James L. Denson, elections board chairman and president of the D.C. Chamber of Commerce, signed a contract in July 1979 obligating the chamber to pay for up to $25,000 in consultant services for his own private real estate ventures, chamber records show.
The records show that Denson took a series of actions -- including signing contracts, disbursing funds and writing letters -- all of which used the name, financial resources and influence of the chamber to further Denson's private business interests.
According to minutes of chamber board of directors meetings and interviews with chamber officials, Denson took these actions without the knowledge or the permission of the directors.
In one instance, Denson wrote a $3,000 check on a chamber bank account to pay an architect's fee for Denson's private corporation, the D.C. Institute for Economic Development.
Denson said in an interview last week that he may have violated some laws in handling chamber funds, but he said that, "always, my primary goal was to make the chamber a viable organization." He said he never did anything "intentionally illegal -- there was no willful intent or anything of that nature."
"If there is a problem, the problem is that I did not get the permission of the board of directors," Denson said before he departed on a promotional flight to Paris paid for by Trans World Airlines.
The chamber's financial records were subpoenaed Friday by federal prosecutors, who say they will look into the allegation. The chamber's board of directors will meet Wednesday for the third time in a week to grapple with the crisis. Nine of the 35 members of the board have resigned in protest of the chamber's management.
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. The chamber receives hundreds of thousands of dollars from the District and federal governments to help finance its activities.
The Washington Post reported Saturday that Denson has misappropriated thousands of dollars from the chamber over the past year. An accounting by the chamber's finance committee showed that Denson withdrew without authorization a total of $26,184 from the chamber's bank accounts in 1979 and 1980, $13,730 of which has not been accounted for.
The chamber is facing debts of $150,000 or more, $90,000 of which represents federal and state withholding taxes not paid.
Denson was appointed by Barry last year as chairman of the D.C. Board on Elections and Ethics. As chairman, Denson exercises broad authority over election procedures, equipment and disputes. In addition, he and two other board members would rule on any type of conflict of interest allegation that might be brought against a District official.
A spokesman for Barry said yesterday that the mayor would not comment based on newspaper accounts of Denson's activities.
One of Denson's chief private business interests in 1979 focused on the Washington Coliseum, the aging arena at Third and M streets NE. Over nearly a year's time, Denson took a series of steps to further his chances of purchasing and renovating the coliseum for an unspecified use. "I don't know what it's going to be," he said when asked of his plans for the building last week.
In the course of making his plans and arranging for a total of $1.2 million in financing, Denson often used the name, resources and image of the chamber to help the private project succeed.
On July 25, 1979, Denson received a letter from Andrew Bennett Associates, setting forth the terms of a consulting contract on what was called the "Coliseum Project." The five-page contract attached to the letter describes a proposed agreement between the Bennett firm and the D.C. Chamber of Commerce.
Chamber officials say that this contract was never presented to the board of directors for approval.
The preamble of the document -- which was signed by Denson as president of the chamber -- reads, "Whereas the chamber is desirous of undertaking [economic development] activities . . . [and] the chamber desires to engage the contractor, . . . [the] contractor agrees to render advisory services . . . on a project to acquire, rehabilitate and operate the Coliseum."
Howard Lazenby, who was the chamber's bookkeeper at the time and who worked closely with Denson on financial matters, said files relating to the coliseum were kept at the chamber offices and that Denson led Lazenby to believe that "the coliseum project" was an official project of the chamber.
One $1,500 check written on the chamber's account to Denson's institute during this period combined the names of the two organizations to read: "Pay to the order of D.C. Chamber of Commerce Institute for Economic Development."
The check was co-signed by Allison Bryant, an official of the U.S. Department of Housing and Urban Development, who served both as chamber vice president and as a director of Denson's private institute.
Bryant was on loan from HUD to the chamber under an exchange program arranged through the District government. Reached by telephone over the weekend, Bryant declined to comment.
Denson acknowledged that his method of signing the checks violated the chamber's corporate bylaws. "There's no explanation for it. It's been corrected," he said.
The terms of the contract allowed Andrew Bennett to charge the chamber $500 a day for his personal advisory services and $225 a day for his firm's services. The total payments to Bennett and his firm were not to exceed $24,825.
