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.

FitzGerald prepares to sue over 2005 Ameritrust purchase

The years of controversy over Cuyahoga County’s 2005 purchase of the Ameritrust Tower may be about to reach a climactic moment.

Cuyahoga County Executive Ed FitzGerald's law department is preparing to file a lawsuit over the controversial real estate deal. The county’s board of control voted today to hire two law firms as special counsel for “potential litigation related to the County’s purchase of the Ameritrust Complex.”

County law director Majeed Makhlouf says the county may sue the former Staubach Co., a former real estate consultant to the county, and Anthony Calabrese III, a lawyer who represented Staubach.

Prosecutor Tim McGinty may become involved in the case as well. The “primary avenue” for a suit, according to Makhlouf, would be an Ohio law that allows county prosecutors to sue for damages over a contract “procured by fraud or corruption” or to recover money “illegally drawn” from the county treasury.

FitzGerald has talked about suing Staubach, now part of Jones Lang LaSalle, since early 2012. He has complained about the $3 million the old county government paid Staubach over the Ameritrust purchase and the allegations Calabrese was involved in criminal wrongdoing related to the deal.

Cuyahoga County’s old government paid $21.7 million for the Ameritrust complex in September 2005 and spent roughly $23 million more on the project, including the $3 million broker fee, asbestos removal, and the purchase of a second parking garage. The new county government sold the complex to the Geis Cos. this year for $27 million, or a loss of about $18 million.

McGinty indicted Calabrese on corruption charges related to the Ameritrust affair this summer. The indictment claims that Calabrese got J. Kevin Kelley to give him “non-public information” from then-commissioner Jimmy Dimora about the pending deal, and that after the sale, Calabrese arranged for Kelley to receive a $70,000 bribe for his help. A county grand jury is also reportedly investigating possible connections among Dimora, Calabrese, and Vincent Carbone, whose company was the construction manager on the Ameritrust project. Calabrese has pled not guilty.

Rob Roe of Jones Lang LaSalle says the company has cooperated with all prior investigations into the Ameritrust transaction and will cooperate in any future inquires. "We believe our efforts on behalf of the County met the highest standards of quality and ethics that our clients have come to expect from us, and no one connected with any prior federal or County investigation into the transaction has ever suggested that they did not," Roe said in a statement Tuesday.

In an interview with me in spring 2012, Roe defended Staubach’s broker fee (which was shared with other companies) and its advice to the county (which was to lease the Ameritrust complex, not buy it). Roe said nothing about Calabrese’s conduct while representing Staubach appeared improper or gave him pause, and that Calabrese never talked about using any connections in county government to help Staubach.

A lawsuit now would come eight years after the controversial real estate deal. In fact, the county may be racing against the clock. If it files suit before September 30, it could avoid a legal battle over whether an eight-year statute of limitations applies.

The investigation of the deal has been long and complex, Makhlouf says. Now, with the federal corruption investigation mostly complete and the Ameritrust complex sold, the county is close to ready.

“This is a very important piece of litigation for us,” says Makhlouf, “but we couldn’t do anything that risked what we were doing in the sale of Ameritrust and the potential for the rejuvenation of that entire quarter.”

To assemble a case, the county’s lawyers have looked at the Jimmy Dimora trial, the federal and county indictments of Calabrese, county documents that federal investigators seized and have now returned, and an employment discrimination lawsuit against Jones Lang LaSalle that alleges senior management improperly destroyed records after learning about clients’ roles in federal corruption probes.

“It wasn’t the kind of investigation you went into, and there were all these records, and you went through them, and [found] the smoking gun,” Makhlouf says. “It was the type of investigation that needed many pieces to fall together from different places.”

The county hired business law firm Brennan, Manna & Diamond of Akron, and Giffen & Kaminski of Cleveland, which has business litigation and white-collar criminal defense practices. It was hard to find law firms who could help the county, Makhlouf says. Almost every local law firm had represented clients in the county corruption investigation, he says, and many firms did not want to sue a real estate broker because they see them as sources for referrals.

