The Scandal Roiling the L.A. County Assessor's Office Suggests Your Tax Bill Is All About Who You Know, and How Much You've Donated to Assessor John Noguez
Owen Harris has a reputation within the Los Angeles County Assessor's Office for being a stickler. Middle-aged, balding, with close-cropped gray hair, he's a supervising appraiser — one whom tax agents bitch about when they get together.
They call him a "defender of the roll." It's not a compliment. Tax agents are private consultants hired by property owners to lobby for lower property taxes. They believe Harris will defend a high appraisal, whether or not the facts back it up. As much as they hate him, though, they respect his intelligence.
On Jan. 4, 2011, Harris was going over a case that was headed to the Assessment Appeals Board when he spotted something unusual.
The property was a five-bedroom mansion on Evelyn Place in Beverly Hills. Originally valued at $3.7 million, the appraiser had cut it to $2.8 million.
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Harris tried to double-check the appraiser's work but found he couldn't. The appraiser hadn't done any work. He had just submitted a number, with nothing to back it up. More troubling, he had submitted it to the clerk without getting Harris' approval. It appeared he was trying to hide the appraisal.
Harris dug into the paperwork and found that the appraiser had submitted several more appraisals in the same way. This was a serious problem. He alerted his supervisors: They were dealing with a rogue appraiser.
The next day, the appraiser, Scott Schenter, was called into a meeting in the assessor's Culver City office with Harris and two other supervisors.
Confronted with the evidence, Schenter admitted that he had changed the values without approval. He acknowledged that it was wrong. But he had an excuse. The "third floor" — the Assessor's executive office downtown — had asked him to look into the properties.
Who specifically on the third floor? John Noguez, he said.
Noguez had just been sworn in as the county assessor, the elected head of the entire 1,500-employee department.
Schenter knew he was in trouble, and he might have grasped at anything to save his job. But if what he said was true, then he was not a rogue. He was a scapegoat.
Schenter's allegations set off a firestorm that has both the media and the district attorney's investigators circling the assessor's office. Some have speculated that Schenter was angling for kickbacks. But L.A. Weekly's investigation indicates that his true motivation was likely politics. According to a source familiar with Schenter's account, he slashed roll values by more than $100 million in hopes that the beneficiaries would contribute to Noguez's campaign for assessor. Noguez directed him to do it, Schenter has alleged, and he went along with it because he wanted a promotion.
Records show that some beneficiaries of Schenter's actions did, in fact, donate to Noguez's campaign. And the Weekly has learned that the chief beneficiary of Schenter's reductions, a tax agent named Ramin Salari, helped Noguez get his start in politics with a $15,000 donation.
Over his long career in the assessor's office, Noguez received political contributions from many property owners whose buildings he personally appraised. And politics continued to play a significant role in the office after Noguez was sworn into the top job. Appraisers complained about the access given to tax agents, including Salari.
In fact, Salari continued to get his way. In one memo, a Noguez deputy explained why: Salari was a "known donor."
The assessor's office usually is a sleepy place. The work of assembling a trillion-dollar tax roll is dull enough to ward off outside attention. But beneath the drudgery is a story of ambition, greed and vicious internal disputes about the fundamental role of the office.
John Noguez represents the decades-long progression away from "defending the roll" and toward a more "taxpayer-friendly" approach. It sounds nice, but in practice it has meant befriending powerful brokers and their wealthy clients, all of whom want tax breaks in return for their friendship.
The key to understanding property taxes is that appraisals are not carved in stone. As professionals like to say, it is the only form of tax based on an opinion. Those opinions can be influenced — often by consultants known as "tax agents." Their job is to persuade appraisers to lower their property valuations. If they succeed, they get a cut of the savings.
If tax agents can't convince the appraisers, they can go to the Assessment Appeals Board. The board's job is to listen to both sides and make a ruling. But caseloads are heavy and, in reality, assessor's representatives often hash out bargains with tax agents in the cafeteria across the hall, outside the public eye.
Campaigns offer another lever of influence. Tax agents commonly contribute to assessor's races and encourage clients to donate as well. Tax agents also sit on a citizens' advisory committee, where they have access to top-level assessor executives. They are not shy about offering opinions about which appraisers are easy to work with — and which ones need to be dealt with.
