Evans’s financial interest in EagleBank was among the revelations in a 97-page report from an ethics investigation released last week. The probe was completed by a law firm hired in July by the D.C. Council to review Evans’s actions since 2014 to determine whether he used his public office to help his private employers and clients of his private consulting firm.
In the fallout from the report, nearly every other member of the council has publicly or privately urged Evans, the city’s longest serving lawmaker, to resign.
Evans’s relationship with EagleBank, among the most prominent Washington lenders, has also attracted the interest of federal prosecutors.
Evans was chairman of the D.C. Council’s finance committee and the Metro board when the city government and transit agency deposited tens of millions of additional dollars into EagleBank accounts. His stock in the bank did not appear on financial disclosure forms at either agency. District law has required council members to make such disclosures since 2013.
EagleBank also became a client of Evans’s private consulting firm, which he has said he formed in 2016 at the suggestion of Ron Paul, then the chief executive of EagleBank.
A spokeswoman for EagleBank said the institution was unaware of Evans’s “failure to disclose that he owned shares of Eagle Bancorp stock.”
Banks rely on deposits to lend money and charge interest. Governments are among the biggest potential customers but usually do most of their business with national banks.
In a 2011 effort to expand its deposits, EagleBank focused on attracting more customers and emphasized a requirement that its loan customers also maintain deposits with the bank. By the end of that year, EagleBank held $2.39 billion in deposits, up from $1.73 billion a year before, according to its annual report.
The bill that Evans introduced in 2011 would have shifted more District government money into local banks. Only three banks met the criteria, EagleBank among them, according to a 2011 article in the Washington Business Journal; Evans told the paper that the legislation was EagleBank’s idea.
“Quite simply, if banks don’t get deposits, we can’t make loans,” Paul testified at a 2012 council hearing on the bill.
Paul told the council that Evans’s bill would have minimal impact on the bank’s bottom line but that community banks are more inclined to lend to local businesses that struggle to get loans.
“For example, EagleBank, if the District were to deposit an additional $30 million under the program, the net earnings impact would be less than one cent per share,” Paul said. “For EagleBank and other community banks, we are just trying to be good corporate citizens.”
The bill did not go forward, but a similar bill introduced by Evans passed unanimously in 2014. EagleBank supported that legislation, too, a spokeswoman said.
“The benefits to communities are immense as local banks are the engines of local business growth, job creation, and returning investment back into the local community,” according to a statement provided Saturday by spokeswoman Shanna Wilson.
The District’s deposits with EagleBank grew from $25 million in 2011, as reported by the Washington Business Journal, to $67 million this year, according to city records.
Evans never publicly disclosed his stock in Eagle Bancorp, the holding company for EagleBank.
Evans said Friday in an email to The Washington Post that his 2005 stock purchase was for shares of Fidelity and Trust Financial, which was acquired in 2008 by EagleBank. The shares, purchased for $50,000, fluctuated in value from about $37,000 to $139,000 since 2013, the ethics investigation said.
Attorneys for Evans told council investigators that the lack of disclosure was a simple misunderstanding. Before 2013, public officials were required to report stock only in companies doing business with the District government. Evans’s lawyers said city ethics officials failed to brief him on the new requirements.
Evans said in email Friday: “At the time [of the stock purchase], the financial disclosure statement only required disclosure if the issuer was doing business with the D.C. government, which Fidelity and Trust was not.”
Evans co-introduced and voted for the 2012 law that strengthened financial disclosure rules. The law also required D.C. Council members to undergo training on ethics rules.
Beginning in 2013, the disclosure form made clear that lawmakers were required to make public any holdings of stocks worth more than $1,000 in any company “whether or not transacting any business with the District of Columbia.”
Evans did not respond to other questions about his dealings with EagleBank.
Paul, EagleBank’s former chief executive, has long been a friend of Evans’s. In 2016, Evans approached Paul about working for EagleBank, but Paul suggested something different, according to the report by lawyers who conducted the council’s ethics investigation.
“Why don’t you set up a consulting firm, and I can hire you as a consultant,” Paul said, according to the account Evans gave investigators.
Soon afterward, Evans created NSE Consulting. Among its first clients were EagleBank and a real estate investment firm Paul founded called RDP Management. The retainer agreements, both dated Aug. 1, 2016, said Evans would provide “information and advice, regarding business matters,” according to copies of the agreements.
Under the agreements, EagleBank would pay Evans $37,500 per year and RDP would pay $25,000. The retainers increased to $50,000 each the following year. In a recent interview with council investigators, Evans could not identify any specific services he provided for EagleBank or RDP, the investigators’ report said.
The report did not identify any actions Evans took as a council member to benefit EagleBank while he was consulting.
In March this year, a federal grand jury issued subpoenas to D.C. officials for documents relating to EagleBank, RDP and other clients of Evans’s consulting company. Neither Evans nor any of the clients have been charged with a crime.
Two weeks after the subpoenas, EagleBank announced Paul’s immediate retirement as a result of “serious health developments.”
In a July earnings report, EagleBank disclosed increased legal expenses because of responses to government subpoenas regarding “the relationship of the Company and certain of its former officers and directors with a local public official.”
Paul did not cooperate with the council’s ethics investigators, citing ill health. He also said that because he was a Maryland resident, the D.C. Council had no jurisdiction over him.
Former EagleBank vice chairman Robert Pincus said he would invoke his Fifth Amendment right against self-incrimination if compelled to testify. Paul and Pincus could not be reached for comment.
The law firm hired by Metro to investigate Evans said he did not disclose his private consulting for EagleBank, even though it is a Metro vendor. Metro’s ethics rules require disclosure of stock ownership worth more than $15,000 in a business if there is a potential conflict of interest.
Metro increased the funds it maintained at EagleBank from $4 million to about $24 million in 2019. The report did not address whether Evans played a role, and EagleBank said it was unaware of any conversations between bank executives and Evans about WMATA’s relationship with the bank.
The Metro board ethics committee that investigated Evans did not know of his ownership of EagleBank stock, according to Metro officials.
Evans told Metro’s investigators that he was not aware of EagleBank’s relationship with Metro.
Robert McCartney and Lynh Bui contributed to this report.