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Thursday, Capital Grille; Friday, Federal Court
Did Developer Go Past Where Politics and Money Legally Intersect?

By Dana Hedgpeth
Washington Post Staff Writer
Monday, September 4, 2006

Douglas Jemal swept into the Capital Grille as usual on a recent Thursday night, knocking back Ketel One vodka on the rocks with a lime, hugging and back-slapping half a dozen men gathered at the bar.

This is a landscape where politics and money intersect. Where Jemal, a wealthy developer, drinks and dines. Cigar smoke swirls above cufflinks and cleavage. A bison head hangs on the dark, paneled walls. Thick, aged steaks are stacked behind glass in a walk-in refrigerator.

Jemal is a Thursday night regular, and his routine appears undisturbed by the corruption trial he is facing, though jury selection in federal court is only days away, scheduled to begin Friday.

At the peak of a colorful and successful career, the 63-year-old developer is accused of crossing the line between making friends and buying favors, giving gifts to a mid-level District bureaucrat as part of a scheme to get favorable government contracts for his company.

Jemal's charges include bribery, conspiracy, and mail and wire fraud. The bribery count alone carries up to a 15-year sentence. On trial with him are his son Norman and Blake Esherick, both of whom line up tenants and manage his properties. All three defendants deny the charges.

Jemal's defense is that he and his business associates gave gifts to Michael A. Lorusso, the former deputy director of the city's Office of Property Management who worked with leasing contracts but denies that they were meant to influence him. His only crime was picking a bad friend, other friends say. A former amateur boxer, Jemal says he will fight, as he always has.

"How many guys come from the street and get to the level I am? How many?" Jemal said, his voice rising slightly. "I wore 'em down because I didn't give up."

And, he said, he's simply a generous guy. He once bought a pair of cowboy boots for a cabdriver in Dallas.

Jemal in Washington

Jemal -- 5 feet 11 1/2 inches tall, 185 pounds, shaved head -- is a distinctive presence. At the Capital Grille, at 6th and Pennsylvania Avenue NW, he wades through the heart of knotted-tie Washington wearing jeans and cowboy boots.

He's known for picking up the tab. He treats the occasional passerby. The two pairs of cowboy boots costing more than $1,000, the flights to Las Vegas and Florida, the Rolex, sports tickets -- the things he and his associates bought for Lorusso -- were gifts, Jemal says, requiring no payback in his world.

He made a name for himself in Washington in 1991 when he bought the Park & Shop, a retail strip in Cleveland Park, invested millions of dollars to fix it up, then sold it. Later, he bought the Woodward & Lothrop building at 10th and F streets NW and helped lure clothing retailer H&M and West Elm furniture there.

A high school dropout from Brooklyn, Jemal made his money in retail and electronics businesses -- and as founder and president of Douglas Development Corp. These days he keeps a wine locker at the Capital Grille. They cost $500 a year, and there's a two-year wait for one. One black-lettered, gold-plated sign reads "Douglas Jemal." Another says "F. Sinatra," one patron's tribute to the entertainer.

One recent Thursday, Jemal sat at his usual spot in a curved booth in the back of the place. He and his guests ate from a silver plate stacked with lamb chops and rib-eye steaks, served family style, and drank a 2002 Cabernet Syrah.

Shrewd, admired for his business acumen, criticized for cursing what can seem like every other word, feared for his occasional temper, Jemal commands attention.

"This trial will be watched by everybody," said Richard Bradley, executive director of the Downtown Business Improvement District. "He's larger than life compared with most of the people in the field. He was a pioneer in parts of the city, and he's very much respected, liked and appreciated. People will watch this very closely."

Robert A. Peck, the former president of the Greater Washington Board of Trade who is now a senior vice president at real estate services firm Staubach Co., said: "Jemal is a unique personality. He's a risk-taking real estate guy who was in marginal neighborhoods before they turned hot.

"I think a lot of people wish him well, and there's a lot of curiosity about how this is going to come out."

Jemal is a builder and a manager of 10 million square feet of office, retail, commercial and residential properties in 185 buildings in the region. He plans to redevelop land he owns on the banks of the Anacostia River in Southeast, hoping to echo Baltimore's Inner Harbor, and wants to redevelop the car-repair garages and abandoned rowhouses on a stretch of New York Avenue NW near the convention center. He has London architect Norman Foster working on designs to redevelop the shuttered Uline Arena near Union Station in Northeast.

The Trial

When he announced Jemal's indictment last fall, U.S. Attorney Kenneth L. Wainstein said, "To those who do business with the government it shows that the honest services of our public servants are not up for sale." At the same time, Mayor Anthony A. Williams (D), a longtime supporter of Jemal's, issued a statement encouraging Wainstein to "aggressively root out corruption anywhere he finds it."

Jemal has long been controversial. He has been sued by contractors who accused him of lateness and not paying bills for construction materials and other services. They say he keeps sloppy paperwork, making it hard to bill and collect from him. He disputes the charges but agrees that his back-of-the-house bookkeeping isn't always neat and orderly. Others credit him with saving historic facades and admire how he calculates in his head what his returns will be and makes deals with a handshake.

"Why am I successful?" Jemal said. "Because I'm a [favorite expletive deleted] daredevil."

Jemal is being defended by white-collar-crime lawyer Reid H. Weingarten, whose clients have included defendants in the scandals at Enron Corp., Rite Aid Corp., Tyco International Ltd. and WorldCom Inc. Weingarten recently defended a Naval Academy midshipman accused of rape. Earlier, as a prosecutor, he was involved in the case of an official who was accused of lying to Congress in the Iran-contra investigation.

