Press release	Mayor’s statement
Grand jury indictment	Prosecution's chart outlining acts

U.S. Department of Justice

KENNETH L. WAINSTEIN
United States Attorney for the District of Columbia

Judiciary Center
555 Fourth Street, NW Washington, D.C. 20530

 

 

PRESS RELEASE

President of Douglas Development Corporation and two high level employees indicted by federal grand jury on conspiracy, bribery, fraud and tax evasion charges

Washington, D.C. – United States Attorney Kenneth L. Wainstein, Michael A. Mason, Assistant Director in Charge of the FBI’s Washington Field Office, Inspector General for the District of Columbia Charles Willoughby, and Rick A. Raven, Special Agent in Charge, Internal Revenue Service, Criminal Investigation, announced that today a federal grand jury sitting in the District of Columbia returned an eight-count indictment against Douglas Jemal, 62, President of Douglas Development Corporation; his son, Norman Jemal, 36, a Douglas Development executive; and Blake Esherick, 42, Director of Leasing at Douglas Development. The indictment charges the three individuals with engaging in a conspiracy between January 2001 and April 2004 to pay bribes to a District of Columbia government official, Michael Lorusso, in order to influence him in performing official acts for Douglas Development in connection with various real estate matters.

Douglas Jemal is also charged with compensating Blake Esherick for his services by providing Esherick substantial income that Esherick failed to declare on his Federal income tax returns.

Finally, all three men are alleged to have engaged in a fraudulent scheme that included sending a false document to a lender in order to obtain funds from a construction loan “draw” for Douglas Jemal’s and Norman Jemal’s personal use and benefit.

The statutory penalty for bribery, upon conviction, is 15 years in prison. The remaining violations each carry up to five years in prison, upon conviction. An arraignment date has not yet been set by the Court.

Today’s indictment is the latest action in the ongoing joint FBI, D.C. Inspector General’s Office, Internal Revenue Service and United States Attorney’s Office investigation into the activities of Michael Lorusso, the former Deputy Director of the District of Columbia’s Office of Property Management, who pled guilty to bribery conspiracy charges in November 2004.

United States Attorney Wainstein stated, "The services of our public employees are not for sale. This prosecution demonstrates that we will bring the full force of the law against those government employees and contractors who corruptly pursue private gain at the expense of the public good."

Rick A. Raven, Special Agent in Charge, Internal Revenue Service, Criminal Investigation, stated "the prosecution of individuals who intentionally conceal income and evade taxes is a vital element in maintaining public confidence in our tax system. We should not expect the honest taxpayer to foot the bill for those who hide income from the IRS."

Bribery Conspiracy, Fraud and Honest Services Fraud

According to the indictment, Lorusso used his official position to benefit, and attempt to benefit, Douglas Jemal and Douglas Development by arranging for the leasing of properties from Douglas Development for the District of Columbia. This included:

• Leasing property from Douglas Development for a vehicle impoundment lot at a cost of approximately $998,000 per year;

• Attempting to purchase property from Douglas Development and companies related to Douglas Development for approximately $12.5 million;

• Signing numerous leases and lease-related documents for a building owned by Douglas Development, resulting in commitments by the D.C. government to pay rent to Douglas Development of more than $100 million over the ten-year term of the leases; and

• Having the D.C. government make numerous payments to Douglas Development in response to a variety of invoices, including invoices that were fraudulent, excessive, duplicate, irregular and otherwise unjustified. Some of these payments also are the basis for charges of Fraud in the First Degree, in violation of the D.C. Code, against Blake Esherick.

In return for this favorable treatment, as charged in the indictment, Douglas Jemal, Norman Jemal and Blake Esherick gave Lorusso items of value, including:

• Cash bribes;

• A Rolex wrist watch;

• Repairs for Lorusso’s personal vehicle at a Virginia auto repair shop;

• A hotel room at the Bellagio Hotel in Las Vegas, Nevada, in May of 2001;

• Airfare and hotel accommodations for another trip to Las Vegas in May 2002;

• The offer of a trip to Florida and purchase of airline tickets for that trip; and

• Other miscellaneous bribes, including expensive cowboy boots, limousine service for local transportation in the District of Columbia area, and private box tickets for Washington Wizards and Washington Capitals games at the MCI Center.

Tax Evasion Conspiracy

Additionally, the indictment alleges that Douglas Jemal gave Esherick compensation that would not be reported to the Internal Revenue Service, in a manner that would be difficult to detect and otherwise leave little or no record in the books of Douglas Development and, if scrutinized, could be characterized as reflecting loans, innocent accounting decisions, or accounting mistakes of others. Jemal did so in order to compensate Esherick for his services, including Esherick’s participation in the illegal bribery scheme.

This compensation made by Douglas Development and Douglas Jemal, which Esherick did not report on his taxes, included:

• Payments made directly to Esherick’s ex-wife for the purposes of paying his personal financial obligations to her;

• Payments made directly to Esherick, apart from the typical Douglas Development payroll checks. On occasion these payments were noted on the books and records of Douglas Development as “loans” or “advances,” but without any written loan agreements between Douglas Development and Esherick, repayments of principal, or interest charged to Esherick in the books of Douglas Development or paid by Esherick to Douglas Development;

• Payments made for Esherick’s personal vehicles; Providing Esherick with rent-free accomodations of a house in Bethesda and paying for utilities and related repairs and expenses at this house; Providing Esherick with rent-free accomodations of an $825,000 house in the District of Columbia in June of 2003, and making payments on the mortgage loan and incurring expenses for renovations and repairs for this house; and

• Underreporting Esherick’s true gross income in calendar years 2001, 2002 and 2003 to the Internal Revenue Service.

Fraud in a Mortgage Disbursement

Finally, Douglas Jemal, Norman Jemal and Blake Esherick are charged with engaging in a scheme to defraud a mortgage company, Mortgage Capital, Inc., by falsifying documents submitted to the mortgage company which resulted in the fraudulent release of $430,000 in loan proceeds directly to Douglas Jemal for his and Norman Jemal’s personal use and benefit, rather than to a third party vendor as required by the mortgage.

In announcing today’s indictment, United States Attorney Wainstein, FBI Assistant Director Mason, Inspector General Willoughby and IRS Special Agent in Charge Raven commended City Councilmember Jim Graham for uncovering evidence of possible favoritism by Lorusso toward certain contractors during City Council hearings held by the Councilmember in 2003. They also thanked the city government for the assistance and cooperation it provided throughout this investigation. Lastly, they praised the work of FBI Special Agents David McClelland and Thomas Chadwick; District of Columbia Inspector General Agent Larry Carr; Special Agents of the Internal Revenue Service, Criminal Investigation; legal assistant Lisa Robinson, and Assistant United States Attorney Mark H. Dubester, who will be prosecuting this matter.

An indictment is merely a formal charge that a defendant has committed a violation of criminal laws. Every defendant is presumed innocent until and unless found guilty.

Back to top of page

---

Government of the District of Columbia
Executive Office of the Mayor

Office of Communications

Statement by Mayor Williams on Indictment of Doug Jemal, Norman Jemal and Blake Esherick

Washington, DC) Mayor Anthony A. Williams issued the following statement upon learning that a federal grand jury returned an eight-count indictment against Doug Jemal, Norman Jemal and Blake Esherick charging them with engaging in illegal conduct in their roles as government contractors.

