Federal prosecutors have determined that Washington parking lot magnate Dominic F. Antonelli Jr. provided most of a controversial $33,000 personal loan to mayoral aide Joseph P. Yeldell but used an intermediary, disguising the transaction and the source of the money. The Washington Post has learned.
According to a source who has talked to lawyers in the U.S. attorney's office here investigating the relationship of Yeldell and Antonelli, prosecutors have been aware for several months that Antonelli was the source of the loan and are trying to determine if it was an illegal payoff in return for Yeldell's successful efforts to have the city sign a multimillion-dollar lease for an office building owned by Antonelli.
The disclosure comes at a time when prosecutors are known to have stepped up their investigation by presenting witnesses to a federal grand jury. They have also expanded the probe and have begun examining other actions taken by Yeldell may have improperly used his former Department of Human Resources post to benefit Antonelli.
In addition to examining the city's lease of Antonelli's building, prosecutors are known to be looking at Yeldell's decision as head of DHR permitting construction of a hospital on property owned by Antonelli.
Prosecutors have declined to comment directly on the progress of the probe or to discuss its details.
Until recently, the investigation had focused on the controversial 20-year, $5.6 million lease that Yeldell urged the city to sign last year on an office building Antonelli had just purchased for $800,000.
The $33,000 second mortgage loan was made to Yeldell at 8 per cent interest two weeks before the city signed the lease. At that time other lenders in the area were charging 10 to 12 per cent interest rates for such loans.
Like the leasing decision, most of the other Yeldell actions that benefited Antonelli were taken within weeks - and sometimes even days - after Yeldell had either solicited or received Antonelli's help in obtaining two different loans totaling $54,000 to pay off mounting personal and business debts.
Yeldell disclosed last month that he had twice sought Antonelli's help in arranging both loans. But this is the first time Antonelli has been identified as the primary source for some of the money.
Yeldell has repeatedly defended his actions as DHR director and has insisted that Antonelli's help with the personal loans never influenced any of his decisions. Antonelli has refused to discuss the matter.
Examination of memos exchanged by Yeldell and other key city government officials, interviews with many of the principals involved and information provided to the municipal auditor, however, have presented a clearer picture of Yeldell's personal and DHR activities as they related to Antonelli's business interest.
It shows that Yeldell, 44, and Antonelli, 54, have quietly enjoyed a mutually beneficial relationship that involved Yeldell's power as a public official and Antonelli's financial connections as a millionaire developer and owner of Parking Management, Inc. (PMI)
During a three-year period, from 1973 to 1976, the then DHR director urged the city to sign the controversial lease on the Antonelli-owned building at 60 Florida Ave. NE; continually smoothed the way for construction of a hospital in which Anotnelli had a financial interest; approved a shift in the hospital site to property owned by Antonelli, and sought funds to buy a downtown hotel in which Antonelli also had a financial interest.
In addition to the federal probe, the D.C. Board of Elections and Ethics is looking into the loan transactions to determine if Yeldell may have placed himself in an illegal conflict-on-interest situation by becoming obligated to Antonelli.
The D.C. Code prohibits a public official from soliciting or receiving gifts, favors, loans, gratuities, political constribution or the promise of future emplopyment based on any understanding that the official's judgements or actions would be influenced. Penalties for violating the statute include a fine of up to $5,000 or imprisonment up to six months, or both.
Mayor Walter E. Washington personally signed the Florida Avenue building lease, and city administrator Julian Dugas - who denies the allegation - has been identified by another city official as having encouged approval of the leasing agreement.
Mayor recently transferred Yeldell to a $47,000-a-year post as a key aide after several city reports about alleged DHR nepotism, cronyism and leasing abuses disclosed no hard evidence of wrongdoing. Washington has said he did not know about Yeldell's loan connections with Antonelli when he named Yeldell as a top assistant.
However, Yeldell has said he discussed the loans some time ago with municipal auditor David Legge, who turned the Yeldell interview over to federal investigators but did not include the loan information in his own leasing report to the mayor. Legge says he "can't remember for sure" whether he and Washington discussed the loans privately before Yeldell was made an aide to the mayor.The mayor says Legge kept the information to himself.
Both loans according to Yeldell, were obtained to help pay off debts he incurred during the more than four years he operated his privately owned - now defunct - travel business, ETA Travel.
The first loan of $21,500 was made in 1973 to Yeldell and six travel business associates. Yeldell has said the loan was arranged through Antonelli barrowed from Madison National Bank, of which Antonelli is a major stockholder.
