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SR 12-06-2016 13C 13.C December 6, 2016 Council Meeting: December 6, 2016 Santa Monica, California 1 of 1 CITY CLERK’S OFFICE - MEMORANDUM To: Mayor and City Council From: Denise Anderson -Warren, City Clerk , Records & Elections Services Department Date : December 6, 2016 13.C Request of Councilmembers McKeown and Himmelrich that Council, in light of rec ent news coverage and Superior Court action, direct staff to review all existing and pending agreements with Neil Shekhter, NMS, and associated entities, verifying information provided as part of such agreements, and attempting to ensure that the municipal corporation, residents/taxpayers, and occupants of NMS buildings are fully protected from possible misstatements and their consequences. 11/26/16, 2’44 PM Judge Rules Santa Monica Developer Forged Documents in Real Estate Dispute | Los Angeles Business Journal Page 1 of 2 http://www.labusinessjournal.com/news/2016/nov/23/judge-rules-santa-monica-developer-forged-document/ HOME NEWS print email Judge Rules Santa Monica Developer Forged Documents in Real Estate Dispute By HENRY MEIER Wednesday, November 23, 2016 A judge ruled Tuesday to sanction prominent Santa Monica developer Neil Shekhter after an eight-day hearing showed the real estate mogul forged documents, destroyed evidence, and committed perjury in connection to a dispute over a joint apartment complex venture. Los Angeles Superior Court Judge Suzanne Bruguera dismissed Shekhter’s lawsuit and ordered the developer and his company to pay attorneys’ fees and costs for the defendant, Boston-based AEW Capital Management. “Plaintiffs fabricated evidence, submitted perjury about the same, and destroyed evidence, while simultaneously representing to the Court that they were proffering authentic documents and that they had preserved evidence,” Bruguera’s order reads. Shekhter initially filed the case in 2014 claiming AEW owed him $720 million for violating the terms of a joint venture agreement. The case, for all its drama, is essentially a contract dispute over the terms of the joint venture agreement between Shekhter’s NMS Properties and AEW to develop nine apartment properties on the Westside. Shekhter claims that the terms of the 2010 deal allowed him to buy out AEW after three years – something he attempted to do in 2013 – while AEW claims there was a five-year term. After extensive forensic investigation and testimony, the judge ruled that a document submitted by Skekhter to prove his claim was not authentic. During the investigation, Shekhter also switched out his personal computer’s hard drive, violating a court order, something his attorney, Skip Miller of Century City’s Miller Barondess, said his client admitted was a mistake. Miller added that he vehemently disagreed with the sanctions and Bruguera’s decision to dismiss the case. “The ruling is wrong as a matter of law and will be overturned on appeal,” Miller said. AEW’s attorneys at Gibson Dunn & Crutcher said they were pleased with the judge’s order. “We are grateful that the Court gave this matter the attention it deserved and came to the right result under these extraordinary circumstances,” Gibson Dunn partner James Fogelman said in a statement. Deals & Dealmakers reporter Henry Meier can be reached at hmeier@labusinessjournal.com. Follow him on Twitter @henry_meier. GET EMAIL NEWS ALERTS >> YOU MAY ALSO LIKE Multifamily Developer Draws Judge’s Sanction Ovitz Wins Ruling in Burkle Suit Judge Refers Lawyer for Prosecution in Dole Fraud Councilman Richard Alarcon and Wife to Stand Trial Heavyweight Investor Suit Spotlights Ex- Underling Judge Tells Burkle to Play Nice in Lawsuit Against Ovitz Redstone Competency Case Dismissed; New Suit Filed Against Daughter Judge to Consider Evaluation of Sumner Redstone HOME LISTS FINANCE HEALTHCARE MANUFACTURING REAL ESTATE SERVICES TECHNOLOGY GOVERNMENT TRAVEL/LEISURE Los Angeles Business Journal 11/26/16, 2’44 PM Judge Rules Santa Monica Developer Forged Documents in Real Estate Dispute | Los Angeles Business Journal Page 2 of 2 http://www.labusinessjournal.com/news/2016/nov/23/judge-rules-santa-monica-developer-forged-document/ BROWSE MORE Classiﬁed The Lists Archives Poll Archive Buy Back Issues LEARN MORE About Us Privacy Policy Contact Us Edit Proﬁle FAQs SERVICES Subscription Center Online Login/Register Advertise with Us Sign-Up for E-News Updates TOOLS Calendar Editorial Calendar OTHER JOURNALS Orange County Business Journal San Diego Business Journal San Fernando Valley Business Journal © 2016 Los Angeles Business Journal Phone: 1-323-549-5225 circulation1@labusinessjournal.com 1 Vernice Hankins From:Ann Hoover <annkbowman@yahoo.com> Sent:Friday, December 02, 2016 10:32 AM To:Kevin McKeown Fwd; Gleam Davis; Sue Himmelrich; councilmtgitems Cc:Rick Cole; Elaine Polachek; Council Mailbox; David Martin; Mirror Editor; editor@smdp.com Subject:December 6th Council Mtg -- Items 13.b. and 13.c. -- THANK YOU - Extremely important topics to discuss! Dear Kevin, Gleam and Sue -- Many thanks to you three for putting two ke y topics on the December 6th Council agenda - Item 13.b. -- To Kevin & Gleam - I believe many in the community w ould be gratified if the Council puts in place a method to formalize and mandate more community input through voter approval (or similar measures) in the development process where projects exceed zoning. No one was surprised that LV failed given the deluge of negative campaigning agai nst it. On the Pro side, th ere simply wasn't money enough to counteract what was filling up peopl e's mail boxes, no matter how many citizen volunteers were on the phones and out on the streets. So MANY thanks - I look forward to seeing what staff and the Council may come up with. Item 13. c. -- And to Kevin and Sue -- Yes, yes, ye s - Council and the City definitely need to look into Neil Shekhter's business activities and determine whether or not NM S is the sort of deve lopment partner the City should continue to favor going forward. (I for one am in favor of