SAN DIEGO (KGTV) — A criminal probe has begun into the city's botched real estate transaction for the building at 101 Ash Street.
This week, the County District Attorney executed search warrants on some of the major players of the deal.
Nearly five years after the city signed a lease-to-own deal for the tower at 101 Ash Street, the asbestos contaminated building remains vacant of city employees.
With more than $20 million of city rent money down the drain, the question remains how a deal this big got the green light.
Civil suits have been filed by City Attorney Mara Elliott and local attorney Michael Aguirre, and a recent city audit documented multiple failures.
But on Tuesday, the investigation took a criminal turn.
Agents for the Disrict Attorney executed search warrants at the offices of Cisterra Development — the 101 Ash landlord — and at the offices and home of Jason Hughes.
Hughes is a well known commercial real estate consultant who, according to legal documents, negotiated on behalf of the city for free, then accepted a $9.4 million payment from Cisterra and a newly created 101 Ash LLC. The money came upon completion of this transaction and a nearby building at Civic Center Plaza.
"These are super sophisticated players," Aguirre said. "The defendants have some of the best attorneys in the country and it's going to take a real effort to get the city out of this difficulty."
The D.A.'s office declined to offer specifics and the warrants are sealed.
But a spokesman for Cisterra said in a statement that the company is confident a review of all documents and statements will show the firm and its workers acted appropriately and legally.
"Cisterra Development has provided all documents relating to these transactions to the San Diego County District Attorney's Office in compliance with the search warrant served (Tuesday)," said the statement, from spokesman Eric Rose. "Search warrants are not criminal charges but merely instruments to gather evidence so the District Attorney can evaluate a case."
An attorney for Hughes said his client has nothing to hide, and that the city accepted and agreed that Hughes could be paid by private parties.
"It is now well-established that Jason disclosed to then-Mayor Faulconer and numerous other top city officials that he would be paid by private parties for his work on 101 Ash and Civic Center Plaza," attorney Michael Attanasio said in a statement. "Jason has produced a written agreement, signed by the City’s top real estate official, confirming that he was transparent in his dealings with the City."
City Attorney Mara Elliott's office had previously referred the case to outside law enforcement.
A spokeswoman for Elliott said Wednesday, "While we only have limited information at this time, we are eager to learn what information is uncovered through these search warrants."