"We in the District government hold all of our employees as well as our contractors to the highest ethical standards, and we expect them to act fairly, openly and honestly as they deal with and represent the District government. District residents deserve to have complete confidence in their government, and I will accept nothing less. 

I am pleased that the US Attorney's office has turned its full attention to this case, and I encourage Mr. Wainstein to aggressively root out corruption anywhere he finds it, whether it is in the government or in the private sector. We will continue to cooperate fully in the investigation."

Back to top of page

---

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

Holding a Criminal Term
Grand Jury Sworn in on September 30, 2004

UNITED STATES OF AMERICA v. DOUGLAS JEMAL, NORMAN D. JEMAL, BLAKE ESHERICK, Defendants

Crim. No.

GJO

Charges:

18 U.S.C. § 371 (Conspiracy)
18 U.S.C. § 201 (Bribery)
18 U.S.C. §§ 1341, 1346 (Mail Fraud and Honest Services Fraud)
18 U.S.C. § 1343 (Wire Fraud)
18 U.S.C. §2 (Aiding and Abetting and Causing an Act to be Done)
22 D.C.C. §§ 3821, 3822(a) (Fraud in the First Degree (felony))
26 U.S.C. § 7201 (Tax Evasion)

INDICTMENT

COUNT ONE
(Conspiracy)

I. INTRODUCTION 

A. The Parties

At all times material to this Count:

1. Defendant DOUGLAS JEMAL was owner and President of Douglas Development Corporation (Douglas Development) with offices at 702 H Street, NW, Washington, D.C. Defendant DOUGLAS JEMAL, by himself and with others, owned numerous parcels of real estate in the District of Columbia metropolitan area.

2. Douglas Development managed real estate owned by defendant DOUGLAS JEMAL. Douglas Development leased properties owned by Douglas Jemal, collected rents, maintained such properties, supervised and managed development of the properties, and performed other property-management functions.

3. Defendant NORMAN D. JEMAL was defendant DOUGLAS JEMAL’s son and an employee of Douglas Development. Among defendant NORMAN D. JEMAL’s responsibilities was that of leasing properties managed by Douglas Development.

4. Defendant BLAKE C. ESHERICK was an employee of Douglas Development. Among defendant BLAKE C. ESHERICK’s responsibilities was that of leasing properties managed by Douglas Development. Defendant ESHERICK’s responsibilities included finding tenants for defendant DOUGLAS JEMAL’s properties at 4800 Addison Road, Capitol Heights, Maryland, and 77 P Street, NE, Washington, D.C., further described in paragraphs 5 and 6.

5. “Jemal’s Fairfield Farms, LLC” was an entity owned 80% by defendant DOUGLAS JEMAL and 20% by defendant NORMAN D. JEMAL. Jemal’s Fairfield Farms, LLC, owned a property at 4800 Addison Road, Capitol Heights, Maryland, which it purchased in 1999 for approximately $1.5 million. The property contained a warehouse and surrounding land, a portion of which was paved and useable as a parking lot.

6. “Cayre Jemal’s Gateway, LLC,” also known as “Cayre Jemal’s Peoples, LLC,” was an entity owned 50% by defendant DOUGLAS JEMAL and 50% by an entity controlled by another individual. This individual will be hereafter referred to as JEMAL’s partner. Cayre Jemal’s Gateway owned the building and property at 77 P Street, NE, Washington, D.C. (77 P Street), which it purchased in 1998 for approximately $5 million. In substance, JEMAL and his partner were each 50% owners of 77 P Street.

7. Michael A. Lorusso was, from approximately November, 2000, through January, 2003, an employee of the District of Columbia Government (DC Government), holding the position of Deputy Director, Office of Property Management (OPM). Among his duties was arranging for the leasing of office and other space for use by agencies of the DC Government and dealing with landlords or representatives of landlords on matters related to the DC Government’s leasing of space.

B. The Status of 77 P Street in 2001

8. In or about 1998, defendant DOUGLAS JEMAL borrowed money from his partner to purchase JEMAL’s share of Cayre Jemal’s Gateway, and on other occasions borrowed money from his partner for other purposes. As of 2001, JEMAL owed his partner approximately $19 million.

9. In 1998, 1999 and 2000, Cayre Jemal’s Gateway borrowed monies from various lenders to develop the property, including taking out a “construction loan” of approximately $39 million.

10. Starting in 1999, defendant DOUGLAS JEMAL, through Douglas Development, sought to obtain tenants for 77 P Street. It was the intent of defendant DOUGLAS JEMAL that if and when tenants would sign leases for space in 77 P Street, defendant JEMAL would be able to obtain a new loan secured by the property and use the loan proceeds to pay off the outstanding construction loan, pay off loans to his partner, and have a source of cash for personal purposes.

11. As of April 2001, no tenants had signed leases to occupy space at 77 P Street.

C. The Status of 4800 Addison Road in 2001

12. As of May 2001, Douglas Development, on behalf of Jemal’s Fairfield Farms, was making loan payments of approximately $15,000 per month as repayment for the loan to purchase 4800 Addison Road. This amount was in excess of the rental income. No tenant was at that time paying rent to use the paved lot. It was the intent of defendant DOUGLAS JEMAL that if and when tenants would sign leases for space at 4800 Addison Road, defendant JEMAL would obtain new loans secured by the property and obtain cash for personal and business purposes.

II. THE CONSPIRACY

13. From in or about January 2001 through April 15, 2004, in the District of Columbia and elsewhere, defendants DOUGLAS JEMAL, NORMAN D. JEMAL and BLAKE C. ESHERICK did willfully, unlawfully and knowingly combine, conspire, confederate and agree together with each other and others known and unknown to the grand jury to commit the offense of Bribery of a Public Official, that is, for defendants DOUGLAS JEMAL, NORMAN D. JEMAL and BLAKE C. ESHERICK to corruptly give, offer and promise Michael A. Lorusso things of value to influence official acts of Michael A. Lorusso and to induce Michael A. Lorusso to do and to omit to do acts in violation of Michael A. Lorusso’s official duties, in violation of Title 18, United States Code, Sections 201(b)(1)(A) & (C) (Bribery).

III. GOAL OF THE CONSPIRACY

14. It was a goal of the conspiracy that the defendants DOUGLAS JEMAL, NORMAN D. JEMAL and BLAKE C. ESHERICK, personally and through Douglas Development, would enrich and reward themselves, each other, and entities under their control, by committing criminal offenses against governmental entities, and to conceal the conspiracy and its objects and the acts undertaken in furtherance of it.

