Developer Sentenced to 4 Years in Federal Prison for Offering a Million-Dollar Bribe to Secure a $45 Million L.A. County Lease

Developer Sentenced to 4 Years in Federal Prison for Offering a Million-Dollar Bribe to Secure a $45 Million L.A. County Lease

          LOS ANGELES – A real estate developer was sentenced today to 48 months in federal prison for offering to buy a million-dollar home for a Los Angeles County public official in exchange for the official’s assistance securing a $45 million county lease for the developer.

          Arman Gabaee, 61, a.k.a. “Arman Gabay,” of Beverly Hills, was sentenced by United States District Judge George H. Wu, who also ordered him to pay a fine of $1,149,000.

          Gabaee pleaded guilty on May 2 to one count of bribery.

          Gabaee was a co-founder and co-managing partner of the Charles Company, a Hollywood-based commercial and residential real estate development firm. The then-county employee whom Gabaee bribed was Thomas J. Shepos, 72, of Palmdale. Shepos was a high-level official in Los Angeles County’s Real Estate Division involved in awarding contracts to real estate developers.

          In the years leading up to his million-dollar bribe offer, from approximately 2010 to April 2017, Gabaee paid Shepos bribes and kickbacks of approximately $1,000 every month in exchange for county leases, preferential contract terms, non-public information and other benefits. Shepos began cooperating with the FBI in December 2016. From then until April 2017, Gabaee paid Shepos $6,000 in cash bribes during recorded meetings in cars, restaurants and men’s restrooms, prosecutors said.

          After years of paying cash bribes, Gabaee in 2016 “sought to further exploit the corrupt arrangement, this time soliciting Shepos’s help obtaining a $45 million county lease for his Hawthorne Mall property – a lease he believed would increase the value of his property ten-fold,” prosecutors said in sentencing papers. In recordings, Gabaee offered to buy Shepos a million-dollar home in exchange for his assistance securing a 10-year, $45 million county lease for office space in the Hawthorne Mall, which Gabaee owned and was redeveloping. Gabaee admitted in his plea agreement to placing two offers on a Northern California home, first for $1,035,000 and later for $1,065,000, as a bribe for Shepos in exchange for the $45 million lease.

          Wiretap calls showed that with a long-term, reliable tenant like the county anchoring the mall, Gabaee believed he could get bank loans to redevelop the property, attract other tenants, and ultimately increase the mall’s assessed value from $17 million to $500 million. With the county lease, Gabaee was considering selling the mall to capitalize on its increased value, wiretap calls showed.

          “This defendant gamed the system during a seven-year bribery spree designed to expand his real estate empire,” said United States Attorney Martin Estrada. “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.”

          Shepos pleaded guilty in November 2018 to one count of making false statements to federal investigators who were investigating his financial relationship with Gabaee and one count of subscribing to a false tax return related to payments he received from Gabaee. Shepos is scheduled to be sentenced on January 19, 2023.

          The FBI investigated this matter.

          Assistant United States Attorneys Lindsey Greer Dotson and Thomas F. Rybarczyk of the Public Corruption and Civil Rights Section prosecuted this case.

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