The second loan of $33,000 was granted to Yeldell in 1976, after the then DHR director said he sought financial advice from Antonelli. The loan was subsequently arranged through a nonbanker friend of Antonelli, according to sources.
The examination of city leasing documents also shows that.
Leasing of the Florida Avenue building culminated nearly a year's effort by Yeldell and his department and was accomplished only after DHR was given its own leasing authority by the mayor.During leasing negotiations the offer made by agents of Antonelli jumped from an initial $2 a square foot without maintenance services to $5.82 with such services. Yedell initially asked for a five-year lease but eventually agreed to 20 years.
DHR consistently sought more provument, leasing and contracting powers than it was capable of using and did not actually use the authority for the purposes for which it had originally sought them.
The order by Mayor Washington giving DHR broader powers was put together in such haste-after the agency encountered initial oppsoition to leasing the Florida Avenue facility -that the order did not go through the traditional review from key department and consequently contained procedural errors and out-of-date administrative steps.
DHR said it needed more leasing and contractiong autonomy to make quicker, more economical decisions, but the Florida Avenue lease resulted in the city paying mote than $300,000 in rent and renovation costs to Antonelli and his son, a contractor, while the building remained unused for nine months.
The sequence of events that eventually involved Yeldell and Antonelli began to unfold as early as June 12, 1973 , when Yeldell first asked Mayor Washington for additional contracting, construction and leasing authority for DHR.
Yeldell said he wanted his own contracting and leasing authority because the city's Department of General Services - which normally handled these matters for all D.C. government departments - took long and assessed DHR too much for the work it performed. But when Yeldell met with general services director Sam Starobin, the DHR chief narrowed his request, asking only that his agency have the rights to negotiate its own service contract for day-care and community treatment needs.
Starobin and three other department heads objected to granting Yeldell's agency this additional authority. Starobin told the mayor that such contracts did not generally require bids.
Despite these objections, however, Mayor Washington signed an order in June, 1974, giving DHR its own contracting - but not leasing - authority.
While his DHR request had been pending, Yeldell's travel agency problems ahd become acute and he began to look around for additional cash reserves to continue its operation.
Yeldell said he was first introduced to Antonelli in October, 1973. Antonell had earlier contributed to Yeldell's unsucccessful campaign for D.C. delegate. The DHR chief and six business associates subsequently borrowed $21,500 from Antonelli's Madison National Bank.
For years Antonelli has been an officer of Doctors Hospital, a 40-year-old medical facility at 1815 I St. N.W that is scheduled to be torn down in 1980. The hospital is owned by the Washington Medical Center, Inc., which also owns the Metropolitan Hotel in the city's West End.
Antonelli sold his stock in corporation late last year following news accounts of the Yeldell-Antonelli leasing and hospital actions. Since early 1976 he had been one of three WMC directors and was actively involved in helping Doctors Hospital build a replacement facility at another downtown site.
The hospital needed DHR's approval to build the new facility. In December, 1973, Yeldell cleared the way for construction of a new hospital when he issued its planners a required "certificate of need" much like a building permit. He did this despite criticism form some medical groups that new hospitals should not be built in Washington until present medical facilities wer being fully utilized.
Even though Doctors Hospital was granted permission to build, planners were having continual problems financing a replacement facility. The parent parent firm had begun selling off, other real estate properties, among them the Metropolitan Hotel, built in 1971 as an extended-care hospital.
In December, 1973 - the same month Yeldell gave the hospital its construction approval and just two months after meeting with Antonelli and about his travel agency loan - employees at DHR's Glenn Dale Hospital for the chroncially ill in Prince George's County got word that the city planned to move that facility into Metropolitan Hotel.
At what Yeldell has since said was the City Council's urging, the DHR director tried unsuccessfully for two years to get Congress to approve funds to buy the hotel. While those efforts faltered, he renewed the hospital's contruction permit in April, 1975 - even though such facilities are supposed to show progress toward construction within a year of receiving the initial certificate.
The subject of 60 Florida Ave. NE first came up in June that same year and soon became entwined in a new bid by Yeldell to expand DHR's leasing and construction powers.
Yeldell has said the building's availability was brought to his attention by a DHR aide, who regarded it as suitable replacement for what he described as the "rathole" service center DHR occupied at 1611-1613 Montello Ave. NE. In late July, 1975, Yeldell asked Starobin to lease the building for five years.
