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Corruption concerns in controversial Ash Street deal

Posted at 6:42 PM, Jun 30, 2021
and last updated 2021-07-02 00:21:27-04

SAN DIEGO (KGTV) - Major questions were raised on Wednesday over the shuttered multi-million dollar taxpayer-funded Ash Street deal downtown, after the San Diego City Attorney filed a lawsuit on Tuesday to recoup losses.

“There is corruption here,” taxpayer attorney Michael Aguirre told reporters at a press conference on Wednesday. He and his team are representing taxpayer John Gordon. A year ago, Aguirre said that Gordon brought a corruption lawsuit against the City and officials to set aside the $200 million taxpayer-funded Ash Street building lease-purchase agreement.

“Mr. Gordon's taxpayer lawsuit sought to void the agreement so the hemorrhaging would stop completely,” added attorney Maria Severson.

This week, in an effort to recoup $44 million in losses, City Attorney Mara Elliott sued to void the 101 Ash Street deal and a related deal, citing anti-corruption law and claiming that the real estate broker who negotiated the deals, Jason Hughes, acted as a volunteer under then-mayor Kevin Faulconer but received millions in unreported compensation.

Aguirre added, “[These are] the three things that we want to know. When did the City Attorney's Office find out about the illegal payment to Jason Hughes? How did they find out about the illegal payment? Who did they tell?”

Part of a statement from Jason Hughes’ attorney reads,

“Jason Hughes has never been paid one penny by the City or the taxpayers for the innovative structured financing solution he developed for the Civic Center Plaza and 101 Ash Street transactions. He has been transparent with the City from day one, and at all times he acted ethically and in full compliance with the laws and regulations applicable to the City’s business. Jason will vigorously defend his well-known and hard-earned reputation for integrity and transparent business dealings.”

For much of the last five years, the building has sat empty. The city tried to move 1,100 employees into it but officials discovered problems on the site's 19 floors. In December of 2019, the city finally moved workers in, only to push them out a month later when the County detected asbestos.

On Wednesday morning before the press conference, a spokesperson for City Attorney Mara Elliott declined a request for an interview.

On Thursday afternoon, the City Attorney’s Office sent the following questions that were raised in the press conference and the City Attorney’s responses to those questions.

City Attorney Q&A

When specifically did the City find out about the payments made to Jason Hughes?

"We received unconfirmed reports of payments made by Cisterra to Hughes in April 2021 for Ash Street, and in June 2021 for CCP. Cisterra's attorneys provided documentary evidence on June 28, 2021."

How specifically did the City find out?

"The City learned of the payments from Cisterra."

Who if anyone did the City share the payment information with, and when?

"The public has been informed by virtue of the amendment to the City's 101 Ash Street lawsuit, which added Jason Hughes as a defendant to that lawsuit, and in the City's CCP lawsuit filed by the City yesterday. Before filing litigation, the City Attorney obtained authority from the San Diego City Council to amend the lawsuit and to bring the new action based on confirmation that Hughes had been compensated by Cisterra while serving as the City's real estate consultant."

With respect to Mr. Aguirre’s allegations against the City, [ABC 10News] can attribute the below quote directly to City Attorney Mara Elliott:

“Credible attorneys base their legal actions on fact rather than speculation, which is what we did here. Building a solid case requires upfront work. Once we had the facts we needed to prove our case, we amended our lawsuit and initiated the CCP litigation. While making wild and unsubstantiated allegations may attract media attention, it doesn't benefit the City or the people we serve. Aguirre is chasing headlines with crazy conspiracy theories. I expect more from our former City Attorney and am embarrassed and disappointed by his attention-seeking conduct.”