Scott Schenter represents that trend taken to its extreme. Investigators ultimately determined that he had wiped more than $100 million off the property tax roll, resulting in a tax giveaway of more than $1 million. The key question is whether he was a "rogue agent," as the assessor's office maintains, or part of something bigger.
In a sworn affidavit, Schenter, who declined to comment to the Weekly, claimed the latter, and circumstantial evidence backs him up. Many of the beneficiaries of Schenter's reductions were close to Noguez, not to Schenter. They include the chief beneficiary: Ramin Salari, a preening, bullying, Ferrari-driving tax agent who until recently was Noguez's best friend.
The L.A. County District Attorney's Office is investigating. It has not taken Noguez up on his offer to be interviewed, which suggests it sees him as a target.
Since word of Schenter's actions leaked out in February, more than a year after the fact, the assessor's office has been struggling to limit the damage. In a March 1 letter to supporters, Noguez denied the existence of a " 'pay-to-play' atmosphere."
Yet every week seems to bring new allegations, and a new organization chart. Noguez's chief of staff resigned, reportedly over concerns about Noguez's relationships with Schenter and Salari. David Zoraster, a deputy who quit in protest of Salari's influence, told his story on the front page of the L.A. Times. With Noguez still reeling from that, the Board of Supervisors began hounding him last week about a sharp drop in the projected tax roll.
As part of the effort to respond to the allegations, Noguez granted a 90-minute interview to the Weekly on March 27. He was friendly, if not entirely forthcoming.
As he confirmed, he and Schenter were colleagues for 20 years. For much of that time, they sat in the same set of cubicles. When he learned what Schenter had done, Noguez claimed he felt "disbelief, surprised, dismayed."
In the interview, Noguez gave the impression that their relationship was like that of any two co-workers — it was "cordial." At most, they might see a movie together.
Yet their relationship seems to have been friendlier than that. In 2003, the Asian Journal noted their attendance at a concert at the Grand Olympic Auditorium in downtown L.A. The reporter wrote that Schenter and Noguez were "seen having an enjoyable time" with the president of a real estate investment firm.
In an email the Weekly obtained via the Public Records Act, Noguez jokingly described Schenter as "my slightly younger brother." In another email, Noguez called him "my brother Scott Schenter-Noguez."
In the second email, Noguez confirmed that he and Schenter would be attending a Super Bowl party hosted by Mark Weinstein, a property investor who was friends with Noguez. The party was held at Weinstein's condo on the Venice Boardwalk in 2007.
Over the years, Weinstein, his company and his wife have collectively given $5,500 to Noguez's campaign. And in late 2010, Schenter slashed the value of Weinstein's condo from $1.7 million to $950,000.
Schenter has claimed that he was following Noguez's instructions. But Noguez denies ever referring any appraisals to him.
In fact, he said, they only spoke once during Noguez's campaign. In September 2010, they were in the hallway outside the Assessment Appeals Board. Noguez said he relayed a message from two tax agents who wanted Schenter to know they had additional information on cases he was working on.
"I did not refer any properties in a formal way," Noguez said.
Once he became aware of Schenter's activities, Noguez said, he put him on leave. His office referred the case to the Office of County Investigations, and then, once the full scope was known, to the district attorney.
"We were en route to terminate" when Schenter resigned, Noguez said.
Noguez said he has not spoken to his longtime co-worker since the meeting in the hallway.
That leaves Salari, another friend who has also caused headaches. Asked about him, Noguez said they had a more recent falling-out. Why? Salari, Noguez said, was "maybe dropping my name too much."
The tax agent business is unregulated in California. What few rules there are, Ramin Salari probably has broken them. In the mid-1990s, in fact, his firm was caught representing clients who did not know they were being represented.
It was a boom time in the industry. Salari had switched from selling commercial real estate at just the right time — in 1992, as the market was softening. He and his partners cold-called their initial clients, relying on contacts from their days as real estate agents, according to Scott Brody, a former partner. If anyone had bought an office building in the previous five years, chances are they were in line for a property-tax reduction.