Bennett could not be reached for comment and it could not be determined whether any chamber funds were collected under the contract.
During these same months, Denson also approached the District of Columbia Development Corp. (DCDC) for a $150,000 loan that would help Denson's D.C. Institute purchase the coliseum. The DCDC receives most of its funding from federal grants funneled through the District government. The board of the DCDC is appointed by Mayor Barry.
DCDC's president, Joseph D. Jackson, said in an interview that when Denson requested the loan, he did so on behalf of the D.C. Institute for Economic Development. "We thought it [the institute] was the economic development component of the D.C. Chamber," Jackson said.
D.C. corporation record show that the institute is not affiliated with the chamber. The institute was incorporated in 1976 by Denson, developer Theodore M. Hagens Jr. and Bryant G. Harris. Harris, who still is listed among the institute's directors, said he was not aware of Denson's dealings on its behalf.
After several months of negotiations, the DCDC board of directors voted in November, Jackson said, to give Denson's institute a $50,000 loan to reimburse him for a purchase contract deposit he had made on the Washington Coliseum property. Jackson said the terms of the loan allowed Denson and his corporation to put up no security other than their interest in the purchase contract. It also required no interest or principal payments until an unspecified date in the future when the purchase contract was executed, Jackson said.
Jackson signed the loan agreement on behalf of DCDC. Denson signed on behalf of his institute. The signature of chamber vice president Bryant also appears on the contract.
At the time, Denson was negotiating with the U.S. Department of Commerce's Economic Development Administration to secure additional financing for the project, chamber records show.
As the financing for the coliseum project began to jell, Denson wrote a series of letters in January to various Washington business leaders on D.C. Chamber stationery asking the officials to serve on the board of the institute.
In those letters, Denson described the institute as the "nonprofit arm of the D.C. Chamber of Commerce."
By February, Denson had signed the latest in a series of agreements with Washington Coliseum, Inc., and its vice president, Charles Lockyer, to extend the settlement date of two major transactions on the coliseum property. In the first transaction, Denson's D.C. Institute would pay $650,000 for the coliseum. Secondly, a company called Ice Age Industries, Inc. would purchase the adjoining Uline Ice House for $600,000, a total purchase price of $1.2 million.
Denson's institute also agreed to pay one percent per month in interest on the purchase price for any additional extensions.
On March 7, members of the D.C. chamber's finance committee, which was investigating Denson's financial dealings, demanded that Denson turn over the records of the Institute for Economic Development since Denson had characterized it to board members as the "nonprofit arm of the chamber."
Denson refused. "It [the institute] never had any relationship to the chamber," Denson said last week. "I've indicated that it was the nonprofit arm of the chamber, but it never got to that stage. I'm still trying to get it off the ground."
The purpose of the institute, he said, was to "feed research and technical information to the chamber."
Also in March, the chamber received a bill for $6,000.75 from the architectural firm of Hammer, Siler & George Associates for a feasibility study the Connecticut Avenue group had conducted on the coliseum.
On March 5, Denson signed a $3,000 check drawn on a chamber bank account paying the architects for part of their services.
In an interview, Denson said, "That was an error. That shouldn't have come out of chamber funds. I have taken full responsibility for that and it will be repaid."
Denson, whose position in the Berry administration makes him the standard bearer of ethics for the District government, is a man who has worn many hats.
In a brochure he published last year to spotlight one of his firms, Jim Denson & Associates, Denson described himself as:
"Washington, D.C.'s newest boxing promoter."
"Newly appointed chairman of the D.C. Board of Elections and Ethics."
"One of the principals in Gallery Center Development Corp.," which unsuccessfully competed for the development rights above the Gallery Place Metro stop.
Former newspaper publisher and editor in California.
Consultant to government and private industry.
President of the D.C. Chamber of Commerce.
Until recently, Denson conducted virtually all of his business out of the drab ninth floor suite of the D.C. chamber at 1319 F Street NW.
Denson was described by one staffer as a man who says little about his business to anyone.
"The only way you could tell when he was in his office was when the door was closed," said Lazenby, the former bookkeeper.