A suit under prosecutors' power to protect public funds is now easier because of the new agreement between the prosecutor and the law department over how they will split and share the job of representing the county in court. That law has no statute of limitations, Makhlouf says.

(Updated, 2:50 pm, to reflect the prosecutor's potential role, and 9/10, with details on the law firms hired and a new statement from Roe.)

FitzGerald: Calabrese holds key to 2005 Ameritrust inquiry

The Ameritrust debacle is almost over. Cuyahoga County is on the verge of selling the old bank complex for $27 million -- or $18 million less than it spent on it.

But there’s still a major question about the old government’s 2005 purchase of the Ameritrust complex. Will the public ever know if it was just an unwise deal, or if wrongdoing was involved?

County executive Ed FitzGerald thinks attorney and corruption defendant Anthony Calabrese III knows the answer, and he wants county prosecutor Tim McGinty to get it out of him.

“You asked what the chances are the public will ever know,” FitzGerald said to me last week. “I think Mr. Calabrese knows! And I think he has even more incentive to be cooperative with the county.”

Calabrese (pictured), the last defendant to plead guilty in the federal government’s Cuyahoga County corruption probe, finally admitted to 18 corruption crimes this month. But federal prosecutors agreed to drop the one charge that involved the Ameritrust complex.

Meanwhile, McGinty has charged Calabrese in county court with conspiring to bribe two rape victims to change their testimony. Calabrese has pleaded not guilty.

McGinty’s office says the county and federal cases are unrelated. Still, FitzGerald thinks McGinty could use the new bribery charge as leverage to get to the bottom of the Ameritrust affair.

“Somebody that is a central figure in the Ameritrust transaction is also facing county charges,” FitzGerald said. “It gives them a pretty good incentive to cooperate.”

In 2005, Calabrese was an attorney representing The Staubach Co., the county’s real estate consultant. Last June, federal prosecutors alleged that Calabrese asked J. Kevin Kelley to lobby Jimmy Dimora to buy the Ameritrust complex and promised to reward him if the county went through with the sale. Two months after the deal went through, Kelley received $70,000 and a company with a tie to Calabrese received $99,000 from unidentified sources, prosecutors claimed.

The FBI and IRS began probing the Ameritrust project in 2007. They investigated whether any money from Staubach was “funneled through others for the ultimate benefit of public officials” – but they couldn’t make a case. Instead, they charged Calabrese with witness tampering in connection with the Ameritrust affair, claiming that in August 2008, after the FBI raids on county offices, Calabrese met with Kelley and made false statements about the company that had given Kelley the $70,000.

But it looks like the feds are done digging into the Ameritrust purchase. They agreed to drop the witness tampering charge against Calabrese in exchange for his guilty pleas on the 18 other charges (his role in Dimora’s Vegas trip, etc.). And Calabrese’s plea agreement does not include any agreement to cooperate with the federal probe.

If federal prosecutors have dropped the Ameritrust affair, it may be because it’s too late for them to dig deeper. There’s a five-year statute of limitations on most federal crimes, including the bribery and extortion statutes often used in public corruption cases. The Ameritrust deal went down 7½ years ago.

In state court, most felonies have a six-year statute of limitations. That leaves one more approach, a lawsuit.

“I have had extensive conversations with prosecutor McGinty about taking civil action,” FitzGerald said last week.

His administration’s two investigations of the Ameritrust purchase appear to have formed his brief for McGinty. Inspector general Nailah Byrd told me her inquiry has been forwarded to another agency she couldn’t name. Law director Majeed Makhlouf, who was also looking into the Ameritrust affair, says he has discussed it with McGinty. “I think he’s interested in it as well,” Makhlouf says.

FitzGerald has made it clear he’d like to sue the former Staubach Co., which made $3 million in broker’s fees off the 2005 Ameritrust purchase. The county executive is a former FBI agent, and the deal seems to have reawakened his investigatory instincts. And, of course, the more mismanagement by the old government he can uncover, the more he burnishes his reformer credentials -- at the same time he’s exploring a run for governor.

