Dive Brief:

• A federal grand jury has indicted four Los Angeles real estate development executives and employees on charges they defrauded government agencies of more than $50 million in a low-income housing scheme, The Los Angeles Times reported.
• The indictment alleges Advanced Development and Investment Inc. President Salim Karimi and three others engaged in a conspiracy to obtain fraudulent loans for affordable housing projects in Los Angeles, The Times reported. Prosecutors said the four submitted fraudulent invoices that "significantly overstated" the true construction costs for the taxpayer-supported projects.
• Karimi was arrested and released on bail in India in December and has been charged with felony counts of conspiracy, wire fraud, aggravated identity theft, tax evasion and making false statements to a federal financial institution, according to The Times. Prosecutors said they believe the other indicted individuals are currently in India as well.

Dive Insight:

Federal officials are seeking Karimi’s extradition, and Indian police officials said they have filed an appeal to cancel Karimi’s bail so that he can be turned over to U.S. authorities. Spokesman Thom Mrozek of the U.S. attorney’s office in Los Angeles said officials are currently looking for the other ADI workers who were also indicted.

Authorities said ADI has built 50 affordable housing projects in California but that the alleged frauds were perpetrated between 2001 and 2010. In just one instance of fraud, the city of Glendale, CA, gave ADI more than $33 million to build four affordable housing projects, but officials said they believe ADI pocketed approximately half of that.

The city of Los Angeles is in the midst of an affordable housing push and a homeless housing crisis. In January, California senators proposed a $2 billion investment in housing for the mentally ill homeless, and the "unprecedented" move is widely regarded as a manifestation of state lawmakers’ frustration with cities’ lack of progress toward reducing their homeless populations. California has approximately 116,000 homeless people, and 60% live outdoors, according to The Times.

Last October, Los Angeles County supervisors voted to grant up to $100 million a year for affordable housing, and Los Angeles Mayor Eric Garcetti announced he would add 100,000 units of affordable housing in Los Angeles by 2021. He also is trying to collect developer fees to help subsidize affordable housing in the city.