A city employe has told a federal grand jury that she gave former D.C. deputy mayor Ivanhoe Donaldson $4,500 at his request after Donaldson gave her a city government check in that amount made out to a friend of his, sources said.
The grand jury is investigating Donaldson, Mayor Marion Barry's top political adviser and chairman of the D.C. Democratic Party, in connection with about $30,000 in checks issued in 1981 when he headed the Department of Employment Services, according to District government officials and other sources familiar with the investigation.
One of the checks the grand jury is focusing on is a $4,500 city check issued in the name of Charles E. Cobb, a free-lance journalist and longtime Donaldson friend, sources said.
Cobb has said in an interview that he told the grand jury he did not receive the $4,500, and that he did not do any work for the city. Cobb said that when he was shown the check by federal prosecutors his own name was on the back of the check as an endorsement, but he said he told the grand jury that the signature was not his.
Sandra Hill, who worked as a program analyst in the employment services department when Donaldson headed it, has testified that Donaldson gave her the check issued in Cobb's name, sources said.
Hill told the grand jury that she deposited the check and gave the money to Donaldson at his request, sources said.
Hill could not be reached for comment.
Donaldson referred all inquiries to his attorneys yesterday. Frederick A. Douglas, one of Donaldson's attorneys, declined to comment yesterday. Donaldson has said previously he was aware there was an investigation, but has declined to discuss it.
Hill, who is now a $31,918-a-year special assistant to city Public Works Director John Touchstone, was acquainted with Cobb and knew he was a friend of Donaldson's, according to sources who are familiar with her version of the events. She has said she assumed the money was going to Cobb, those sources said, and she has told federal investigators that as far as she knew nothing improper took place.
Cobb has told federal investigators that he was out of the country on business when the check was written and that he learned only recently that a check was issued in his name in 1981, sources said.
Federal authorities are investigating what happened to the $4,500 city check issued in Cobb's name and to checks issued in the names of two other persons, one of whom was also a longtime Donaldson friend, sources said.
Barry, who is on the final leg of a three-week trip to Africa, declined to comment when interviewed Thursday by a reporter in Nairobi, Kenya. "I've been away since Dec. 7," Barry said. "I will comment after getting back to Washington after being properly briefed by my staff."
Barry is scheduled to arrive in Washington Monday. Diplomatic sources in Kenya said that one of the stories on the investigation was cabled to Barry.
Donaldson has directed Barry's political campaigns for a decade, managing both of his successful mayoral campaigns. He held several major jobs in Barry's administrations, including head of the employment services department from the fall of 1980 through May 1982. Most recently, he served as deputy mayor for economic development before resigning in October 1983 to become a vice president in the Washington office of E.F. Hutton & Co. Inc., an investment and brokerage firm.
The investigation began after city Inspector General Joyce Blalock alerted the U.S. attorney's office to the checks in question, which were drawn against a special administrative fund that is tied to the city's unemployment compensation fund, sources said.
Barry had asked Blalock to review the department's financial controls after the discovery of financial irregularities that occurred after Donaldson left the department.
For many years, including the time Donaldson headed the department of employment services, the director of the department controlled the special administrative fund, which was separate from the city's central financial management system. In October, following Blalock's review, Barry transferred the fund -- which city officials said could have up to $250,000 in it at any time -- to the city controller's office, as part of an overall effort to tighten control of the department's expenditures.
City government sources said the grand jury has subpoenaed the fund's records.