One Of Skid Row’s Largest Housing Providers Veered Toward Financial Collapse. New Issues Are Surfacing After A City-Led Takeover

L.A. city officials are raising deep concerns about the person they put in charge of Skid Row’s biggest nonprofit housing provider, saying last week that they’re losing confidence in Mark Adams after the city attorney said residents were illegally told that they were about to be evicted over unpaid rent amounts as small as $56.

Now, new findings from LAist are adding to a growing list of questions swirling around Adams as he attempts to manage and fix up nearly 2,000 housing units for many of L.A.’s most vulnerable people, as a court-appointed receiver.

An LAist review of online records late last week found that a company Adams previously used for receivership work — California Receivership Group, LLC — has been banned by the state from doing business since 2015, because he hadn’t paid business taxes that totaled about $3,380.

A few months after the state suspended his business, records show Adams formed a new business with the same name that ends in “Inc.” instead of “LLC.” That’s his current company, which was appointed as the Skid Row Housing Trust receiver along with Adams.

In addition, LAist reviewed court documents that show just weeks before L.A. City Attorney Hydee Feldstein Soto recommended Adams for the Skid Row job in late March, an Orange County judge reduced Adams’ fees by $500,000 after finding he had overbilled for a receivership in Dana Point by an average of 39%. The L.A. Times has reported on other past rulings where judges found Adams overcharged.

“If judges find that he overbills, then why is this somebody that we’re picking?” said Jessica Levinson, a former president of the Los Angeles City Ethics Commission who teaches at Loyola Law School, after reviewing LAist’s findings.

“It’s an indictment of the city for not doing due diligence on this incredibly important role,” Levinson said.

Feldstein Soto was not available for comment for this story, according to her spokesperson.

Adams responds

Asked why he hadn’t paid the taxes, Adams told LAist he hadn’t thought about his prior company —California Receivership Group, LLC — in years and would look into it. He said the LLC was a “shell” that “wasn't really being used,” so “it was no big deal when it was suspended.”

A court ruling, numerous news articles and a government press release show he used that company for receivership business.

Adams also discussed the unpaid taxes in a 2017 deposition about a receivership he handled in Santa Barbara. He said: “It wasn't something I was very focused on, and by the time I was focused on it, we had formed the [newer] corporation so it didn't matter to me.”

Adams noted that his current business is in good standing with the state. He said he let the first business get suspended because he was already operating under the newer business.

“We did not get suspended and then I formed a new company. That's just not the case,” he said.

But the state records do show Adams created the new business in July 2015, five months after the earlier business was suspended in February of that year.

“I will look into payment of the [tax debt] so that the public record is clearer,” Adams said in a follow-up email to LAist.

No formal vetting of Adams before recommending him

The string of issues recently identified by the city attorney — which include missing security guards Adams had promised at the Skid Row apartment buildings and eviction notices sent to tenants that the city attorney said were illegal — are also prompting a question:

Should the city attorney have formally vetted Adams before asking that he be put in charge of housing for hundreds of vulnerable people?

In recent weeks, city officials told the L.A. Times they didn’t know about any prior concerns with Adams’ past performance, and Feldstein Soto told the paper she didn’t fully vet his resume before recommending him on behalf of the city of L.A.

She said her impression was that he was uniquely qualified to handle the housing trust situation because no one else in California had anywhere close to his level of experience.

Feldstein Soto told the Times that her staff is investigating Adams’ performance and plan to announce the findings before the next court hearing, scheduled for Thursday, and didn’t rule out asking the judge to replace Adams. The mayor and city council have no formal oversight role over Adams.

This March, Feldstein Soto requested the court put Adams in charge as the Skid Row Housing Trust faced financial collapse and uninhabitable conditions in many of its nearly 2,000 units. In one of the trust’s buildings, three people died from suspected overdoses in early April, just as the city attorney was asking a judge to put Adams in charge.

Feldstein Soto was sworn in as city attorney in December, after winning the November election.

About 300 people gave her campaign the maximum-allowed amount of $1,500. One of them was Adams, campaign finance records show.

Adams says there is still a lot of work to do to fix up the buildings and other problems, but that significant progress is being made around security and making prompt repairs.

“We inherited an incredible mess from the Skid Row Housing Trust. And it’s taking some time to turn that around,” he said.

City attorney’s office says eviction notices sent to Skid Row tenants violated laws

When the court appointed Adams as receiver in early April, the Skid Row Housing Trust was on the brink of collapse. Adams took control of the properties and essentially became the court-appointed landlord, in charge of handling rent, security and repairs. Court records show among his promises to the court was that he wouldn’t evict anyone simply for a failure to pay rent, according to the L.A. Times.

That promise wasn’t kept. Earlier this month, a round of eviction notices went out to tenants for unpaid rent.

The eviction notices, which were first reported by the L.A. Times, violated tenant protection laws, including a city law that took effect in March that bans evicting people for unpaid rent that’s less than one month of fair market value, Feldstein Soto’s office wrote in a blistering letter to Adams last week.

“We were shocked and deeply disappointed” to learn of the eviction notices, Feldstein Soto’s office wrote to Adams.

Adams told LAist the eviction notices were sent by mistake by a property management company he hired, and that they’ve been rescinded. He said he’s warned the company he’ll fire them if it happens again.

“They know it was a flub up,” Adams said. “Nobody’s going to get evicted for failure to pay rent.”

The 1,500 or so people who live at the trust’s 29 dilapidated buildings in Skid Row “are among our most marginalized and vulnerable populations,” Feldstein Soto told reporters in late March.

“If they lose their housing, there is very little question that they will spill out onto our streets.”

After the recent problems emerged, the city attorney told the Times the city is losing confidence in Adams.

What happened during the vetting process of Adams?

The preparation for the city of L.A.’s request for a judge to appoint Adams as receiver involved three weeks of work donated by the outside law firm Latham & Watkins and more than a dozen lawyers in the city attorney’s office, according to Feldstein Soto.

But that work did not involve fully vetting Adams’ resume, she told the L.A. Times.

The L.A. Times and LAist have since identified public court rulings showing multiple judges had previously found problems with Adams’ handling of past receiverships, including inflating his fees by hundreds of thousands of dollars.

Adams says the decisions against him are from a small handful of cases out of the roughly 300 court-appointed receiverships he’s handled. And he says in those handful of cases, billings were approved by judges before another judge came in and decided the charges were inappropriate.

“That case went through four or five different judges,” he told LAist, about the March ruling in Orange County where a judge drastically reduced his billing.

“And when it was active, the judges who I was working for approved everything that we did. They know all of our billings, there was no dinging of it. But then it went to a judge who had not been involved in the case…and he found what he found.”

Adams said that because of his efforts, the motel in the Dana Point case that he was helping to improve as receiver went from being ranked one of the 10 worst motels in America to “now being redeveloped by a reputable hotel company.”

Pedro Hernandez, the legal and policy director at California Common Cause, said it’s crucial for city officials to vet contractors or businesses they’re recommending, and consider multiple options if possible.

“Cities need to make sure that any contract it enters into are for the public good, and that requires a certain amount of vetting,” Hernandez said.

“Obviously we would hope that that city attorney would look at additional options in its dealings, in its recommendations, that would benefit the public good in ensuring it gets a fair bargain.”

Longtime government ethics expert Bob Stern put it this way: Government officials shouldn’t be recommending people who have unpaid tax debt.

“I don’t think that anybody who owes money to government should be getting government contracts,” said Stern, who helped draft the city of L.A.’s Ethics and Public Campaign Financing law that voters passed in 1990.

LAist reporter Elly Yu contributed reporting to this article.