James L. Denson, accused of misappropriating thousands of dollars from the D.C. Chamber of Commerce for personal business investments, resigned yesterday as chairman of the D.C. Board of Elections and Ethics.
"It is unfortunate but imperative that I concentrate totally on my personal affairs at this time," Denson said in a letter to Mayor Marion Barry that was released late yesterday. "When the facts are known, you and the citizens of the District of Columbia will know that I have served this city honorably and well."
The resignation came only two days after Denson had stepped down as president of the chamber in the face of three pending investigations into the organization's finances -- one by the city's inspector general, another by a federal grand jury and a third by the chamber itself.
But even as Denson resigned as head of the city agency that oversees election operations and the ethical conduct of public officials, D.C. agencies began to move against the chamber for debts incurred while Denson was the organization's president.
The city's Department of Finance and Revenue filed a tax lien against the chamber to collect $17,604 in unpaid withholding taxes, effectively cutting off city funds to the chamber.
D.C. Auditor Matthew S. Watson stopped payment of a $4,266 check to the chamber that was part of a $52,000 city grant to promote minority tourism.
The D.C. Department of Employment Services, meanwhile, canceled further payments to the chamber on a $291,000 Comprehensive Employment and Training Act grant for training of 24 clerks and tour guides.
The chamber was slated to receive about $472,000 in District and federal funds this fiscal year. Chamber records show that the organization is $150,000 in debt.
Denson's resignation from the ethics board brought to a head an issue that Barry had struggled with for a week. Daily newspaper articles detailed Denson's alleged misuse of funds, the three investigations were begun one by one and city hall observers waited for Barry to act on what some saw as a worsening situation.
In the end, however, Barry claimed no public role in the departure from the board of the person he appointed chairman in 1979. Instead, he simply released Denson's letter of resignation along with a terse mayoral statement and refused to talk to reporters.
Denson, reached last night, referred inquiries to his lawyer. The lawyer could not be reached immediately.
One key mayoral aide who advised Barry on the controversy said the mayor refrained from acting because he did not want to appear as if he were simply capitulating to newspaper reports.
Other observers viewed the situation as a ticklish political one for the mayor, who was elected to office with a narrow plurality and whose popularity seems to have decreased with Barry's handling of the city's current financial crisis.
City Council member John L. Ray (D-At Large) who is often a political ally of Barry, noted that Denson is in some ways representative of the middle-class black residents of Upper Northwest, among whom Barry has never enjoyed great support. "This is a tough one for Marion," Ray said. "He doesn't just want to kick [Denson] out into the cold."
Barry had said repeatedly that he would take no action against Denson at least until he received an interim report from D.C. Iinspector General Joyce Blalock on the chamber's handling of District and federal funds. Blalock's report was scheduled to reach Barry's desk yesterday, but never arrived.
But sources close to the mayor said Barry's hand was forced by an article in The Washington Post yesterday reporting that, according to FBI records, Denson used a forged document to obtain a $30,000 federal loan guarantee in 1972, and later defaulted on the loan.
"That threw a different light on things," said one close adviser to Barry. The source said Barry felt that even if Denson had misused chamber funds as alleged, the actions might not be illegal. But use of a forged document is a much more serious accusation.
The source said Barry threatened yesterday to remove Denson from the board if he did not step down.
According to chamber records obtained by The Washington Post, Denson misappropriated thousands of dollars over the last year from the organization, a trade association of small and minority-owned businesses.
Chamber records show that Denson 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.
The records indicate that Denson took a series of actions -- including signing contracts, disbursing funds and writing letters -- which used the name, financial resources and influence of the chamber to further his own private business interests.
Denson acknowledged last week that he may have violated some laws in handling chamber funds, but he insisted 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."
Persons close to Denson have reportedly been advising him for several days to step down. Sources said lawyer Larry C. Williams and developer Theodore R. Hagans, both past presidents of the D.C. chamber, were trying to persuade Denson to resign from the ethics board.
"I don't see how he [Denson] had any choice," said one source familiar with the discussions. "Every time we look at the papers we notice more material about him. I would think he's been sufficiently destroyed by now."
The source said Denson indicated "that he [Denson] might have been involved in robbing Peter to pay Paul," but said he believed the investigations "may turn up irregularities or comingling of funds, but nothing strictly illegal."
Barry appointed ethics board member Albert C. Beveridge II to replace Denson as chairman. Beveridge, 45, is a lawyer and has served on the board since July 3 of last year. Beveridge challenging a city law that would have required Barry to resign his seat as a City Council member to run for mayor.
Denson is a registered Republican, and by law Barry will have to fill his slot on the board with another Republican since the board must have representation by both major parties, Beveridge and board member Virginia P. Moye are both Democrats.