Douglas Jemal, one of Washington's most prominent developers, was indicted yesterday on charges of bribing a city official to get sweetheart contracts that inflated his profits and cost taxpayers millions in unnecessary expense.
Jemal got two major leases and other favorable deals while giving the D.C. official about $25,000 worth of gifts, prosecutors said, including a Rolex watch, Las Vegas lodging and airfare, cowboy boots and seats in the company's luxury box for sporting events at MCI Center.
A federal grand jury also indicted two other executives in Douglas Development Corp., Jemal's D.C.-based company: his son, Norman Jemal, and leasing director Blake Esherick. All three defendants face conspiracy, bribery, fraud and other charges.
Most of the allegations involve dealings with Michael A. Lorusso, the former deputy director of the D.C. Office of Property Management. Lorusso, 40, pleaded guilty to bribery conspiracy charges last year and agreed to aid authorities in a probe of city contracting practices. Less than three months after Lorusso's guilty plea, authorities raided Jemal's office in the city's Chinatown section.
Jemal, 62, who holds a portfolio of more than 7 million square feet of office and retail space in the region, has become the face of the revitalized downtown and has a reputation in business and political circles for taking on and transforming properties in long-forsaken corners of the city. Yesterday he denied any wrongdoing and said he welcomed the opportunity to clear his name after three years of investigations.
"No reason to hide. I'm elated that this is moving forward," he said. "It's been a shadow over my head for many years. At least we're moving toward resolution."
Jemal said that the probe has not affected his business and that he doubts it will now. He added that he did not fret that a grand jury indicted him. "You can find evidence to charge someone for crossing the street, frankly," he said.
All three men are expected to answer the charges next week in U.S. District Court. Esherick, 42, and Norman Jemal, 36, were not available for comment, but their attorneys said they, too, had committed no crimes and expected to prove that in court.
Jemal, a longtime supporter of Mayor Anthony A. Williams (D), is credited with bringing hip eateries and bustling offices to the once-dead F Street area near the MCI Center. But some D.C. Council members raised questions about his ties to Lorusso, who had broad control in determining which properties the city purchased and leased. The scrutiny led to Lorusso's firing in January 2003, as well as the investigation by the FBI and other agencies.
The indictment says criminal behavior was behind two deals brokered with Jemal in 2001 that drew the council's attention. In one, Lorusso signed a $998,000-a-year lease to rent 4800 Addison Rd., a Prince George's County property that the city turned into an impoundment lot. In the other, Lorusso signed a series of leases that called for spending more than $100 million over 10 years to rent space for offices at 77 P St. NE. Prosecutors said Lorusso also arranged for the D.C. government to pay Jemal $1.5 million in unsupported or excessive invoices.
Lorusso later pushed a plan for the city to pay $12.5 million to buy the property for the impound lot, even though an independent appraiser valued it at $4 million. The deal, which also called for selling a historic city firehouse on Massachusetts Avenue NW to Jemal's company, fell through when the council raised objections.
Prosecutors said yesterday that Jemal and his co-conspirators provided Lorusso with a variety of gifts. Besides the watch, they picked up the $70 expense to have its wristband enlarged, prosecutors said. And in addition to the cowboy boots, sports tickets and Las Vegas trips, the items included $10,000 in cash, $1,000 in car repairs and limousine service, they said.
The leases formed one prong of the indictment. The grand jury also said that Douglas Jemal provided Esherick with rent-free accommodations in homes in Bethesda and Northwest Washington and other compensation that was not reported on Esherick's federal income tax returns. In addition, the grand jury accused Esherick and Douglas and Norman Jemal of defrauding a mortgage company.
Muscular, tall and bald, Jemal never fit the cliche of a Washington businessman. He preferred black T-shirts to suits and was willing to strike risky deals that others considered potential money-losers. The city has provided a reliable source of business for Jemal; since 1999, it has leased a number of his properties at a cost of about $50 million, according to records. The mayor even rented his 2002 campaign office from Jemal.
Today, the District leases nearly 363,000 square feet of property from Jemal in three locations, including 77 P St., now listed in records as 64 New York Ave. NE. The city closed the impound lot in Prince George's County last year and opened a lot a new location.
At a news conference announcing the charges, U.S. Attorney Kenneth L. Wainstein said that the investigation is continuing and that the prosecution of the men sends a stern message.
"To those of us in public service, it reminds us that we must never place our private gain above the public good," 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."
Williams issued a statement encouraging Wainstein to "aggressively root out corruption anywhere he finds it."
"We in the District government hold all of our employees as well as our contractors to the highest ethical standards, and we expect them to act fairly, openly and honestly as they deal with and represent the District government," the statement said.
The criminal investigation came after questions were raised by council members Carol Schwartz (R-At Large) and Jim Graham (D-Ward 1). Both held hearings to examine the business deals.
Schwartz was the first to challenge the proposal to buy the impound lot. "I feel good about this," she said of the indictment. "I instinctively knew that there was something not good about this deal."
Graham called Douglas Jemal as a witness during a series of hearings in 2003. Jemal refused to answer questions about his business relationship with Lorusso at one hearing in June 2003, invoking his right against self-incrimination 23 times.
Graham, whom Wainstein publicly thanked for his work, said yesterday he was glad his council committee kept digging.
"We were tenacious but fair," he said. "We followed every lead we were given. . . . One thing led to another, and we just kept going and going. "
Staff writer Nia-Malika Henderson contributed to this report.