The son of Persian immigrants, raised in Utah, Salari spoke Farsi. That helped him win over Persian property owners.
"He's a tough Middle Eastern Persian dude," said a former colleague. "He's a grinder, and his clients are grinders."
Salari worked on contingency. If he won a reduction, he would keep half the proceeds. As the market dropped, there was increasing demand for his services.
"When we first started, it was like the Wild West," said Brody, his former partner. "What Ramin does extremely well is he's able to decipher really quickly the assessor's data and a lot of the time use their data against them. A lot of the people hired in the assessor's office really were not qualified. They were overwhelmed."
But making clients understand the need for a tax agent's services could be a challenge, so Salari found a shortcut. Jim Jochimsen, an assessor's representative, figured out that Salari's firm had been filing appeals without the approval of property owners.
The Assessment Appeals Board responded by requiring a client's signature on all applications. Even that proved no guarantee: One of Salari's partners had to be reprimanded for signing a client's name and then lying about it.
Salari declined the Weekly's request for an interview.
In a legal filing, he bragged that he had been able to "streamline" the appeals process and make it "highly profitable."
He bought a 6,000-square-foot house in Arizona and developed a taste for sports cars. He once wrote to a car magazine, praising the new Porsche Boxster, and later became fond of Ferraris. He uses "myf430spider" as his personal email address. (His wife's email address refers to another Ferrari: "my360modena.")
With success, however, came family strife. A dispute over an unpaid commission in 2000 prompted Salari to sue his cousin, Leo Goodwin, for slander. According to the suit, Goodwin had taken to calling Salari a "thief," a "crook," a "liar" and a "charlatan."
Salari countered that Goodwin was trying to blackmail him, and was impugning Salari's "well-known reputation for honesty and fair dealing."
In fact, most appraisers hate working with Salari, and some competitors believe he gives their industry a bad name.
"He overcharges," said Wes Nichols, another tax agent. "He overpromises. And I don't know how he was getting some of the reductions he was getting."
Salari has been accused of failing to turn over subpoenaed evidence. At a recent tax hearing, representatives of the assessor's office complained that Salari had withheld a five-year operational budget for an apartment building. Under questioning, Salari admitted that he had failed to disclose certain revenue streams that would have pushed the valuation higher.
Salari also is known for browbeating appraisers who balk at his demands, and for going over their heads. Jochimsen said that Salari would issue threats, such as, "If you don't go this value, I'll go up to the third floor, and you'll be taken care of."
On one occasion last year, Salari pushed for a 51 percent decline on a commercial building, which had been purchased and appraised just the year before. The appraiser on the case was appalled, arguing it was impossible for the value to fall so far in one year. Salari dug up a case in which a property fell 62 percent in 15 months, and forwarded it to the appraiser.
"I believe your unprofessional and rude conduct that day was inexcusable," Salari wrote, copying the message to several top-level supervisors.
In another case, an appraiser told one of Salari's clients that he didn't need to hire an agent to get a reduction, because it would be automatic. In a rage, Salari went directly to Noguez.
"Is it the practice of your office to have [principal appraisers] meeting with property owners already represented by authorized tax agents?" he wrote.
Salari has been known to boast of his connections to Noguez. Attorneys for two of Salari's clients told the Weekly that he claimed to be able to get deals no one else could get, thanks to his access.
The tax agent business has become much more competitive than it was in 1992. Commissions have dropped substantially, to as little as 20 percent or less. Yet Salari still charges 50 percent. Other tax agents believe he can only justify that fee by claiming to have special connections.
While some of that surely is Salari's sales pitch, there is some truth to it as well.
At a recent tax hearing, an Assessment Appeals Board member announced that Salari had contributed to his bid for Montebello City Council.
"If anybody here is uncomfortable with that, let me know," said the board member, Jack Hadjinian, who took $5,000 from Salari. "I assure everybody here I will not let that impede my decision today."
The assessor's representative, Tony Stearns, did not ask Hadjinian to recuse himself.
"The assessor does not have a problem with that," he said.
