By David S. Fallis and Dan Keating
Washington Post Staff Writers
Monday, November 28, 2005
Archie Prioleau's finances were in shambles when District officials entrusted him with $1.7 million in grants in 1998. His mission was to outfit a state-of-the-art computer center in Southwest Washington to train needy city residents, then place them in jobs.
Prioleau, a charming, politically connected businessman who was emerging from bankruptcy, first helped himself.
With the District's approval, he gave himself an $82,000 salary and paid his brother $8,000 as a consultant. He spent $25,000 for signature artwork and a matching stainless steel table. He bought $6,000 chairs, a new blue sport-utility vehicle and a silver van, personalized with vanity tags. He spent $143 to settle debts at a florist and rush a "Happy Birthday" bouquet to the D.C. Council member who approved his grants. He billed taxpayers for it all.
Over seven years, District officials sank nearly $5.4 million into his projects. Three city agencies gave him multiple contracts, and four others had a role in making sure he was paid.
But when Prioleau's foundation collapsed last year, the city's investment evaporated. Most of the furnishings had been sold at public auction after languishing in a warehouse for almost two years. About $195,000 worth of equipment was sold for slightly less than $9,000, just to pay a storage bill. Prioleau closed his training center.
Prioleau defended his work in interviews over the course of a year and reported to the D.C. government that his center had trained thousands of disadvantaged people. But city officials say there are no records to verify that number.
The story of Archie Prioleau and his dealings with the District is one of broader failings -- the propensity across city agencies to violate their policies as they dispense public funds with little attention to how the money is spent.
In their dealings with Prioleau, District leaders ignored signs of his financial troubles, handpicked him for a major project without requiring him to compete and broke contracting rules when they paid him. They rubber-stamped his bills and only intermittently held him accountable. Officials did not know the extent of his spending problems until The Washington Post investigated. But the evidence was often sitting in their files.
Most of the funding that flowed to Prioleau over the years came from three agencies.
The Department of Housing and Community Development let him spend lavishly on the $4.6 million computer training center he called DC Link and Learn. But for years, the agency failed to carefully track Prioleau's work, records show. After questions this year from The Post, federal monitors investigated and told the city this month that it must repay the federal government the $1.7 million unless it proves that needy people were trained and the spending was proper.
The Department of Employment Services, which employed Prioleau's nonprofit group to train and find work for young people, let him hire his company and equip a new office while he was paying to keep furniture and computers in storage. In March, the agency hired outside auditors to review his spending.
The Office of the Chief Technology Officer paid Prioleau $377,000 in 2002 to plan a fundraising gala and help design a business campus at McKinley Technology High School, despite warnings from a city official and others that he might not be able to deliver. The gala never happened, and the campus was never built.
"There was absolutely no oversight whatsoever," school board President Peggy Cooper Cafritz said. She said she had warned a city official not to rely on Prioleau, whom she called a "talented hustler" who oversold what he could accomplish.
Prioleau declined to discuss many specifics but said he had helped the city and had done nothing improper. "I have met the requirements of every grant that I have been part of," he said in an interview. In an e-mail, he added: "We worked . . . to move people . . . where they could become contributing individuals to their community and to their families. We were successful and did a lot of good."Successful Start
Prioleau, 55, a heavyset, gregarious man, founded his tiny nonprofit organization -- the Foundation for Educational Innovation Inc. -- in 1993. He had left an 18-year marketing career at IBM and set up shop in his Mitchellville home and an office on G Street NW.
For a time, he drew glowing publicity. His ability to find corporate sponsors for his work helping low-income families was touted by his supporters as a national model. He was passionate, speaking often of his desire to close the "digital divide" that separates the poor and the wealthy.
"My take is that Archie is a wonderfully motivated, well-intentioned, marvelous guy, but . . . his vision was bigger than his capacity to deliver," said Alice M. Rivlin, an early supporter of Prioleau's and a former member of the congressionally appointed board that controlled District finances for six years.
To reach his goals, Prioleau forged relationships with people who would become crucial to his landing city contracts. He donated cash to politicians pivotal to his projects.
His vice president at the nonprofit organization had previously worked for Marion Barry, when he was the District's mayor. And Prioleau dressed up his board with well-connected names, such as William Rumsey Jr., former chief of staff to D.C. Council Chairman Linda W. Cropp.
"He was everyone's favorite friend," Rumsey said.
