In 1999, Montgomery County leased a shuttered public school to the Yeshiva of Greater Washington, a deal both sides considered a bargain. The nonprofit group got a derelict building and 20 acres in Wheaton for $1.75 million, with the understanding that it pay the millions more needed to renovate it. The county unloaded a neighborhood eyesore. Seven years later, the deal has turned out to be costly for taxpayers and a boon for Yeshiva.

The county school system took back the building to ease overcrowding, had to compensate Yeshiva for renovations it had made and spent $12.4 million on further improvements needed to reopen the facility as a public school. The county then leased a second former public school to Yeshiva, where it now operates a private girls academy.

Yeshiva’s compensation was a $9.9 million construction contract with the school system that provided nearly enough public money to cover the cost of the organization’s renovations at both schools, according to a Yeshiva financial document reviewed by The Washington Post.

A top aide to County Executive Douglas M. Duncan (D) was involved at every stage of the complex series of transactions. The aide, Jerry Pasternak, mixed policy and political roles, helping to negotiate the leases and the construction contract with Yeshiva, in addition to raising some of the $92,000 that Yeshiva supporters have contributed to Duncan’s political account since 1998. Pasternak declined to be interviewed for this article.

Jeffrey Lee Cohen, president of Yeshiva’s board of directors, said in written responses to questions that county schools Superintendent Jerry D. Weast initiated the move from the first school to the second, not Yeshiva. The construction contract “was executed and performed in good faith by both parties,” Cohen said.

In interviews in late May this year, Cohen and fellow Yeshiva board member Dennis Berman said there was no connection between Duncan’s support for the leases and campaign contributions to him from the organization’s supporters. “It certainly never was a quid pro quo,” Berman said.

Duncan spokesman David Weaver said that the county executive had addressed questions for this article in earlier interviews. Weaver noted that Duncan did not act alone; the school leases and the construction contract were approved or funded by the County Council.

“I’ve spent 25 years working hard to do things for people,” Duncan said in an interview in June. “Do people give contributions? Yes. Is there a pay for play? No. Is any decision I make based on campaign contributions? No. I always put policy before politics.”

After being elected county executive in 1994, Duncan implemented a policy of leasing or selling unused public schools as a way to return neighborhood eyesores to productive use, he added. “We had people living in [one former public school]. We had syringes in the courtyard, we had mattresses in the courtyard, we had condoms in the courtyard. That’s not good for a neighborhood.”

Duncan is completing his third term as county executive. On June 22, he abruptly halted his campaign for governor of Maryland, citing a diagnosis of clinical depression.

Montgomery school system officials said they entered into the construction contract so that Yeshiva would relinquish the first school, which Duncan had leased over school system objections. “We had to fulfill a lease which we did not write, which we were not a party to,” school system spokesman Brian Edwards said. He said Weast was not available to discuss the issue.

The contract allowed Yeshiva to bill the full $9.9 million regardless of the renovation costs and to use the leftover taxpayer money as it wished. The school system awarded the contract without competitive bidding and waived rights to inspect the project.

“Our clear intent was to reimburse [Yeshiva] for what they had done” at the first school, said Richard Hawes, the school system’s director of facilities management. “If they made money off of it, that’s the American way,” he said.

The financial records reviewed by The Post indicate that in 2004, Cohen wrote checks for $200,000 to two educational organizations in Israel from an account used for renovation work funded by the construction contract. The records also show that Cohen wrote a $220,000 check on the same account to Brit Limited Partnership, a firm he partially owns that has contributed $12,000 to Duncan.

Cohen declined to answer questions about these checks.

Two Deals for Yeshiva

In the mid-1990s, Yeshiva was searching for a new home for its girls school. The organization had vacated a six-acre campus in the Four Corners area of Silver Spring and was temporarily housing the girls school at a synagogue.

On Oct. 29, 1998, Pasternak wrote to the County Council in support of a Duncan initiative to lease the former Col. Joseph A. Belt Junior High School in Wheaton to Yeshiva. The proposed deal gave Yeshiva the option to buy the 20-acre facility for the amount of the 17-year lease: $1.75 million. The terms were similar to a 1995 lease between the county and a nonprofit group that defaulted in July 1998.

In the letter, Pasternak said Yeshiva had funds available to renovate Belt; the Maryland-National Capital Park and Planning Commission had bought the organization’s Four Corners property that year for $1.25 million.

The same day the letter was dated, the Duncan campaign received $4,000 from Brit Limited Partnership. The amount is the maximum that a person or corporation can give a candidate in an election cycle under Maryland law.

Community members and the school system opposed Duncan’s proposal because they wanted Belt reopened as a public school. But the council twice approved the transaction, and Duncan signed the lease-purchase deal Aug. 26, 1999.

A month earlier, Duncan’s campaign had received checks for $20,000 from five Saipan companies linked to then-lobbyist Jack Abramoff and an additional $15,000 from Cohen, Berman and their companies and partners. Abramoff served on Yeshiva’s board in the late 1990s and early 2000s, including one term as president.

In November 2000, schools superintendent Weast proposed that the school system reclaim Belt to alleviate overcrowding, vindicating community members who said it was needed for public use. “This plan is a special opportunity presented by the willingness and generosity of the Yeshiva of Greater Washington to modify its plan to occupy the Belt facility as a private school . . . and, in return, gain the use of [a] different former school site,” Weast wrote to school board members Nov. 22, 2000.

A day earlier, Duncan’s campaign had received $10,000 from five Yeshiva-related donors.

Weast proposed shifting Yeshiva to the former Montgomery Hills Junior High School in Silver Spring, which, like Belt, was a former public school under county control and in poor condition.

