Investigators with the San Diego County District Attorney's Office served search warrants Tuesday at the headquarters of real estate brokerage Hughes Marino and Cisterra Development, both of which have been linked to the city's much-debated lease-to-own deal for the 101 Ash Street building in downtown San Diego.
The search warrants served Tuesday morning follow a lawsuit filed by the San Diego City Attorney's Office to void the city's lease-to-own agreements in both the 101 Ash Street and Civic Center Plaza building deals.
A DA's spokesman confirmed that investigators served search warrants at both locations, but did not elaborate on the nature of the investigation.
The City Attorney's Office alleges in its litigation that commercial real estate broker Jason Hughes — CEO and owner of Hughes Marino — represented himself to be a "special volunteer for real estate services" who was negotiating the building deals on the city's behalf for free "out of a sense of civic duty."
However, the city says he was actually paid $9.4 million in unreported compensation from Cisterra Development, the landlord in both transactions. When negotiations between Hughes and the 101 Ash Street building's owners did not resolve, the city says Hughes entered into talks with Cisterra for a lease-to-own agreement if Cisterra acquired the building.
RELATED: Emails Reveal More About City's Ash Street Lease Deal
Hughes' attorney, Michael Attanasio, previously issued a statement indicating his client disclosed with the city that he would be compensated for his work.
When reached for comment regarding Tuesday's search warrants, Attanasio said in a statement that Hughes has instructed his legal counsel "to cooperate completely with any legitimate requests from law enforcement agencies regarding all the facts surrounding 101 Ash and Civic Center Plaza. This includes making available all relevant information and documents. Jason issued these instructions because he has nothing to hide."
The city alleges it learned of $4.4 million Hughes was paid as part of the 101 Ash Street transaction through its litigation over the lease-to-own deal for the downtown high-rise, which was evacuated due to asbestos violations shortly after city workers were moved into the building. The skyscraper remains vacant, and questions and accusations abound among elected officials and the general public over how the deal went through amid apparent structural issues with the building.
Hughes allegedly also received an unreported sum of around $5 million from Cisterra for negotiating the Civic Center Plaza deal.
His attorney's statement on Tuesday indicates that Hughes has produced a written agreement confirming he could be compensated by private parties for negotiating the deals, which he claims city officials "accepted and agreed -- orally, in writing, and repeatedly."
A Cisterra spokesman said the company provided "all documents relating to these transactions to the San Diego County District Attorney's Office in compliance with the search warrant served today," while emphasizing that "search warrants are not criminal charges but merely instruments to gather evidence so the district attorney can evaluate a case. We are confident that a review of all documents and statements will show that Cisterra and its employees acted appropriately and complied with all criminal and civil laws."
