Jack Johnson's stamp on affordable-housing program in Prince George's

By Ovetta Wiggins
Washington Post Staff Writer
Friday, December 3, 2010; 10:53 PM

A longtime friend and former business partner of Prince George's County Executive Jack B. Johnson and a developer accused of shoddy construction work are among the builders who have received federal money to create affordable housing in Prince George's County in the past eight years.

The list of those who received funds from the HOME Investment Partnerships Program also includes nonprofit groups that have worked for years to help low-income residents find housing and a few organizations with limited experience in the field.

Johnson, who was arrested last month in a federal corruption probe, doled out $12.4 million to developers to create affordable housing in the county between December 2002 to September 2010, government documents show.

Federal and Prince George's officials have complained that the county's housing agency has mismanaged some of the program's funds.

Johnson was taken into custody after federal agents overheard him on a wiretap telling his wife, Leslie, to flush a $100,000 check from a developer down the toilet and to stuff $79,600 in her underwear. The Johnsons were charged with evidence tampering and destroying evidence and could face up to 20 years in prison. The Johnsons have been released from custody for the time being.

Federal authorities said Johnson took cash and checks from a developer, identified in court documents as Developer A, as early as 2007, including a check for $100,000 to help the developer obtain funds from HOME.

It remains unclear who the developer is, which project received the money and when the money was received.

"It gives credence to what nonprofits have said for a while: that for-profit developers receive favorable attention in lieu of nonprofit developers," said Chad Williams, who runs Morphodo Communities, a venture that provides technical assistance to community-based housing development groups.

Friend and contributor

Mirza H.A. Baig - a friend and one-time business partner of Johnson's and a major campaign contributor - has received $1.2 million in affordable-housing funds, or 10 percent of all the money given out in the county during Johnson's time in office.

In 2005, Baig paid $610,000 under a no-bid contract for county-owned land where 11 houses were part of a low-income federally subsided development in Upper Marlboro. He doubled his investment in August when he sold the property for $1.2 million to Roots of Mankind Corp., a Temple Hills nonprofit agency that received federal housing funds from the county to acquire the land.

Baig, a doctor in Laurel, has not been accused of any wrongdoing. He did not return repeated calls seeking comment.

In 1992, Baig and Johnson bought land together in Laurel for $450,000, Johnson reported in a financial disclosure form that elected officials are required to file annually. About two years later, Johnson sold his interest for $1 million.

Cynthia Whitmire, director of programs at Roots of Mankind, said Baig wanted $2.4 million for the Upper Marlboro property. But he agreed to sell it for $1.2 million and to join the nonprofit group in a partnership - Roots of Mankind Romwood Square LLC.

"He's a silent partner," Whitmire said.

Whitmire said Sandy Marenberg, a broker and consultant who works with nonprofit groups on affordable-housing deals, introduced Baig to officials at Roots of Mankind. But Marenberg said last week that he did not recall how Baig - with whom he has worked on projects in Baltimore County and elsewhere in Maryland - became a part of the deal.

"I don't know if [Roots of Mankind] had the relationship with Dr. Baig or [its bank] did," Marenberg said.

He said that his involvement with Roots of Mankind lasted about a month and that the agency decided not to hire him.

Homeowner complaints

N. Stephen Stavrou is listed as the registered agent for two companies, based in the same office suite in Annapolis, that have benefited from the housing program.

In 2004, Glenmore Associates received $950,000 to acquire property and construct affordable housing in Hyattsville.

Four years later, the county awarded Stavrou Associates $1 million for the rehabilitation and acquisition of Rainier Manor in Mount Rainier. And in October, the county granted an additional $1.3 million for the project.

With the three awards, Stavrou is one of the biggest recipients of HOME funds in the county over the past eight years. His companies donated $1,070 to Johnson's campaign in 2003.

Stavrou was awarded the funding even though his company has been plagued by controversy. He did not return repeated calls seeking comment.

