Will we ever get answers on the Ameritrust Tower debacle?

Ten years ago today, Jimmy Dimora allegedly held one of his now-infamous power meetings in Independence, at the Holiday Inn on Rockside Road. The topic of the day was the Ameritrust Tower.

Dimora and his fellow Cuyahoga County commissioners were searching for a new county headquarters site. Two months earlier, in November 2004, the Staubach Co., the county’s real estate consultant, had delivered a report that scored the Ameritrust complex fourth among competing developers’ proposals.

But on Jan. 21, 2005 -- according to the lawsuit Ed FitzGerald’s administration filed in June -- Dimora met with someone from Staubach and the company’s attorney, Dimora crony Anthony Calabrese III.

Four days later, Staubach delivered its recommendation that the county should relocate to the Ameritrust complex, owned by the late developer Dick Jacobs -- even though it still ranked lower than other sites in Staubach's scoring.

Later in 2005, Dimora and his fellow county commissioners dumped the plan to lease the Ameritrust complex and bought it for $21.7 million. The county eventually lost about $28 million on its investment in the Ameritrust site. The costs included a $2.6 million payment to Staubach to get out of its contract.

Today, Cuyahoga County’s new government has a lawsuit pending against the firm and several other defendants. The suit is Cleveland’s last chance to get the elusive answers to long-asked questions:

Did Dimora corrupt the decision to buy the Ameritrust Tower? Did he nudge the 2005 county headquarters search toward his benefactor, Dick Jacobs, who had seeded his 1998 campaign with a $36,000 donation?

Did the pattern revealed in the 2008 federal corruption investigation -- people paying Dimora’s cronies to influence him – also lead to the Ameritrust Tower debacle?

A decade after the alleged deed, the question is in danger of receding into history. But it’s still alive, because there’s money at stake.

FitzGerald and his law director, Majeed Makhlouf, spent years building a case against Staubach and the politically connected consultants and attorney it hired, including Vince Russo (Frank Russo’s son) and Calabrese -- both of whom were sentenced to federal prison on other corruption charges.

The former Staubach, now Jones Lang LaSalle, says Russo, Calabrese, and company performed legitimate services for them. Its lawyers -- and other defendants’ -- have filed disdainful court briefs asking judge Jose Villanueva to dismiss the case.

The firm calls the county’s complaint “patently false,” says it “fails to meet even the barest pleading requirements,” and has “no facts to support its claims.” It argues that FitzGerald filed his case too late because of the statute of limitations.

The suit faces other hurdles besides the passage of time. Staubach wasn’t quite responsible for the decision to buy the Ameritrust complex – it recommended that the county lease the site and move in. It warned that totally new construction would not be "fiscally responsible." The decision to buy it instead (to tear it down) was heavily influenced by Tim Hagan, who joined the county commission in January 2005 and felt it was important for the government to own its headquarters, not be “subservient to a landlord.”

Now that FitzGerald is gone, how hard will the county keep fighting?

FitzGerald was practically obsessed with the 2005 Ameritrust Tower transaction during his four years as county executive. He knew that the purchase of the long-vacant skyscraper was one of the reasons voters threw out the old government, which made his election possible. The former FBI agent and ambitious reformer was energized by the prospect of baring ugly truths about the tower deal. He badly wanted to prove he could govern better than the Dimora-era regime.

Now the battle falls to Armond Budish, FitzGerald’s successor. Budish has already shown hints of distancing himself from his predecessor’s legal battles. He’s announced that he’ll hire a new law director to replace Makhlouf. Within days of taking office, he released FitzGerald’s keycard records, which FitzGerald had tried to withhold from the public.

In some ways, the Ameritrust suit is a remnant of Cuyahoga County’s dirty past. FitzGerald mopped up the Ameritrust debacle by selling the complex to a developer who agreed to build and lease a new headquarters for the county on the site. (In keeping with FitzGerald’s goal to reduce the size of county government, the new building is smaller than the behemoth Dimora and Hagan envisioned and abandoned.)

Now, the modern, glassy new county HQ is open. Next door, the once-scorned Ameritrust Tower has been resurrected as The 9: a luxury hotel, club stage for burlesque dancers, and high-rise home of Johnny Manziel. The gorgeous Cleveland Trust rotunda is about to reopen as, of all things, a downtown grocery store.

Both sides are awaiting Villanueva’s ruling on the motions to dismiss the case.  If the judge issues a mixed ruling -- allowing some counts to proceed but hinting at weaknesses in the case – then I could see Budish deciding to cut the legal bills and declare it’s time to move on.