keeping our noses clean). THANK YOU! Wishing each of you the happiest of Holiday Seas ons and thank you so much for listening to the community and for your responsive leadership! Best, Ann Hoover 310-560-9902 Development heavy discussions schedul ed for Dec. 6 council meeting Item 13-C 12/06/2016 1 Item 13-C 12/06/2016 2 Development heavy discussions scheduled for Dec. 6 council meeting The decisions before City Council at their Dec. 6 meeting are as important as ever, but a pair of requests from ... Item 13-C 12/06/2016 2 Item 13-C 12/06/2016 1 SMCLC Comments on Item 13 -C, NMS, on the Dec. 6, 2016 City Council Agenda Summary and Action Items Recently, t he Superior Court issued two orders finding that developer NMS and its founder and CEO Neil Shekhter committed “massive, intentional, coordinated efforts to destroy evi dence,” “fraud,” and “perjury,” and forcing it to cede control of 9 projects, including in Santa Monica, and pay more the $6 m illion in attorneys’ fees and costs. The scope of the fraud and document destruction is shocking. These are no longer allegations; they are Court findings. NMS has at least 18 (eighteen) pending projects in Santa Monica, 15 in downtown, and numerous existing projects. More are expected. Santa Monica must take vigorous action to protect itself and its residents . This is an especially urgent matter where we are dealing with a single developer who would control so much of our Downtown. Can the Council tell residents and the business community that despite the Court's extensive findings of misconduct it has confidence in NMS’ basic honesty and reliability ? Initial Action Items the City Should Take Now to Protect Itself and the Public 1. End all discussions with NMS or Shekht er on their 18 pending Santa Monica development projects . If a hearing is required, the City should hold one. Santa Monica must not do business with or reward those found to have committed fraud and perjury , whose words have been found to be worthless, and whose actions have been found to utterly fail to comply with ethical business norms. 2. Carry out a comprehensive r eview of all the existing NMS projects, including the use of outside forensic experts as to: (a) representations NMS has made, (b) its compliance with its existing and future obligations (under agreement and law), and (c) its business operations. All of the City’s rights should be evaluated. Given the Court’s findings of forgery, perjury and alteration of computer data and documents, this review cannot take NMS’ representations or document s at face value. Independent, outside forensic experts need to be hired to take part in this review – the only way NMS’ fraud was uncovered was through the use of highly trained forensic experts. City staff is busy and is not trained to carry out a deep forensic review. 3. Review the City’s internal controls to determine the extent to which it knew , or should have known, of the seri ous allegations against NMS, earlier court orders and NMS’ questionable litigious history . The Council and the public should have been informed of these before it approved NMS projects. This should be part of a larger review of the City's due diligence and vetting processes. Item 13-C 12/06/2016 3 Item 13-C 12/06/2016 2 4. Provide the Council and the public with a complete and detailed list and report in a single document of all existing and pending NMS projects , their status and all pertinent details. Any additional NMS sites as to which development applications are expect ed or likely should also be included. Background and Scope and Depth of NMS Misconduct Found by Court In a recent 94-page opinion, the Superior Court detailed NMS’ and Neil Shekhter’s orchestration of a fraudulent plot to cheat its partner on multiple Westside and Santa Monica real estate properties. The Court found an elaborate NMS scheme of forgery, altering computer metadata, backdating Shekhter’s home computer at least seventeen times, and destroying and hiding evidence. Their conduct was called “shocking.” http://smclc.net/NMS.CourtOpinion.pdf NMS and Shekhter were found to have committed “massive, intentional, coordinated efforts to destroy evidence,” “fraud,” and “perjury.” Further, the Court specifically found that Neil Shekhter had committed perjury, having “provided false testimony under oath to mislead the Court and cover up his own misconduct.” Such pervasive fraudulent conduct as found by the Court doesn’t just suddenly happen. What was unveiled is a deeply disturbing picture of a corporate culture gone wrong. NMS has been a favored developer. Its many projects factor heavily in the proposed Downtown Community Plan which the Council will take up this comin g spring. NMS has at least 18 projects pending in Santa Monica, comprising hundreds of thousands of square feet. At least 3 of NMS’ numerous existing projec ts were recommended by city staff and approved by the Council even after the Court had already issued extraordinary orders against NMS: (1) that NMS “freeze all of its electronic documents so that they cannot be modified or deleted;” and (2) ordered a forensic examination of its electronic documents. While these orders should have set off alarm bells at City Hall, apparently the City’s approvals went through without any consideration or public mention of the se issues . According to Gerry LaPorte, a former Secret Service forensic expert, this was one of the worst cases of blatant forgery he has seen in his long care er. http://www.labusinessjournal.com/news/2016/nov/23/judge-rules -santa-monica -developer - forgeddocument/ http://therealdeal.com/la/2016/10/17/hogs-get -slaughtered-aew-claims-nms -forged - documents-in -jointventure- lawsuit/ Santa Monica should not do business with a company like NMS that commits these horrendous business practices and cannot be trusted to exercise basic integrity and ethics. It cannot be Item 13-C 12/06/2016 4 Item 13-C 12/06/2016 3 trusted to follow the law. It would be a breach of the City’s stewardshi p to allow people who have been found to be fundamentally dishonest