Ex-D.C. Worker Says Scheming Began Early

Michael A. Lorusso, center, a former D.C. leasing official, testified in U.S. District Court yesterday in the bribery case of developer Douglas Jemal.
Michael A. Lorusso, center, a former D.C. leasing official, testified in U.S. District Court yesterday in the bribery case of developer Douglas Jemal. (By Susan Biddle -- The Washington Post)
By Carol D. Leonnig
Washington Post Staff Writer
Wednesday, October 4, 2006

Within a few months of taking a key D.C. government job, a financially strapped Michael A. Lorusso was already scheming for ways to turn his city position and new acquaintance with downtown developer Douglas Jemal into personal profit.

Just days after meeting Jemal in April 2001, the former D.C. leasing official testified yesterday, he agreed to travel to Las Vegas, stay at the sumptuous Bellagio hotel on Jemal's tab and hide the trip from his city bosses. Over drinks in the Bellagio bar with his host, Lorusso said, he hurriedly struck a deal for the city to pay Jemal's company, Douglas Development Corp., the eye-popping fee of $120,000-an-acre to rent land for a vehicle impound lot for one year -- three times what Jemal had recently paid to buy the land outright.

And with that, the much-anticipated government witness in Jemal's bribery trial said, he began to put in 10- and 12-hour days -- officially on the city payroll but secretly working for Jemal. Lorusso, the former deputy director of D.C. property management, admitted concocting a string of frauds so the city would pay Jemal exorbitant prices for his properties and even for work the company never did.

Lorusso, when asked by prosecutors why he falsified invoices in fall 2001 so the city would have to pay twice for $325,000 worth of work for which Jemal had been given a city check to pay the contractor, said his reasoning was the same as with all the other schemes.

"It was just another way to get in the good graces of Douglas Development," he said.

Lorusso's testimony is the linchpin in the government's effort to convict Jemal, his son Norman Jemal and Jemal leasing agent Blake Esherick on charges of providing bribes to a city official. Lorusso, 40, left the city after two years in the job, forced out after a D.C. Council investigation and the city auditor found evidence of fraud and theft in Lorusso's dealings with Jemal and another city contractor. Lorusso later pleaded guilty to bribery conspiracy charges and is aiding prosecutors in hopes of getting a lighter prison sentence.

Defense attorneys have argued in court that Jemal, his son and Esherick gave gifts to Lorusso because he was their friend, not because they expected favors. They say Lorusso is lying to limit his prison time.

On the stand in U.S. District Court yesterday, Lorusso appeared much changed. His hair is graying where it was once jet black. He wore an accountant's wire-rimmed glasses instead of his sporty, blue-tinted glasses. His old swagger and braggadocio were gone, replaced by a meek voice.

From the start, Lorusso said, he and Jemal's team had an understanding that Lorusso would also enjoy some financial profits from the corrupt city deals Lorusso crafted. Lorusso recounted receiving $10,000 in cash in a white envelope in the main conference room in Douglas Development Corp. offices after Esherick told Lorusso there was "something for him" in a cigar humidor there. Other gifts included a Rolex watch, a free overhaul of his Audi convertible and free dinners and drinks at the Capital Grille, a favorite hangout of Jemal's, at least 15 times.

But the breadth of actions that Lorusso admitting taking to profit Jemal and his company -- and the lax city oversight that allowed him to single-handedly authorize highly questionable deals -- dominated testimony yesterday.

While Norman Jemal was paying $543-a-night for Lorusso and his brother to stay at the Bellagio in May 2001, Lorusso spent a total of 10 minutes with Jemal to arrange a $989,000-a-year lease for Jemal's property at 4800 Addison Road in Capitol Heights to be the city's new impound lot.

That summer, Lorusso said, he confided to Esherick that he had a lot of student loans and that "my salary was not meeting my personal needs." Lorusso said Esherick told him he was worried about his long-term financial future if Jemal should promote his sons and push Esherick out. The two hatched an idea, Lorusso said, to create a "special projects" fund in Lorusso's office and tap it for cash using phony invoices.

In July, Lorusso said he approved paying Jemal $38,000 for unspecified "move-in" damage after a city agency relocated to Jemal's office building at 77 P Street NE, although he saw no substantial damage.

In September, Lorusso said he was urged by then-Deputy Mayor Eric Price to find a way to spend $1 million that the city was required to spend to help small businesses find cheap office space. Lorusso instead created an invoice that made it appear Jemal had to be reimbursed roughly $929,000 for renovating basement offices at 77 P Street. No such work had been done.

Staff writers Yolanda Woodlee and Dana Hedgpeth contributed to this report.

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