On Sept. 26 the General Services Department received two proposals on the building, each for 20 years with the rental costs varying from $2.50 to $6.50 a square foot, depending on services provided. Starobin rejected both offeres as "unreasonable" and said DHR had not justified its need for a building that was nine-tenths larger than its previous facility.
While the Florida Avenue negotiations were going on with the General Services Department - and before DHR had its own leasing authority - Antonelli wrote directly to Yeldell in September , 1975, with an offer to renew the city's lease on another Antonelli-owned building at 500 1st St. NW.
A new element was injected into the Florida Avenue negotiations on Oct. 1 when the General Services Department received an offer from a small contractor. Emanuel Logan, to lease building to the city for 10 years at $4.25 a square foot a year - a price lower than Antonelli's.
After the General Service Department had further talks with Logan to clear up concerns about maintenance and other matters, the General Services Department drew up a letter of intent to rent the building form Logan, who like Antonelli, had not yet officially purchased it from the seller, Peoples Drug Store.
Both offers were sent to Yeldell, but about a week later DHR said it did not have the money to lease the building and was no longer interested in the site.
In the following month, November, 1975, DHR revived its request for autonomous leasing and procurement authority. It said it needed it principally because of problems at D.C. General Hospital.
This time Mayor Washington did not solicit the views for his department heads but signed the order Dec. 19, 1975. As a result, no one noticed that some procedures detailed in the order had not been required for years. Later, the order had to be amended.
Since the order was signed, according to Starobin, DHR has continued to use the General Services Department for construction an procurement and some leasing services - including certain services for D.C. General Hospital. Yeldell and Mayor Washington had initially justified the independent powers for DHR, saying that the General Services Department acted too slowly to deal with the hospital problems.
Starobin says he did not learn DHR had been given its own leasing powers until Jan. 5. But on Dec. 26, just seven days after the mayor signed the order, Antonelli sent DHR a new leasing proposal on 60 Florida Ave.
In February, 1976, Yeldell hired two consultants to help DHR appraise property and negotiate leases. In so doing he ignored the advice of a key DHR assistant who told him that the agency should keep using the General Services Deparment on an interim basis until it had an experienced leasing staff of its own.
One of the consultants hired by DHR to advise them on the Antonelli case said Antonelli told him about the job and that he is "absolutely positive" that Yeldell knew Antonelli recommended him for the post. Yeldell denies this. This consultant successfully encouraged DHR to sign a 20-year lease instead of a 10-year rental agreement that was then being discussed.
Also in February, Yeldell has said he called Antonelli for "ideas" on where he could get a new personal loan. The subsequent $33,000 loan was arranged through Lawerence A. Sinclitico, a land title insurance agent and a friend of Antonelli. The loan was made in the name of John Halloran, whom Yeldell has said he does not know. Most of the money was actually Antonelli's sources say.
Yeldell actually received the loan on May 25, justnt to buy the Florida Avenue building and other propertynt to buy the Florida Avenue building and other property in the area. Antonelli want to settlement on the purchase the following month just beofre the mayor signed the lease on the building.
Also on the day before he receivedhis personal loan, Yeldell appeared before a congressional subcommittee to seed funds for the city to buy Metropolitan Hotel.
About a week later, on June 7, Yeldell and Antonelli met together on another matter - Doctors Hospital. The hospital needed another extension on its certificate to allow the proposed building site to be shifted to land owned by Antonelli on 19th Street NW. Under terms of an agreement between Antonelli and the hospital's parent corporation. Antonelli was to receive title to the old hospital site (where a new office/shopping complex was planned) and half interest in the new hospital.
Yeldell approved the extension, although his own health adivsers complained they had not been consulted.
Group Health Association, a prepaid health insurance group that uses Doctors Hospital, hopes to obtain a certificate to build a hospital, but Doctors has been trying to get GHA to join a merger that would enable Doctors to finance a new facility.
One source has said Antonelli told GHA it would not receive a certificate from Yeldell and should merge with Doctors. When Yeldell announced that he was extending the certificate for Doctors, he privately advised GHA to merge with the Antonelli group, the same source said.
Yeldell has denied involvement in urging such a merger. Doctors Hospital now plans to relocate at the Metropolitan Hotel.
Last month, after the recommendation of the Legge report, Mayor Washington placed DHR's autonomous leasing and contracting powers back in the hands of the General Services Department.