Indeed, it would be awfully hypocritical if the assessor did have a problem. Salari has supported Noguez's political career from the very beginning.
John Noguez has a lot of friends. A social butterfly, he's generally well liked. But even supporters say he has a blind spot for people who might want to take advantage of his friendship.
"At times, his niceness may have worked against him, because everyone considered him a friend," said Gary Townsend, his former chief deputy.
Though he was born in Los Angeles, Noguez spent the first six years of his life in Mexico. His mother brought him to Boyle Heights, and he attended Roosevelt High School and Cal State L.A.
When he was 20, Noguez took an internship at the assessor's office. He became an appraiser and, over the next 27 years, developed a focus on L.A.'s historic downtown.
His personality destined him for politics. In 2003, he ran for Huntington Park City Council, on a slate with two allies. On the day before the election, his allies received a donation of mailers worth $15,000 from a "businessman" — tax agent Ramin Salari.
The contribution — along with others from Noguez's friends — dwarfed what either candidate had been able to raise on their own. It helped seal the slate's election, putting Noguez in the majority.
This kind of cash infusion was something new in Huntington Park, a heavily Latino city wedged between Bell and Vernon.
"He was a fundraising machine," said Elba Romo, a former council member who was not allied with Noguez. "He would have these fundraisers, and most of the people that would show up would be property owners."
L.A. Weekly reviewed a list of 274 "decline in value" appraisals performed by Noguez from 2002 to 2009. At least a half-dozen property owners on the list also contributed to his campaigns for office.
Among the most prolific was downtown developer Steve Needleman, whose property Noguez appraised in 2004. Needleman gave $4,500 to Noguez's city campaigns from 2003 to 2006. He and his wife gave another $6,000 to Noguez's campaign for assessor.
Noguez also appraised the properties of Macerich Management Co., whose executives gave $13,500 to his campaign for assessor. And tax agent Salari, who had numerous appeals cases opposite Noguez, gave $2,000 to his assessor's race. His relatives gave another $8,000.
All of Noguez's appraisals — unlike Scott Schenter's — were approved by supervisors. But that does not guarantee that he was never influenced by contributions. Appraisal is not an exact science. Noguez's appraisals were his opinions, and opinions are subject to persuasion.
Noguez, for his part, stands by every appraisal he's done.
"The market information speaks," he told the Weekly. "I know my buildings. I knew what I was doing, and I was respected for it."
Asked why so many downtown building owners would take an interest in Huntington Park politics, Noguez said, "My friendship garners people to want to support me."
But even if contributions didn't affect Noguez's appraisals, they did seem to influence his personnel decisions.
Mark McNeil gave $4,500 to Noguez's city campaigns from 2003 to 2007, and another $1,000 to Noguez's campaign for assessor. After Noguez was elected, McNeil was promoted from an assessor's representative to chief appraiser of major real properties.
Andrew Stephens, another assessor's representative, donated $1,000 to Noguez's assessor's campaign. The day after Noguez was elected assessor, Stephens gave another $6,000 to Noguez's City Council account — where there were no contribution limits.
Stephens became McNeil's boss.
David Zoraster, an appraiser at CB Richard Ellis, also was rewarded for his long-standing support. Zoraster gave Noguez about $4,500 over the years, including Noguez's first-ever political check — $500 for a failed bid for Huntington Park treasurer. Noguez hired Zoraster as a special assistant.
And then there's Scott Schenter. He gave $1,000 to Noguez's council campaign in 2007, and another $1,000 to his campaign for assessor. He'd hoped he would be promoted, too.
It didn't work out that way.
John Noguez's 2010 campaign broke the fundraising record for an assessor's race, bringing in more than $1 million. His opponent, John Wong, raised just $40,000.
Yet toward the end of the race, Noguez piled up more than $140,000 in debt. In late 2010, Noguez appealed to his supporters to raise even more money. That's when Scott Schenter started slashing roll values.
A 28-year veteran of the office, Schenter was never at a loss for harebrained ideas. He owned hundreds of Web domains, mostly associated with athletes, including 24kobe.com, in the apparent hope that one would lead to a big payout. He tried to develop a golf course, hoped to build an Indian casino near Spokane, got into the animated-sign business and even dabbled in nuclear medicine, earning a patent for a process to manufacture a particular isotope.
