D.C. elections and ethics board chairman James L. Denson has misapporopriated thousands of dollars over the past year from the D.C. Chamber of Commerce, the private local business association that he heads, according to chamber records.
The records show that Denson has drawn a total of $26,184 from chamber bank accounts without authorization and paid these funds to himself or to a private development firm he set up during a period in which he exercised control over the chamber's finances.
Denson acknowledged this week that he may have violated some laws in handling chamber funds, but he insisted that most of the funds he withdrew amounted to repayments for personal loans he made to the chamber when payrolls were in danger of not being met.
A recent review of records for 1979 and 1980 by the chamber's own finance committee has found, however, that Denson has withdrawn $13,730 more than he has deposited in chamber bank accounts. Accountants who have looked into the condition of the chamber's books say that Denson has hopelessly commingled his personal finances with those of the chamber, which faces debts totaling $150,000 or more, including as much as $90,000 due in state and federal withholding tax payments.
Chamber officials privately contacted federal prosecutors Thursday seeking an investigation, which is expected to begin soon.
Nine members of the chamber's board of directors -- including its general counsel, treasurer and finance committee chairman -- have resigned in recent weeks in protest of the chamber's management and the apparent unwillingness of the full board to come to grips with evidence that funds may have been illegally diverted from chamber accounts.
"I felt there was evidence of misapporpriated funds," said Sidney Freidberg, the chamber's general counsel until Wednesday and partner in Arent, Fox, Plotkin & Kahn. "I didn't want to be associated with an organization in that situation."
Friedberg said his parting advice was that the chamber's records be turned over to federal prosecutors for investigation.
Denson, reached for comment Thursday shortly before he was scheduled to leave for France on a promotional flight paid for by Trans World Airlines, denied doing anything "intentionally illegal."
"There was no willful intent or anything of that nature," he said, "there were lots of errors and mistakes and management problems, but that's all been corrected."
Denson, a part-time boxing promoter and former newspaper editor, attributed the allegations against him to a few disgruntled chamber staff members. "It's really been a witchhunt. I know what's happening, they're trying to get me."
Denson was appointed to the three-member elections and ethics board by former Mayor Walter Washington. Last year, Mayor Marion Barry elevated Denson to chairman, a top position in the Barry administration.
The D.C. chamber is the smaller of the two major business associations in the city. The larger is the Greater Washington Board of Trade, which represents a broad spectrum of businesses across the metropolitan area. The chamber's membership is confined to the District. It has traditionally spoken for small and minority-owned companies.
From documents made available to The Washington Post and from interviews with chamber directors and employes, an examination shows that Denson:
Transfered $11,500 in chamber funds into a private corporation called the D.C. Institute for Economic Development. This firm is owned soley by Denson. The directors of this institute, among them such business leaders as R. Robert Linowes, were told by Denson they were serving on the board of the "nonprofit arm of the D.C. Chamber of Commerce." The directors have never met and are not aware that the institute recently borrowed $50,000 in unsecured loan funds from a D.C. government corporation. bDenson now acknowledges that the firm has "no relationship" to the chamber.
Used $3,000 in chamber funds to pay for an architect's study of a proposal to convert the Washington Coliseum at Third and M streets NE into a new multipurpose arena. Denson's institute has been negotiating to become the developer of the project. Denson acknowledged that this was an "error" and said the $3,000 would be repaid.
Instructed the chamber's bookkeeper, Howard Lazenby, to not pay federal and state withholding taxes for chamber employes during part of 1979, according to Lazenby. Denson denies this. The chamber now owes an estimated $90,000 in back withholding taxes to the District and federal governments.
Allegedly attempted to rig the election of officers at the National Business League's conventions last September in New Orleans by buying memberships for nearly 700 firms that did not belong to the chamber.Each membership was worth one vote at the convention. Denson had been authorized to vote his membership in block and he used this authority -- and the additional votes -- to support his own unsuccessful bid to become president of the national organization.
"That's a lie," Denson said of the allegation. "I'm not going to discuss it, but that's a lie." He said the additional memberships that he voted for by an external group wanted to bring new members into the business league." Denson declined to reveal the name of the group.
The chamber's financial crisis is compounded by an internal power struggle among its top officers -- and charges of racism.
Most board members interviewed discounted these charges as an attempt to explain away the financial problems of the chamber.
However, racial issues have also been raised at recent chamber board meetings where newer white board members have clashed with black board members. These bitter encounters have centered on whether the chamber's top officer should be black and whether the chamber -- once named the Negro Chamber of Commerce -- should continue to rapidly integrate its membership.
Indeed, Denson's self-stated mandate over the past several years has been to broaden the interracial base of the chamber.
The current acting executive vice president of the chamber is Edward J. van Kloberg, who is white. Van Kloberg is a former American University dean recruited by Denson to attract new members and set up new programs.
However, Van Kloberg has been locked in a continuing struggle with another Denson recruit, vice president Allison Bryant, who is black and who was loaned to the chamber by the U.S. Department of Housing and Urban Development (HUD) under a presidential exchange program arranged through Mayor Barry.
Bryant was virtually evicted from chamber offices earlier this year by Van Kloberg. The chamber has never paid its 50 percent share of Bryant's salary under the exchange agreement. After a group of black and white members of the chamber board agreed privately to try to terminate Bryant's contract, they drafted a letter to Major Barry asking him to send Bryant back to HUD. The reason stated in the letter was that the chamber could not afford to pay Bryant's salary.
The black members of the group, however, refused to sign the letter saying it would be "political suicide" to openly challenge a Denson protege in front of the major. The letter was signed by two white board members, Rolf Mattar of E. F. Hutton, and Richard B. Kinsey, a health policy consultant.
Bryant responded to these moves with an indignant four-page letter to Van Kloberg in which Bryant warned him to "stop the threats."
The events that led up to the mass resignations, charges and counter-charges began in February when the board learned for the first time that the chamber was more than $100,000 in debt.
During late February and March, the chamber's finance committee battled with Denson and Bryant to wrest control of the chamber's bank accounts from the two men.
Many board members were concerned that they might be held personally liable for withholding taxes not paid to the District and federal governments. Members were told that withholding payment checks to the Internal Revenue Service were drawn and signed, but then placed in desk drawers.
Those board members who have resigned are Friedberg; Emily Womach, president of the Women's National Bank; Mattar; Richard B. Kinsey, of the Center for Studies in Health Policy; Melody Gilsey; Harold Fischer, vice president of D.C. National Bank, Luanne Gibbons, Vincent P. Lowe and Linowes.
Those board members who remain say they will try to restructure the chamber's debt to save the organization from bankruptcy.
Much of the chamber's funding in recent years has come from the District government either through direct appropriation or through federal grants administered by D.C. agencies.