Friday, March 16, 2012

Two county investigations of Ameritrust Tower underway since December; feds cooperating

Ed FitzGerald didn’t order one Ameritrust Tower investigation, he ordered two. They’re not new; they’ve been underway since December. And Cuyahoga County officials are conferring with federal investigators about the Ameritrust project, though the extent of those conversations isn’t clear.

That’s some of what I learned this week in the wake of the Plain Dealer's Tuesday Ameritrust story.

Cuyahoga County inspector general Nailah Byrd is reexamining the county’s 2005 purchase of the vacant skyscraper. Her job is to give taxpayers a full accounting of the aborted county headquarters project, which cost $45 million, and examine it for possible wrongdoing. Law director Majeed Makhlouf is looking into whether the county can sue any of the project’s contractors, including real estate consultant The Staubach Co., to recover funds.

County executive Ed FitzGerald asked Byrd and Mahklouf to examine the Ameritrust project in December, after a report about county-owned property amplified FitzGerald’s concerns.

“This is probably the most prominent public policy fiasco in decades,” FitzGerald told me. “It will cost the county more money than all the corruption allegations put together. It’s incumbent upon us to have an exhaustive review process.”

FitzGerald says he wants the county’s twin investigations to look into:

• the former county commissioners’ decision to buy the Ameritrust Tower
• the $3 million paid to real estate consultant The Staubach Co.
• adjacent properties, including the $5 million purchase of a Huron Road parking garage that Jimmy Dimora was bribed to expedite
• the county’s decision to remove the asbestos from the tower
• the legal representation involved in the deal, including corruption defendant Anthony O. Calabrese III’s role representing Staubach.

“It could be a case of incompetence, it could be a case of corruption, or it could be a mix of the two,” FitzGerald says.

Byrd says she hopes to complete her inquiry within eight weeks. “We’ve got a ton of documents in the conference room,” she says.

Makhlouf says he can’t say when his “massive” investigation will be done. “At this point, we’re looking at everything, the full investigation of the whole transaction, all the parties involved and everything,” he says.

Evidence unsealed at the Jimmy Dimora bribery trial has aided Makhlouf’s investigation, he says. “The inspector general has been working with the U.S. Attorney’s office on a lot of stuff,” he adds.

The FBI examined the Ameritrust Tower deal in 2007 as part of the county corruption investigation, but federal prosecutors have not filed any charges related it. A five-year statute of limitations on most federal crimes limits their ability to reach back to 2005 now.

“We have been in contact with them [the FBI and U.S. Attorney’s office] about what they’re doing on the criminal end of it,” FitzGerald says. “I can’t talk to you about what they’re willing to share, although they don’t share a whole lot.”

Anthony O. Calabrese III, who negotiated the $3 million in payments on Staubach’s behalf, is scheduled to go to trial in September on bribery and corruption charges related to the county corruption investigation. In 2005, when Calabrese was representing Staubach, federal prosecutors charge he was already colluding with Dimora buddy J. Kevin Kelley on schemes to extract cash from the nonprofit Alternatives Agency and a contract with the Parma school board. He's also accused of involvement in the 2008 conspiracy to bribe Dimora on Alternatives Agency's behalf. That raises alarm bells for FitzGerald.

The county executive sounds eager to sue Staubach (now owned by Jones Lang LaSalle). He can’t believe the county paid $3 million for its work, and he thinks its recommendation of the Ameritrust property was bad advice. The county’s new real estate consultant, Allegro, was paid $220,000 to study all the county’s properties, and it concluded that the Ameritrust Tower isn’t fit for government use.

So the county is likely to sell the tower. “The chances are quite remote that we’re going to be able to recoup the costs that we have into that facility,” FitzGerald says. The county now values the property at only $17 million, according to Crain’s Cleveland Business (a figure FitzGerald wouldn’t confirm), which means taxpayers could face a loss of about $28 million. {Update, 3/23: I wonder if this $17 million figure is actually from the appraisal by The K&D Group, which has been interested in buying the tower for years. K&D might turn the tower into an apartment building.}

“When that happens, and there’s an actual accounting of how much the county will lose in that transaction," FitzGerald says, "then I think people will say, ‘Did you exhaust every option to try to remedy this very flawed process that we inherited?’ ”

True. But I also think FitzGerald’s revelation shows his shrewd sense of political timing. The local political beat was about to calm down after Dimora’s trial and Dennis Kucinich’s March 6 defeat. By dropping mention of the investigation to the Plain Dealer, FitzGerald stepped back into the news right when the public’s anger with Dimora is at its height.

It’s unusual for an administration to investigate a previous administration. But if FitzGerald turns up new revelations about the tower debacle, he’ll burnish his credentials as a reformer. If he sues someone over it, people will cheer, even if it ends as poorly as Mayor Jackson’s foreclosure-crisis lawsuit.

Investigating one's predecessors is easy, compared to doing better next time. Like Dimora, Tim Hagan, and Peter Lawson Jones before him, FitzGerald is making plans to move the county government to new offices. He, too, says he wants to save money while doing it. Can he? That’s a subject for another blog post.

Update, 6/7: The FBI and IRS investigated the Ameritrust Tower purchase and the Staubach contract as part of the county corruption investigation, according to a new indictment of Calabrese. See my new post here

To read my 2008 story about the Ameritrust affair, "Tower Play," click here.

2 comments:

Anonymous said...

Awesome FitzGerald flattery, Erick. Thanks for the reassurance that the shenanigans of yore are over.

Anonymous said...

“The inspector general has been working with the U.S. Attorney’s office on a lot of stuff,”

Do the voters of Cuyahoga County know that HIS Inspector General are NOT SWORN Law Enforcement?

They have already botched a few cases. The Sheriff should be handling this investigation. Not HIS non-Law Enforcement people!