Before he got in hot water over his appraisals, Schenter had another odd brush with notoriety. In 2009, the L.A. Times spotted USC tailback Joe McKnight driving a Land Rover registered to Schenter. Because Schenter had a company called USC Marketing, and had registered 4joemcknight.com, there was concern that he was engaged in sports marketing in violation of NCAA rules.
In an email to the Times, Schenter claimed — implausibly — that his company's name stood for "United States China Marketing." He also said McKnight's girlfriend was an employee of another of his companies, one that involved cancer research, and that she made the payments on the Land Rover.
"I am an entrepreneur that has his hands in numerous businesses and investment opportunities," he wrote.
Schenter also had ambitions inside the office. When assessor Rick Auerbach announced his retirement, Schenter saw a chance to move up. According to a person familiar with Schenter's account, he was one of several people — both tax agents and appraisers — who helped solicit contributions for Noguez, in the expectation of a reward after the election. He felt he was under intense pressure to do so.
In the fall of 2010, as the campaign chest dwindled, Noguez called Schenter twice and told him to take care of two tax agents, according to the source. The idea was that if the agents received tax breaks, they might return the generosity with a campaign check, and encourage their clients to do likewise.
One of those agents was Ramin Salari, who handed Schenter a list of parcels he wanted reduced. Schenter accommodated him, as well as three other tax agents. According to a Weekly analysis, those four agents account for the bulk of the more than 150 parcels Schenter lowered.
Noguez denied being aware of any of this. However, he acknowledged that he spoke to Schenter on behalf of tax agent Patricia Younis outside the assessment hearing rooms. Younis, who gave $3,000 to Noguez's campaign, got a roll reduction of $8 million for a condo complex on Ocean Front Walk.
Billionaire developer Robert Maguire III had given $1,000 to Noguez. He was a Salari client. Schenter reduced his Bel Air mansion from $5.5 million to $4 million.
Rouhollah Esmailzadeh, president of a lighting company, also was a Salari client. His Brentwood mansion was reduced from $9.2 million to $6 million. Esmailzadeh had already given Noguez $1,000. But on Oct. 28, 2010 — around the time the Schenter reduction went through, and just before the assessor's election — Esmailzadeh gave another $4,000 to Noguez's council account.
Schenter did a poor job of covering his tracks. He may have believed that if he was caught, Noguez would back him up.
After Owen Harris made his initial discovery, Schenter wrote in an email to a friend: "Things were good for a while, last week my supervisor is attacking me again. I thought with the new assessor this would be over but you know I am in trouble again."
Under questioning from his supervisors in Culver City, Schenter was quick to point the finger at Noguez. In an affidavit, he said Noguez had told him to "look into some of the listed properties." He also said he realized that Harris would not have approved the lower values but that he wanted to give property owners a "fairer shake."
In a lengthy memo, he also claimed he was the victim of a "double standard."
At hearings, "I was the sole assessor's representative to make all value decisions," he wrote. Why was it OK for him to lower values without a supervisor's approval during appeals hearings but not while acting as a front-line appraiser?
Schenter bragged about his abilities as a representative, writing that the hearing officers told him, "You are Rain Man! How can you do calculations and values in your head without a calculator?" He added, "I was put in these value decision duties because my supervisor knows that I know value and am capable of making proper decisions."
Indeed, had Schenter made his changes at the Assessment Appeals Board, or in the cafeteria across the hall, most would never have been reported to supervisors in the assessor's office. Had he been just a little higher in the bureaucracy, he might have gotten away with it.
Schenter resigned at the end of January 2011. The assessor's office never disclosed the misconduct to the public. Instead, each of the affected properties was reappraised, and a few months later the property owners who had received unauthorized reductions got a form letter in the mail.
"We regret that an assessment error occurred on the above referenced property. A review was performed to correct the error," the letter stated. "We sincerely apologize for any inconvenience this may have caused you."
