Ivanhoe Donaldson received consulting contracts worth more than $320,000 from developers and firms seeking business with the District government shortly after he stepped down as a deputy mayor in October 1983, according to a presentencing memorandum filed yesterday by federal prosecutors.
A development team headed by Western Development Corp. agreed in April 1984 to pay Donaldson $250,000 in consulting fees if it won the rights to develop a $460 million office, hotel and commercial complex on the Portal site, the last major redevelopment parcel in Southwest.
The city's Redevelopment Land Agency voted 3 to 2 last September to award the project to the Western team.
Herbert Miller, a Western official, said Donaldson has received $85,000 so far for providing advice on relations with Portal area community groups, but that it was unclear whether he would receive the rest of the money.
Donaldson, the architect of Mayor Marion Barry's political career, also was assisted by banker Jeffrey N. Cohen, a Barry ally, in obtaining a $78,000 loan from the National Bank of Commerce in the fall of 1982 despite Donaldson's poor credit rating and objections raised by the bank's then president, the memo stated.
Cohen, who was chairman of the bank at the time of the transaction, said yesterday that he did not arrange for Donaldson to get the loan, which he said was approved by the bank's loan committee without being influenced by Cohen. At the time of the loan, Donaldson was directing Barry's reelection campaign. Cohen stepped down as chairman last year to head a major redevelopment project in the Shaw area that has been financially underwritten by Barry's administration.
Donaldson's business and loan activities, while not deemed illegal, were cited by Assistant U.S. Attorneys Daniel J. Bernstein and David F. Geneson in the memo, which urged U.S. District Court Judge Gerhard A. Gesell to impose a stiff punishment on Donaldson, who pleaded guilty last month to charges of systematically defrauding the D.C. government of nearly $200,000, tax evasion, and obstructing an investigation of criminal wrongdoing.
"The facts of this case inescapably show that Donaldson is a predator," the memo stated. "He stole from the people of the District of Columbia. He persuaded or intimidated others to help him steal. When he learned that his thefts might be uncovered, he lied and enlisted others to lie on his behalf.
"The abuse of trust and misuse of power shown in this case call for a sentence of a substantial period of incarceration and an equally significant fine," it stated.
Donaldson, 44, the former deputy mayor for economic development and acting director of the D.C. Department of Employment Services, is scheduled to be sentenced Monday and faces a maximum sentence of 23 years in prison and a $360,000 fine. The prosecutors also have asked Gesell to order Donaldson to reimburse the city for the public funds he stole "with impunity" between 1981 and 1984.
In the 61-page memo and accompanying backup documents, prosecutors outlined new details about Donaldson's tattered personal finances, his theft of city funds while he was both inside and out of city government, and his schemes for stealing or diverting city funds and then using close friends to try to cover up his activities.
The memo also vividly described how Donaldson intimidated other city officials and private contractors who were fearful of his sweeping power over city jobs and government contracts.
Cornbread Givens, the head of a private poverty agency that received a $65,000 sham contract from the city used to illegally funnel money to Donaldson, testified before a grand jury that "I knew I was involved in a scam," according to the memo.
"That was the first time in my life I actually saw the insides of a government scam where contracts were moving without any interference," Givens testified. "Now, I ain't never seen that before. I guess I was fascinated by it."
The prosecutors said that Donaldson stole city funds to pay off specific personal debts and that over the past decade he was almost constantly in financial difficulty because of "his continued pattern of living beyond his means."
In applying to the National Savings and Trust in 1979 for a loan to consolidate his personal debts, Donaldson said in a letter that his strained financial condition "created a major cash shortage for me, delaying the payment of bills and robbing Peter to pay Paul."
Federal prosecutors also disclosed that the joint FBI and Internal Revenue Service investigation found that:
*Donaldson received $70,000 from Datacom Systems Corp., a New Jersey-based parking management and collection firm that holds District contracts worth an estimated $4 million. He received $34,000 of the funds in early 1985, when Datacom was negotiating its largest contract with the city.
