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Taming the Wild 740 Club 

City investigating politically connected nightspot that draws 1,000

Wednesday, Jun 6 2007
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A DECISIVE MOVE by Councilman José Huizar spells trouble for the rowdy 740 Club, a notorious gang magnet on Broadway in downtown’s historic core that until recently was frequented by Huizar and a number of other local politicos.

The question is, what took him so long to act, and how did the club, whose owner, Ralph Verdugo, was chased out of Whittier two years ago for running a violent nightclub and convicted of hosting illegal stripteases, set up shop in Los Angeles in the first place?

Public officials won’t say much, yet some answers are in the City Planning Department and Building and Safety Department files. Given some of the figures associated with the property at 740 S. Broadway, such as an influential architect and a powerful developer who owns the building, the 740 Club is a prime example of the flawed system for approving entertainment venues in the reawakening downtown.

click to enlarge (Photo by Gregory Bojorquez)
  • (Photo by Gregory Bojorquez)

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In a May 21 letter to the city’s acting chief zoning administrator, Michael LoGrande, Huizar wrote, “Club 740 has become a nuisance and has been connected to a number of violent criminal incidents. Please immediately engage with the Los Angeles Police Department, the Department of Alcoholic Beverage Control and the City Attorney’s Office to investigate the club with consideration to revoke [its] Conditional Use Permit.”

City Attorney Rocky Delgadillo is taking action against the club under the Citywide Nuisance Abatement Program, the letter states. Revocation of the conditional-use permit would prohibit alcohol sales, which could force the owner, Verdugo, out of business. Delgadillo’s office would not comment.

Yet Huizar was not the first to act. LAPD Captain Andy Smith says he has been after the owners for more than a year to clean up the 740 Club, which the L.A. Weekly exposed in April as the scene of a recent gang-related killing, a suspected sexual assault of a female patron and persistent disturbances. (See “Politics Meets Street,” L.A. Weekly, April 13–19.) The club has also been the site of a number of well-attended, if disparate, fund-raisers, including one for Huizar and another for the outlaw biker gang the Mongols.

A gang-related shooting occurred outside the club on May 12, when a member of the Rolling 90’s pulled out a .22-caliber gun and shot and injured a man, right in front of a police officer, according to Smith, whose officers have observed gangs recruiting at the 740 Club.

“It’s unfortunate that downtown attracts that kind of a crowd,” Smith says, adding that the club has posted illegal signs advertising its rap and Latino dance music acts, served overly drunk patrons, served after hours, allowed overcrowding and failed to scan all patrons’ driver’s licenses.

“We don’t have those problems at other clubs right down the street, but that place .?.?. there’s all sorts of people involved.”

Until recently, council member Huizar was one of them. He told the Weekly he went to the club a number of times and took his wife there, and that he hosted a Metropolitan Democratic Club event and held a fund-raiser there last year. He has since returned the meager $2,000 he raised from the club, owner Ralph Verdugo and a couple of employees, one of whom Huizar knows from his Boyle Heights school days.

But despite those connections, the 740 Club didn’t get its approval to operate during Huizar’s watch. That happened in late 2004 and early 2005, when Mayor Antonio Villaraigosa was the councilman for the 14th District, which includes a grimy stretch known as the Broadway Corridor that developers and condo dwellers are now flocking to.

Verdugo used to own Ibiza Steak and Lounge in Whittier — that is, until a spate of public nuisances and illegal activity from 2000 to 2004 led the Department of Alcoholic Beverage Control to suspend his liquor license and Whittier officials to revoke his permit to sell alcohol.

But within a matter of months, Verdugo was back in business in downtown L.A. He had a new conditional-use permit, handed out by L.A. city officials, and a new liquor license under a different corporate name.

The 740 Club, a spectacularly renovated theater with private VIP rooms, is at the rear of the 10-story Garland Building. Patrons enter from a pee-drenched alley that runs between Broadway and Spring Street. It was once the site of the Globe Theater, and the entire district is listed on the National Register of Historic Places.

Before the state issues a liquor license in such a case, the Planning Department must issue the conditional-use permit. City records show that the 740 Club sailed through this process with no scrutiny of who would be running the club or what kind of club its operators had in mind.

BUT THE CLUB DID HAVE the blessing of a wealthy international developer, some well-connected lobbyists — and the support of then-mayor Jim Hahn and then-councilman Villaraigosa.

The owner of the Garland Building is Farhad “Fred” Yousefzadeh, a real estate mogul with properties in L.A., Las Vegas, New York and Europe. Yousefzadeh, also president of the influential Downtown Business Improvement District, has personally vouched for the 740 Club from the start. Yousefzadeh did not return calls for comment.

In early 2004, Yousefzadeh, of Nighttime Broadway Corporation, applied for a permit to sell alcohol on the premises, city records show. John Borunda, a retired veteran LAPD officer, acted as an expediter for the company, as did clothing retailers Neajat and Josef Sarshar.

According to a letter of approval dated January 21, 2005, the 740 Club is in a moderate crime zone with “a very high concentration of alcohol sales establishments.” Its operators wanted the club open until 6 a.m., with alcohol cut off at 2 a.m.

Just prior to a public hearing on December 6, 2004, LAPD officers from the Central Area Vice Unit said that extended hours and young patrons could create problems for the burgeoning residential market.

Although police opposed the 6 a.m. closing time, the letter shows that, aside from police, there was “little opposition” during the hearing. It was “quickly determined” the application should be granted, even though a Nighttime Broadway representative said the owner did not have a tenant, and his answers to questions, the letter says, “were vague and speculative.”

After the brief hearing, Yousefzadeh submitted a pending-lease agreement with Verdugo’s company, The Entertainment Group. Rejecting police concerns, city Zoning Administrator Albert Landini approved a five-year permit with an option for another five years, stating, “It is this specific type of nightclub that the city is trying to encourage be developed on the Broadway Corridor.”

Following the city’s lead, the state of California issued a liquor license without commenting on Verdugo’s publicly reported misconduct in Whittier.

“If an operator hasn’t been found guilty of a crime of moral turpitude, it’s not likely we’d deny a license, once the local jurisdiction has approved a [conditional-use permit],” says Rick Ryan, a regional director at the Department of Alcoholic Beverage Control.

Building department records show that City Hall insiders helped the 740 Club through the permit process. However, the club still lacks final approval from the fire department, yet continues to allow raucous weekend crowds of close to 1,000.

Former city planning commissioner Steve Carmona helped the club pass its fire and building safety inspections, and Archeon Group, an architectural firm run by planning consultant Chris Pak, was instrumental in lobbying for a modification of building ordinances, records show. Pak and his company and employees have donated more than $40,000 in campaign contributions to L.A. city officials in recent years.

Meanwhile, head structural engineer Lincoln Lee, of the building department’s Case Management Unit, waived preliminary inspections and approved temporary-occupancy permits for the club. Last year, the Los Angeles Times exposed the Case Management Unit for offering end-runs around government red tape to building owners and developers who made significant political contributions to city officials. However, building department officials deny that the Case Management Unit handled the permit process for 740 Club.

Ed Rosenthal, a redevelopment specialist with CB Richard Ellis and an adviser to the city Community Redevelopment Agency, says the groomed path of the 740 Club is not unique. Yet he says he is surprised that Huizar and other politicos, such as Bell Gardens City Councilman Mario Beltran, who has claimed business ties to Verdugo, and La Puente Councilman John Solis, the 740 Club’s co-manager, would use a crime-magnet nightclub to hold political events and fund-raisers.

While he’s “not incredulous” about what they did, he finds it “incredible.”

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