IV. MANNERS AND MEANS

To further the objects and goals of the conspiracy, defendants and others known and unknown to the grand jury would and did use the following manners and means, among others:

15. On numerous dates from May 2001 through late 2002, defendants DOUGLAS JEMAL, NORMAN D. JEMAL and BLAKE C. ESHERICK, personally and through Douglas Development, took a variety of actions to provide things of value to Michael A. Lorusso, including:

a. In or about May 2001, inviting Michael A. Lorusso to accompany them on a trip to Las Vegas, Nevada, and paying for his hotel accommodations at the Bellagio Hotel;

b. In or about July or August 2001, giving Michael A. Lorusso cash;

c. In or about August 2001, giving Michael A. Lorusso a Rolex brand men’s wrist watch;

d. In or about October 2001, giving Michael A. Lorusso cash, a portion of which was divided between Lorusso and defendant BLAKE C. ESHERICK;

e. In or about October 2001, paying for over $1,000 in repairs for Michael A. Lorusso’s personal automobile;

f. In or about February 2002, offering to take Michael A. Lorusso on a trip to Florida and purchasing airline tickets for Michael A. Lorusso for this trip; 

g. In or about May 2002, providing airfare from BWI Airport to Las Vegas, Nevada, and providing hotel accommodations and various meals for Michael A. Lorusso in Las Vegas, in connection with a trip by Douglas Development employees to Las Vegas,

h. In or about May, 2002, while in Las Vegas, Nevada with Michael A. Lorusso, purchasing two pairs of cowboy boots for him at a cost of over $1,000;

i. On several dates in 2001 and 2002, providing limousine service for Michael A. Lorusso for local transportation in the District of Columbia area; 

j. On several dates in 2001 and 2002, providing tickets and making tickets available for Washington Wizards and Washington Capitals games to Michael A. Lorusso at Douglas Development’s private box at the MCI Center;

k. In late 2002, at Michael A. Lorusso’s request, taking steps to purchase approximately over $600,000 of furniture from an entity known as Global Furniture Resources, Inc.; and

l. Providing other items of value not specified above.

16. Said actions were made with the intent of influencing Michael A. Lorusso to use his official position to benefit Douglas Development and defendant DOUGLAS JEMAL, and to obtain Lorusso’s services on an “as needed” basis, so that when the opportunity presented itself Lorusso would take action on Douglas Development’s and defendant DOUGLAS JEMAL’S behalf, said actions by Lorusso consisting of the following, among others:

a. Causing the DC Government to lease 4800 Addison Road for use as a vehicle impoundment lot at a cost of approximately $998,000 per year;

b. Attempting to cause the DC Government to purchase 4800 Addison Road for approximately $12.5 million, even after an appraiser informed Lorusso that the fair market value was substantially less than that amount;

c. Attempting to cause the DC Government to sell an abandoned firehouse station at 438 Massachusetts Avenue, N.W., to an entity owned by defendant DOUGLAS JEMAL;

d. Causing the DC Government to enter into leases of a value in excess of $100 million as a tenant in 77 P Street over the approximate ten-year term of the leases and signing lease-related documents on behalf of the DC Government and various of its agencies;

e. Causing the DC Government to make payments to Douglas Development in response to a variety of invoices, including invoices which were fraudulent, excessive, duplicative, irregular and otherwise unsupported, including the following:

i. Undated, unnumbered and unsigned invoice, submitted approximately in or about July 2001, for $38,000 for “D.O.E.S. Relocation Expenses”;

ii. August 8, 2001 invoice for $99,000 for “additional construction management services”;

iii.   September 26, 2001 invoice for $66,000 for “77 P Street, NW, New Economy, Reimbursement for Telco Room Buildout”;

iv. September 27, 2001 invoice for $100,000 for “Build Out Reimbursement”;

v. September 28, 2001 invoice for $863,299.28 for “Reimbursement for Tenant Construction [,] 77 P Street, NW, New Economy”;

vi. February 2002 invoice in the amount of approximately $261,000 for construction at 4800 Addison Road;

f. Using DC Government funds under the control of a third party to pay over $377,000 of financial obligations of Douglas Development related to tenant improvements at 77 P Street, thereby saving Douglas Development that same amount; and,

g. Otherwise taking steps of benefit to Douglas Development in connection with numerous routine issues involving and relating to the DC
Government’s leasing of space through Douglas Development.

17. Defendant BLAKE C. ESHERICK was the Douglas Development employee who dealt primarily with Michael A. Lorusso on leasing matters on behalf of Douglas Development and personally provided Lorusso several items mentioned in paragraph 15 above, such as extending invitations to Las Vegas, providing Lorusso the Rolex watch and providing Lorusso cash.

18. Defendants DOUGLAS JEMAL and NORMAN D. JEMAL obtained the services of BLAKE C. ESHERICK, including his commission of dishonest acts on their behalf as described above, and obtained the personal loyalty of defendant BLAKE C. ESHERICK, by rewarding and compensating ESHERICK, and ESHERICK knowingly received such compensation, in forms which: a) would not be and were not reported to the Internal Revenue Service; b) would be falsely and deceptively recorded and difficult to detect as income to ESHERICK in the books and records of Douglas Development; and c) could be characterized as loans, innocent accounting decisions or accounting mistakes of others, rather than culpable and concerted attempts by defendants DOUGLAS JEMAL, NORMAN D. JEMAL and BLAKE C. ESHERICK to evade ESHERICK’s income tax obligations. In particular, the defendants DOUGLAS JEMAL, NORMAN D. JEMAL and BLAKE C. ESHERICK caused ESHERICK to be compensated in the following ways:

a. By causing payments to be made directly from Douglas Development to defendant BLAKE C. ESHERICK’s ex-wife for the purposes of paying ESHERICK’s personal financial obligations;

b. By causing numerous payments to be made directly to defendant BLAKE C. ESHERICK, apart from the standard Douglas Development payroll checks;

c. By falsely recording numerous checks payable to defendant BLAKE. C. ESHERICK in Douglas Development’s books as loans or advances, even though there was no written loan agreement between Douglas Development and ESHERICK, there were few if any repayments, and there was no interest ever charged to ESHERICK in the books of Douglas Development or paid by ESHERICK to Douglas Development;

d. By causing payments to be made for vehicles owned personally by defendant BLAKE C. ESHERICK;

e. By providing defendant BLAKE C. ESHERICK housing accommodations in a Bethesda, Maryland house jointly owned by defendants DOUGLAS JEMAL and NORMAN D. JEMAL and by having Douglas Development pay for utilities at this house and house-related expenses;

f. By having defendant DOUGLAS JEMAL purchase a residential property selected by defendant BLAKE C. ESHERICK in the District of Columbia in June of 2003 for $825,000, by making payments on the $625,000 mortgage loan and making payments for certain renovations and repairs, and by permitting ESHERICK to reside in that residence rent-free; and

g. By reporting to the Internal Revenue Service that defendant BLAKE C. ESHERICK’s gross income in each of the calendar years 2001, 2002 and 2003 was $70,200.

OVERT ACTS

In furtherance of the above-described conspiracy and to carry out the objectives thereof, the defendants carried out the following acts, among others:

1. In or about a date in early May 2001, defendant BLAKE C. ESHERICK invited Michael A. Lorusso to go to Las Vegas with himself and others from Douglas Development.

2. On or about a day in or about mid-May 2001, a member of the conspiracy used, or caused defendant NORMAN D. JEMAL’s American Express credit card to be used, to pay for Michael A. Lorusso’s room at the Bellagio Hotel in Las Vegas.

3. On or about July 9, 2001, defendant NORMAN D. JEMAL caused checks to be prepared, payable to American Express, drawn on a Douglas Development and a personal bank account, to pay for the American Express bill containing the Bellagio Hotel charges, described above. .

4. In or about July or August 2001, the precise date being unknown, defendant BLAKE C. ESHERICK gave Michael A. Lorusso cash.

