Federal prosecutors have asked for a stiff sentence for one of three developers who have pleaded guilty to filing false tax returns in connection with the District's troubled Bates Street housing redevelopment, saying that his "greed doomed the project from the outset."
Lawrence J. Brailsford, a partner in the project, and two other principals each face maximum penalties of three years in prison and $5,000 in fines for failing to report substantial amounts of income taken from the venture.
But prosecutors have singled out Brailsford in asking for a sentence "which both punishes him and deters him, and others, from engaging in similar conduct."
In doing so, they said in a presentencing memorandum that Brailsford did not cooperate with the federal government in its investigation of misuse of federal funds at the Bates Street project, that he is not "truly remorseful," and that his tax deficiency on unreported income was the highest of the three.
The other two principals in the project, Jack W. White and George Holmes Jr., entered into plea agreements with prosecutors earlier than Brailsford. They agreed to cooperate in the investigation in exchange for being allowed to plead guilty to filing false tax returns rather than the more serious charge of tax evasion. Prosecutors also agreed to take no position on sentencing.
The 163-unit Bates Street project, Mayor Marion Barry's attempt at a showcase housing development, received $13 million in mostly federal funds to renovate town houses in a rundown area of Shaw near North Capitol Street and Florida Avenue NW.
White and Holmes were scheduled to be sentenced yesterday, but U.S. District Court Judge Oliver Gasch postponed action to May 21, the day Brailsford is to be sentenced.
Brailsford was brought into the project in 1979 when the Barry administration caused a major shakeup in the original development team, which included Holmes. Brailsford withdrew from the project in 1980.
Prosecutors charged that Brailsford "had control of the checkbook" on the project and wrote himself or his consulting firm more than $400,000 in Bates Street checks in 1979 and 1980, most of which he did not report on his income tax returns. "Given the undercapitalization of the Bates Street project, Mr. Brailsford's greed doomed the project from the outset," the prosecutors' memo said.
They calculated his outstanding tax liability as $133,128 for 1979 and $124,598 for 1980.
R. Kenneth Mundy, Brailsford's attorney, disputed both the prosecution's figures and its portrayal of Brailsford. Brailsford has admitted only to a tax liability of $11,000 on $50,000 in unreported income for 1980, Mundy said.
"It is not Bates Street embezzlement or misuse of funds. He was not even indicted for that after a two-year investigation," Mundy said.
Holmes pleaded guilty in August to failing to report $122,000 in income from the project in 1980.
Prosecutors said White had $60,410 in unreported Bates Street income, and that he had $30,016 worth of work done at his house on Alaska Avenue by project workers.