Or, Budish could adopt FitzGerald’s zeal. He, too, could benefit politically if he recovers money possibly lost to the old regime’s corruption.

There’s also a simpler reason for Budish to keep fighting.

The suit seeks to resolve important unanswered questions. Did we truly plumb the depths of Cleveland’s corruption in 2008? Or did the corruption go even higher and deeper than we know?

Ten years later, Clevelanders still deserve an answer.

FitzGerald files suit over 2005 Ameritrust deal -- but can he answer the biggest question?

Ed FitzGerald says he’s kicked off the “hopefully the last chapter” in the Cuyahoga County corruption saga. He’s filed a lawsuit to try to prove longstanding suspicions that Jimmy Dimora and his cronies corrupted the county’s ill-fated 2005 purchase of the Ameritrust Tower.

The lawsuit could answer questions about the old county government’s controversial $3 million deal with a real estate consultant. It also hints at an even deeper possible scandal -- that Dimora may have manipulated the search for a new county headquarters site so that the Ameritrust site would come out on top.

For years, FitzGerald has vowed to get to the bottom of lingering questions about the former Staubach Co.’s real estate consulting contract. He thinks its $3 million payment was inflated, and he questions why Staubach liked the Ameritrust site.

“This whole thing started because when you look at the transaction on its face, it doesn’t make sense,” FitzGerald said yesterday. After the FBI probe of the Ameritrust deal didn’t result in convictions, FitzGerald asked county prosecutor Tim McGinty to look into it. “As the years went by, we got some additional information from the prosecution,” FitzGerald said.

Now, FitzGerald’s administration claims Staubach paid $500,000 to people close to Dimora, who helped Staubach get Dimora’s ear and then get the contract. The alleged cast of characters includes Vince Russo, corrupt ex-auditor Frank Russo’s son, and Vincent Carbone, a contractor implicated in the county corruption probe. The suit says Staubach hired them as “government relations” consultants.

“The amounts involved here are pretty astronomical,” FitzGerald said. “Over a half million dollars -- a huge portion of the total contract -- is all in government relations. Whether or not they’re true experts in government relations is a real question.”

The suit also claims Anthony Calabrese III played a major role in corrupting the Ameritrust project. Calabrese, a central figure in the federal corruption case, worked as an attorney for Staubach.

The suit (pdf) alleges that Staubach hired Calabrese so that he’d help them get meetings with Dimora and win the county’s business. It claims Calabrese got $99,000 of Staubach’s alleged “government relations” payments.

Last year, county prosecutor McGinty got Calabrese to plead guilty in state court to paying a $70,000 bribe for inside information about the Ameritrust sale. McGinty also called Dimora, Frank Russo, and others to testify before a county grand jury. Info from McGinty’s criminal investigation helped the law department file suit.

The complaint even tackles the most explosive question about the deal: Why did the county choose to buy the Ameritrust complex? The suit clearly implies that Dimora steered Staubach’s site search for a new county headquarters toward the Ameritrust complex, then owned by the late developer and Indians owner Dick Jacobs.

Dimora met with Staubach officials at the Holiday Inn Rockside in Independence on January 21, 2005, the suit claims -- four days before Staubach delivered its recommendation.

“Ameritrust all of a sudden became the first recommended choice,” county law director Majeed Makhlouf said yesterday. Earlier, Staubach had ranked the site fourth. Makhlouf says Staubach hasn’t provided any records about why it moved the Ameritrust site to first place.

The lawsuit claims the county wouldn’t have chosen the Ameritrust site if not for Staubach’s alleged wrongdoing. Makhlouf suggested the county may seek damages for its $1 million annual upkeep of the complex and the $10 million it spent to remove asbestos from it. (The county sold it last year at a loss of about $18 million.)

But Staubach didn’t tell the county to buy the building – it recommended leasing it. The company, now part of Jones Lang Lasalle, pointed that out in a statement yesterday. It accused FitzGerald of filing a “baseless” lawsuit for political purposes (to burnish his reformer credentials while he’s running for governor, presumably). The company denied any wrongdoing and noted that it cooperated fully with McGinty’s investigation. Update: The company also says Russo and Carbone's company provided "legitimate services" that included "much more than government relations," and that the county has ignored documents that prove as much.

“Isn’t it rather interesting,” Makhlouf said, “[that] all these expenses are allegedly charged to see how suitable the building is, so you can tear it down?” Sure. And that’s a question for Dimora. Staubach never wanted to tear it down.

The decision to buy the Ameritrust Tower lies with Dimora, Tim Hagan, and Peter Lawson Jones, the county commissioners in 2005. Hagan and Jones explained their reasoning in my 2008 story “Tower Play.” Dimora’s reasons are less clear.