to develop entire parts of our downtown. December 4 , 2016 Diana Gordon Diana Gordon Co-chair, Santa Monica Coalition for a Livable City (SMCLC) Cc: City Council City Manager City Attorney City Clerk Planning Commission Community Leaders Item 13-C 12/06/2016 5 Item 13-C 12/06/2016 1 Vernice Hankins From:Johnson Thurston <johnsonthurstonsm@gmail.com> Sent:Sunday, December 04, 2016 6:11 PM To:Kevin McKeown Fwd; Tony Vazquez; Glea m Davis; Sue Himmelrich; Pam OConnor; Terry O’Day; Ted Winterer; councilmtgitems Subject:Public Comment for Item 13C Dear Council Members McKeown and Himmelrich, Thank for for your efforts to re-consider City projects with Developer NMS. It is only proper to no longer b elieve anything the company says or proposes. I realize it likely takes courage to go up against such a powerful liar. Thank you for standi ng up for a great city. I want to echo SMCLC, I call for the City of Santa Monica to end all discussions and negotiations with NMS and Shekhter on all pending NMS projects. The City should also do an in-depth review of all of its rights as to all existing NMS projects, in cluding NMS’ compliance with all of its obligations. Thank you for your consideration and hard work, Johnson Thurston Santa Monica CA Begin forwarded message: From: Santa Monica Coalition for a Livable City <info@smclc.net > Subject: Important update on SM Devel oper NMS and Further Court Rulings Date: December 4, 2016 at 10:34:13 AM PST To: johnsonthurstonsm@gmail.com Reply-To: info@smclc.net Important Update on SM Developer Found to Have Forged Documents, Committed Perjury and Engaged in Massive Fraud December 4, 2016 Item 13-C 12/06/2016 6 Item 13-C 12/06/2016 2 Santa Monica Coalition for a Livable City, 1223 Wilshire Blvd. #1002, Santa Monica, CA 90403 SafeUnsubscribe™ johnsonthurstonsm@gmail.com Forward email | Update Profile | About our service provider Sent by info@smclc.net in collaboration with Try it free today Dear SMCLC Supporter, In SMCLC’s November 28, 2016 alert we informed you that the Los Angeles Superior Court had found that Santa Monica’s most prolific downt own developer, NMS, and its founder and CEO Neil Shekhter, had committed “massive, intentional, coordi nated efforts to destroy evidence,” “fraud,” and “perjury.” http://smclc.net/NMS .CourtOpinion.pdf The Court has now issued further rulings. The Court “ordered the real estate mogul to cede all control of [the nine projects in dispute in that lawsui t, including in Santa Monica,]” according to the L.A. Business Journal . The Court also ordered NMS to pay more than $6 million in attorneys’ fees and costs. http://labusinessjournal.com/new s/2016/dec/02/judge-a mends-ruling-adds-a ttorneys-fees-real- estat/ But NMS has many more existing and pending projects in Santa Monica that would significantly alter our Downtown that were not part of that lawsuit. The City has just confirmed to us that NMS has 18(eighteen) pending Santa Monica projects, 15 in our Downtown, that have not yet been approved. And we understand that NMS has additional site s in Santa Monica that will likely lead to even more NMS development applications. Given the Court’s comp rehensive findings, SM CLC is calling for the City of Santa Monica to end all discussions and negotiations with NMS and Shekhter on all pending NMS projects. The City should also do an in-depth review of all of its rights as to all existing NMS projects, including NMS’ compliance with all of its obligations. Last week SMCLC sent the City a public records request for copies of all NMS development agreements. Can the Council assure residents and the business community, that despite the Court’s extensive findings, it has confidence in NMS’ basic honesty and reliability? We think not. Santa Monica must not do business with people found to have engaged in the “massive,” “coordinated,” and pervasive misconduct found by the Court. We want to correct one item from our 11/28/16 al ert. The projects for the Jo-Ann Fabrics and Aaron Brothers sites are not NMS projects. Rather, the De nny’s site across the street, as well as many others downtown, are NMS projects. This is an especially urgent matter when we are deal ing with a single developer who would control so much of our downtown. Best, Victor, Diana, Sherrill, Jeff Item 13-C 12/06/2016 7 Item 13-C 12/06/2016 1 Vernice Hankins From:Santa Monica City Manager's Office Sent:Monday, December 05, 2016 9:05 AM To:councilmtgitems Subject:FW: NMS FYI From: Michele Perrone [mailto:micheleperrone@icloud.com] Sent: Sunday, December 4, 2016 3:00 PM To: Winterer Ted <otedo@aol.com>; Tony Vazquez <Tony.Vazquez@SMGOV.NET>; Kevin McKeown Fwd <kevin@mckeown.net>; Gleam Davis <Gleam.Davis@SMGOV.NET>; Terry O’Day <Terry.Oday@smgov.net>; Pam OConnor <Pam.OConnor@SMGOV.NET> Cc: Santa Monica City Manager's Office <manager.mailbox@SMGOV.NET>; Elaine Polachek <Elaine.Polachek@SMGOV.NET>; Attorney Mailbox <Attorney.Mailbox@SMGOV.NET> Subject: NMS Dear City Council Members, City Manager and City Attorneys, In light of the below court findings I hope you will pull out of any deal possible with NMS. My slow growth leanings aside, why would we continue with a crook ? And no single company should own this much of us, anyway. Thank you! Michele Perrone Ocean Park Resident Begin forwarded message: From: Santa Monica Coalition for a Livable City <info@smclc.net > Subject: Important update on SM Devel oper NMS and Further Court Rulings Date: December 4, 2016 at 12:34:15 PM CST To: micheleperrone@me.com Reply-To: info@smclc.net Item 13-C 12/06/2016 8 Item 13-C 12/06/2016 2 Santa Monica Coalition for a Livable City, 1223 Wilshire Blvd. #1002, Santa Monica, CA 90403 SafeUnsubscribe™ micheleperrone@me.com Forward email | Update Profile | About our service provider Sent by info@smclc.net in collaboration with Important Update on SM Developer Found to Have Forged Documents, Committed Perjury and Engaged in Massive Fraud December 4, 2016 Dear SMCLC Supporter, In SMCLC’s November 28, 2016 alert we informed you that the Los Angeles Superior Court had found that Santa Monica’s