5. On or about August 28, 2001, a member of the conspiracy, the precise identity being unknown, paid or caused to be paid for a Rolex watch by charging the purchase price of the watch to defendant NORMAN D. JEMAL’s American Express credit card.

6. On or about August 28, 2001, defendant BLAKE C. ESHERICK gave Michael A. Lorusso a Rolex brand wrist watch.

7. On or about a date in late August 2001 or early September 2001, defendant BLAKE C. ESHERICK instructed a Douglas Development employee to send the Rolex brand wrist watch back to the jewelry store so that the watch’s wristband could be enlarged.
8.   On or about a date close but prior to October 7, 2001, defendant BLAKE C. ESHERICK gave Michael A. Lorusso cash.

9. On or about between October 10, 2001 and October 15, 2001, defendant BLAKE C. ESHERICK approved the payment by Douglas Development to American Express of $70 to pay for the wrist band repairs on the Rolex wrist watch.

10. On or about October 10, 2001, a member of the conspiracy, the precise identity being unknown, caused a Douglas Development employee to pick up Michael A. Lorusso’s vehicle for purposes of driving it to an automobile repair establishment in Virginia and having it repaired.

11. On or about October 15, 2001, defendant NORMAN D. JEMAL caused to be prepared and signed check 2321, drawn on his own bank account, in the amount of $30,158.01, payable to American Express, as payment for the American Express bill containing the charges for the Rolex watch.

12. On or about several dates in 2001 and 2002, members of the conspiracy caused tickets to be provided to Michael A. Lorusso for various events at the MCI Center as follows:

a. December 15, 2001 (Basketball - Washington Wizards vs. Miami Heat);

b. February 7, 2002 (Basketball - Washington Wizards vs. Sacramento Kings); and

c. December 26, 2001 (Hockey - Washington Capitals vs. Philadelphia Flyers).

13. On or about February 8, 2002, a member of the conspiracy caused an airline ticket to be purchased for Michael A. Lorusso for air travel from Baltimore, Maryland to Fort Lauderdale, Florida, said ticket being charged to NORMAN D. JEMAL’s American Express credit card.

14. On or about February 22, 2002, a member of the conspiracy, the precise identity of whom is unknown, caused an airline ticket to be purchased for Michael A. Lorusso for air travel from Baltimore, Maryland, to Las Vegas, Nevada, said ticket being charged to NORMAN D. JEMAL’s American Express credit card.

15. Over the weekend from on or about May 17, 2002, through on or about May 21, 2002, members of the conspiracy paid for meals and hotel accommodations for Michael A. Lorusso in Nevada.

16. On or about May 21, 2002, defendant DOUGLAS JEMAL purchased two pairs of cowboy boots for Michael A. Lorusso, at a total cost in excess of $1,000.

17. In or about late 2002, members of the conspiracy agreed to purchase furniture from International Builders, Inc.

18. On or about several dates in 2001, 2002 and 2003, defendants BLAKE C. ESHERICK and DOUGLAS JEMAL caused checks to be prepared, drawn on accounts of Douglas Development, made payable to ESHERICK’s ex-wife.

19. On or about several dates in 2001, 2002 and 2003, defendants BLAKE C. ESHERICK and DOUGLAS JEMAL caused checks to be prepared, drawn on accounts of Douglas Development, made payable to BLAKE C. ESHERICK.

20. On or about numerous dates in 2001, 2002 and 2003, defendant NORMAN D. JEMAL caused checks to be prepared, drawn on his personal bank account, made payable to Fidelity Bank, as payment for the mortgage at 7804 Radnor Road, Bethesda, Maryland.

(Conspiracy, in violation of Title 18, United States Code, Section 371)

COUNT TWO
(Bribery)

From between in or about May 2001 and December 2002, in the District of Columbia and elsewhere, defendants DOUGLAS JEMAL, NORMAN D. JEMAL and BLAKE C. ESHERICK, as principles, aiders and abetters and coconspirators, did corruptly, give, offer and promise Michael A. Lorusso, a public official of the District of Columbia, things of value, as set forth in the following table:

	DATE	THING OF VALUE
a.	In or about May 2001	Hotel accommodations at the Bellagio Hotel, Las Vegas, Nevada;
b.	In or about August 2001	Cash;
c.	In or about late August 2001	Rolex men’s wrist watch;
d.	In or about September or October 2001	Cash;
e.	In or about October 2001	Repairs to Lorusso’s Audi automobile;
f.	In or about February 2002	Trip to Florida;
g.	In or about May 2002	Air travel, hotels, and several meals in Las Vegas;
h.	In or about May 2002	Cowboy boots;
i.	Numerous dates in 2001 and 2002	Meals and entertainment, specifically including meals at the Capital Grille, Zola’s and other District of Columbia restaurants, and tickets to events at the MCI Center;
j.	Various unknown dates	Use of Douglas Development’s limousine service for local travel in the District of Columbia area;
k.	Unknown date in 2002	Offer of a custom-made suit;

to influence official acts of Michael A. Lorusso and to induce Michael A. Lorusso to do and to omit to do acts in violation of Michael A. Lorusso’s official duties, so that when the opportunity presented itself, Lorusso would take actions on defendant DOUGLAS JEMAL’s and Douglas Development’s behalf, to include:

i) actions in the nature of causing the DC Government to enter into leases of property owned in whole or in part by defendant DOUGLAS JEMAL;

ii) actions in the nature of causing the DC Government to attempt to purchase property owned by defendants DOUGLAS JEMAL and NORMAN D. JEMAL; 

iii) actions in the nature of causing the DC Government to pay invoices submitted for payment by Douglas Development, including invoices which were false, fraudulent, unsupported, duplicate or excessive;

iv) actions in the nature of causing DC Government funds to be used to pay for financial obligations of Douglas Development; and 

v) numerous routine actions involving the exercise of discretion in connection with the DC Government’s relationship with Douglas Development.

(Payment of Bribes to Public Official, in violation of Title 18, United States Code, Sections 201(b)(1)(A) & (C), and Aiding and Abetting and Causing an Act to be Done, in violation of Title 18, United States Code, Section 2)

COUNT THREE
Mail Fraud (Money and Honest Services)

I. Introduction

1. Paragraphs One through Twelve of Count One of this Indictment are realleged and incorporated by reference as if stated in full.

II. The Mail Fraud Scheme

2. From in or about May 2001 and continuing through at least in or about January 2003, in the District of Columbia and elsewhere, defendants DOUGLAS JEMAL, NORMAN D. JEMAL and BLAKE ESHERICK, as principals, aiders and abettors and coconspirators, knowingly and willfully devised and intended to devise a scheme and artifice: a) to defraud and deprive the DC Government and to obtain money by means of false and fraudulent pretenses and representations; and b) to defraud and deprive the DC Government and the citizens of the District of Columbia of their right to the honest and faithful services of Michael A. Lorusso as an employee of OPM, performed free from deceit, favoritism, bias, self-enrichment, self-dealing and conflict of interest.

III. Purpose of the Scheme

3. The purpose of the scheme was for the defendants to provide things of value to Michael A. Lorusso and thereby induce him to take actions as a DC Government official to financially benefit and enrich, directly and indirectly, defendants DOUGLAS JEMAL, NORMAN D. JEMAL, BLAKE C. ESHERICK and companies under their control.

