Douglas Development Corporation Official Pleads Guilty to Tax Evasion Fourth DDC Official to be Convicted of Felony

Washington, D.C. - The Vice President in Charge of Construction at Douglas Development Corporation (DDC), Paul A. Millstein, 44, of Silver Spring, Maryland, has pleaded guilty to a single count of tax evasion, U.S. Attorney Jeffrey A. Taylor and Francis L. Turner, Special Agent in Charge, Internal Revenue Service, Criminal Investigation, announced today.
The defendant entered his guilty plea today in the U.S. District Court for the District of Columbia before the Honorable Ricardo M. Urbina. The statutory maximum penalty is five years in prison. Under the federal sentencing guidelines, the defendant faces a likely sentence that will not include incarceration. Judge Urbina set sentencing for September 4, 2007.

According to the facts set forth by the government prosecutor at the plea proceeding and contained in the charging document, in 1999, Millstein received funds from his employer outside the DDC payroll system. He received $25,000 in or about April 1999, and $50,000 in or about November 1999. These checks were issued to him from DDC's law firm, drawn on the law firm's escrow account. The sources of funds were from real estate refinancing proceeds involving Douglas Jemal-owned properties. Millstein did not report that $75,000 as income to the IRS.

Millstein is now the fourth high-level Douglas Development official to be found guilty of a felony charge. In October 2006, Douglas Jemal, the President and owner of Douglas Development, was found guilty at trial of wire fraud. Blake Esherick, the number two official at Douglas Development, was found guilty at the same trial of wire fraud and tax evasion. The Chief Financial Officer of Douglas Development, John E. Brownell, has pled guilty to tax evasion and is pending sentencing.

This conviction also marks the sixth individual convicted of a felony arising from the criminal investigation that looked into the relationship between the D.C. Government and certain private developers and contractors. In addition to the convictions of the four officials from DDC, in October 2004, Fernando Villegas, a construction contractor, pleaded guilty to conspiracy to pay bribes to a D.C. Government official and is pending sentencing. Also in October 2004, Michael Lorusso, a former D.C. Government official, pleaded guilty to conspiracy to receive bribes (from Villegas and from Douglas Development). He also is pending sentencing.

In announcing today's guilty plea, U.S. Attorney Taylor and IRS Special Agent in Charge Turner praised the work of the following individuals: Special Agents Christine Morrison and Charles Jones, and Revenue Agent Jennifer Abbot of the Internal Revenue Service; FBI Special Agents David McClelland, Thomas Chadwick, Andrew Sekela and Eric Paris; FBI Forensic Computer Technician Susy Hwang; Legal Assistant Lisa Robinson of the U.S. Attorney's Office; and Assistant U.S. Attorneys Timothy G. Lynch and Mark H. Dubester, who has handled this matter from its inception.

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