Prioleau also built a key relationship with then-D.C. Council member Charlene Drew Jarvis, who was also president of Southeastern University, a position she still holds. Jarvis was an adviser to Prioleau's planned computer training center, records show, and her university lists itself as a co-founder of DC Link and Learn. In 1998, the university named Prioleau to its board and months later advanced his nonprofit group $50,000 for additional space it could use at his new facility.
Shortly after Prioleau applied for the funds, Jarvis wrote a note pushing the housing agency to speed funding to him. Jarvis made it official by signing the $1.7 million grant paperwork on the council's behalf. The project was also approved by the financial control board.
In an interview, Jarvis said her role in approving the grant was not a conflict because Southeastern did not receive grant funds. "We simply occupied space in the center," she said.Bad Spending
Over the years, indications that Prioleau was a risky investment for the District were accumulating in public records.
When the Department of Housing and Community Development gave him the training center grants in 1998, Prioleau and his wife, Elveta Martin, were coming out of personal bankruptcy, and a court trustee was investigating his transactions with his nonprofit organization. Later, several vendors sued his foundation over unpaid bills, and it was ordered in one case to pay about $237,000 to a computer firm.
In the meantime, Prioleau was failing to file tax returns for his nonprofit organization, records show. The most recent tax return on file is for 1997, according to the IRS. Prioleau said in interviews that his accountant failed to file the returns and other paperwork and said he went bankrupt because he invested his own money in his projects.
Still, millions of dollars in city money were flowing into his bank accounts. But the dollars were flowing out just as fast.
He had initial approval to spend $20,000 on one vehicle but spent $56,000 on two, even before the grant was finalized, to transport "125 students every 90 minutes," he explained later in a report.
He spent $6,000 on a rosewood credenza and matching desk. The elaborate conference table was accompanied by 20 chairs that cost $2,000 each.
Artist Raymond Karpuska, who drove his creations from Florida to Prioleau's door, said Prioleau sat down at the head of the table, admiring the work. "I remember him patting his hand on the table, saying, 'We are going to get the girls in here dancing on this,' " Karpuska said.
With the District's approval, Prioleau found other ways to pay himself and his family with public money.
In 2000, he paid his wife $6,875 for three months of work and years later tried to bill the city $4,500 to retain her law firm, records show. In 2004, he paid his teenage daughter $936 for "outreach." And for two years, Prioleau hired a second company he runs, paying it about $213,000 for consulting work to his nonprofit organization.
The company, FEI Enterprises Inc., had a similar name and shared offices with his nonprofit organization. Prioleau headed both and, at times, his wife and his brother were officers in both firms. He subcontracted the firm for services including such tasks as "test and reproduce charts and posters."
Officials at the Department of Employment Services, which administered the grant, said Prioleau was free to subcontract with companies of his choice, although they knew of no other grantees who had used this arrangement.
But Rick Cohen, executive director of the National Committee for Responsible Philanthropy, said after reviewing the records that "if it looks like self-dealing, it should not be done. Most nonprofits would not even contemplate anything like this."
One of Prioleau's most perplexing expenditures was his move to new offices in 2002.
When the federal government gave up the rehabbed Southwest site he'd been occupying, Prioleau was forced to relocate DC Link and Learn to a much smaller, aging walk-up in Adams Morgan, a site meant to be temporary.
"That was a huge hit to us," said Prioleau, referring to the loss of his spacious, rent-free location.
He warehoused most of the furnishings -- several tractor-trailers full of desks, computers and office supplies -- and began to incur $4,950 monthly storage fees. For the new site, he bought new computers, spent thousands on office supplies and signed a nearly $1,400-a-month furniture lease.
Prioleau billed the employment services agency for much of it. The agency said the expenses were necessary to keep the program going and because the new offices were too small to accommodate the furnishings from the previous site.
Within months, Prioleau began to fall behind on storage payments. After almost two years, when the debt had climbed to more than $100,000, the storage company held an auction in April 2004.
Big-screen TVs, satellite receivers, fax machines, computer equipment, tables and chairs sold within hours. A $6,000 chair went for $5, and the $4,000 credenza sold for $15, records show. The stainless steel conference table fetched $550, but its companion artwork was tossed in the trash.
"There was a lot of abandoned stuff bidders didn't want. Not knowing what the heck any of it was, it went into the dumpster," said Kevin Boss, operations manager for Moving Masters.
