offenses.

As might be expected, Kofi Bonner had no reasonable explanation of what Keith Jackson was doing for Lennar while professing his surprise that Lennar’s highly paid consultant turned out to be so slimy.  Nowhere from Bonner came the words “bag man”, extortion, or, bribery in describing Jackson’s job description.

Back in 2007 Francisco Da Costa, who currently sits on the City’s Ethics Committee commented on Keith Jackson and his relationship with Lennar::

“If there are things to be investigated, it must be Kofi Bonner and his cronies. These scum bags come in-spread blood money and think – if they buy officials and other such entities as regulatory agencies, they can get away with murder.  Wrong.”

Outside of political considerations, problems have persisted pertaining to cleaning up contaminants at Hunter’s Point left over by the military, including radioactive waste. Back in 2014 serious charges came forth from an NBC news report that the Navy’s contractor Tetra Tech was mishandling soil samples for testing.  Despite seven whistle blowers coming forth, the problems were blamed on low level employees that were collecting material for testing.

Eventually Tetra Tech was fired by the Federal government.  A new contractor was hired to check on previous work and to certify where construction can be built. At the same time, land transfers from the Navy were stopped until the current mess is sorted out.

This process may take a few years, because it turns out that – due to falsified soils reports, there is major concern about radioactive soil throughout the Hunter’s Point development has been ignored.

At this juncture, no one has asked why Tetra Tech filed false reports, despite being unlikely a government contractor such as them could be so careless.  If one were to “round up the usual suspects”, Lennar would be on the top of the list because they would materially gain from environmental road blocks being lifted.

At the present time limited work is being done by Lennar and their subsidiary Five Point Holdings in San Francisco.  There are also delays for them at Candlestick Park where the Metropolitan Transportation Commission (MTC) has promised almost a billion dollars in street improvements, flood control, and infrastructure improvements in the place that the San Francisco 49ers called home.

In addition, problems have also occurred at the Treasure Island Development with environmental groups and difficulties associated with sinking land that is going to cost multi-millions for the Army Corp of Engineers to fix.

If this were not enough, the Lennar Way has had more than its share of difficulties with their most ambitious project at Newhall ranch in Santa Clarita which they someday envision building 20,000 units of housing.

 

 

 

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.