Donaldson was named to the board of Datacom, which is owned by Lockheed Corp., and was hired as a part-time consultant shortly after he left city government in late 1983 to become a vice president with E.F. Hutton & Co. A Datacom spokesman said yesterday that Donaldson "did nothing at all" for Datacom related to the firm's D.C. government contracts.
*Several more D.C. government employes admitted to the federal grand jury investigating Donaldson that they violated city financial controls and rules under pressure from Donaldson. Robert Robinson, the administrative officer for the mayor who issued a $36,000 check to a Donaldson consulting firm called First City Corp. without supporting documentation, testified that he did so after getting authorization from Dwight Cropp, the executive secretary to the mayor.
Cropp, now the mayor's chief of intergovernmental relations, denied before the grand jury that he had authorized the check. However, Cropp said that in view of Donaldson's clout, "I would not have stood in the way" if Robinson had sought his authorization. Cropp declined yesterday to comment on the matter.
*Donaldson's financial problems date to at least 1976 and he repeatedly was hounded by creditors for not paying credit card and repair bills, mortgage and business loan payments and monthly fees on his Wyoming Avenue NW condominium apartment. An examination of Donaldson's bank records revealed that between 1976 and 1983 Riggs Bank sent him more than 80 delinquency letters because he was behind on his monthly mortgage payments.
*Although Donaldson was in almost constant financial trouble, his earnings from the District government and from private firms after he left the city government were substantial. Shortly before he resigned as deputy mayor in late 1983 at a salary of $63,700 to become a vice president with E.F. Hutton, Barry gave him a $19,000 bonus for "distinguished service."
In 1984, Donaldson and his wife Winifred, who is a District government employe, deposited $371,000 in their bank accounts. Among Donaldson's sources of income were a salary of $140,000 from E.F. Hutton and consulting fees from other private firms.
*Donaldson falsified his District government employment applications when he stated that he received an undergraduate degree from Michigan State University and a master's degree from Columbia University. Prosecutors said he dropped out of Michigan State before graduating and did not get a master's degree from Columbia.
*Donaldson threatened Marion (Duke) Greene, a private businessman who unwittingly had helped Donaldson unlawfully obtain city funds. When Greene pressed Donaldson for paper work on the transaction, according to prosecutors, "He was confronted by Mr. Donaldson who told him, 'Since it seems like it's so hard for you to understand, maybe you might not want to consider doing business with the city government.' "
Prosecutors detailed the high-powered life style of Donaldson -- including lavish expenditures for luxury items such as a $30,000 1983 Mercedes-Benz, thousands of dollars in tailored clothing, jewelry and art objects -- and how the former city official's thefts coincided with severe financial pressures.
Stuart Long, a political supporter of Barry's who operates the Hawk and Dove restaurant on Capitol Hill, told investigators that several checks cashed by Donaldson at the restaurant totaling about $2,500 may have been for poker games Donaldson played with unidentified high-level city government officials.
Prosecutors outlined how Donaldson relied on money he took from the District government to cover personal debts, including the $78,000 loan from the National Bank of Commerce.
Michael Sullivan, president of the bank at the time the loan was approved, told investigators he twice turned down Donaldson's request for the loan in September 1982 because Donaldson submitted "poor financial statements." However, according to the memo, Sullivan said the bank's loan committee overruled him after "Jeff Cohen directed him Sullivan to present the loan application" to the committee.
Cohen yesterday denied that he directed Sullivan to do anything. Cohen said he may have suggested that Sullivan refer the request to the loan committee, but the decision to approve the loan was made by the bank's loan committee, not by him.
According to the prosecutors' memo, Cohen told investigators the ". . . loan looked good on the bank's record for community investment, in view of Donaldson's high visibility in the community." Cohen said he does not recall making such a statement.
Barry, who was interviewed by investigators, is quoted in the memo as saying that Cohen informed him that Donaldson was delinquent on repaying the loan and that Cohen "did not want to take any action that might reflect unfavorably on Mayor Barry's administration."
Cohen said he does not recall having such a conversation with Barry.