A real estate developer was sentenced to four years in federal prison Thursday, Dec. 15, for bribing a Los Angeles County official in exchange for steering the county to enter into a $45 million agreement to lease space at the derelict Hawthorne Plaza mall.
The developer, Arman Gabaee, 61, of Beverly Hills, sometimes known as Arman Gabay, pleaded guilty to one count of bribery in May and has been ordered to pay a fine of $1,149,000.
Gabaee is the co-founder and co-managing partner of the Charles Co., a Hollywood-based commercial and residential real estate firm that bought the mall in 1999.
From 2010 to 2017, Gabaee paid roughly $1,000 every month to Thomas J. Shepos, 72, of Palmdale, a high-level official in L.A. County’s Real Estate Division, for preferential treatment on leases, better contract terms and access to nonpublic information, according to the U.S. Attorney’s Office.
Shepos began cooperating with the FBI in late 2016. Over the next five months, Gabaee was recorded paying Shepos $6,000 in cash bribes during meetings in cars, restaurants and men’s restrooms, prosecutors said.
Gabaee offered to buy a nearly $1.1 million home in Santa Rosa for Shepos in 2016 in exchange for the official’s help securing a 10-year, $45 million lease from the county. Shepos, due to his seniority, had “significant autonomy to contractually bind the county,” according to the U.S. Attorney’s Office.
“This defendant gamed the system during a seven-year bribery spree designed to expand his real estate empire,” United States Attorney Martin Estrada said in a statement. “The scheme culminated in a massive million-dollar bribe that was motivated by Mr. Gabaee’s immense greed. By facilitating this pay-to-play system, Mr. Gabaee undermined confidence in the integrity and fairness of our public institutions.”
Prosecutors said Gabaee, in wiretapped calls, believed having the county as an anchor for the mall would allow him to redevelop the property and increase its value to as much as $500 million. The developer also was considering selling the mall to capitalize on the higher value, the calls showed.
Shepos pleaded guilty in November 2018 to one count of making false statements because he initially lied to investigators looking into his financial relationship with Gabaee and to one count of falsifying his tax return due to the omission of the bribes. He is set to be sentenced on Jan. 19.
In response, the Los Angeles County Board of Supervisors ordered a complete review of all of the county’s leases with Gabaee and his companies, including four buildings in El Monte, one in Pasadena and one in Los Angeles.
The Hawthorne Plaza mall shut down in 1999, not long after its final anchor, JCPenney, exited. Once an economic boon for Hawthorne, the site had deteriorated throughout the 1990s and had become a blight by the time Gabaee and the Charles Co. picked it up for $7 million. Gabaee pitched various ideas to revitalize the site over the years and secured a major lease from L.A. County’s Welfare Fraud Division in 2001, but the mall never recovered.
By 2009, it was considered an eyesore, a haven for criminals and a target for arsonists. The decrepit mall was featured as an apocalyptic backdrop in music videos for Taylor Swift’s “Ready For It” and in Beyoncé’s “Superpower.” During the period in which Gabaee was paying out bribes to Shepos, the Charles Co. submitted plans to the city in 2016 for a $500 million overhaul that would include a movie theater, a gym, a bowling alley and new shops, offices and homes.
Those new plans hinged on a significant expansion of the space leased to the county, according to reports at the time.
The city later rescinded its approvals after more than a year went by without any progress. The Charles Co. blamed the delays on changing market conditions in 2018 and indicated the company would submit new plans.
That never happened.
In December 2021, after issuing “hundreds of administrative citations” related to the blighted mall, Hawthorne filed a nuisance abatement lawsuit against Gabaee and one of his companies. The lawsuit listed more than 50 violations of state and local laws related to the hazardous conditions at the site, which stemmed from unpermitted structural work and the operation of illegal businesses, according to a statement from the city.
“What was once a centerpiece of the local community in its bustling downtown has become a shell of a gutted building, hosting illegal dumping, graffiti, homeless encampments, children trespass and numerous other hazardous conditions and activities threatening the health, safety, and peace of the community,” the statement read.
A month later, firefighters had to put out a blaze that started in a homeless encampment set up in a subterranean parking structure at the mall.