In the months since the District government seized control of a dilapidated housing complex, citing years of unpaid bills by its owner, many of the residents of Park Southern Apartments have wondered what happened to their missing security deposits.
Now, a new city report raises another question: What happened to their rent?
D.C. housing officials have completed an audit of how Capitol Services Management accounted for $300,000 in rent collected from March to May, in the final weeks before the District installed its own management company to run a property that had fallen more than 36 months behind on a city-backed mortgage.
According to the audit, almost $30,000 in rent payments from a six-week period is unaccounted for — the amount of the gap between what Capitol Services Management collected from residents and the smaller amount that was deposited into a Park Southern bank account.
According to the audit, Capitol Services Management also held on to another $30,000 in management fees that it wasn’t entitled to, paid $8,000 in salary to the head of the nonprofit corporation that owns the building despite no timecard or contract, and paid that woman’s attorneys $10,000 without ever seeing a bill.
In all, the audit lists over $103,000 in “unsupported revenue and expense discrepancies.”
On Thursday, Mayor Vincent C. Gray’s office forwarded the findings to the Internal Revenue Service and the District’s attorney general’s office.
Phinis Jones, the owner of Capitol Services Management, strongly disputed the report’s findings in a written response to the city. Jones provided explanations for why the District’s numbers might be off in several areas.
“The notion that any monies were stolen or pocketed are not supported by this accounting,” said Donald Temple, Jones’s attorney. “There is not one thing in this that shows Phinis Jones took a red cent.”
But the burst of activity in the still unfolding controversy around Park Southern Apartments appeared bound to keep Jones’s name circulating in the final weeks of the District’s mayoral race.
Jones is a major campaign fundraiser and contributor to D.C. Council member Muriel E. Bowser’s mayoral bid.
The city’s audit report comes as the District’s inspector general continues to investigate the property — and after IRS agents presented a criminal summons to managers at Park Southern last month and carted off boxes of financial documents.
Park Southern became the subject of two investigations after a Washington Post report in July detailed the building’s deep disrepair and its nonprofit owner’s default on a $3 million city-backed loan.
At the center of the dysfunction are two people: the board president of the nonprofit corporation that owns the building, Rowena Joyce Scott, a minister who is also one of Southeast Washington’s most influential Democratic powerbrokers; and Jones, the property manager hired by Scott.
Scott and Jones have faced accusations that they wielded political influence to avoid government scrutiny and to benefit personally at the expense of Park Southern’s residents.
Scott maintains that she did nothing wrong and made critical repairs but lacked the money to do more.
But with the city’s plummeting stock of affordable housing now a central theme in this year’s mayoral election, one of Bowser’s general election opponents, D.C. Council member David A. Catania (I-At Large), has accused Bowser of improperly thwarting the city’s efforts to figure out what went wrong at Park Southern to protect supporters who helped her win.
Scott is a former Gray supporter who switched her allegiance to Bowser during the Democratic mayoral primary.
According to the audit, Jones collected more than $311,000 in rent, sometimes through money orders, but deposited less than $282,000, leaving deposits “understated by $29,882.96.”
In his response to the city, Jones said more than $13,000 of the money that the city audit said was not accounted for in fact had been collected and deposited. But the amount couldn’t be correctly reconciled because Jones had been “locked out of our office” at Park Southern.
Jones said that the remaining $16,000 was not collected by Jones’s company — but probably by the city’s own property manager, which followed him.
Catania repeatedly has called for Bowser to return $20,000 in campaign contributions tied to Jones.
In a debate last week, Catania also charged that Bowser attempted to “grease the wheels” for Jones during his and Scott’s attempted sale of Park Southern in May by inviting him to a private meeting with city housing officials as the sale effort was underway.
Bowser strongly disputed that characterization, saying she was trying to bring all of the parties to the table to find a solution to retain the property’s status as affordable housing.
She also said it would be premature to return contributions from Jones, who has continued to be listed as a host for some of her campaign fundraisers.
“I don’t see any reason to return contributions” from Jones, she said during the debate. “These are accusations that have been made against them, and none of them have been founded.”
Jones, eight companies he either controls or has a financial stake in, and an employee of one of those companies have contributed a total of $20,000 to Bowser’s campaign.
After the city inserted its own property manager at Park Southern in May, Jones initially resisted requests by the D.C. attorney general’s office and Department of Housing and Community Development to turn over nearly $300,000 in tenant rent collections from March and April.
In July, Jones finally provided not the money but an accounting of how it was spent. He said his accounting proved that he did nothing wrong.
A copy of the accounting he provided to The Post at the time showed that more than a third of the money went to utility payments; $57,000 was paid to employees, including Scott; and $66,000 was retained by Jones for management and other fees, in part because Jones said District officials had never notified him that he was losing his contract to manage the property. He retained three months’ worth of fees, saying that was what he was entitled to, but left the money in escrow, saying he would await a court fight with the city over the money.
In August, Jones sued the city, accusing District officials of breaking his property-management contract.