Staubach’s potential defense seems clear. Rob Roe of Staubach (now part of Jones Lang LaSalle) told me last year that the old county government actually disregarded his company’s advice about the Ameritrust complex. Roe also said nothing about Calabrese’s conduct while representing Staubach appeared improper or gave him pause, and that Calabrese never talked with him about using any connections in county government to help with the contract.

McGinty’s spokesperson declined to comment about FitzGerald’s comments, saying the office couldn't comment about an open investigation. Calabrese’s federal attorney, Chad Ziepfel, also declined comment.

We’ll see if Calabrese talks to McGinty about the Ameritrust complex. Maybe he won’t. He already faces a likely nine-year sentence in federal prison, and that didn’t motivate him to cooperate with the feds.

Is time running out for county action on the Ameritrust purchase? Normally, lawsuits over contracts in Ohio have an eight-year statute of limitations, which would bar a suit from being filed after this September. But McGinty could possibly use this law, which says a prosecutor can sue for damages over a county contract “procured by fraud or corruption.” It’s not clear whether that law has a time limit attached.

(Photos: Cuyahoga County Sheriff, clevelandskyscrapers.com)

FBI, IRS investigated Dimora, Kelley, payment to Staubach Co. over Ameritrust Tower purchase

The FBI and IRS investigated whether Cuyahoga County officials received bribes for their decisions on the ill-fated Ameritrust Tower project, a prosecutors' filing revealed today.

Among the details alleged in the filing: Anthony O. Calabrese III -- an attorney for The Staubach Co., the county's real estate consultant -- asked county employee J. Kevin Kelley to lobby Jimmy Dimora to buy the Ameritrust complex.  Calabrese, who represented Staubach in contract negotiations with the county, promised to reward Kelley if the county purchased the complex.

And in October 2005, soon after the county bought the Ameritrust Tower and paid Staubach $2.6 million for its consulting work, Kelley and a company with a tie to Calabrese both received five-figure payments as part of an unidentified series of financial transactions.  The FBI and IRS investigated whether any money from Staubach was "funneled through others for the ultimate benefit of public officials," the prosecutor's filing said.

The new information is part of a superceding indictment of Calabrese, who's scheduled for a September trial on corruption charges.

However, the filing is also significant for what it does not say.  It doesn't assert that Kelley actually lobbied Dimora, or that Dimora received anything of value for his Ameritrust decisions, or that any of the Staubach money actually went indirectly to public officials, or that the Staubach Co. was aware of what Calabrese was allegedly doing.

Staubach isn't named in the Calabrese indictment, but the company is easily identifiable from details. (Only one "global real estate advisory firm" got paid $2.6 million "related to the Ameritrust project" in fall 2005.) The company had recommended that the county lease, not buy, the Ameritrust Tower as a headquarters site. Its contract called for it to be paid more than $4 million if a deal on a property it recommended was completed.  That $4 million-plus was later negotiated down to a $2.6 million.

Rob Roe, who was managing partner of Staubach (now part of Jones Lang LaSalle), told me in April that nothing about Calabrese’s conduct while representing him appeared improper or gave him pause, and that Calabrese never talked about using any connections in county government to help with the contract.

Calabrese faces only one charge related to the Ameritrust Tower investigation: tampering with a witness or informant.

The indictment alleges that, a week or two after the July 2008 FBI corruption investigation raids, Calabrese met Kelley in downtown Cleveland. They went from a hotel lobby to the 21st floor of the Justice Center, the filing charges, where they talked in a place overseen by someone they could trust: then-judge Bridget McCafferty's jury deliberation room.  The charge alleges that Calabrese talked about the county corruption investigation and a Business 57, which had given Kelley $70,000 three years earlier.  Calabrese made false statements to Kelley, the charge says.

The new charge, Count 20 in today's indictment, explains a lot of the buzz around the Ameritrust Tower lately.  It reveals some of what the FBI was investigating in 2007 and 2008 (previous clues appeared in Judge Sara Lioi's late December opinion).

It also shows that county executive Ed FitzGerald's decision to investigate the Ameritrust Tower purchase, the Staubach contract, and Calabrese's relationship to it isn't just based on idle suspicion.  Judging by what he and top aides told me earlier this year, the U.S. Attorney has been communicating with him and county inspector general Nailah Byrd about the Ameritrust Tower's place in the corruption investigation.