most prolific downt own developer, NMS, and its founder and CEO Neil Shekhter, had committed “massive, intentional, coordi nated efforts to destroy evidence,” “fraud,” and “perjury.” http://smclc.net/NMS .CourtOpinion.pdf The Court has now issued further rulings. The Court “ordered the real estate mogul to cede all control of [the nine projects in dispute in that lawsui t, including in Santa Monica,]” according to the L.A. Business Journal . The Court also ordered NMS to pay more than $6 million in attorneys’ fees and costs. http://labusinessjournal.com/new s/2016/dec/02/judge-a mends-ruling-adds-a ttorneys-fees-real- estat/ But NMS has many more existing and pending projects in Santa Monica that would significantly alter our Downtown that were not part of that lawsuit. The City has just confirmed to us that NMS has 18 (eighteen) pending Santa Monica projects, 15 in our Downtown, that have not yet been approved. And we understand that NMS has additional site s in Santa Monica that will likely lead to even more NMS development applications. Given the Court’s comp rehensive findings, SM CLC is calling for the City of Santa Monica to end all discussions and negotiations with NMS and Shekhter on all pending NMS projects. The City should also do an in-depth review of all of its rights as to all existing NMS projects, including NMS’ compliance with all of its obligations. Last week SMCLC sent the City a public records request for copies of all NMS development agreements. Can the Council assure residents and the business community, that despite the Court’s extensive findings, it has confidence in NMS’ basic honesty and reliability? We think not. Santa Monica must not do business with people found to have engaged in the “massive,” “coordinated,” and pervasive misconduct found by the Court. We want to correct one item from our 11/28/16 al ert. The projects for the Jo-Ann Fabrics and Aaron Brothers sites are not NMS projects. Rather, the De nny’s site across the street, as well as many others downtown, are NMS projects. This is an especially urgent matter when we are deal ing with a single developer who would control so much of our downtown. Best, Victor, Diana, Sherrill, Jeff Item 13-C 12/06/2016 9 Item 13-C 12/06/2016 3 Try it free today Item 13-C 12/06/2016 10 Item 13-C 12/06/2016 1 Vernice Hankins From:jane wiedlea <jwiedlea@aol.com> Sent:Monday, December 05, 2016 12:58 PM To:Kevin McKeown Fwd; Sue Himmelrich; Glea m Davis; Tony Vazquez; Clerk Mailbox; info@smconservancy.org Subject:Fwd: SMCLC Comments on Item 13-C, NMS, on December 6, 2016 City Council Agenda I agree with this statement of wh at needs to be done by our city with regard to the NMS situation. Jane Wiedlea Koehler ---------- Forwarded message ---------- From: Santa Monica Coaliti on for a Livable City Date: Dec 5, 2016 11:33 AM Subject: SMCLC Comments on Item 13-C, NM S, on December 6, 2016 City Council Agenda To: jwiedlea@aol.com Cc: December 5, 2016 Hi, Tomorrow our City Council takes up what it needs to do to protect the City and the public vis-a-vis NMS in a 13-C item which reads: "Request of Councilmembers McKeown and Hi mmelrich that Council, in light of recent news coverage and Superior Court action, dire ct staff to review all existing and pending agreements with Neil Shekhter, NMS, and associ ated entities, verifying information provided as part of such agreements, and attempting to ensure that the municipal corporation, residents/taxpayers, and occupants of NMS buildings are fully protected from possible misstatements and their consequences." Given the Court’s ongoing rulings as to the massive, coordinated extent of NMS’ fraud, forgery and perjury, SMCLC believes that it is vital that residents and the business community demand that the City conduct a full-s cale review of all of NMS’s obligations on its existing projects and cease all negotiations with NMS on the 18 or more pending projects N MS has proposed for our Downtown. And even more development applications are expected. Item 13-C 12/06/2016 11 Item 13-C 12/06/2016 2 Santa Monica Coalition for a Livable City, 1223 Wilshire Bl vd. #1002, Santa Monica, CA 90403 SafeUnsubscribe™ jwiedlea@aol.com Forward email | Update Profile | About our service provider Sent by info@smclc.net in collaboration with Try it free today We are attaching our initial comments to the City Council on item 13-C to trigger a comprehensive review and imm ediate actions we believe are needed now to protect the City and residents. http://smclc.net/PDF/Council13-CNMS12.6.16.pdf If you agree, please consider adding your voices (via emails) to the discussion. Thanks, Diana Gordon for SMCLC Item 13-C 12/06/2016 12 Item 13-C 12/06/2016 1 Vernice Hankins From:jane wiedlea <jwiedlea@aol.com> Sent:Monday, December 05, 2016 12:58 PM To:Kevin McKeown Fwd; Sue Himmelrich; Glea m Davis; Tony Vazquez; Clerk Mailbox; info@smconservancy.org Subject:Fwd: SMCLC Comments on Item 13-C, NMS, on December 6, 2016 City Council Agenda I agree with this statement of wh at needs to be done by our city with regard to the NMS situation. Jane Wiedlea Koehler ---------- Forwarded message ---------- From: Santa Monica Coaliti on for a Livable City Date: Dec 5, 2016 11:33 AM Subject: SMCLC Comments on Item 13-C, NM S, on December 6, 2016 City Council Agenda To: jwiedlea@aol.com Cc: December 5, 2016 Hi, Tomorrow our City Coun cil takes up what it needs to do to protect the City and the public vis-a-vis NMS in a 13-C item which reads: "Request of Councilmembers McKeown and Hi mmelrich that Council, in light of recent news coverage and Superior Court action, dire ct staff to review all existing and pending agreements with Neil Shekhter, NMS, and associ ated entities, verifying information provided as part of such agreements, and attempting to ensure that the municipal corporation, residents/taxpayers, and occupants of NMS buildings are fully protected from possible misstatements and their consequences." Given the Court’s ongoing rulings as to the massive, coordinated extent of NMS’ fraud, forgery and perjury, SMCLC believes