IV. Description of the Scheme

It was part of the scheme and artifice to defraud that:

4. Paragraphs Fifteen and Sixteen of Count One of this Indictment are re-alleged as if set forth in full.

V. Use of the Mails and Interstate Carrier

5. On or about the dates set forth below, the defendants, for the purposes of executing the above-described scheme, did knowingly place in any post office and authorized depository for mail matter and knowingly caused to be delivered by mail, the following items:

	Date On or About	Item mailed	Description of Mailing
1(a)	June 22, 2001	American Express statement of NORMAN D. JEMAL, containing Bellagio Hotel charges	American Express statement, addressed to Norman D. Jemal, 702 H Street, NW, Washington, D.C.
1(b)	July 17, 2001	Check drawn on account of Douglas Development in the amount $21,939.37	check mailed from Washington D.C. to American Express, Newark, NJ
2(a)	September 22, 2001	American Express statement of NORMAN D. JEMAL, containing charges from Fred Brown Jewelers	American Express statement, addressed to Norman D. Jemal, 702 H Street, NW, Washington, D.C.
2(b)	October 15, 2001	Check drawn on account of NORMAN D. JEMAL, payable to American Express, in the amount of $30,158.01	check mailed from Washington, D.C. to American Express, Newark, NJ
3(a)	October 1, 2001	American Express statement of Douglas Development employee, containing charges from Fred Brown Jewelers in the amount of $70	American Express statement, addressed to Douglas Development employee, 702 H Street, NW, Washington, D.C.
3(b)	October 17, 2001	Check drawn on account of Douglas Development, payable to American Express, in the amount of $5,061.84	check mailed from Washington, D.C. to American Express, Newark, NJ
4(a)	November 1, 2001	American Express statement of Douglas Development employee, containing charges from auto repair business amount of $1,326.92	American Express statement, addressed to Douglas Development employee, 702 H Street, NW, Washington, D.C.
4(b)	November 16, 2001	Check drawn on account of Douglas Development, payable to American Express, in the amount of $12,558.56	check mailed from Washington, D.C. to American Express, Newark, NJ
5(a)	February 22, 2002	American Express statement of NORMAN D. JEMAL, containing charges for hotel reservations in Las Vegas and payments to a travel agency for airline ticket to Florida for “Lorusso/M”	American Express statement, addressed to Norman D. Jemal, 702 H Street, NW, Washington, D.C.
5(b)	March 24, 2002	Checks drawn on account of NORMAN D. JEMAL, payable to American Express, in the amount of $3,014.82, and on account of Douglas Development, in the amount of $521.84	checks mailed from Washington, D.C. to American Express, Newark, NJ.
6(a)	February 28, 2002	American Express statement of NORMAN D. JEMAL, containing charges for American West airline ticket from Baltimore to Las Vegas for “Lorusso/M”	American Express statement addressed to Norman D. Jemal, 702 H Street, NW, Washington, D.C.
6(b)	March 16, 2002	Checks drawn on account of NORMAN D. JEMAL, payable to American Express, in the amount of $9,115.61, and on account of Douglas Development, in the amount of $5,019.33	checks mailed from Washington, D.C. to American Express Chicago, Ill.
7(a)	May 29, 2002	American Express statement of NORMAN D. JEMAL, containing charges in Las Vegas	American Express statement, addressed to Norman D. Jemal, 702 H Street, NW, Washington, D.C.
7(b)	June 14, 2002	Check drawn on account of NORMAN D. JEMAL, payable to American Express, in the amount of $11,209.85.	checks mailed from Washington, D.C. to American Express, Chicago, Ill.
8(a)	June 19, 2002	American Express statement of Douglas Jemal, containing charges in Las Vegas, including the Boot Barn	American Express statement, addressed to Douglas Jemal, 702 H Street, NW, Washington, D.C.
8(b)	June 27, 2002	Check drawn on account of Douglas Jemal, payable to American Express, in the amount of $14,408.34	checks mailed from Washington, D.C. to American Express, Newark, NJ

(Mail Fraud, in violation of Title 18, United States Code, Sections 1343 and 1346, and Aiding and Abetting and Causing and Act to be Done, in violation of Title 18, United States Code, Section 2)

COUNT FOUR
(Fraud in the First Degree)

I. FRAUD

1. In or about early July 2001, the precise date being unknown, through July 20, 2001, defendant BLAKE C. ESHERICK did engage in a scheme with intent to defraud the District of Columbia Government and to obtain for Douglas Development Corporation (Douglas Development) property of the District of Columbia by means of false and fraudulent pretenses, representations and promises and thereby did obtain property of the District of Columbia and caused the District of Columbia to lose property, said property of a value of $250 and more.

II. DESCRIPTION OF THE SCHEME

2. It was part of the scheme that defendant BLAKE C. ESHERICK would create and submit, and cause to be created and submitted, to the District of Columbia Government, an undated, unsigned, unnumbered false and fraudulent invoice captioned “77 P Street, NE, D.O.E.S. Relocation Expenses” seeking payment to Douglas Development of $38,000 related to purported damage resulting from the move of the District of Columbia Department of Employment Services into 77 P Street, NE, Washington, D.C, in late June 2001, said invoice being false and fraudulent as follows:

a. Said invoice set forth a claim for “80 man-hours overtime for staff supervision and engineering during move,” when, in truth and in fact, the extent of overtime compensation paid by Douglas Development was to a single employee for 16 hours in the total amount of $288.

b. Said invoice set forth a total claim for “D.O.E.S. Relocation Expenses” in the amount of $38,000 when, in truth and in fact, Douglas Development incurred actual expenses of approximately less than $10,000 resulting from move damage.

3. On or about July 20, 2001, the District of Columbia Government issued a check payable to Douglas Development in an amount consisting in part of $38,000 paid in response to the above-described false and fraudulent invoice.

(Fraud in the First Degree (felony), in violation of Title 22, District of Columbia Code, Sections 3221(a), 3222(a)(1))

COUNT FIVE (Wire Fraud)

I. Introduction

1. Paragraphs One through Four of Count One of this Indictment are realleged and incorporated by reference as if stated in full.

2. Participant #1 was an employee at Douglas Development and a conspirator and aider and abettor in this count. This individual is not charged in this count or named in this Indictment;

3. Participant #2 was an employee at Douglas Development and a conspirator and an aider and abettor in this count. This individual is not charged in this count or named in this Indictment;

4. “Cayre Jemal’s Gateway, LLC,” also known as “Cayre Jemal’s Peoples, LLC,” was an entity owned 50% by defendant DOUGLAS JEMAL and 50% by an entity controlled by another individual. (This individual will be hereafter referred to as JEMAL’s partner.) Cayre Jemal’s Gateway owned the building and property at 77 P Street, NE, Washington, D.C. (77 P Street), which it purchased in 1998 for approximately $5 million. In substance, JEMAL and his partner each were 50% owners of 77 P Street.

5. From 1998 through 2001, Cayre Jemal’s Gateway borrowed monies from various lenders to develop 77 P Street, and as of November 2002, Cayre Jemal’s Gateway owed approximately $40 million on a construction loan. In addition, Cayre Jemal’s Gateway owed money to defendant DOUGLAS JEMAL’s partner, and defendant DOUGLAS JEMAL personally owed monies to his partner related to other personal borrowings. As of 2001, JEMAL owed his partner in excess of $19 million.

