FBI Launches Investigation Into LA Department of Transportation Employees Over Alleged Contract Fraud and Side Business Conflicts

LOS ANGELES — The Federal Bureau of Investigation has launched a sweeping investigation into employees of the Los Angeles Department of Transportation, focusing on project managers and senior staff suspected of operating undisclosed private businesses while simultaneously managing city infrastructure contracts worth hundreds of millions of dollars.

According to sources familiar with the investigation, the FBI's Public Corruption Unit has identified at least 34 LADOT employees — primarily project managers — who allegedly failed to disclose outside business interests as required by city ethics ordinances. Several of these individuals are suspected of steering city contracts to vendors connected to their private enterprises.

'This is one of the most significant municipal corruption investigations in Los Angeles history,' said a source within the U.S. Attorney's Office. 'We're looking at project managers who were entrusted with overseeing critical transportation infrastructure while secretly running businesses on the side — in some cases, businesses that directly intersected with their city responsibilities.'

The investigation is particularly focused on LADOT employees who hold business interests in industries adjacent to their government work, including construction, real estate development, and import/export operations. Investigators are examining whether city resources, work hours, or insider knowledge were used to benefit these private ventures.

All LADOT employees under investigation have been placed on administrative leave effective immediately, with their city email accounts and building access suspended. The department has also frozen all active project management assignments pending the outcome of the probe.

Los Angeles City Controller has ordered a comprehensive audit of all LADOT contracts awarded in the past five years. 'The people of Los Angeles deserve to know that their tax dollars are being managed by public servants who are fully committed to their government duties — not moonlighting as private entrepreneurs,' the controller said in a statement.

Employees who are found to have violated city ethics rules face termination, forfeiture of pension benefits, and potential federal charges including wire fraud and honest services fraud, which carry sentences of up to 20 years in federal prison. The FBI is encouraging any LADOT employees with knowledge of improper conduct to contact the bureau's tip line.