An independent investigation found that Jim Graham acted improperly when he tried to influence plans to develop a Metro-owned parcel of land. (Mark Gail/TWP)

During his tenure on the Metro Board of Directors, D.C. Council member Jim Graham violated the transit authority’s ethics rules, according to an investigation into his role in a 2008 development deal.

The 62-page report released Thursday said that Graham improperly mixed his role as a D.C. Council member with his role as a Metro board member when he attempted to influence plans to develop a Metro-owned parcel of land on Florida Avenue NW.

“We take no joy in the findings of this investigation,” said Metro board member Alvin J. Nichols, who chaired the special committee that oversaw the investigation.

Graham (D), the longtime council member for for Ward 1, called the report “baffling.”

“I continue to feel like Alice falling down the rabbit hole,” he said. “This is just bizarre.”

Graham noted that Metro’s general counsel had found no violation of Metro’s standards of conduct and that the new report found no evidence of any crime.

Metro board chairwoman Catherine Hudgins said Thursday that the board was aware of the general counsel’s finding but had decided that the matter merited a more thorough investigation.

The questions surrounding Graham’s conduct stem from efforts by the firm Banneker Ventures to develop Metro-owned property near the Shaw-Howard U Metro stop. At about the same time, Warren Williams Jr., a principal at Banneker, was seeking a lucrative contract to run the D.C. Lottery.

The report said that at a 2008 meeting in his council office, Graham told members of the firm he would support the lottery bid if the company agreed not to pursue the Metro venture.

The outside investigation, for which Metro paid $800,000, is the latest round of scrutiny for Graham and his office. Earlier this year, Graham was cited in a D.C. inspector general’s report examining allegations of improprieties in the awarding of the D.C. Lottery contract. Last year, Graham’s former chief of staff pleaded guilty in a long-running federal investigation of the D.C. taxi industry.

The new report — produced for Metro by Cadwalader, Wickersham & Taft, an international law firm with extensive experience in internal investigations — did not conclude that Graham’s conduct violated any laws. But it said that the council member’s actions ran counter to Metro’s standards of conduct for its board members.

Graham’s conduct “pitted the interests of the Council of the District of Columbia against the interests of Metro,” the report said.

Metro’s board was briefed on the findings in a closed session Thursday.

Investigators reached their conclusions after reviewing e-mails and interviewing nearly three dozen people, including Graham, current and former Metro board members and those connected with the bid to win the development rights to the Florida Avenue parcel.

Graham served on the Metro board from 1999 to 2010, and as chairman in 2003 and again in 2009.

“Rather than operating within the confines of the Metro board room to garner the necessary votes to oppose Banneker Ventures, [Graham] circumvented the Metro board by attempting to single-handedly persuade Mr. Williams to withdraw from the Florida Avenue project by using the lucrative D.C. lottery contract as leverage,” the report said.

Banneker eventually won the right to develop the Metro parcel but never built the project. Eventually, it was awarded to another developer.

But that outcome did not eliminate concerns about Graham’s conduct. “Regardless of whether Council member Graham was correct in his concerns about Banneker Ventures, the method he used toward achieving his goal undermined the integrity of the joint venture process,” the report concluded.

Metro’s standards of conduct call for the removal of a board member who willfully violates certain provisions of the authority’s standards of conduct. But Graham is no longer a member of the board, so the board cannot sanction him. The board did, however, authorize the release of the report and other investigative files to law enforcement agencies and other investigative bodies.

Banneker Ventures had asked Metro to look into the allegations.

In a 2010 letter to Metro, attorney A. Scott Bolden, representing Banneker, asked the transit authority’s inspector general to look into Graham’s actions as they related to the Florida Avenue development project. Instead, Metro General Counsel Carol B. O’Keeffe responded in a letter, “The allegations in your letter, standing alone, do not appear to constitute a violation of the Board’s Standards of Conduct.”

However, board members later concluded that O’Keeffe’s letter did not address allegations related to Graham and the lottery contract, and decided an independent investigation was warranted.

In June, the Metro board’s audit and investigations committee hired the law firm to look into Graham’s actions as they related to the Metro development. The move came after the D.C. inspector general released a report on his investigation into the city’s controversial three-year effort to award the $120 million lottery contract. That contract process coincided with a plan to launch a first-in-the-nation Internet gambling program.

In January, D.C. Inspector General Charles J. Willoughby released his report. In it, he said that while Graham’s actions “may give the appearance that he lost complete independence or impartiality, and may have affected adversely the confidence of the public in the integrity of the government, the OIG did not find sufficient evidence to support or conclude that the councilmember had acted improperly.”