6. An entity called “MTD Real Estate Services, LLC” (occasionally referred to as “MTD”) was incorporated in the District of Columbia by the attorneys for Douglas Development in or about August of 2002. The initials MTD correspond to the first initials of sons of defendant DOUGLAS JEMAL, Participant #1 and defendant BLAKE C. ESHERICK.

7. On or about November 19, 2002, defendant DOUGLAS JEMAL, on behalf of the entities that owned 77 P Street, signed loan documents in relation to a $67 million loan from Morgan Stanley Mortgage Capital, Inc. (Morgan Stanley). The terms of the loan provided that the loan proceeds would be disbursed as follows:

• approximately $41 million was to be distributed to pay off a lender for an outstanding construction loan;

• approximately $7 million was to be held back by the lender and placed in escrow, to be used solely to finance certain construction and related costs; this portion of the loan proceeds was referred to as a “tenant improvement [TI] construction reserve” (tenant improvement reserve);

• approximately $19 million was held back and to be distributed when all the tenants – DC Government agencies – had moved into 77 P Street and were paying rent.

8. The loan agreement setting forth the terms related to the tenant improvement reserve stated that the tenant improvement reserve funds were to be disbursed “directly to ... third party vendors and/or contractors that provide invoices, receipts and other similar written documents.” The term “third party vendor and/or contractor” was not defined. The agreement further stated: “In no event shall Agent disburse the [Tenant Improvement] Construction Deposit directly to Borrower.” The term “borrower” was defined in the loan agreement as “Cayre Jemal’s Gateway Holdings, LLC a District of Columbia limited liability corporation.”

9. By means of correspondence between Douglas Development and defendant DOUGLAS JEMAL’s partner prior to the November 19, 2002 loan settlement, it was agreed that JEMAL’s partner would receive nearly all the $19 million that was held back by the lender – the third category of funds described in paragraph 7 above – as partial repayment for the loans from the partner to Cayre Jemal’s Gateway and from the partner to defendant DOUGLAS JEMAL.

10. In or about December 2002, defendant DOUGLAS JEMAL had a need for approximately $400,000 in order to complete the purchase of a property in the District of Columbia.

II. Wire Fraud Scheme

11. From on or about November 1, 2002 through on or about January 31, 2005, in the District of Columbia, defendants DOUGLAS JEMAL, NORMAN D. JEMAL, BLAKE C. ESHERICK, Participant #1 and Participant #2, willfully, unlawfully and knowingly devised and intended to devise a scheme and artifice to defraud Morgan Stanley, JEMAL’s partner, and the Internal Revenue Service (IRS), and to obtain money under the control of Morgan Stanley, by means of false and fraudulent pretenses and representations.

III. Purpose of the Fraud Scheme

12. It was the purposes of the fraud scheme that the defendants and participants would enrich defendants DOUGLAS JEMAL and NORMAN D. JEMAL by means of a scheme whereby the defendants and participants would use false and fraudulent documents to obtain proceeds from the lender out of the tenant improvement reserve for the personal use of defendants DOUGLAS JEMAL and NORMAN D. JEMAL in such a way as to: a) conceal from defendant DOUGLAS JEMAL’s partner that defendants DOUGLAS JEMAL and NORMAN D. JEMAL had obtained a portion of the loan proceeds for their personal use and benefit; b) conceal from Morgan Stanley that defendants DOUGLAS JEMAL and NORMAN D. JEMAL had obtained funds from the TI Construction Reserve for their personal use and benefit; and c) conceal from the IRS that defendants DOUGLAS JEMAL and NORMAN D. JEMAL had obtained funds for their personal use and benefit.

IV. Description of the Scheme

It was part of the scheme and artifice to defraud that:

13. On or about November 18, 2002, Participant #2 signed a memo to JEMAL’s partner, explaining details of the loan, which stated in part:

Note that $7 million is being held back to fund the remaining tenant improvement and leasing commissions (all of these are to outside brokers). [emphasis supplied]

14. On or about November 21, 2002, two days after settlement, Douglas Development submitted its first “draw” request to Morgan Stanley for a disbursement of approximately over $3.5 million from the tenant improvement reserve. Among the invoices submitted to justify the draw was an invoice from MTD Real Estates Services (MTD) to Cayre Jemal’s Gateway in the amount of $430,039.08. Said invoice was false, fraudulent and misleading as follows:

a. The invoice stated that the payment was due for representation of the DC Government Department of Transportation, when in fact, MTD had no agency relationship with the DC Government Department of Transportation;

b. The invoice set forth a commission schedule based on a ten year lease, when in fact the actual lease was for 8 ½ years;

c. The invoice represented that MTD had an address at Eastern Avenue, NW, Washington, D.C., though the defendants BLAKE ESHERICK, DOUGLAS JEMAL and Participant #1 did not have offices at the Eastern Avenue address;

d. Even though the invoice represented that MTD had an address at 6856 Eastern Avenue, NW, the phone number on the invoice was a phone number of a fax line at Douglas Development;

e. The invoice bore little or no relationship to the actual lease terms.

15. This false, fraudulent and misleading invoice was approved for payment by defendant BLAKE C. ESHERICK.

16. In response to a request from Morgan Stanley for a “lien release” and wiring information related to MTD, the defendants and Participants took the following acts:

a. They obtained the signature of an acquaintance of defendant DOUGLAS JEMAL on a “lien release” document, when in truth and in fact, this individual had no knowledge of the affairs of MTD and no knowledge of the representations in the document;

b. On or about December 10, 2002, defendant DOUGLAS JEMAL signed documents opening an account at Adams National Bank (Adams) in the name of MTD; defendant DOUGLAS JEMAL was the only signor on the MTD Adams account and the address on the account was the address of Douglas Development;

c. The defendants and Participants caused a memorandum to be prepared, purportedly from the acquaintance referenced in paragraph (a), above, to Douglas Development’s Controller, setting forth the wiring instructions for the MTD Adams account, when, in truth and in fact, the acquaintance was unaware of this memorandum, did not give permission to use his name in any such memorandum, and was unaware of any such bank account or wiring instructions;

d. Participant #1 sent by telefax the lien release and the memorandum containing wiring instructions described in the preceding paragraph from the offices of Douglas Development, in Washington, D.C. to the offices of the lender, in New York, NY.

17. On or about December 12, 2002, the lender authorized the transmission by wire of $430,039.08 from accounts located outside the District of Columbia to the MTD Adams account in the District of Columbia, and said funds were in fact wired.

18. On or about December 13, 2003, Participant # 2 and defendant NORMAN D. JEMAL directed that $400,000 be wired out of the MTD Adams account to the account of a settlement company, where the funds were used by defendants DOUGLAS JEMAL and NORMAN D. JEMAL to purchase a property in the District of Columbia.

19. On December 16, 2003, a $30,000 check was written from the MTD Adams account payable to Douglas Development, leaving a small balance in the MTD Adams account; thus, nearly the entire $430,039.08 was used for the benefit of defendant DOUGLAS JEMAL, and just a few dollars remained in the possession or control of MTD.