About two dozen residents of Cameron Grove, a senior housing community, stormed a County Council meeting last year to complain about mold, leaky pipes and faulty heaters in condominium apartments built by Stavrou in Upper Marlboro. The residents sued the company in May.

Stavrou Associates also has been sued by the owners of Windsor Crossing, a condominium complex the company built in Suitland. Allen Mott, an attorney for Windsor Crossing residents, said the homeowners' suit, filed in 2007, alleged construction deficiencies, including problems with paving and exterior trim. The case was settled.

Stavrou's name was also linked to an FBI probe two years ago when agents raided the home and office of a developer, a high-ranking fire official, two senior-level Johnson aides and a former council member.

According to the search warrants, agents were searching for information relating to dozens of companies and individuals. Included on the list for the search warrants executed at Johnson aides' offices and other locations were Stavrou, Stavrou and Associates Inc., and "any associated entity."

The Johnson years

The county has distributed $25.2 million in HOME funds to developers since the program began in 1992, and nearly half of that funding has been given out while Johnson has been in office. Millions more have been allocated to projects in the last two years, but the money has not been distributed.

At least five nonprofit groups - St. Paul Community Development Corp. in Temple Hills, Artspace Limited Partnership in Minneapolis, Victory Housing in Bethesda, Housing Initiative Partnership (HIP) in Hyattsville, and Roots of Mankind - have received money to build, renovate and rehabilitate buildings.

HIP is one of the biggest recipients of funding through the affordable housing program. Victory Housing, an agency of the Catholic Archdiocese of Washington, is another major recipient.

"We often take the worst houses, fix them up and make them affordable," said Mosi Harrington, the executive director of HIP.

Victory Housing and HIP have worked on affordable housing projects for years. Other groups, including Roots of Mankind and Omega Gold of Suitland, are working on their first projects.

Jericho Housing Development LLC, a limited-liability company set up by Jericho City of Praise church in Landover in 2003, received $1 million to help fund the construction of its $52 million senior-living community.

Other top recipients include Allentown Associates LP of Suitland and SUR Developers and Builders in Upper Marlboro.

According to plans submitted to the county, Allentown intended to use $1.7 million to acquire and rehabilitate a 178-unit apartment complex in Suitland. The developer on that project, M. Scott Copeland of RST Development LLC, did not return repeated calls.

SUR Developers and Builders received $1.8 million for a new construction project in Upper Marlboro. Richard Edson, a developer involved in the project, did not return repeated calls.

A checkered history

Johnson's arrest - part of a probe that also has targeted business owners and police officers - created additional problems for a program that has a checkered history in the county.

This year, the county Department of Housing and Community Development was forced to return $2 million to the federal government after failing to meet a five-year deadline for spending the money. And in October 2008, the county nearly lost $5 million in HOME funds after failing to meet a deadline for earmarking the money.

Meanwhile, the Housing and Community Development offices were among the locations raided last month as part of the federal investigation, according to two county government sources, who spoke on condition of anonymity because they are not supposed to talk about the probe. A department employee said FBI agents were at the offices for about six hours.

"The arrest [of Johnson] is going to have a trickle-down affect," Williams said. "Everyone is going to walk on eggshells when it comes to the HOME program, and maybe that's a good thing."

Brad Ingerman, president of the New Jersey-based Ingerman Group, said many developers are wondering what will happen next. His company received $685,000 about two years ago toward the cost of developing a 70-unit senior housing project in Blandensburg.

"Is the county government going to go into a deep freeze because of the chilling effect . . .of what's happening?" he asked.

Del. Jolene Ivey (D-Prince George's) said she hopes that the incoming county executive, Rushern L. Baker III, and his administration will address problems in the county housing department and its management of the affordable-housing program.

At least one County Council member said the council had asked repeatedly why the department was constantly on the brink of losing federal funds and why federal officials have described the county program as being "among the worst performers."

"I assume that the position that Rushern is creating to investigate and eliminate fraud and waste will look into this kind of thing and the feds will take care of this particular instance," Ivey said.

Staff researchers Magda Jean-Louis and Lucy Shackelford contributed to this report.

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