By Hillel Aron
By Joseph Tsidulko
By Patrick Range McDonald
By David Futch
By Hillel Aron
By Dennis Romero
By Jill Stewart
By Dennis Romero
Industry proved the perfect venue. Founded in 1957 by Stafford, then a wealthy San Gabriel Valley rancher, Industry was never so much a city as a concept: Draw a boundary around a stretch of fallow, freeway-close farmland, declare the area a redevelopment zone, commit all the resources of municipal government to development, and see how much money could be made. Over the course of 20 years, the city, which never boasted more than 200 registered voters, issued $600 million in public debt, the proceeds of which went to finance a development boom at the juncture of the 60 and 605 freeways. Along the way, Stafford and a small clique of cronies reaped millions of dollars in profit and real estate. And from the time the Roskis arrived in 1975, Majestic Realty was Stafford's primary development partner. As a competing real estate agent put it at the time, Majestic was Stafford's "hip-pocket developer."
One Industry profit center for Majestic and its sister firm, Commerce Construction Co., was the city contract to build a $15 million, 284-room hotel atop the city's exhibit and conference center - known together under the rubric Industry Hills and Sheraton Resort. Under the terms of a 50-year contract, Majestic also operated the hotel under a lease for the "air rights," or space above the new center, without competitive bidding for 3 percent of the hotel's gross revenues. The city's redevelopment agency paid for designing, building and managing the facility's restaurants, bars, conference halls, two 18-hole golf courses, Olympic-size pool, riding stables and riding trails. Industry, in short, paid for the amenities that made the hotel worth visiting, and for annual operating losses as high as $5.5 million after the center's completion.
On several other projects, when Majestic set out to assemble land parcels and encountered resistance from another landholder, city officials condemned the property of the recalcitrant owners and then sold the sites to Majestic.
A case in point is a property once owned by Leo and Louisa Vejar. In 1975, the Vejars were ready to sell their property or develop it themselves, but, according to their attorney, the city withheld building permits and actively discouraged potential buyers. The city's Urban Development Agency then condemned the property and sold it to Ed Roski Jr., whose Commerce Construction promptly built a retail furniture outlet on the site. Some time later, it turned out that Stafford held an interest in the property.
Even the 110-acre Crossroads Business Park, home to Majestic's headquarters, was purchased from Industry's redevelopment agency. The city spent millions of dollars to build the surrounding infrastructure, and millions more lobbying Caltrans to build an offramp and interchange adjacent to its offices.
Stafford's remarkable run in Industry came to light in 1980, when the L.A. Herald-Examiner published Scot Paltrow's groundbreaking series detailing a string of inside deals and sweetheart contracts that revolved around Stafford. Four years later, Stafford was indicted along with King and a handful of local contractors; at the time, a federal prosecutor dubbed it "the biggest public corruption scandal in California history."
Ed Roski and his father were never charged with any crime, but the Herald stories and prosecutors in the criminal case portrayed Majestic as a key to Stafford's operations. Roski was a partner with Stafford in a number of real estate holdings; to this day Roski holds property in partnership with both of his convicted colleagues. And Stafford and King were close friends with Roski (see sidebar).
The inside dealings in Industry were complex and hard to track, and their legality was never fully explored. Instead, federal prosecutors identified Stafford and several others as engaging in a simple fraud that involved $1.3 million in false billings to the redevelopment agency. In 1984, Jim Stafford was convicted and sentenced to 10 years in federal prison. He was released after serving nine years. Roski, in the meantime, remained in Industry and continued to reap the benefits of his collaboration.
In an interview with the Weekly, Roski Jr. denied doing anything unethical in Industry. And he was quick to defend the character of his old friend. "Jim Stafford was a very, very good person," Roski said. "He got involved in a situation that any other time in his life he never would have. I felt very sorry for him."
For the next 10 years, the Roskis maintained a very lowprofile. But they kept Industry as their base of operations - it remains the site of their largest holdings - while continuing to build their real estate empire.
Majestic's formula was to purchase surplus parcels of land from the Union Pacific, Southern Pacific and Santa Fe railroads in a string of Eastside cities, and then build big-box warehouses through Roski-owned Commerce Construction Co. The strategy led to Roski's introduction to Phil Anschutz, who bought Southern Pacific in 1985. Negotiations over land deals led to a partnership that now includes the purchase of the Kings and the financing of the downtown arena. More important for Majestic, the rail-corridor strategy matched the needs of Fortune 500 shippers and manufacturers like IBM and Goodyear, allowing the firm to prosper even as the real estate market plunged into recession. Between 1990 and 1995, the company developed 8 million square feet of new property, including major projects in Atlanta, in Denver and in cities across California. "We do our homework," explained Kent Valley, a senior vice president at Majestic and a buddy of Roski Jr.'s since Vietnam. "It's not gambling, it's well-thought-out development."