that it is vital that residents and the business community demand that the City conduct a full-s cale review of all of NMS’s obligations on its existing projects and cease all negotiations with NMS on the 18 or more pending projects N MS has proposed for our Downtown. And even more development applications are expected. Item 13-C 12/06/2016 13 Item 13-C 12/06/2016 2 Santa Monica Coalition for a Livable City, 1223 Wilshire Bl vd. #1002, Santa Monica, CA 90403 SafeUnsubscribe™ jwiedlea@aol.com Forward email | Update Profile | About our service provider Sent by info@smclc.net in collaboration with Try it free today We are attaching our initial comments to the City Council on item 13-C to trigger a comprehensive review and immediate actions we believe are needed now to protect the City and residents. http://smclc.net/PDF/Council13-CNMS12.6.16.pdf If you agree, please consider adding your voices (via emails) to the discussion. Thanks, Diana Gordon for SMCLC Item 13-C 12/06/2016 14 Item 13-C 12/06/2016 1 Vernice Hankins From:Council Mailbox Sent:Monday, December 05, 2016 3:39 PM To:Tony Vazquez; Ted Winterer; Pam OConnor; Sue Himmelrich; Gleam Davis; Terry O’Day; Kevin McKeown Fwd Cc:councilmtgitems; Elaine Polachek; David Martin Subject:FW: 18 NMS properties - cause for ex pdited lien, restrictions, cloud ? Council ‐ Please see the email below re: Item 13C on tomorrow’s agenda. Thank you, Stephanie From: Ken Robin [mailto:maestro90403@gmail.com] Sent: Sunday, December 04, 2016 4:11 PM Subject: 18 NMS properties ‐ cause for expdited lien, restrictions, cloud ? Is there cause for expidite d action on property title? http://www.smobserved.com/story/2016/12/05/opinion/smclc-demands-city-of-sm-halt-processing-of-18- development-applications-by-nms/2344.html Item 13-C 12/06/2016 15 Item 13-C 12/06/2016 1 Vernice Hankins From:Nancy Morse <nancym@netzero.net> Sent:Monday, December 05, 2016 4:47 PM To:Council Mailbox; councilmtgitems Subject:12/6/2016 Agenda Item 13C: NMS To: City Council, City Manager From: Nancy M. Morse Subject: 12/6/2016 Agenda Item 13C: NMS Given recent court findings I think the City of Santa Monica cannot have faith in the integrity of NMS. The city should not do business with people or businesses that have been found to have engaged in such misconduct. On all pending NM S projects the city should end all discussions and ne gotiations with NMS and Shekhter. The city should conduct a review of all existing NMS projects to verify the city’s standings. There also needs to be an internal review of staff’s relations with NMS I wonder how the cour t findings impact the large sums of money NMS gave to Santa Monica PACs to fight measure LV and to support candidates. There may not be a legal impact, but elected officials are under scrutiny for NMS's influence. Nancy Morse Item 13-C 12/06/2016 16 Item 13-C 12/06/2016 1 Vernice Hankins From:Noma Boardmember <nomaboard@gmail.com> Sent:Monday, December 05, 2016 5:03 PM To:councilmtgitems Cc:Rick Cole Subject:Item 13-C: City Council Agenda for 12/6/16 Right-click here to download pictures. To help protect your privacy, Outlook prevented automatic download of this picture from the Internet. Dear Mayor Vazquez and City Council Members, We were stunned to hear of the information discovered and the recent court action taken against Neil Shekhter and NMS, one of Santa Monica's most active developers. Accordingly, we give our full support to the Councilmembers' Request presented in this Item. The review should include any NMS representations in their Development Agreements in and with the city and NMS' compliance with all obligations under their existing DA's. Furthermore, the City should cease any further negotiations or discussions with NMS on its pending pr ojects, including those they may only be are a junior partner to, until municipal and taxpayer safety are assured. As t he forgeries, backdating of co mputers, and hiding of documents by NMS were only discovered by highly trained outside ex perts, staff and Council should be authorized to hire such experts to uncover information not readily available through staff inquiry. Additionally, outside experts should also be considered to be hired for this study, as staff has also worked with NMS and its agents on numerous projects in the past and should not be put at risk of comp romise or professional conflict. Finally, we would hope that any Council member who personally or as a candidate for public office received any benefit or contribution from Mr. Shekht er or NMS recuse him/herself in this matter. Respectfully, The .NOMA Board smnoma.org NOMAboard@gmail.com Item 13-C 12/06/2016 17 Item 13-C 12/06/2016 1 Vernice Hankins From:John Cyrus Smith <johncysmith@gmail.com> Sent:Tuesday, December 06, 2016 2:41 AM To:Kevin McKeown; Ted Winterer; Sue Himmelric h; Tony Vazquez; Gleam Davis; Terry O’Day; Pam OConnor; Rick Cole; Clerk Mailbox Subject:Council Agenda Item 13.C. NMS Dear Council members, 13.C. Request of Councilmembers McKeown and Himmelrich that Council, in light of recent news coverage and Superior Court action, direct staff to review all existing and pending agreements with Neil Shekhter, NMS, and associated entities, verifying information provided as part of such agreements, and attempting to ensure that the municipal corporation, residents/taxpayers, and occupants of NMS buildings are fully protected from possible misstatements and their consequences. Having read extensively about the misdeeds NMS and Neil Shekter are accused of, I mu st simply request that the Council cease doing business with such a company and it's founder. Perjury. Fraud. Falsified documents. Inte ntional, coordinated effo rts to destroy evidence. Does our progressive, forward-thinking city really want this man and this company as its most prolific developer? If we allow this type of developer to continue to build here, then that is exactly the kind of development we will attract. Where else is NMS committing fraud or falsif ying documents? Compromising safety? Taking shortcuts? You will never know because