The Calabrese indictment also contains a cameo appearance by Tim Hagan, aka Public Official 10, but it's one Hagan might find flattering: "PO10 [Hagan] questioned the County contracting with Business 55 [Staubach]. Despite PO10's concerns, the County awarded Business 55 an approximately $3 million contract related to the Ameritrust purchase and transition." (Mostly true, except the contract was signed before Hagan took office.)

Here are some links to my previous reporting about the Staubach contract and FitzGerald's Ameritrust investigations:

"How the county spent $3 million on Staubach’s Ameritrust contract," April 30

"How Hagan and Co. cut Staubach loose from Ameritrust deal," May 1

"Two county investigations of Ameritrust Tower underway since December; feds cooperating," March 16

"Can FitzGerald sue Staubach over Ameritrust Tower?" March 23

"FBI investigated failed Ameritrust Tower sale, asbestos contract," Dec. 29


(photo from clevelandskyscrapers.com)

How Hagan & Co. cut Staubach loose from Ameritrust deal

Yesterday, I blogged about how Cuyahoga County’s former government committed to a big consulting contract with The Staubach Co. worth more than $4 million as part of its ill-fated search for a new county headquarters. Today, the story continues with the contract’s undignified end: the county rejecting parts of Staubach’s advice and cutting it loose for $3 million.

One more person on the county’s side, besides Neil Dick and Jay Ross, objected to the Staubach contract’s cost: Tim Hagan, who replaced Tim McCormack on the county commission in January 2005.

“I would not have consummated that contract,” Hagan told me in a 2008 interview about the Ameritrust affair. “I thought [the price] was too much. I didn’t like the terms of it.” He began looking for a way to sever the contract.

In January 2005, Staubach recommended that the county lease the Ameritrust complex from the Jacobs Group. That March, after negotiations, Staubach told the commissioners that Jacobs had improved its offer: it had agreed to include a large parking garage and build a second tower alongside the Ameritrust Tower.  (See the design sketch above.)

Staubach has been criticized for recommending the Ameritrust site. It’s not a sought-after location for offices because the tower is so thin. Rob Roe, former managing partner of Staubach, says the second tower was meant to address that.

“We understood that the floor plan of the tower was too small to accommodate their use,” Roe says. “The tower was always built to have a mate.”

The above design sketch shows the new tower that never came to be: about half the height of the Ameritrust Tower and touching it on one end, suggesting that the two towers’ floors could’ve been linked together.

Hagan, like Staubach, liked the Ameritrust complex’s location and its historic bank rotunda. But he thought the Ameritrust Tower was a blight on downtown’s skyline. He also felt a government shouldn’t lease its main offices.

“You can’t be entangled with a private enterprise if the future of a building might be in question,” Hagan told me in 2008. “The public [should] not have to ask anybody for permission to do whatever they wanted within their public building.”

Also, Hagan told me, he didn’t trust Staubach’s advice.

“I didn’t take their advice because that advice might have been in their own best interest, to be quite candid about it!” Hagan said. He didn’t elaborate. “I wanted to sever the relationship with Staubach and we did.”

(Roe doesn’t know what to make of Hagan’s comment. He says Staubach, now merged with Jones Lang Lasalle, has negotiated other deals with the Jacobs Group, but has never been hired by it. His company represents real estate users, not developers.)

Hagan and Dimora decided to buy the complex from Jacobs and tear down the Ameritrust Tower -- ignoring Staubach’s advice that “totally new construction” would not be “fiscally responsible.” (For more on this, see my 2008 story, “Tower Play.”)

The county cut Staubach out of the loop and negotiated directly with The Jacobs Group.

“We didn’t really need [Staubach] to do that negotiation,” says Dave Lambert of the prosecutor’s office. “Therefore, the commissioners asked me to get us out of the contract.

“They brought their lawyer in. The decision was made to cut our losses, cut Staubach out of the process and move on.”

