Prince George’s County spent hundreds of thousands to settled suit that alleged vast bribery scheme

May 23, 2012

The FBI’s investigation into the Prince George’s County “pay-to-play” bribery scheme led to spectacular arrests and dramatic court testimony. Jack Johnson, the former county executive, and his wife, Leslie, who was caught with wads of cash stuffed into her underwear, are in prison. More than a dozen others have pleaded guilty.

But beyond the criminal convictions, the scandal cost taxpayers hundreds of thousands of dollars, which have not previously been disclosed, to settle a lawsuit. The suit was filed by a developer who alleged that county officials or those acting on their behalf demanded large sums of money in exchange for county approvals for his projects.

The developer, Arun Luthra, went along at first, his lawsuit said. But when he ultimately refused to pay, the suit claimed that Jack Johnson shut him out to show “what happens to those who don’t play ball.”

Saying it did not want to get bogged down in a lengthy court fight, the administration of Johnson’s successor, Rushern L. Baker III (D), settled Luthra’s case for $550,000, without anyone admitting wrongdoing. In addition to the money it paid Luthra, the county spent $450,000 on outside attorneys to defend the county government, Johnson and four County Council members named in the lawsuit.

The agreement, which the county declined to disclose publicly for several months, was obtained by The Washington Post through the Maryland Public Information Act.

Through his attorney, Jonathan Shurberg, Luthra declined to discuss the case.

Luthra’s lawsuit was filed in Prince George’s County Circuit Court in January 2010, nearly a year before the Johnsons’ arrests. In it, Luthra alleged pervasive corruption during Jack Johnson’s tenure as county executive that mirrored what federal investigators have found. Luthra said county officials and others pressured him frequently for payoffs and campaign contributions. Luthra also alleged that Johnson and county officials urged him to hire “the right professionals,” including the real estate broker who ran Johnson’s transition team, to help him win approvals for his development projects.

Johnson, the lawsuit said, was “never at a loss for creative ways to exploit the development process for personal gain.”

As the case proceeded in court, all of the defendants denied the allegations, and Prince George’s Circuit Court Judge James J. Lombardi eventually dismissed all but Johnson and the county government. Lombardi ruled that Luthra’s allegations against the other defendants — the four council members, a lobbyist and a real estate broker — did not have enough merit to proceed.

According to the lawsuit, Luthra’s problems with the county began in 2005, when his company needed a zoning change to build an office building next to its hotel near the New Carrollton Metro station.

Several of Johnson’s “cronies,” as the suit calls them, approached Luthra , saying they had been sent by Johnson or members of the County Council to help him secure the change, the lawsuit alleged.

Luthra said he paid $400,000 — although he provided no documentation, names or specific dates of payments in the lawsuit — to get the zoning change approved by the council. He was asked to pay again after he won approval, but he refused, the lawsuit said. At that point, according to the lawsuit, Luthra began to think he might have become ensnared in a shakedown scheme.

Shortly afterward, Johnson proposed moving the county’s housing department from its Largo quarters to leased space in Luthra’s New Carrollton office building, the lawsuit said. The deal would have paid Luthra $11 million over 10 years. But according to Luthra’s complaint, it also unfurled another round of payment requests.

As Luthra was negotiating the lease with county officials, Charles Dukes, a commercial real estate broker, reached out to him, the lawsuit said. Dukes, who had led Johnson’s transition team in 2003 and had since been named head of the county’s Economic Development Corp., told Luthra that he would have to pay him a $342,000 real estate commission up front for the deal to be approved by the council.

Dukes denied the allegations in court papers, and the judge eventually dismissed him from the case. “The allegations against me were untrue,” Dukes said in an interview.

The lawsuit alleged that Dukes was working in concert with Johnson and members of the council’s public safety committee, and “had some kind of financial arrangement with Johnson and members of the [council’s public safety] committee and perhaps others as well, by which monies paid [for] spurious and bogus commission agreements would be funneled back . . . either directly or in the form of political contributions in return for affirmative votes on contracts.”

Luthra sued committee members Marilynn M. Bland, Camille Exum, Tony Knotts and Ingrid Turner, all Democrats. Exum did not return calls for comment; Turner and Knotts denied the allegations in interviews; and a spokesman for Bland also denied the allegations. There were no depositions or formal discovery of documents and witness statements before the council members were dismissed from the lawsuit.

When Luthra refused to pay, Johnson decided to “make an example of [Luthra] to demonstrate to both county officials and others just what happens to those who don’t ‘play ball,’ ” the lawsuit alleged.

Luthra also contended in the lawsuit that lobbyist Michael Arrington, another longtime Johnson associate, told Luthra that the lease would stand a better chance of approval by the council if he donated $50,000 to the Prince George’s County Presidential Inaugural Committee, which helped plan a local inaugural ball for President Obama. Arrington’s attorney Timothy Maloney acknowledged in court papers that Luthra was one of several county busi­ness executives approached by his client to raise money for the committee and said there was nothing improper about the contact.

Luthra donated $4,000 to the committee and also hired Arrington to lobby the council on his behalf at a rate of $5,000 per month, the lawsuit alleged. Arrington, who was also dismissed from the case, did not return several calls seeking comment.

Still, the deal to move the county housing department languished. Luthra claimed that in 2009, then-council member Knotts told one of Luthra’s employees that if the businessman raised $40,000 for Knotts’s reelection campaign the lease would have a better chance of being approved.

“The charge had no merit,” Knotts said in a recent interview. “My own concern was that the media was trying to include me in Jack Johnson’s problems. I never felt that after this was all over that anyone was given due justice to say, ‘Look, we had nothing to do with Jack.’ ”

William Snoddy, a deputy county attorney, said the Baker administration settled the case to avoid further expense to taxpayers.

“Even had the county won the case, it would have spent a considerable amount of money defending,” he said.

Staff researcher Jennifer Jenkins contributed to this report.

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