there is no way to give pr ojects the kind of review needed to assure it won't happen, again and again and again. We've all seen the movie, "The Godfather", and the scene where Marlon Brando tells the other New York bosses that, while THEY are welcome to deal in the sale of heroin, he will not. If others want to welcome this type of developer, let them. But not here. Not now. Not ever. Sincerely, John Cyrus Smith JohnCySmith@gmail.com Item 13-C 12/06/2016 18 Item 13-C 12/06/2016 1 Vernice Hankins From:Santa Monica City Manager's Office Sent:Tuesday, December 06, 2016 9:15 AM To:councilmtgitems; David Martin; Salvador Valles Subject:FW: Council Meeting Tuesday, 12-6-16 - NMS FYI From: sy@ymlaw.net [mailto:sy@ymlaw.net] Sent: Tuesday, December 6, 2016 7:33 AM To: sarah.gorman@smgov.net; Sue Himmelrich <suehimmelrich@suehimmelrich.net>; 'gleam.davis@smgov.net'; 'kevin@mckeown.net'; 'pam.oconnor@smgov.net'; 'terry.oday@smgov.net'; 'tony.vazquez@smgov.net'; 'ted.winterer@smgov.net'; 'gnewbold@gmail.com'; David Martin <David.Martin@SMGOV.NET>; andersonsmpc@yahoo.com; Mario@FBHarchitects.com; freddycan@freddycan.net; jenniferfkennedy@gmail.com; leslielambert92@gmail.com; richard@richardmckinnon.com; parryplan@gmail.com; Santa Monica City Manager's Office <manager.mailbox@SMGOV.NET>; Attorney Mailbox <Attorney.Mailbox@SMGOV.NET> Cc: 'Lewis Perkins' <LewisPerkins@comprehensivefinancial.net> Subject: Council Meeting Tuesday, 12 ‐6 ‐16 ‐ NMS Honorable Council Members and Commissioners In light of the recent Rulings by the S uperior Court regarding NMS and its principal, I fully support and applaud the inquiry recommended by City Councilmembers Kevin McKeown and Sue Himmelrich regarding all current and pending building agreements. I also believe it is important to determine what other deve lopers and individuals may have been or are in partnership with NMS in other projects in our City. Regards, Stephen Youngerman Item 13-C 12/06/2016 19 Item 13-C 12/06/2016 1 Vernice Hankins From:Mary Marlow <smtransparency@verizon.net> Sent:Tuesday, December 06, 2016 9:57 AM To:councilmtgitems Cc:Ted Winterer; Kevin McKeown Fwd; Gleam Da vis; Terry O’Day; Pam OConnor; Tony Vazquez; Sue Himmelrich; Mario Fonda Bern ardi; Nina Fresco; Amy Anderson; Jennifer Kennedy; Richard McKinnon; Jason Parry; Leslie Lambert; Rick Cole; Marsha Moutrie; Clerk Mailbox Subject:Santa Monica Transparency Project Comme nts on Dec. 6, 2016 City Council Agenda item 13C, NMS In light of the recent Los Angeles Superior C ourt rulings on NMS and it’s founder Neil Shekhter finding massive fraud, forgery, perjury and destructi on of evidence, the Trans parency project would like to bring to the Council’s and public’s attention NMS’s political contributions in Santa Monica elections and comment on 13-C. NMS and its subsidiary LLC’s been major contribut ors to recent Santa Monica elections. They appear to have the most exis ting and pending projects in our City of any developer. Beginning in 2010 NMS wrote checks totaling $20,000 to the Slate Mailer PAC, Santa Monicans for Quality Governance. NMS specifically earmarked $10,000 in support of Terry O’Day with another $10,000 in support of Bob Holbrook . Gleam Davis and Pam O’Connor each contributed $2,000 from their own re election committees to be included in t he slate mailers. Some of the slate mailers were deceptively similar to legitimate mailers by Police, Fire, Democratic Club and City sanctioned neighborhood associations. In 2012 the PAC, Santa Monicans for a Responsible Future (SMURF), received $100,000, 20% of it's funding from NMS. SMURF spent $117, 685 in support of Gleam Davis, $102,862 for Terry O’Day, $79,556 for Ted Winterer and $105,960 Shari Davis for City Council . All but Shari Davis were elected. The 2014 election focused on the airport and affordabl e housing ballot initiati ves. Although, NMS says they are an affordable housing pr ovider, no political contributions were recorded for funding the affordable housing ballot measure. The most recent 2016 developer PAC, No on LV - Housing Opportunity for a Modern Economy sponsored by Santa Monica Housing Providers (HOME) was funded 73% by NMS with $365,000 of approximately $500,000 given by NMS and its many LLCs. Measure LV, which received almost 45% voter approval, would have required NMS’ pending projects to go before voters for approval. This would have brought NMS and its ac tivities sharply to the public’s attention. NMS has at least 18 projects totaling almost 1375 apartments pen ding approval by the Planning Commission and City Council with one 60 unit project on Santa Monica Blvd. already approved by City Staff administratively. 13 pending projects comprising 981 apartments are located downtown along 5 th , 6 th, , 7 th and Lincoln. Item 13-C : Item 13-C 12/06/2016 20 Item 13-C 12/06/2016 2 Existing projects: We urge council to carefully review all existing projects owned or managed by NMS for full compliance with Santa Monica zoni ng, all rules, laws and other obligations, environmental reviews, required fees and financial obligations, traffic management plans, and Development Reviews and De velopment Agreements. Residents have been told that some of NMS buildings have alr eady been sold. We urge the City Council in any research and action on NMS, to verify the sold buildings are not held by any entity related to NMS or its pr incipals or officers. This review must include the active participation of independent, outside forensic experts. Experienced forensic experts only discover ed the misconduct found by the Court through a full search. Pending projects : The City should end all negotiations with NMS and related entitles on all pending projects . Santa Monica should not be doing busine ss with companies and people found to have committed these horrible, dishonest acts. Respectfully, Santa Monica Transparency Project Mary Marlow, Chair Item 13-C 12/06/2016 21 Item 13-C 12/06/2016 1 Vernice Hankins From:Mary Marlow <smtransparency@verizon.net> Sent:Tuesday, December 06, 2016 9:57 AM To:councilmtgitems Cc:Ted