On Nov. 26, 1982, James George, a deputy director of the D.C. Department of Employment Services, got a telephone call from Ivanhoe Donaldson asking him to issue a $26,000 check to a polling firm to pay for an unemployment study.
Donaldson, a top political adviser to Mayor Marion Barry, had resigned as head of the agency earlier that year and was temporarily out of government, but George bent the city's contracting rules in order to accommodate him, as he did on several other occasions, according to federal court documents.
George was was not alone in helping Donaldson, who pleaded guilty Tuesday to interstate transportation of fraudulently obtained funds, obstruction of justice and tax fraud charges. The high-ranking Employment Services official was one of at least six Barry administration officials who allegedly were key figures in a complex web Donaldson created to siphon more than $190,000 from the District government between 1981 and 1983, according to court documents.
The officials include Curtis McClinton, Donaldson's successor as deputy mayor for economic development; Matthew Shannon, Employment Services director and a Donaldson protege; Robert Robinson, administrative officer for the office of the mayor; Sandra Hill, a former Employment Services employe and now an assistant to the public works director, and Lillian Manson-Neal, special assistant to the Employment Services deputy director.
The fate of those officials, none of whom has been charged, remains uncertain.
Barry, speaking to reporters at a news conference late yesterday upon his return from a National League of Cities conference in Seattle, said he would not comment on their actions. The mayor said, however, that the system in place when the abuses occurred has been reformed and "those actions will not happen under present circumstances."
"We have a very tight system now," Barry said. "These kinds of transactions that went on during that period could not happen now."
Assistant U.S. Attorneys Daniel J. Bernstein and David F. Geneson, who handled the case, said yesterday that the investigation of improprieties is not over and that "the grand jury investigation is continuing."
"When Mr. Donaldson is sentenced, we want to put him before the grand jury," Bernstein said."
Barry, citing the ongoing federal investigation, said it would be improper for him to comment on D.C. officials who have been mentioned in the case and declined to say whether he plans to initiate any investigation or disciplinary actions of his own.
Shannon, George and McClinton said through spokeswomen that they would have no comment becausing of the ongoing investigation. The others could not be reached.
The 18-months-old investigation has involved a number of federal agencies. In addition to the U.S. attorney's office, G. Donald Hickman, a special agent of the FBI's Washington field office, played a major role. Two investigators with the Internal Revenue Service, special agent Edward J. Murphy and revenue agent Herbert Berl, also took part.
In a statement issued Tuesday after Donaldson pleaded guilty to the three felony charges, U.S. Attorney Joseph E. diGenova said Donaldson had used his "unquestioned influence and authority within the city government" to manipulate government officials into "circumventing accounting and contracting procedures."
The details of the irregularities emerged as prosecutors presented their case orally before U.S. District Judge Gerhard A. Gesell, who will sentence Donaldson, 44, on Jan. 27.
Prosecutors asserted that in at least five other instances George ordered checks to be issued to friends and relatives of Donaldson without the supporting documents that are supposed to accompany such expenditures. Donaldson forged their endorsement signatures on several checks and, on two occasions, ordered Hill to cash the checks at local banks.
A lower-level accountant, Haridis Unni, questioned George about a $1,800 check written to Judy Richardson, but George "provided no further explanation to Mr. Unni and declined to provide Mr. Unni with any written justification for his actions," prosecutors said. "Because Mr. George was the third highest ranking official at the agency, Unni did as he was told."
Donaldson, again while out of office and working in the private sector, ordered that a contract totalling $65,000 be given to the Poor Peoples Development Foundation headed by Cornbread Givens and that it be monitored by Neal, who prosecutors said had "absolutely no expertise in this area," evidence showed.
"Mr. Matthew Shannon would testify that in early 1984 he had been advised by the current deputy mayor, Curtis McClinton, that Ivanhoe Donaldson wanted a contract awarded to Cornbread Givens," the prosecutors said.
Versions of how the $65,000 contract was given differed as to what happened next. Shannon told investigators that he merely passed along this information to George and that George apparently followed up by giving the contract.
"George and another agency official . . . would testify that Mr. Shannon personally ordered that Givens be given" the contract, the court documents stated.
In another contract given to the Poor Peoples Development Foundation, Donaldson asked Robinson to issue a $27,500 check "on an expedited basis" for a contract to be performed by Givens' foundation. On several occasions after the request in May 1983, Robinson said he asked Donaldson for written documentation for the check that had been issued and Donaldson said he would provide it later, prosecutors said.
Robinson told Donaldson it was a "violation of D.C. government policy" to issue the check before the written contract was approved.
"Due to Mr. Donaldson's high position in the city administration, Mr. Robinson would testify that he did not feel it was his place to express his concerns to other government officials," the prosecutors said in their presentation.
Barry yesterday blamed an Employment Services fund known as the Special Administrative Account Fund for many of the difficulties outlined by the U.S. attorney and his assistants. The revolving account, which was intended to make emergency benefits payments to unemployed persons, was not part of the city's Financial Management System, an integrated computer system.
Barry said there were 30 to 40 such "outside" funds in the government when he became mayor in 1979 but that he has systematically attempted to bring them into the fold of the management system for greater control. Alphonse G. Hill, deputy mayor for finance, said yesterday he was not aware of any such funds still in existence in agencies controlled by the administration.
The mayor said the guilty plea of Donaldson, a friend and adviser dating back to the civil rights protests of the 1960s, would not damage Barry politically and that the investigation of Donaldson proved the D.C. system of checks and balances was functioning well.
"It was our system that detected this," Barry said, alluding to an audit by the D.C. inspector general's office that discovered irregularities in the issuance of checks from the special account within Employment Services. "It wasn't the news media ferreting it out. It wasn't the U.S. attorney finding it out. It was the D.C. government."
Barry asserted that his administration retains the support of 75 percent of the D.C. voters and that their backing would not be swayed by the revelations.
Barry is expected to run for reelection next year, and he said yesterday that the timing of the Donaldson plea was not a factor in his political considerations.