Almost from the day he helped catapult Mayor Marion Barry into power in District politics seven years ago, Ivanhoe Donaldson was in financial trouble.
He suffered the indignity of being hauled into D.C. Superior Court in July 1979, shortly after Barry took office, for failing to pay a contractor for remodeling his Wyoming Avenue NW condominium. He was sued again in 1981 for failure to pay $3,000 in Visa credit card bills. His taste for Mercedes, limousines, custom-tailored suits and frequent meals at expensive downtown restaurants drained his and his wife's city government paychecks.
And ill-fated business ventures, particularly a health drink distributorship called Avant-Garde Food & Beverage Ltd. that he operated in 1982 and 1983, brought irate creditors down upon him.
Through it all, Donaldson, a civil rights organizer turned political strategist and D.C. government official, projected an aura of a man totally in control -- a feared bureaucratic infighter who usually could get his way. But his career and reputation for invincibility were shattered Tuesday when he admitted in court that he illegally obtained more than $190,000 in city funds over a three-year period -- primarily to cover personal expenses.
While many of Donaldson's friends and erstwhile admirers struggled to come to terms with his stunning revelations and precipitous fall from grace, some sources said it was a case of an arrogant politician who exploited his power to underwrite an extravagant life style, never dreaming that authorities would pick up the scent of his unlawful paper trail.
"He really came from one strata and tried to move up to another one overnight," said a prominent lawyer who has known Donaldson for years. "That's very tough."
Donaldson's guilty plea before U.S. District Court Judge Gerhard A. Gesell to interstate tranportation of fraudulently obtained funds, obstruction of justice and tax fraud -- all felonies -- left little doubt about how he obtained the money.
He illegally arranged to issue city checks in the names of two longtime friends from the civil rights movement, a former campaign associate and an aunt who lives in New York, then pocketed most of the funds. Donaldson also duped compliant city contractors into serving as middlemen to funnel District funds to himself.
Far less clear, however, is precisely how Donaldson spent the illegally obtained funds and why he risked his considerable reputation to steal the money, mostly from a special revolving account within the D.C. Department of Employment Services that was set up to make emergency benefit payments to the unemployed.
"He never directly or indirectly asked me for a loan to help him out," said Jeffrey N. Cohen, a well-to-do Washington banker and developer who has known Donaldson for years. "That's the shame of this . . . . A lot of people considered themselves his friend, and if he said 'Help,' they would have said, 'What can we do for you?' "
James Gibson, former director of the D.C. planning office and the outgoing director of the Meyer Foundation, said, "We've been very close for a very long time. This is just an absolute tragedy."
Robert P. Watkins, a lawyer representing Donaldson, said Friday, "Neither Mr. Donaldson nor I will have anything to say about this matter."
Donaldson, 44, the son of a New York City policeman who left Michigan State University in 1960 to join the Student Nonviolent Coordinating Committee and organize blacks in the South, has kept his private life secret from many of those he befriended in the civil rights movement, in politics and, most recently, in the corporate world. Many of those who claim to be closest to Donaldson say he remains an enigma.
Donaldson kept about $147,000 of the $193,000 taken from the city and Barry's 1982 reelection campaign committee for his personal use, according to documents filed by the U.S. attorney's office. The remainder was kept by the friends and contractors who assisted him in cashing the illegal checks. No one else has been charged in the case.
The systematic thefts spanned a period of more than three years. The documents say $27,145 was taken in 1981, $37,800 in 1982 and $64,000 in 1983, Donaldson's last year in D.C. government. According to the documents, an additional $65,000 was taken in 1984, after Donaldson had resigned to become a vice president with E.F. Hutton & Co. but still held sway over city officials. Donaldson left his job with Hutton in September.
Interviews with many of Donaldson's friends, associates and critics and a review of public documents and records provide a portrait of a free-wheeling spender who reveled in the trappings of success of his most well-to-do associates. Sources close to the investigation said that Donaldson was spending roughly twice what he was earning from his government jobs at the time of the thefts.
"He dined out almost every night," recalled a close friend. "In social settings he almost always picked up the tab, no matter how much . . . . That was part of the aura -- to be able to pick up the tab and fly off wherever he wanted to."
Donaldon's D.C. government career dates to 1975, when he served as an aide to then-City Council member Marion Barry, a friend from the civil rights days. Donaldson, who managed Barry's 1978 campaign for mayor, followed Barry into office in 1979 as a general assistant and then, between 1980 and 1982, served as acting director of the Department of Employment Services.
He temporarily left government in 1982 to run Barry's reelection campaign and to launch several business ventures, including the disastrous beverage distributorship and a consulting firm called First City Corp. After heading Barry's second-term transition team as a paid consultant, Donaldson returned to government in 1983 as deputy mayor for economic development.
In his last full year in government, Donaldson and his wife, Winifred, who is employed in the D.C. Department of Public Works as a special assistant in the Bureau of Parking, received a combined income from the city of about $103,000 -- good pay by government standards, if not by the standards of lawyers and business persons on K Street.
