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Correction to This Article
This article about the corruption investigation in Prince George's County incorrectly said that Omega Gold Development Group has received a $900,000 federal grant that it was awarded by the county. Prince George's has allocated $900,000, through the federal HOME Investment Partnerships program, to pay for acquisition, development costs and down-payment closing cost assistance on a housing development in Suitland, but the organization has not yet received the money.
Some funds awarded to Pr. George's HOME program tied to corruption probe

By Ovetta Wiggins and Miranda S. Spivack
Washington Post Staff Writers
Monday, November 15, 2010; 11:10 PM

In the past two years, Prince George's County officials have awarded about $7 million in federal funding to developers on six projects to build affordable housing throughout the county, a review of government documents shows.

Some of that money, from the HOME Investment Partnerships program, is part of the widespread corruption investigation that led to the arrests last week of County Executive Jack B. Johnson and his wife, Leslie Johnson. They are charged with witness tampering and destroying evidence and could face up to 20 years in prison.

One of the developers, identified only as Developer A in court documents supporting the Johnsons' arrests, reportedly received a federal grant and had given Jack Johnson $100,000 as early as 2007 that federal officials say was a way to secure the money.

Johnson was arrested Friday after he pocketed $15,000 from the developer and was heard by federal investigators telling his wife over the phone to flush the check down the toilet and stuff $79,600 in cash in her underwear, according to court documents.

It's unclear who Developer A is, whether he received money in the past two years or which project the money was allocated to fund. But the Prince George's County Council auditor said the county will review the Housing Department, which has long been under scrutiny for suspected mismanagement.

Chief Auditor David Van Dyke said a contract will be finalized this week and will explain the scope and details of the audit. The council sought the review this year after it learned that the department had not used $2 million in federal housing money for low-income residents.

"It will be a very broad, top-down review of the department, its operations and how they are performing," said Van Dyke, who added that the audit will take about three months.

Allegations of pay-to-play politics in Prince George's have swirled for years. The FBI began its investigation in January 2006 after agents said they learned that "real estate developers . . . were regularly providing things of value to public officials in exchange for official acts that were favorable to these individuals and their companies."

The HOME program works as follows: The director of the county's Department of Housing and Community Development recommends which developers should receive HOME funding for their projects. The county executive then makes the request to the County Council, which in turn has to approve the recommendations.

Earlier this year, Prince George's came under fire after it had to return $2 million to the federal government because it did not meet a five-year deadline to allocate the money. HUD officials have said the county has a history of poor performance in the HOME program.

HOME, which started in 1992, is run by HUD. It is the largest federal block grant program designed to create affordable housing, doling out $2 billion a year to state and local governments.

Prince George's received $47.8 million between 1992 and 2009, according to HUD. In fiscal 2009, $3.1 million in HOME money was allocated. There is no indication that these projects are under investigation or that developers have committed any wrongdoing.

A review of government data over the past two years shows that developers used $6.9 million in HOME funding to help acquire property in Upper Marlboro to build a 102-unit facility for seniors, rehabilitate two apartment complexes in Lanham, build a 60-unit apartment building for seniors in Hyattsville, acquire and renovate a senior citizens' housing project in Mount Rainier and buy 3.1 acres of land in Suitland to build 18 single-family homes for low-income residents.

The money went to Annapolis-based developer Stavrou Associates and lesser-known Preservation Services, Omega Gold Development Group, SUR Developers and Builders and Victory Housing.

Legislation was approved this year for Preservation Services to receive $900,000 for the rehabilitation of Glenarden Woods, a 153-unit apartment complex in Lanham. The council also granted Preservation $1.2 million from the HOME program to rehab Glenreed Housing, a Lanham-based development with 104 units.

The action plan called for the developer to replace boilers, heating and air-conditioning units in each apartment, emergency generators and the fire-detection system. The developer would also install new appliances and remodel the bathrooms.

Jim Brown, president of Victory Housing, which built the Hyattsville project, said Monday that the organization has not been contacted by federal authorities.

"We have not heard a word," he said. The project received $1.3 million from the HOME program for the 60-unit senior housing project, and "everything worked out extremely well."

Stephen Stavrou of Stavrou Associates wants to acquire the Rainier Manor property and do a complete renovation. Stavrou has received $1.3 million for its project in HOME funding. According to the developer's action plan, the building had water damage during the past few years. The developers plan to reduce the size of the complex. Stavrou did not return calls seeking comment.

Omega Gold wants to build 18 single-family homes on Shadyside Avenue in Suitland. The $900,000 received from the HOME program would pay for acquisition, development costs and down-payment closing cost assistance. Calls to Omega Gold's office in Suitland were not returned Monday.

Money from the HOME program to SUR Developers and Builders went to acquire land to build a 102-unit rental housing for seniors in Upper Marlboro. Officials at SUR Developers and Builders did not return messages seeking comment.

wigginsovetta@washpost.com spivackm@washpost.com

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