Jemal, his son and Esherick have a defense team of at least seven lawyers. They are not saying whether Jemal will testify in the trial, which is expected to last four to six weeks. They are expected to call to the stand city officials, real estate brokers familiar with the deals and community leaders.

In 2003, the D.C. Council investigated Jemal's ties to Lorusso, who had broad influence in deciding which properties the city leased and bought. In those hearings, Jemal testified but invoked his right against self-incrimination 23 times. Lorusso was fired from his city job in 2003, pleaded guilty in 2004 and agreed to help prosecutors. Assistant U.S. Attorney Mark H. Dubester, the lead prosecutor, has successfully prosecuted several fraud and conspiracy cases, including the conviction of a former D.C. school board member for theft and tax evasion.

Lorusso brokered several deals with Jemal's company starting in 2001 that prosecutors allege involved criminal activity. In one of them, they say, Lorusso pushed the city to rent an impoundment lot on Addison Road in Prince George's County for $998,000 a year. Jemal owned the lot.

Lorusso also allegedly tried to get the city to sign off on a deal to pay Jemal's company $12.5 million for the impoundment lot even after an appraiser told him it was worth much less, prosecutors say. Another part of the deal involved selling a historic city firehouse on Massachusetts Avenue NW to Jemal's company.

In another case, Lorusso pushed the city to enter into leases for more than $100 million over 10 years to rent space for offices at 77 P St. NE, an old brick building near New York and Florida avenues NE that Jemal renovated. Prosecutors say Lorusso arranged for the city to pay Jemal's company $1.5 million in unwarranted invoices.

"I take no glee in another person's misfortune, but I know I did my job in uncovering this scandal," said D.C. Council member Jim Graham (D-Ward 1), who held 63 hours of hearings on Jemal's ties to Lorusso. "What we now have is a whole different realm. All of the civil issues are resolved. You can commit a wrongdoing and that doesn't constitute a crime. This is up to the jury and the judge to decide."

Jemal has paid to resolve his financial disagreements with the city over leases at 77 P St. NE, according to Graham.

Jemal's Projects

Far from slowing down after his indictment, Jemal has been working as hard as ever, building on his early business -- when he made money off hundreds of little properties that people drive by every day -- to more upscale projects.

Even as he is getting ready for trial, he has been quietly negotiating to form a partnership with Bob Carr, his complete opposite. Carr is one of the top executives at the well-established development company his father started, CarrAmerica Realty Corp., which has large, prominent office buildings in downtown. The company recently finished constructing, with Jemal as its partner, the Atlantic building at 9th and F streets NW. Jemal's partnership with Carr, who is likely to bring 20 associates with him, is expected to bring order, credibility and more of an institutional approach to Jemal's sometimes disheveled operations.

"Douglas provides a creative genius and patient money that, when you couple it with Bob's development discipline, it's the perfect marriage," said Raymond A. Ritchey, a major developer and executive vice president of Boston Properties Inc. "The two together may be the odd couple, but it will be an extremely formidable factor in the D.C. development community."

The son of Sephardic Jewish immigrants -- his father was an Egyptian who imported and exported linens and his mother was Syrian -- Jemal left school at 15. He worked as a busboy at a seafood restaurant in Long Branch, N.J., and unloaded trucks at a store that sold beach towels and sandals along the Asbury Park Boardwalk in New Jersey.

He came to Washington in 1966, two years after he got married, and opened Bargaintown D.C., a five-and-dime store where the Verizon Center now sits. Jemal had to close that store to make way for the Metro, he said, and later he opened his own electronics and records stores in the District. He then got into his family's New York-based electronics business, The Wiz -- known for its slogan, "Nobody Beats the Wiz." Jemal ran about a dozen stores in the Washington area and sold his part of the business shortly before the chain went bankrupt. He got his start in real estate in the early 1980s.

Jemal didn't shun rundown properties. "I was in Shaw when the devil wouldn't even pray in church basements there," he said.

He bought the former Wonder Bread Bakery on Georgia Avenue NW, turned it into office and retail space, and sold it a few years later to Howard University for $18 million. When few others were gambling on downtown, Jemal bought rundown storefronts near the Verizon Center site and renovated them. Although his critics complain about the quality of the restaurants, he got major national chains and office tenants to sign leases for the space.

"I have one word when I think of his name: guts," said Monty Hoffman, a major D.C. developer. "He went into areas nobody else would. He didn't overanalyze anything. He treats real estate like a commodity. He'd go forward with deals and figure the rest out later because he's got a maverick style. He continues to roll again and again."

Jemal drives a black Ford F-350 pickup truck to his office in a building he renovated on H Street NW near the Verizon Center. Nearly every inch of wall space in his office is plastered with old black-and-white pictures of the city, antiques and parts he's pulled from old buildings.

He is partial to his Harley, fast cars and a boat that he keeps at his house in Annapolis on the Severn River. He also keeps an apartment in one of his historically renovated buildings downtown. His wife, Joyce, lives in New York and New Jersey, according to his friends, who say the two have an understanding to live apart.

They have four daughters and two sons, aged 40 to 19. Most Friday nights, friends say, he drives his truck to spend the weekend with his wife and have Sabbath dinner, returning to Washington Sunday night or Monday morning.

At his "clubhouse," as he calls the Capital Grille, Jemal contemplated his trial.

"Getting indicted is an education," Jemal said. "It's the ultimate, ultimate shooting-it-all."

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