In September 2005, the county bought the Ameritrust complex as is for $21.7 million. The purchase agreement specifically required the county, not Jacobs, to pay Staubach’s broker’s fee.

“The county wanted to negotiate our final fee down from what was in the contract,” Roe says. “They felt it was easier to control the payment of that fee.”

Staubach’s contract had promised a fee of $6.85 per square foot for its role in choosing the 641,000-square-foot Ameritrust complex. That would’ve added up to $4.4 million.

Instead, Lambert and Staubach attorney Anthony O. Calabrese III negotiated a $2.6 million final payment to Staubach. Add in its initial fee, and Staubach got an even $3 million.

Calabrese’s role brings up one last unanswered question about the Ameritrust affair. Calabrese faces trial in September on charges stemming from the county corruption probe. Federal prosecutors claim that by 2004 and 2005, Calabrese was engaged in a racketeering conspiracy with former county employee and Dimora crony J. Kevin Kelley to “give things of value to public officials and their designees” in return for favors to Calabrese, his law firm and their clients. (The specific charges dating back that far involve the nonprofit Alternatives Agency.)

Calabrese appears only once in public records about the Staubach contract, in a mid-negotiation email in 2004 about how to define “rentable area,” the measure by which Staubach insisted on being paid. Lambert says Calabrese never mentioned any relationships with county employees during settlement negotiations, and never did anything that gives him pause in retrospect.

The county’s inspector general and law department surely want to know if Calabrese’s role in the Staubach contract was clean. But they may not be able to answer the question without subpoena power. That may be one reason why the inspector general is, I’ve been told, cooperating with the FBI.

Update, 6/7: Calabrese asked Kelley to lobby Dimora to buy the Ameritrust Tower, according to a new indictment of Calabrese. The FBI and IRS examined five-figure payments that Kelley and a company linked to Calabrese received in fall 2005, after the building was purchased and Staubach got paid, the indictment says. Hagan makes a flattering cameo appearance in the filing as the public official who questioned the Staubach contract. See my new post here. 

How the county spent $3 million on Staubach’s Ameritrust contract

Jimmy Dimora, Peter Lawson Jones, and Tim McCormack were thinking big when they set out on their quest for a new county headquarters in 2004 -- a journey that ended in the $45 million Ameritrust Tower debacle.

They decided they needed a lot of advice to pull off their plan to move the Cuyahoga County government into enormous new offices of 600,000 square feet or more.

They signed a big, sprawling, 26-point contract with a big, sprawling team of consultants headed by real estate company The Staubach Co. Despite advice to scale back the contract, the county commissioners promised the consultants they’d get paid $4 million to $5 million out of the final deal. A year later, the county got out of the contract for $3 million.

That’s some of what I’ve discovered by reading public records, interviewing people on both sides of the negotiations, and reviewing interviews I conducted in 2008 about the Ameritrust Tower.

The 2004 Staubach contract is back in the news because Cuyahoga County’s inspector general and law department are reexamining it as part of their inquiries into the Ameritrust affair. County executive Ed FitzGerald is talking about suing the former Staubach, which has merged with Jones Lang Lasalle. My requests for public records about the contract led me to the inspector general’s office, where I looked through the same documents her staff is examining.

I discovered that a consultant, Neil Dick of the Dick Group in Shaker Heights, warned Cuyahoga County’s government not to pay The Staubach Co. any more than $400,000 to help acquire a headquarters site.

Ever since the Ameritrust deal went bad, Dick has been waiting for a call.

“Three million dollars to do that work is beyond anything that’s reasonable,” Dick says now.

Dick was hired in 2004 to help Cuyahoga County choose a real estate consultant team. The county wanted the team to provide a vast range of services. They would evaluate several developers’ proposals for the headquarters project and recommend a site. The county also wanted the consultants to confirm the government’s current space needs and give advice on the new headquarters’ space planning, design, architecture and engineering. It wanted advice about financing the deal and on move management.

Eight consulting teams who wanted the job responded with a wide range of pitches. One company, Allegro, offered to simply evaluate the developers’ proposed sites for $190,000 to $220,000. County staff rejected Allegro for responding too narrowly to its request. (Allegro recently worked for the FitzGerald administration. It was paid $220,000 to evaluate all of the county’s property holdings.)