20. At no time after December 12, 2002 and prior to January of 2005 did the defendants or participants, on behalf of MTD, file a tax return with the IRS reporting MTD’s receipt of $430,039.08 income.

21. At no time after December 12, 2002 and prior to January of 2005, did the defendants or Participants inform the tax preparer for Douglas Development, defendant DOUGLAS JEMAL and defendant NORMAN JEMAL of the details of this transaction, of defendant DOUGLAS JEMAL’s and defendant NORMAN D. JEMAL’s receipt of funds in the manner described above, and of the existence of MTD.

V. Use of Wires

For the purpose of executing the above scheme and artifice to defraud, defendants DOUGLAS JEMAL, BLAKE C. ESHERICK, and NORMAN D. JEMAL did cause to be transmitted by wire the following writing, signs, signals and sounds:

1. On or about November 18, 2002, a telefax from the District of Columbia to defendant DOUGLAS JEMAL’s partner in New York, NY;

2. December 10, 2002, a telefax from the District of Columbia to Morgan Stanley in New York, NY;

3. On or about December 12, 2002, approximately $430,039.08 by wire from a bank outside the District of Columbia to the MTD Adams account in the District of Columbia.

(Wire Fraud in violation of Title 18, United States Code, Section 1343, and Aiding and Abetting and Causing an Act to be Done, in violation of Title 18, United States Code, Section 2)

COUNT SIX
(Tax Evasion 2001)

1. Defendant DOUGLAS JEMAL was owner and President of Douglas Development Corporation (Douglas Development) with offices on 702 H Street, NW, Washington, D.C.

2. Douglas Development managed real estate owned by defendant DOUGLAS JEMAL.

3. Norman D. Jemal was defendant DOUGLAS JEMAL’s son and an employee of Douglas Development. He is not charged in this count. Defendant DOUGLAS JEMAL and Norman D. Jemal jointly owned a property at 7804 Radnor Road, Bethesda, Maryland (the “Bethesda house”).

4. Defendant BLAKE C. ESHERICK was an employee of Douglas Development.

5. During calendar year 2001, defendant BLAKE C. ESHERICK received weekly salary payments from Douglas Development based on an annual salary of $70,200 (less a contribution to his “401K” plan); these salary payments were paid from Douglas Development’s payroll account and handled by a company which provided payroll services to Douglas Development.

II. Tax Evasion

6. From on or about January 1, 2001 through March 23, 2003, in the District of Columbia and elsewhere, defendants DOUGLAS JEMAL, BLAKE C. ESHERICK and others, as principals, aiders and abettors and coconspirators, did willfully attempt to evade and defeat the payment of a large part of the income taxes due and owing by defendant BLAKE C. ESHERICK to the United States of America for the calendar year 2001, by:

A. concealing and attempting to conceal from all proper officers of the United States of America the true and correct income of defendant BLAKE C. ESHERICK for calendar year 2001 by the following acts:

1. causing BLAKE C. ESHERICK to receive the following as part of his compensation in 2001:

i. payments of $27,100 by check directly from Douglas Development to BLAKE C. ESHERICK’s ex-wife; said checks were prepared by Douglas Development personnel and signed by defendant DOUGLAS JEMAL;

ii. payments in excess of approximately $20,000 by checks directly from Douglas Development to BLAKE C. ESHERICK; said checks were prepared by Douglas Development personnel and signed by defendant DOUGLAS JEMAL;

iii. rent-free housing, to include utilities at the Bethesda house, of a fair market rental value of approximately of $2,000 per month; the checks for the mortgage payment for the house were prepared by Douglas Development personnel and signed by Norman D. Jemal;

iv. payments in excess of $10,000 in the form of checks directly from Douglas Development as payments for an automobile personally owned by and used by BLAKE C. ESHERICK; said checks were prepared by Douglas Development personnel and signed by defendant DOUGLAS JEMAL;

2. on or about a date in 2002, submitting to the Internal Revenue Service a Form W-2 reporting defendant BLAKE C. ESHERICK’s “wages and earning” as $66,000, that is, solely the amount paid to ESHERICK through Douglas Development’s standard payroll process, based on a salary of approximately $70,200 less a “401K” contribution, and not including the aforesaid items of compensation;

3. by causing the above income items to be recorded in the books and records of Douglas Development, or, in the case of the Bethesda house, handled through the personal bank account of Norman Jemal, so as to conceal defendant BLAKE C. ESHERICK’s true compensation;

B. in or about various dates in 2001, causing Douglas Development to withhold and pay to the Internal Revenue Service taxes of $2,842 from defendant BLAKE C. ESHERICK’s salary, that is, the amount withheld solely on the $66,000 income that ESHERICK was paid through Douglas Development’s standard payroll process with no withholding on the aforesaid income items;

C. on or about March 23, 2003, causing to be prepared, signed, filed and mailed a false and fraudulent federal income tax return, Form 1040, for calendar year 2001, for defendant BLAKE C. ESHERICK, said return being false and fraudulent in that:

1. the return represented, at line 22, that BLAKE C. ESHERICK’s total income for calendar year 2001 was $70,135, when, in truth and in fact, BLAKE C. ESHERICK’s total income for calendar year 2001 was substantially in excess of that amount;

2. the return represented at line 36, that BLAKE C. ESHERICK had itemized deductions of $47,721, as set forth in Schedule A, consisting in part of home mortgage interest and points of $26,996, as reported on Schedule A, line 10, and real estate taxes of $3,956, as reported on Schedule A, line 6, when in truth and in fact, BLAKE C. ESHERICK did not have itemized deductions of $47,721, did not pay mortgage interest of $26,996 and did not pay real estate taxes of $3,956 in calendar year 2001;

3. the return represented, at line 58, that BLAKE C. ESHERICK’s total income ax due and owing for calendar year 2001 was $1,394 when in truth in truth and in fact, BLAKE C. ESHERICK’s income tax due was substantially in excess of that amount.

(Attempt to Evade and Defeat Taxes and Payment Thereof, in violation of Title 26, United States Code, Section 7201, and Aiding and Abetting and Causing an Act to be Done, in violation of Title 18, United States Code, Section 2) )

COUNT SEVEN 
(Tax Evasion 2002)

1. Paragraphs One through Four of Count Six are incorporated by reference as if set out in full.

2. During calendar year 2002, defendant BLAKE C. ESHERICK received weekly salary payments from Douglas Development based on an annual salary of $70,200 (less a “401K” contribution); these salary payments were paid from Douglas Development’s payroll account and handled by a company that provided payroll services for Douglas Development.

