A financier from the U.S. Virgin Islands who is funding a campaign to bring slot machines to the nation's capital has incurred expenses of more than $250,000, including more than $120,000 paid or owed to businessman Pedro Alfonso and former D.C. Council member John Ray, the drive's leading local advocates.

In an interview yesterday, Ray said financier Rob Newell is paying Alfonso a consulting fee of $8,000 a month to perform his duties as chairman of the D.C. Video Lottery Initiative of 2004. Newell also is paying consulting fees to the initiative's treasurer, Vickey Wilcher, a former executive director of the D.C. Republican Party, and to Margaret Gentry, who is serving as bookkeeper, Ray said.

Ray, meanwhile, said he is billing the initiative $106,778 in legal fees, plus $1,849.33 in expenses, figures that are expected to rise as Ray's law firm does battle in court with community activists trying to block the initiative from conducting a petition drive to place the legalization of slot machines on the Nov. 2 ballot.

That lawsuit is scheduled for its first hearing today in D.C. Superior Court. If the petition drive is allowed to proceed, slots backers must collect the signatures of 17,500 registered voters by July 6 to place the issue before voters this fall.

Ray said the initiative has already hired two professional firms to circulate the petitions and has agreed to pay them as much as $225,000, bringing the full cost of the petition drive to nearly half a million dollars.

Ray acknowledged for the first time yesterday that the money to finance the initiative originates with Bridge Capital LLC, a St. Croix firm that provides high-cost loans for risky investments, according to its Web site.

Newell is chief operating officer of Bridge Capital. Its chief financial officer is Shawn Scott, a young entrepreneur who has been denied or failed to obtain gambling licenses in five states where regulators found evidence of financial mismanagement, irregular accounting practices and hidden partnerships.

Though it was Scott's idea to bring slots to the District, Ray said Scott was banished from the campaign after Ray determined that he "would not be a good partner." Yesterday, Ray acknowledged that he is not certain whether Scott has a continuing financial interest in the slots project.

"I can't trace every penny of this," Ray said. "But I have to conclude that it's Rob's money."

Anti-slots activists said the proliferation of outside money being paid to D.C. residents -- particularly Ray and Alfonso -- undercut a public campaign to portray the slots initiative as a homegrown effort to bring jobs and economic development to a forgotten stretch of New York Avenue NE. Slots backers propose to build a $510 million entertainment complex at New York Avenue and Bladensburg Road NE, including a luxury hotel, a bowling alley, shops, restaurants and a gambling hall with 3,500 slot machines.

"Pedro Alfonso and John Ray want to make you think they were sitting on the mountaintop, thinking about how can we revitalize New York Avenue, when lo and behold, this guy stepped in with this opportunity," said Dorothy Brizill, executive director of the nonprofit group DCWatch and one of three plaintiffs suing to block the initiative.

"But when you hear about everybody being paid, you realize it's not about the merits of revitalizing New York Avenue. It's not about giving black, local entrepreneurs a leg up. It's all about the people who are driving the initiative making big bucks," Brizill said.

Ray defended the payments, saying they are appropriate compensation for long hours spent working on behalf of the slots campaign. He said Alfonso, for example, "is going out to community meetings, making presentations, talking to the chamber, to minority business groups, to the Hispanic community. So he's being paid for his activities."

In a brief telephone interview yesterday, Alfonso declined to answer questions about the consulting fees, saying he would call back later. Subsequent attempts to reach him were unsuccessful. Newell was in Idaho yesterday tending to a family emergency and could not be reached, according to a spokeswoman.

Ray said he does not know whether it is typical for officers of public initiatives to receive payments from the political action committees formed to support their causes. But he disputed Brizill's assertion that the slots campaign is driven by outside interests.

"I have been in Washington, D.C., since 1967. I've lived in the city ever since I set foot here. I was a public servant in the city for 18 years. . . . So I'm very much a part of this city," Ray said. Noting that Alfonso, too, has lived in the District for years, Ray said the slots initiative "has a great local face."

Under city law, the slots initiative is not required to file a report revealing its contributions and expenditures until July 10. But Ray, who serves as general counsel to the initiative, agreed to answer questions about its finances after The Post obtained an internal memo detailing Newell's payments to Alfonso and other residents.

The lawyer for the D.C. slots initiative says Pedro Alfonso is receiving $8,000 a month as a consulting fee to serve as the initiative's chairman.