Winterer; Kevin McKeown Fwd; Gleam Da vis; Terry O’Day; Pam OConnor; Tony Vazquez; Sue Himmelrich; Mario Fonda Bern ardi; Nina Fresco; Amy Anderson; Jennifer Kennedy; Richard McKinnon; Jason Parry; Leslie Lambert; Rick Cole; Marsha Moutrie; Clerk Mailbox Subject:Santa Monica Transparency Project Comme nts on Dec. 6, 2016 City Council Agenda item 13C, NMS In light of the recent Los Angeles Superior C ourt rulings on NMS and it’s founder Neil Shekhter finding massive fraud, forgery, perjury and destructi on of evidence, the Trans parency project would like to bring to the Council’s and public’s attention NMS’s political contributions in Santa Monica elections and comment on 13-C. NMS and its subsidiary LLC’s been major contribut ors to recent Santa Monica elections. They appear to have the most exis ting and pending projects in our City of any developer. Beginning in 2010 NMS wrote checks totaling $20,000 to the Slate Mailer PAC, Santa Monicans for Quality Governance. NMS specifically earmarked $10,000 in support of Terry O’Day with another $10,000 in support of Bob Holbrook . Gleam Davis and Pam O’Connor each contributed $2,000 from their own re election committees to be included in t he slate mailers. Some of the slate mailers were deceptively similar to legitimate mailers by Police, Fire, Democratic Club and City sanctioned neighborhood associations. In 2012 the PAC, Santa Monicans for a Responsible Future (SMURF), received $100,000, 20% of it's funding from NMS. SMURF spent $117, 685 in support of Gleam Davis, $102,862 for Terry O’Day, $79,556 for Ted Winterer and $105,960 Shari Davis for City Council . All but Shari Davis were elected. The 2014 election focused on the airport and affordabl e housing ballot initiati ves. Although, NMS says they are an affordable housing pr ovider, no political contributions were recorded for funding the affordable housing ballot measure. The most recent 2016 developer PAC, No on LV - Housing Opportunity for a Modern Economy sponsored by Santa Monica Housing Providers (HOME) was funded 73% by NMS with $365,000 of approximately $500,000 given by NMS and its many LLCs. Measure LV, which received almost 45% voter approval, would have required NMS’ pending projects to go before voters for approval. This would have brought NMS and its ac tivities sharply to the public’s attention. NMS has at least 18 projects totaling almost 1375 apartments pen ding approval by the Planning Commission and City Council with one 60 unit project on Santa Monica Blvd. already approved by City Staff administratively. 13 pending projects comprising 981 apartments are located downtown along 5 th , 6 th, , 7 th and Lincoln. Item 13-C : Item 13-C 12/06/2016 22 Item 13-C 12/06/2016 2 Existing projects: We urge council to carefully review all existing projects owned or managed by NMS for full compliance with Santa Monica zoni ng, all rules, laws and other obligations, environmental reviews, required fees and financial obligations, traffic management plans, and Development Reviews and De velopment Agreements. Residents have been told that some of NMS buildings have alr eady been sold. We urge the City Council in any research and action on NMS, to verify the sold buildings are not held by any entity related to NMS or its pr incipals or officers. This review must include the active participation of independent, outside forensic experts. Experienced forensic experts only discover ed the misconduct found by the Court through a full search. Pending projects : The City should end all negotiations with NMS and related entitles on all pending projects . Santa Monica should not be doing busine ss with companies and people found to have committed these horrible, dishonest acts. Respectfully, Santa Monica Transparency Project Mary Marlow, Chair Item 13-C 12/06/2016 23 Item 13-C 12/06/2016 2633 Lincoln Blvd., #513, Santa Monica, CA 90405 December 6, 2016 Santa Monica City Council 1685 Main Street Santa Monica , CA 90401 Re: Support of Item 13 -C Dear Council M embers, In light of recent Superior Court action and associated news coverage, bearing on the honesty and integrit y of major Santa Monica developer Neil Shekhter of NMS, SMRR supports the request of Councilmembers McKeown and Himmelrich to direct staff to review all existing and pending agreements with Neil Shekhter, NMS, and associated entities, verify information pr ovided as part of those agreements, and attempt to ensure that the City, residents/taxpayers, and occupants of NMS buildings are fully protected from possible misstatements and their consequences. We believe that neither the Council, Planning Commission or staff should proceed any further in considering pending proposals until the City Attorney and appropriate staff come back to Council with a thorough review, analysis and recommendations regarding compliance to date with existing agreements, possible conce rns regarding current proposals, and the integrity of the named developer, his associates and his successors in interest. For the protection of our community and our values, SMRR supports as broad a review as possible of facts, law and potential courses of action. Council may want to consider the advisability of retaining outside forensic experts to assist in what will likely be a complex investigative process. We thank Councilmembers Himmelrich and McKeown for bringing this i tem before the Council . Ver y truly yours, Denny Zane Co -Chair , Santa Monicans for Renters’ Rights Serving the Needs of All Santa Monica Residents Since 1979 1 Vernice Hankins From:Mary Marlow <mmarlow7@icloud.com> Sent:Tuesday, December 06, 2016 4:56 PM To:councilmtgitems Cc:Ted Winterer; Kevin McKeown Fwd; Gleam Da vis; Terry O’Day; Pam OConnor; Tony Vazquez; Sue Himmelrich; Marsha Moutrie; Rick Cole; Clerk Mailbox; Mario Fonda Bernardi; Nina Fresco; Amy Anderson; Jennifer Kennedy; Richard McKinnon; Jason Parry; Leslie Lambert Subject:Santa Monica Transparency project Comment s on Dec. 6 City Council Agenda Item 13 C In addition to the PAC monies listed in the Transparency Pr oject’s letter earlier