Another team that didn’t make the final cut, headed by the Oliver Design Group, offered to provide all the services the county wanted for about $1.9 million to $2.2 million.

The three teams chosen as finalists had different approaches to charging for all those services. They all offered to do the first two phases of work -- recommending a site and negotiating with the chosen developer -- for between $390,000 and $500,000.

The third phase, the project’s implementation, proved harder to price.

The Staubach Co. said it wanted an initial fee of $396,000 for phases one and two -- which it would pay back if it received a brokerage commission as part of the county’s final development deal. Staubach originally proposed a commission of $5.85 per square foot of space in the new building. Since the county commissioners wanted a 600,000 to 700,000 square-foot headquarters, that meant $3.5 million to $4 million.

Dick noted in his July 2004 evaluation that Staubach was well-qualified for the job, but its fee proposal was the most expensive. Staubach, unlike the other finalists, was offering “the option of re-evaluating the entire process and development direction” for the headquarters project, he wrote.

Staubach was “offering to provide services that may be redundant and costly,” Dick warned.

“I was raising the issue of, for that high a fee, even with those additional services, are they really needed?” Dick recalls. “And what can the county really afford?”

But county staffers agreed that Staubach was one of the better-qualified firms. That July, the county commissioners -- Dimora, Jones, and McCormack -- authorized the staff to begin negotiations with Staubach.

In August, Staubach sent the county its proposed terms. The company had raised its price: it now wanted $6.85 per square foot, or $4.1 million to $4.8 million. Dick objected.

“Staubach’s charge of $6.85 [per square foot] with third party unacceptable. This should not be part of this agreement,” he wrote in 2004. “Brokerage commission – this is not a traditional approach and not appropriate.”

Jay Ross, then the county’s director of central services, also objected to Staubach’s fee proposal. “NO,” read repeated notations on it in Ross’ handwriting. County staff created a counter-proposal that would’ve capped Staubach’s fees at $390,000.

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Formrer Staubach managing partner Rob Roe, in his first interview on the Ameritrust affair in years, argues that the company’s fee was a fair-market cost for the vast range of services its team provided.

“We supported our fee proposal with other contracts and similar types of things we had done with other municipal and federal and city governments,” says Roe, now managing partner at Jones Lang Lasalle. “The fee was shared amongst somewhere in the neighborhood of nine companies.”

Roe argues that observers who think the Staubach team was overpaid don’t understand the wide scope of its contract.

“A deal of this nature is not a traditional deal in the city of Cleveland,” Roe says. “You can’t look at it in just the microscope of Cleveland, Ohio. [It’s] a national, significant, headquarter-caliber transaction.”

The price dispute fell to lawyers for the county and Staubach to resolve. The question boiled down to this: Should Staubach be paid like an owner’s representative reviewing proposals? Or like a real estate broker, who lines up tenants to fill a building and is paid by the landlord?

The county’s lawyer was Kathleen Martin, then the head of the prosecutor’s office’s civil division. (Martin is now deceased.) Staubach was represented by two lawyers from the law firm Vorys, Sater, Seymour, and Pease, including Anthony O. Calabrese III, now a defendant in the county corruption case.

Calabrese’s role in the Staubach contract has raised alarms for FitzGerald, who ordered the two new inquiries into the Ameritrust affair. Calabrese’s federal indictment claims that by summer and fall 2004 -- the time when Calabrese was negotiating for Staubach -- he was already engaged in a racketeering conspiracy with Dimora crony J. Kevin Kelley involving the nonprofit Alternatives Agency.

Roe says that nothing about Calabrese’s conduct while representing him appeared improper or gave him pause, and that Calabrese never talked about using any connections in county government to help with the contract.

Staubach’s fee proposal won out. All the developers contending for the headquarters project signed agreements promising to pay Staubach $6.85 per square foot as part of a final lease deal, according to Roe. Martin’s successor at the county, David Lambert confirmed this after reviewing a file from the negotiations.

