D.C. attorney general sues building owners over $1.2 million in expenses

By Mike DeBonis
Washington Post Staff Writer
Wednesday, November 10, 2010; 10:42 PM

D.C. Attorney General Peter Nickles on Wednesday sued the owners of a Southeast Washington office building - among them a political nemesis of Mayor Adrian M. Fenty's - alleging that they tried to improperly charge $1.2 million in expenses back to the city, including contributions, champagne and bar tips.

The principal owner of the building, at 2100 Martin Luther King Ave. SE, is R. Donahue Peebles, a developer who has emerged in the past year as a Fenty critic and for months considered running for the mayor's office. The suit seeks repayment of more than $600,000, plus damages.

In a statement, Peebles disputed the bulk of the lawsuit and accused Nickles of discarding a settlement negotiated by city officials to "pursue a political vendetta."

The lawsuit is rooted in an effort by the city's real estate department in the past year to scrutinize the government's leases of private office space. Since the work began in September 2009, more than 30 leases have been reviewed by the Schonbraun McCann Group, a New York consulting firm. Many showed evidence of improper expenses and were subsequently settled, said Robin-Eve Jasper, head of the department, bringing more than $1 million into the ailing city coffers.

Only Peebles's company has been sued. "This one rose to the top," Nickles said.

Nickles said he rejected the settlement, calling it "unsatisfactory" and "not . . . in the public interest." Three lawyers from Nickles's office had participated in the settlement talks, Jasper said.

Peebles announced in May that he would not seek the mayor's office, after pondering the race for months. Although he did not publicly endorse Gray, Peebles helped bankroll an independent expenditure campaign aimed at ousting Fenty, spending nearly $100,000 on the "Coalition for a Better District of Columbia."

The suit has been filed weeks before Nickles is expected to leave office ahead of the incoming administration of Vincent C. Gray (D).

"I know that this is a consequence of my criticism," Peebles said. "It is a price I am willing to pay in order to do my part in standing up to an administration that has repeatedly practiced intimidation."

The Anacostia building houses a service center for the city's human services department. The structure was the first that Peebles developed, and it is the foundation of what his company says is a $4 billion national portfolio.

The lease, which dates to 1988, entitles the building's owners not only to a monthly rent payment, but also to reimbursements for "any and all expenses . . . in connection with the operation, management, maintenance and repair" of the building. The suit says that the company owning the building, in which Peebles owns a controlling 50 percent stake, interpreted that provision too loosely.

Among the allegations is that the company billed the city for $3,700 in political contributions - including donations to council members Marion Barry (D-Ward 8), Michael A. Brown (I-At Large) and Jack Evans (D-Ward 2).

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