Given what we now know about Dimora’s corruption -- how he repeatedly nudged the county toward decisions that benefited his friends and benefactors -- the question of whether he nudged this search toward a benefactor’s site is worth asking. Dick Jacobs, who died in 2009, seeded Dimora’s first campaign for county commissioner with a $36,000 donation.

An FBI wiretap caught a Dimora crony claiming vaguely that the county chose the Ameritrust site because the owner of a competing property wouldn’t pay a kickback. But the FBI couldn’t build a case on that. Learning the truth or untruth of that story may be beyond the reach of FitzGerald’s lawyers -- the real last chapter in the county corruption saga, one that no one may be able to write.

Can FitzGerald keep county HQ proposals secret? Should he?

I saw the first signs a few months ago, but I never thought it'd be this bad.  Ed FitzGerald is asserting the right to lease a new Cuyahoga County headquarters, sell 13 public buildings, and maybe string together a mega-deal to do it all with one developer, without letting the public see the proposals until the contracts are signed.*

In other words, the county executive is launching a new headquarters search that's less transparent than the infamous Ameritrust deal.  And a four-year-old state law may allow him to do it.

I could barely believe this front-page Plain Dealer story today, "Details on county proposals won't be released to public."  But an email to me from county law director Majeed Makhlouf confirms it's true. Makhlouf quoted from a 2008 law that allows counties to use competitive sealed proposals instead of competitive sealed bidding to award contracts. The law says (bolds mine):

In order to ensure fair and impartial evaluation, proposals and any documents or other records related to a subsequent negotiation for a final contract that would otherwise be available for public inspection and copying under section 149.43 of the Revised Code shall not be available until after the award of the contract.

That law ought to anger anyone who cares about open government.

I knew secrecy was building around the county's big move earlier this year, when I asked for the appendix to a report about the county's real estate holdings and got a call from FitzGerald, who politely explained why he wasn't giving it to me.

His argument, that the report's details were a "trade secret," was fishy. He also said the appendix would give away property appraisals and hurt the county's bargaining position, a practical argument that made more sense. (See my earlier post here.)

But now, he and Makhlouf are asserting the right to tell us nothing about the bargaining positions of developers competing for a public contract -- "so officials could negotiate the best deal for selling property," as the PD paraphrases. In other words, to preserve the county's ability to play developers against each other by keeping them in the dark and bluffing!

I thought the whole point of creating a new government was to create more accountability and openness.

Think about the last search for a new county headquarters.  It was botched so badly, it cost the public tens of millions of dollars and helped bring down the old form of government.

My story about the Ameritrust affair ("Tower Play," June 2008) showed that the county commissioners bought the Ameritrust complex thinking their plan would save money, but it would actually have permanently added to the cost of government. That became clear if you dug deeply enough into the county's assumptions about the costs of leasing vs. building, the costs of financing, and the costs of maintaining, renovating, and operating offices. But if you just trusted the commissioners' assertions, you had no way of knowing they were wrong.

This time, we'll know even less about the county's plans to move. Because the administration chose to request "proposals" instead of "bids," it looks like almost all the important information will be kept secret, in closed executive sessions of the county council and in documents locked up until the contract ink is dry.*

"So I guess we're just supposed to trust the process?" Laura Johnston, the PD's county government reporter, tweeted in frustration yesterday. 

Today I talked to David Marburger, a top media lawyer in town and co-author of Access With Attitude: An Advocate's Guide to Freedom of Information in Ohio. He said the sealed proposals law may not be as black-and-white as Makhlouf says. He read the law and pointed to another section of it:

A county contracting authority shall not use competitive sealed proposals for contracts for construction, design, demolition, alteration, repair, or reconstruction of a building... 

What if the county chooses a developer's proposal to construct a brand-new headquarters building? Could it still keep the proposals secret? Or, say the county chooses to lease an existing downtown office building (as most people think it will). What if the lease calls for the landlord to alter, repair, or reconstruct the building before the county moves in? Can the proposals still be withheld?

Either way, Marburger calls the law bad policy.

"Officials are allowed to commit to a contract before the public can see what the options were and influence the outcome," he says. "That can't be in the public's interest. ... By then, it's too late to even raise questions."

*Update, 7/23: FitzGerald says the proposals will be released to the public one step before the contracts are signed, when the negotiated deals go to the county council for approval.  The county request for proposals says so too.

This is an improvement, though it leaves the public with a short window of opportunity to see and debate the options before the contracts are signed.  See item #1 in my new blog post.

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.