In October 2004, Dimora, Jones and McCormack approved the contract, including the fees Staubach wanted. McCormack told the Plain Dealer in 2009 that he liked Staubach’s proposal because the developer, not the county, would’ve paid in the end.

Actually, the developer would’ve likely rolled the cost of Staubach’s fee into the county’s lease payments, for the county to pay over the course of 20 or 30 years.

It didn’t work out that way. Tomorrow, I’ll post about how the county’s relationship with Staubach ended.

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. 

(photo from clevelandskyscrapers.com)

Can FitzGerald sue Staubach over Ameritrust Tower?

Ed FitzGerald is mad. He wants to unload the Ameritrust Tower, Cuyahoga County’s $45 million albatross and skyline ghost. He knows he’ll have to sell the empty high-rise for less than the county put into it. Taxpayers are likely to lose more than $20 million.

So the county executive wants to sue The Staubach Co., the real estate consultant that recommended the Ameritrust complex as the best site for a new county headquarters in 2005 and got paid $3 million.

Is FitzGerald grandstanding, like Mayor Frank Jackson did with his lawsuit against subprime lenders? Or does he have a case?

FitzGerald told me he wants to know whether “a contract violation or fraud” occurred. When his law director finishes his investigation, we may know more about whether anything improper happened when lawyer Anthony O. Calabrese III — now a defendant in the county corruption investigation — negotiated the county contract on Staubach’s behalf. We may also find out why the county paid Staubach (now owned by Jones Lang LaSalle) so much money for the job.

But if FitzGerald tries to argue that Staubach’s advice was so bad, it shares responsibility for the Ameritrust debacle, I think he’ll have a hard time. That’s because the county didn’t make the deal Staubach recommended.

I unearthed Staubach’s final recommendation to the county while working on “Tower Play,” my 2008 story on the Ameritrust Tower affair. Staubach recommended the Ameritrust complex, but it didn’t advise the county to buy the site. It negotiated a lease deal that would’ve obligated the owner, The Jacobs Group, to build a new, second tower next door.

“We believe the Jacobs proposal … is the best overall offer,” Staubach wrote to the county commissioners on March 31, 2005. “The existing tower’s high-rise identity and historic rotunda are unmatched by the other submittals.”

Staubach recommended that the county lease the Ameritrust Tower, the Cleveland Trust rotunda, an attached parking garage and a second tower Jacobs had agreed to build for about $120 million to $125 million. The report says Staubach’s negotiations with Jacobs had gotten the company to add the garage and the new tower to the deal, “neither of which were previously offered.”

The second tower seems to have been an echo of Marcel Breuer’s original plan to build two Ameritrust towers. “The overall structure will effectively accommodate all targeted County functions,” Staubach wrote -- perhaps implying that the existing tower, standing alone, would not.

But Jimmy Dimora, Tim Hagan, and Peter Lawson Jones accepted part of Staubach’s advice and disregarded the rest. They bought the Ameritrust Tower directly from The Jacobs Group for $21.6 million in September 2005, without Staubach as a negotiator.

And Dimora and Hagan didn’t buy the tower to move into it. They bought it to tear it down — a path Staubach had warned against.

“We do not believe a totally new construction alternative would be fiscally responsible at this point in time,” its report added.

Two years later, that line in Staubach’s report was proven right. The commissioners halted the project in fall 2007 after realizing they couldn’t afford it. (You can read my full account of the project in my “Tower Play” story.)

FitzGerald’s administration could still argue that Staubach never should’ve recommended the Ameritrust site at all. In a previous phase of the search, Staubach had named its top four sites, including the Ameritrust complex, but noted drawbacks to each. The Ameritrust Tower’s flaws included its small floor plate — one of the reasons the tower isn't desirable office space today.

But if FitzGerald sues, the former Staubach could argue the county’s real losses came when Dimora, Hagan and Jones bought the tower instead of taking the lease deal. In the end, Staubach could deploy an argument most everyone in town accepts -- that Dimora, Hagan, and Jones are ultimately responsible for the taxpayers’ loss on the Ameritrust Tower.

(photo from clevelandskyscrapers.com)