today, NMS principals Neil and Margot Shekhter and NMS officers John Coletti, James Anderson,and Dino Ciarmoli contributed $1250 to Pam O’Connor’s 2010 re election committee. Terry O’Day’s 2012 re election committee received $750 from Margot Shekhter, John Colletti and James Anderson of NMS. Respectfully, Santa Monica Transparency project Mary Marlow, Chair 1 SMCLC Comments on Item 13 -C, NMS, on the Dec. 6, 2016 City Council Agenda Summary and Action Items Recently, t he Superior Court issued two o rders finding that developer NMS and its founder and CEO Neil Shekhter committed “massive, intentional, coordinated efforts to destroy evi dence,” “fraud,” and “perjury,” and forcing it to cede control of 9 projects, including in San ta Monica, and pay more the $6 m illion in attorneys’ fees and costs. The scope of the fraud and docume nt destruction is shocking. These are no longer allegations; they are Court findings. NMS has at least 18 (eighteen) pending projects in Santa Monica, 15 in downtown, and numerous existing projects. More are expected. Santa Monica must take vigorous action to protect itself and its residents . This is an especially urgent matter where we are dealing with a single developer who would control so much of our Downtown. Can the Council tell residents and the business community that despite the Court's extensive findings of misconduct it has confidence in NMS’ basic honesty and reliability ? Initial Action Items the City Should T ake Now to Protect Itself and the Public 1. End all discussions with NMS or Shekht er on their 18 pending Santa Monica development projects . If a hearing is required, the City should hold one. Santa Monica must not do business with or reward those found to have committed fraud and perjury , whose words have been found to be worthless , and whose actions have been found to utterly fail to comply with ethical business norms. 2. Carry out a comprehensive r eview of all the existing NMS projects , including the use of outside forensic experts as to: (a) representations NMS has made, (b) its compliance with its existing and future obligations (under agreement and law), and (c) its business operations. All of the City’s rights should be evaluated. Given the Court’s findings of forgery, perjury and alterati on of computer data and documents, this review cannot take NMS ’ representation s or document s at face value . Independent, outside forensic experts need to be hired to take part in this review – the only way NMS ’ fraud was uncovered was through the use of highly trained forensic experts. City staff is busy and is not trained t o carry out a deep forensic review. 3. Review the City’s internal controls to determine the extent to which it knew , or should have known, of the seri ous allegations against N MS, earlier court orders and NMS’ questionable litigious history . The Council and the public should have been informed of these before it approved NMS projects. This should be part of a larger review of the City's due diligence and vetting processes. 2 4. Provide the Council and the public with a complete and detailed list and report in a single document of all existing and pending NMS projects , their status and all pertinent details. Any addi tional NMS sites as to which development application s are expect ed or likely should also be included. Background and Scope and Depth of NMS Misc onduct Found by Court In a recent 94 -page opinion, the Superior Court detailed NMS’ and Neil Shekhter’s orchestration of a fraudulent plot to cheat its partner on multiple Westside and Santa Monica real estate properties. The Court found an elaborate NMS scheme of forgery, altering computer metadata, backdating Shekhter’s home computer at least seventeen times, and destroying and hiding evidence. Their conduct was called “shocking.” http://smclc.net/NMS.CourtOpinion.pdf NMS and Shekhter were found to have committed “massive, intentional, coordinated efforts to destroy evidence,” “fraud,” and “perjury.” Further, the Court specifically found that Neil Shekhter had committed perjury, having “provided false tes timony under oath to mislead the Court and cover up his own misconduct.” Such pervasive fraudulent conduct as found by the Court doesn’t just suddenly happen. What was unveiled is a deeply disturbing picture of a corporate culture gone wrong. NMS has been a favored developer . Its many projects factor heavily in the proposed Downtown Community Plan which the Council will take up this comin g spring. NMS has at least 18 projects pending in Santa Monica, comprising hundreds of thousands of square feet. At least 3 o f NMS’ numerous existing projec ts were recommended by city staff and approved by the Council even after the Court had already issued extraordin ary orders agai nst NMS : (1) that NMS “freeze all of its electronic documents so that they cannot be modified or deleted;” and (2) ordered a forensic examination of its electronic documents. While these orders should have set off alarm bells at City Hall, apparently the City’s approvals went through without any consideration or public mention of the se issues . According to Gerry LaPorte, a former Secret Service forensic expert, this was one of the worst cases of blatant forgery he has seen in his long care er. http://www.labusinessjournal.com/news/2016/nov/23/judge -rules -santa -monica -developer - forgeddocument/ http://therealdeal.com/la/2016/10/17/hogs -get -slaughtered -aew -claims -nms -forged - documents -in -jointventure - lawsuit/ Santa Monica should not do business with a company like NMS that commits these horrendous business practices and cannot be trusted to exercise basic integrity and ethics. It cannot be 3 trusted to follow the law. It would be a breach of the City’s stewardshi p to allow people who have been found to be fundamentally dishonest to develop entire parts of our downtown. December 4 , 2016 Diana Gordon Diana Gordon C o -chair, Santa Monica Coalition for a Livable City (SMCLC ) Cc: City Council City Manager City Attorney City Clerk Planning Commission Community L eaders