II. Tax Evasion

3. From on or about January 1, 2002 through March 23, 2003, in the District of Columbia and elsewhere, defendants BLAKE C. ESHERICK, DOUGLAS JEMAL and others, as principals, aiders and abettors and coconspirators, did willfully attempt to evade and defeat the payment of a large part of the income taxes due and owing by BLAKE C. ESHERICK to the United States of America for the calendar year 2002 by:

A. concealing and attempting to conceal from all proper officers of the United States of America the true and correct income of defendant BLAKE C. ESHERICK for calendar year 2002 by the following acts:

1. causing causing defendant BLAKE C. ESHERICK to receive compensation in 2002 in forms not reported to the Internal Revenue Service, including:

i. payments of $26,950 directly from Douglas Development to BLAKE C. ESHERICK’s ex-wife; said checks were prepared by Douglas Development personnel and signed by defendant DOUGLAS JEMAL;

ii. payments of approximately in excess of $20,000 in the form of checks directly from Douglas Development to BLAKE C. ESHERICK; said checks were prepared by Douglas Development personnel and signed by defendant DOUGLAS JEMAL;

iii. payments of $3000 directly to a credit card account of BLAKE C. ESHERICK.

iv. rent-free housing, to include utilities, in the Bethesda house, of a fair rental value of approximately of $2,000 per month; checks for the mortgage payment for the house were prepared by Douglas Development personnel and signed by Norman D. Jemal;

v. payments in excess of $23,000 in the form of checks directly from Douglas Development as payments for automobiles personally owned by BLAKE C. ESHERICK; said checks were prepared by Douglas Development personnel and signed by defendant DOUGLAS JEMAL;

2. on or about a date in 2003, submitting to the Internal Revenue Service a Form W-2 reporting defendant BLAKE C. ESHERICK’s “wages and earning” as $66,000, that is, solely the amount paid to ESHERICK through Douglas Development’s standard payroll process based on a salary of $70,200 less a 401K contribution, and not including the aforesaid items of compensation;

3. by causing the above income items to be recorded in the books and records of Douglas Development, in the case of the Bethesda house, handled through the personal bank account of Norman Jemal, so as to conceal BLAKE C. ESHERICK’s true compensation;

B. in or about various dates in 2002, causing Douglas Development to pay withholding to the Internal Revenue Service of a total of $3,295, that is, the amount withheld solely on the $66,000 paid through Douglas Development’s standard payroll process, with no withholding on the aforesaid income items; and,

C. causing to be prepared, signed, filed and mailed a false and fraudulent federal income tax return, Form 1040, for calendar year 2002, for defendant BLAKE C. ESHERICK, said return being false and fraudulent in that:

1. the return represented, at line 22, that BLAKE C. ESHERICK’s total income for calendar year 2002 was $66,000, when, in truth and in fact, BLAKE C. ESHERICK’s income for calendar year 2002 was substantially in excess of that amount;

2. the return represented at line 38 that BLAKE C. ESHERICK had itemized deductions of $59,899, as set forth in Schedule A, consisting in part of home mortgage interest and points of $26,078, as reported on Schedule A, line 10, and real estate taxes of $4,389, as reported on Schedule A, Line 6, when in truth and in fact, BLAKE C. ESHERICK did not have itemized deductions of $59,899, did not pay mortgage interest of $26,078 and did not pay real estate taxes of $4,389 in calendar year 2002;

3. the return represented, at line 55, that the BLAKE C. ESHERICK’s total tax due for calendar year 2002 was $0 when in truth in truth and in fact, BLAKE C. ESHERICK’s income tax due was substantially in excess of that amount.

(Attempt to Evade and Defeat Taxes and Payment Thereof, in violation of Title 26, United States Code, Section 7201, and Aiding and Abetting and Causing an Act to be Done, in violation of Title 18, United States Code, Section 2)

COUNT EIGHT (Tax Evasion 2003)

Introduction

1. Paragraphs One through Four of Count Six are incorporated by reference as if set out in full.

2. During calendar year 2003, defendant BLAKE C. ESHERICK received weekly salary payments based on an annual salary of $70,200 less a “401K” contribution; these salary payments were paid from Douglas Development’s payroll account and handled by a company which provided payroll services.

II. Tax Evasion

3. During the calendar year 2003, defendant BLAKE C. ESHERICK had and received gross income of approximately in excess of $150,000, resulting in taxable income in excess of approximately over $140,000; upon said taxable income there was owing to the United States of America an income tax in excess of approximately $40,000; well knowing and believing the foregoing facts, defendants BLAKE C. ESHERICK, DOUGLAS JEMAL and others, as principals and aiders and abettors and coconspirators, did willfully attempt to evade and defeat a large part of the income tax due and owing by him to the United States of America and payment thereof for said calendar year by:

A. on or before April 15, 2004, in the District of Columbia, failing to make an income tax return, as required by law, to any proper officer of the Internal Revenue Service;

B. on or before April 15, 2004, failing to pay to the Internal Revenue Service said income tax;

C. concealing and attempting to conceal from all proper officers of the United States of America the true and correct income of defendant BLAKE C. ESHERICK for calendar year 2003 by the following acts:

1. causing defendant BLAKE C. ESHERICK to receive compensation in 2003 in forms not reported to the Internal Revenue Service, including:

i. payments of $22,536 directly from Douglas Development to BLAKE C. ESHERICK’s ex-wife; each of said checks was prepared by Douglas Development personnel and signed by defendant DOUGLAS JEMAL;

ii. payments of approximately in excess of $45,500 in the form of checks directly from Douglas Development to BLAKE C. ESHERICK; each of said was checks prepared by Douglas Development personnel and signed by defendant DOUGLAS JEMAL;

iii. a payment in excess of $5000 directly to American Express as payment for expenses incurred personally by BLAKE C. ESHERICK;

iv. from in or about January 2003 through approximately July 2003, rent-free housing, to include utilities, in the Bethesda house owned by defendant DOUGLAS JEMAL and Norman D. Jemal, of a fair rental value of approximately of $2,000 per month; checks for the mortgage payment for the house were prepared by Douglas Development personnel and signed by Norman D. Jemal;

v. from in or about August 2003 through December 2003, rent-free housing, to include utilities, in a Washington, D.C. house purchased by defendant DOUGLAS JEMAL for $825,000 in June 2003 at defendant BLAKE C. ESHERICK’s request; said property had a fair-market value rental value of $3,000 per month and checks for the mortgage payment for the house were prepared by Douglas Development personnel and signed by defendant DOUGLAS JEMAL;

vi. payments in excess of $3,000 in the form of checks directly from Douglas Development as payments for an automobile personally owned by defendant BLAKE C. ESHERICK; each of said checks was prepared by Douglas Development personnel and signed by defendant DOUGLAS JEMAL;

2. by causing the above income items to be recorded in the books and records of Douglas Development or, in the case of the Bethesda house and the 6001 Nevada Avenue house, handled through the personal bank accounts of defendant DOUGLAS JEMAL and Norman Jemal, so as to conceal defendant BLAKE C. ESHERICK’s true compensation;

3. in or about Spring 2004, submitting to the Internal Revenue Service a Form W-2 reporting defendant BLAKE C. ESHERICK’s “wages and earning” as $66,000, that is, solely the amount paid to ESHERICK through Douglas Development’s standard payroll process and not including the aforesaid items of compensation;

D. in or about various dates in 2003, causing Douglas Development to pay withholding to the Internal Revenue Service of a total of $1,727, that is, the amount withheld solely on the $66,000 paid through Douglas Development’s standard payroll process, with no withholding on the aforesaid income items.

(Attempt to Evade and Defeat Taxes and Payment Thereof, in violation of Title 26, United States Code, Section 7201, and Aiding and Abetting and Causing an Act to be Done, in violation of Title 18, United States Code, Section 2)

A TRUE BILL: 

FOREPERSON

ATTORNEY OF THE UNITED STATES IN AND FOR THE DISTRICT OF COLUMBIA