Yeshiva said that it deserved to be moved into a renovated school because it had begun renovating Belt. In March 2002, the school system hired an architectural firm to design the renovation of Montgomery Hills.

Cohen updated Yeshiva parents that month about the need to leave Belt. “[T]he County will present us with a building of the same caliber as our current location, renovated to our specifications,” he wrote, noting approvingly that the Montgomery Hills facility was closer to a Jewish community. “The terms we negotiated are very advantageous,” he added, with “very” in bold type.

In late November 2002, a contracting firm employed by the school board drew up a $10.2 million budget for the renovation work. But school officials and Yeshiva representatives soon agreed that the school system would not employ independent contractors. According to notes dated Dec. 19 and taken by a county real estate analyst at a meeting attended by Pasternak and other county officials: “Yeshiva is now going to do the work.”

The price was slightly lower than the contracting firm’s estimate: $9.8 million.

Yeshiva’s leaders were on familiar ground in undertaking a construction project. Cohen and Berman, by this time both members of the Yeshiva board, are partners in BECO Management Inc., a commercial real estate firm in Rockville that they founded with other partners in 1986. BECO managed the school renovation work, the financial records show.

Cohen is BECO’s president and has been president of the Yeshiva board since 2001, when he took over from Abramoff.

Contract Questioned

On March 28, 2003, school superintendent Weast, then-school board president Patricia B. O’Neill and Cohen signed the “stipulated sum” contract for $9.8 million, which was later increased to nearly $9.9 million. The no-bid agreement waived the county’s right to inspect the work, apart from standard inspections required for building and occupancy permits.

Associate County Attorney Eileen Basaman sent an e-mail to Pasternak dated five days later. “The Construction Contract frightens me. A lot,” she wrote. “The County would never execute this contract for itself,” she added, in part because “we give up our rights to inspect the project.”

Hawes, the school system’s director of facilities management, said that such inspections would have been pointless, because the contract gave Yeshiva the right to modify the work. He also defended the lack of competitive bidding. “We were just looking for a deal that would ensure we had Belt back by July 1 of the following year. We couldn’t hire anyone else to do that,” he said.

The deal with Yeshiva, Hawes said, allowed the school system to eliminate the risks of cost overruns and delays.

The $9.9 million construction contract was intended to fund improvements at Montgomery Hills to match Yeshiva’s work at Belt and was simultaneously understood to represent “the agreed upon value” of Yeshiva’s Belt renovations.

A Yeshiva financial document reviewed by The Post indicates the organization’s actual cost at Belt: a little more than $4 million. The document also says how much it spent at Montgomery Hills: less than $6.4 million.

All told, the document indicates that Yeshiva spent about $10.4 million in renovating both schools, approximately $500,000 more than the value of the $9.9 million contract with the school system. The original 1999 lease-purchase deal with the county for Belt was an “as is” transaction that required Yeshiva to fund the millions of dollars needed in improvements.

The school system had agreed to take back one renovated school and provide another in return. But the system later spent $12.4 million on Belt before reopening it in 2005 as the A. Mario Loiederman Middle School.

In switching schools, Yeshiva lost the option to buy that had been part of the Belt transaction. Instead, it received a lease for up to 90 years at Montgomery Hills.

Cohen said in a statement: “After raising millions of dollars and spending hundreds of hours of volunteer time, the [Belt] facility was renovated as a permanent home for Yeshiva.” The school system, he added, “requested that Yeshiva move out of the newly renovated Belt school and take on the burden of renovating the abandoned Montgomery Hills School.”

A school system e-mail and other records indicate that FBI agents made inquiries about the construction contract in 2005. Michelle Crnkovich, spokeswoman for the FBI’s Baltimore office, said that a fraud investigation was closed this year but declined to say why.

In June this year, a county official signed the Montgomery Hills lease with Yeshiva.

Role of Duncan Aide

Pasternak, an aide who has served Duncan as a political adviser for more than a decade, oversaw the transactions involving Yeshiva as a special assistant to the county executive. In written answers provided to The Post in late May, he said that although he had been “involved in the Yeshiva school project,” county real estate officials and lawyers “handle leases for the County.”

Janice Turpin, the school system’s team leader for real estate management, wrote in notes dated Aug. 9, 2002: “Pasternak negotiating lease,” referring to Montgomery Hills.

Pasternak, in an e-mail dated Feb. 3, 2003, asked another county official to “[l]et me know if you believe this [draft] allows us to enter into the lease that we need to have with Yeshiva.”

In an e-mail dated Feb. 25, 2003, a month before the construction contract was signed, Turpin described Pasternak as “very anxious to get the construction agreement [to] the Yeshiva folks ASAP.”

In an interview, Hawes said Pasternak took part in construction contract negotiations.

Council member Tom Perez (D-Silver Spring), who voted against the lease on the two occasions it came up for council approval, said Pasternak was deeply involved in the matter. “Nothing of substance got approved without his okay,” Perez said.

Duncan campaign manager Scott Arceneaux said that Pasternak met Abramoff through the Orthodox Jewish community and accepted his offer to raise money for Duncan. This May, after inquiries from The Post, Duncan announced that he would return $20,000 in campaign donations linked to Abramoff.

In recent years, campaign money has continued to flow from Yeshiva-related donors to Duncan. In January and March 2004, his campaign raised $20,000 from Cohen, Berman and other contributors connected to them. This past January, the campaign took in $23,000 from six donors affiliated with Cohen or Yeshiva.

“I believe that Doug Duncan has done a great job for Montgomery County, and therefore I have supported him,” Cohen said.

WP