Schenter's resignation set the stage for an internal battle over the access granted to tax agents, especially to Salari. Not long after, appraisers began complaining that agents were trying to trade on Noguez's friendship. Ultimately, the appraisers' union intervened, writing to Noguez to share concern that such influence "jeopardizes the impartiality and integrity of the office."
At the root was a fundamental disagreement over the role of the assessor's office.
On one side were young-gun assessor's representatives, such as Andrew Stephens and Mark McNeil, both promoted to top management roles by Noguez. They had imbibed the "taxpayer-friendly" approach that says appraisers are not supposed to "defend" a particular value. Instead, they are supposed to work with property owners or their agents to arrive at the fair market value, whatever that may be. On the other side were "defenders of the roll," who treat tax agents more like adversaries.
David Zoraster, who came over from CB Richard Ellis, turned out to be in the latter camp. He worked at the assessor's office 30 years ago and hadn't had a chance to learn the new approach. That put him on a collision course with Ramin Salari.
The confrontation came over two apartment complexes in Hermosa Beach, owned by a publicly traded real estate firm. In securities filings, the firm put the value of the buildings at $63 million and $55 million, respectively. Salari wanted to reduce both to $35 million.
Zoraster thought that was way too low, and set about finding comparables that would support a higher value. On Nov. 30, 2011, Zoraster sent Salari an email informing him that he would be personally handling the case before the appeals board.
The next day, Salari forwarded Zoraster's message to Noguez; his chief of staff, Chris Carlos; and Eric Haagenson, a top deputy.
"This was not my understanding," Salari wrote. "Please advise." The day after that, Carlos removed Zoraster from the case.
That was the last straw for Zoraster, who resigned in protest.
What followed was a dramatic showdown at the Assessment Appeals Board between the two factions within the assessor's office. McNeil wrote up a lengthy memo on the encounter, later obtained by the Weekly.
Zoraster told McNeil he had resigned because "I refuse to sell my reputation to this department."
"I don't know if Noguez is on a suicide mission or what," Zoraster told McNeil, according to his memo. "But the appraisers have had it. They know Ramin will always get his way, and no one will ask him any questions."
Sharon Moller, another manager, confided in McNeil that she missed "the good old days," when assessor representatives "were strong advocates of the appraiser's cases."
In the memo to his bosses, McNeil accused Moller and Zoraster of "aiding and abetting internal political dissidents" in the district offices. He alleged that they had concocted a biased case to attack Salari. He even criticized their clothing.
"This poor judgment was directed at a known friend and supporter of the department," McNeil wrote. "I get the distinct impression Dave and Sharon are very comfortable with coordinating in behavior among the districts that is designed to deliberately undermine [Noguez]. They have done it here by subjecting a known donor and political supporter to what seems to be a biased appraisal."
McNeil recommended that Moller be demoted.
But the memo backfired. By citing Salari's campaign contributions in writing, McNeil offered the clearest evidence to date that political considerations play a role in appraisals. The memo is now the subject of a personnel investigation.
"It raises a red flag with me, and that's why it's being investigated," Noguez told the Weekly.
Noguez transferred McNeil to the West District and demoted his bosses, Stephens and Haagenson. Haagenson retired, and Moller was given his job — one of the top assignments in the office.
Before he stepped down, Chris Carlos, Noguez's chief of staff, was working on a plan to tighten up reporting of value reductions at the assessment appeals hearings. That would, in theory, make it harder for tax agents to win reductions that are way out of line. But now that he's gone, his proposal has been put on the back burner.
Noguez is feeling pressure to do something. So he's contemplating a plan to require tax agents to register as county lobbyists. That would force them to disclose clients and their revenue. It also would bar them from making campaign contributions.
Meanwhile, a group of tax agents has formed the California Alliance of Taxpayer Advocates, in hopes of warding off state regulation. To that end, the organization has promulgated a code of ethics that bars "false or misleading conduct" in tax cases. Salari is not a member of the group.
As for Owen Harris, the "defender of the roll" who uncovered Scott Schenter's wrongdoing, he has not been given an award or even publicly thanked.
Instead, after years of complaints from tax agents on the Westside, and much to their relief, he was transferred downtown.
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