LORAIN — Lorain Community Development Director Sandy Prudoff was placed on paid administrative leave Thursday because he is the target of an FBI investigation.

Prudoff, who has been with the city for decades, was escorted out of City Hall by a Lorain police officer, Assistant Law Director R.J. Budway and Service Director Robert Gilchrist, who will take over Prudoff’s duties while he is suspended.

The investigation into Prudoff’s ties in with the Cuyahoga County corruption probe that has been going on for more than a year and has led to allegations against Cuyahoga County Commissioner Jimmy Dimora, Cuyahoga County Auditor Frank Russo and others, city officials said.

Although Dimora and Russo have not been charged in the case, several others have, including former Lakewood Mayor Anthony Sinagra and Kevin Kelley, a former Parma school board member and Cuyahoga County employee.

Lorain Law Director Pat Riley and Mayor Tony Krasienko said they learned a little about the allegations facing Prudoff during a meeting with the FBI on Thursday morning.

What they did learn, they said, pointed to Prudoff’s connection to Alternatives Agency Inc., a Cleveland treatment and rehabilitation center for criminals on parole.

The city had become aware of Prudoff’s connection to Alternatives after a March article in The Plain Dealer detailing the agency’s link to Sinagra, Kelley and others named Prudoff as a public official who did business with Alternatives, Krasienko said.

Prudoff, who could not be reached for comment Thursday, said in the March article that he had helped Alternatives scout property when the agency was considering expanding into Lorain. Prudoff said in the article that he and his girlfriend’s son, who worked with him to scout property for Alternatives, never found a suitable location.

In an indictment filed last month against Sinagra, federal prosecutors accused him and other Alternatives consultants of performing “little, if any, actual work for the agency” and receiving payments that weren’t commensurate with the work they did. Sinagra pleaded guilty to bribery and mail fraud charges two weeks later, according to court records.

Krasienko and Riley said they grew more concerned after learning in June from Vorys, Sater, Seymour & Pease, a Cleveland law firm that represents the city, that federal investigators had subpoenaed some of the firm’s records involving Lorain.

Riley said the law firm wanted to know if the city wanted to exert its right to attorney-client privilege. He said he sent the firm a letter directing them what documents could and could not be released.

A partner with the law firm, Anthony Calabrese III, also did work for Alternatives and is widely believed to be described as “Attorney 1” in the Sinagra indictment. “Attorney 1” and others would hire “unnecessary consultants at high fees” and those consultants then used those fees “to benefit Attorney 1 and his designees on matters unrelated to Alternatives Agency,” the indictment said.

Calabrese, who has not been charged in connection with the corruption probe, has done work for Lorain, and Vorys, Sater, Seymour & Pease continues to work for the city on various issues, including the ongoing dispute over the controversial property tax abatements under the city’s Community Reinvestment Area program.

Krasienko said the timeframe of the investigation that the FBI is looking at is between 2004 and 2006, but he and Riley said they could offer few other details. No other city employees are considered targets of the investigation, they said.

Riley said the FBI plans to serve a subpoena today at City Hall for the Community Development Department’s records, something that could be problematic.

“We need our records to conduct business,” he said.

Krasienko said while the city has been aware that Prudoff may have been the target of an investigation for months, they took a greater interest in August — about the same time Sinagra was indicted — and began to push to find out if Prudoff was in trouble.

But they didn’t want to take any action to relieve Prudoff of his duties until after talking with investigators, Krasienko said.
“We were not wanting to hinder or screw up an investigation by the FBI,” he said.

The FBI gave the city the green light to take administrative action against Prudoff at the meeting Thursday, Krasienko said.
“They said they were basically ready to go anyway,” he said.

If Prudoff, who was relieved of his city-issued keys, cell phone and car Thursday, is charged, the city would place him on unpaid leave, Krasienko said.

Lorain County Prosecutor Dennis Will said his office wasn’t involved in the federal investigation. He said he could only recall one time in the past few years that his office looked into Prudoff — when Lorain Port Authority Chairman Ben Fligner accused Prudoff of trying to bribe him in 2007.

Fligner accused Prudoff of threatening Fligner that unless the Port Authority acted as construction manager on the remodeling of the city jail, the city would never again offer its services to the authority or Fligner again.

Will said there was never enough evidence to present the case to a grand jury, and the investigation was dropped.

Contact Brad Dicken at 329-7147 or bdicken@chroniclet.com.