Real estate adviser in Ash Street deal pleads guilty to conflict of interest count

The real estate adviser who helped broker the city of San Diego's lease-to-own agreements for the 101 Ash Street and Civic Center Plaza buildings pleaded guilty Thursday to a misdemeanor conflict of interest charge and agreed to return more than $9.4 million the city's former landlord paid him.

The plea bargain came one day after the San Diego City Council voted 7- 2 to approve a deal for Jason Hughes, 55, to pay back the money he received from landlord Cisterra Development for facilitating the deals.

Though Hughes has said he informed six senior city officials of his intention to be compensated for his work, city officials and prosecutors claimed he accepted the money while representing himself as a volunteer adviser.

The agreement reached this week means the city will dismiss its lawsuits against Hughes, and no criminal charges will be pursued against him other than the lone misdemeanor count alleging he violated Government Code Section 1090, which prohibits public officials and volunteers working on behalf of government entities from having financial interests in deals they broker.

Hughes will not face any time in custody. As part of the plea deal, he will be placed on probation for one year and pay $9,433,872.30 in restitution to the city.

At a news conference that followed the court hearing, San Diego County District Attorney Summer Stephan said Hughes' real estate expertise played a large role in the filing of a criminal case, as conflict-of-interest cases are rarely elevated above civil or administrative penalties to criminal prosecutions.

As far as other potential parties in the matter, no one else has been charged. Stephan said Cisterra's role in the deal was examined, but she indicated there was evidence Hughes told Cisterra that city officials were aware he was going to be paid.

"To not charge a case doesn't mean that people didn't act badly. It just means that there isn't right now evidence beyond a reasonable doubt," Stephan said. "But we certainly felt a duty and looked at everything, every single communication we could get our hands on to see whether it leaves reasonable doubt that Cisterra did not criminally participate in a conspiracy with Hughes."

In a statement released Wednesday shortly after the city council's vote, a spokesman for Jason Hughes and his company, Hughes Marino, said Hughes "acted in good faith to support the city of San Diego during a time of significant uncertainty and urgent need for the city."

The statement continued, "While Jason was prepared to put forth a vigorous defense at trial, he has concluded it is in his best interest to settle all claims against him in order to avoid the heavy cost and ongoing distraction of protracted litigation. Jason looks forward to being able to fully focus his time and resources on Hughes Marino's continued national success, his family, and the San Diego community."

Asbestos violations and other issues led the city to move its employees out of the 101 Ash building shortly after it opened in early 2020.

Last year, the city council accepted a much-debated settlement with Cisterra Development and lender CGA over the real estate deals.

The settlement transferred ownership of the properties to the city for around $132 million — $86 million for 101 Ash and $46 million for CCP — and called for Cisterra to return around $7.5 million in profits it made in its lease-to-own deal with the city on the 101 Ash property. The deal allowed Cisterra to keep its $6.2 million in profits from a similar deal for Civic Center Plaza.