During the years in which he defrauded the city and Barry's reelection campaign, interviews and records show, Donaldson:
*Purchased a 1983 Mercedes 300-D turbo diesel with a sticker price of $31,632 from the American Service Center in Arlington, with financing from the D.C. National Bank.
About a week before the auto purchase, on Dec. 21, 1982, Donaldson illegally obtained $36,000 from the city and deposited it in the First City Corp. account, according to court documents. An executive of D.C. National declined to say last week whether Donaldson repaid the car loan.
*Dined out practically every night at expensive Washington restaurants, including Jean-Pierre, Tiberio Ristorante, Christini's, Mel Krupin's, Duke Ziebert's and Joe & Mo's. Dinner for two often cost $100 or more.
Donaldson frequently dined with close friends, including Elijah B. Rogers, an executive with Alexander Grant & Co. and a former city administrator; Jeff Mitchell, an advertising executive, and Matthew Shannon, his successor as director of the Department of Employment Services.
*Spent considerable sums for clothing, including an occasional purchase of custom-tailored suits from Art Custom Tailor, a high-priced men's shop on Wisconsin Avenue NW that caters to prominent lawyers, businessmen and professional athletes willing to spend $800 or more for a suit.
*Occasionally rented a limousine from Carey International Limousine Service of Arlington for personal use.
*Borrowed $78,000 from the National Bank of Commerce in November 1982 "for the purpose of carrying on or acquiring a business, professional or commercial investment," according to records filed with the D.C. Recorder of Deeds. Donaldson used his condominium apartment on Wyoming Avenue, assessed at $145,600, as collateral in obtaining the loan from a bank then headed by Jeffrey Cohen. The loan was subsequently repaid, according to a knowledgeable source.
Some of that money was used by Donaldson to launch Avant-Garde in the fall of 1982. The firm, which distributed a soda called Natural Quencher on the East Coast, was forced to close the following spring as debts piled up.
As a SNCC volunteer in the Deep South during the early 1960s, a friend recalled, the slender, angular-looking Donaldson was a sensitive man with a "very soft touch" who took part in the "freedom rides." Donaldson, the friend said, coaxed poor blacks to register to vote by sitting with them for hours on their front porches or exuberantly singing with them in church. He risked his life during numerous stays in smalltown jails and once was waylaid by a policeman and some unidentified white men who threatened him with a gun, according to a story told by one of Donaldson's SNCC colleagues, Charles Cobb.
A friend noted that even then Donaldson showed a taste for nice clothes and good times whenever they shed their dust-covered denims and headed north on SNCC fund-raising forays.
It was during his days with SNCC that he forged his lifelong friendships with Barry, Cobb, who is a journalist, Judy Richardson of New York City, D.C. City Council members Frank Smith (D-Ward 1) and John Wilson (D-Ward 2), city official Courtland V. Cox and others. Years later, Donaldson was to enlist the unsuspecting Cobb and Richardson in his schemes to steal money from the District.
It was also during his SNCC days that Donaldson earned an enduring reputation as a tough, committed civil rights activist. He gained national recognition as a political strategist by helping to elect a number of prominent black leaders, including Georgia state Sen. Julian Bond, Mayor Richard Hatcher of Gary, Ind., and more recently, Mayor Harold Washington of Chicago.
He held a number of academic posts, including resident fellow at the Institute for Policy Studies, a liberal think tank, and an instructor in Afro-American studies at the University of Massachusetts.
His entry into District politics seemed to change him. Teamed up with Barry, an ambitious pragmatist, Donaldson, the strategist and ideologue, soon saw the unlimited potential for organizing Washington, a predominantly black Eastern city which then had much of the flavor of the South.
Donaldson, as one friend said, suddenly "moved into the fast lane." He startled some of his civil rights friends in 1973 by showing up at a birthday party in a leased Mercedes.
His persona seemed to change as well as he grew in stature in Washington. No longer the tall, lean kid with the "soft touch," Donaldson became known as Barry's aggressive, moody hatchet man, a master at organizing campaigns and bringing government bureaucrats into line.
Donaldson began to circulate in a number of circles, including those of his old civil rights and social activist buddies; the political activists, black entrepreneurs and hangers-on who make up the local political scene; and what is considered by some to be the cream of the city's black lawyers and business persons, the people who belong to the "right" clubs and dress and drive for success. Donaldson became most intrigued with the latter group, according to some of his friends.
His move to E.F. Hutton & Co. in late 1983 meant a big increase in salary and a big step up for him in climbing the District's social ladder, but the evidence of wrongdoing buried deep in the District bureaucracy eventually came back to haunt him.
"There was an enormous amount of pride in the guy," said a lawyer who has been a friend of Donaldson for years. "I used to work in government . . . but I got out when I saw I couldn't live on that type of salary.
"Perhaps he wanted everything at one time.