Officials at two city agencies, Employment Services and Housing, said they didn't know of the sale until told of it last spring by The Post.New Warnings
Prioleau's other pet project, McKinley Technology High School, elicited warnings from school officials. In early 2001, Assistant Superintendent Wilma Bonner became alarmed at Prioleau's expanding role. Prioleau, a nostalgic McKinley alumnus, announced in a public meeting that he was brokering a $100,000 donation from Sprint to promote the school, although school records show that at the time he had no contract.
"I don't know who sanctioned Mr. Prioleau for this role," Bonner wrote in an e-mail to the school system's lawyer. "He has stated that he is reporting to the Mayor."
School officials, concerned that he was collecting money in their name, distanced themselves from the donation, which was written to Prioleau's foundation. Then-Superintendent Paul L. Vance "said he didn't want to touch it. . . . I remember him telling Archie that," said school board member William Lockridge.
Vance did not return calls seeking comment.
Prioleau himself raised another red flag when he told city and school officials in a 2001 e-mail that he was using money from an unrelated federal grant to help fund the McKinley project. He expected to "recover those funds," he told them, when city money became available.
Then-City Administrator John A. Koskinen thanked Prioleau for the "positive report" and said he would help him get paid. Within months, the school system paid his for-profit company about $50,000.
Koskinen said he did not recall Prioleau's claim that he was using federal money for the city project. "It would have been clear you can't do that," Koskinen said. U.S. Department of Education officials said that shifting federal funds to other purposes is not allowed and that they have referred the matter to the agency's inspector general.
After he ran up more than $300,000 in bills, Prioleau got a signed agreement from the city and the schools, putting him in charge of much of the McKinley campus efforts. Cafritz said he was hired despite her warnings to Chief Technology Officer Suzanne J. Peck. "I said, 'You have got to listen to me on this: You need to be careful about your relationship with him, and you have got to protect the city,' " Cafritz said.Little to Show
What Prioleau accomplished remains a mystery. He told the city's housing agency that his training center served about 6,800 people from 1998 through 2002.
Victor Selman, chief operating officer for the housing agency, said he believes the District got its "money's worth" but said there is no way to verify Prioleau's figures.
The Department of Employment Services, which paid Prioleau $3.1 million to train disadvantaged youths, said his nonprofit organization found entry-level jobs and other placements for 136 youths between 2000 and 2004.
After visiting the Southwest center in 2002, a city official wrote that "only 4 participants were engaged in activities." In March 2004, a city monitor visiting the Adams Morgan location reported that he found three people in class. Two, he noted, left after a break.
Robert Sweeney, whom Prioleau hired in 2002 to teach high school equivalency classes, said he did not think DC Link and Learn was prepared for the task. In hindsight, Sweeney said, "No one when I was there, including myself, really knew what we were doing."
Some students said the program helped them find jobs. But Carlette Fletcher, who attended GED training at the Southwest site, said her class was frustratingly uneven. "It was one teacher one day telling us one thing, then another teacher another day telling us another," she said. For that and other reasons, she quit.
Last November, the Employment Services agency warned Prioleau that he was close to losing his training grant, after an agency investigation that determined that nonprofit payroll taxes were delinquent, that audits were overdue and that Prioleau had billed the grant for inappropriate expenditures.
In December, Prioleau pulled out of the grant. In January, he closed the Adams Morgan training center and, in March, the city's housing agency repossessed the two vehicles, after questions by The Post.
Employment Services officials defended their monitoring of his grant and said they acted when they found problems. And Housing Director JaLal Greene, who was not at the agency at the time, said controls are much tighter now.
"Every once in a while, you get someone who is very familiar with the rules and can play at the edges of what is allowed and is not allowed," Greene said. Prioleau, he said, "knows how to play this game."
Across town, a renovated McKinley High opened, but the technology campus never moved beyond the drawings Prioleau commissioned. The city's Office of Planning told the mayor's office in a memo that development proposals from Prioleau's "team" had multiple "deficiencies." Donations for the campus had to be returned.
Prioleau said in an interview that he fulfilled his obligation by delivering plans and marketing materials but that the project disintegrated because of fighting between school board officials and the mayor's office. "We put the blood, sweat and tears in there. And it wasn't about the money," he said. "For me, it was a passion. It was bringing back my history."
But Peck, the city's chief technology officer, said she had a "dawning awareness" that critics had been right -- Prioleau could not deliver.
When Prioleau attempted to bill the District again in 2002, Peck said she saved taxpayers any further expense and told him no.
"I called him in and said, 'The party is over.' "
Staff researcher Bobbye Pratt contributed to this report.