The District ended its epic two-year legal battle with a politically-connected developer with a whimper, not a bang. Rather than go to court, the city agreed to settle its civil lawsuit against 2100 MLK Associates, the real estate partnership co-owned by R. Donahue Peebles -- a supporter of Mayor Vincent Gray -- for just a tenth of $1.2 million it was accused of overbilling the city government.
The $120,000 settlement doesn't even cover the city's legal expenses in the case, let alone recoup the $600,000 in questionable expenses it had already paid. D.C. also agreed not to pursue any additional claims against Peebles' firm. This no-fault settlement ensures that District taxpayers will never find out why they were billed for $3,700 for political contributions to three D.C. council members; $1,000 for fundraisers in Florida, where Peebles moved in 1996; more than $2,000 for champagne and bar tips; and janitorial services, trash removal and other fees that should have been covered by the city's 30,000-a-month rent. Taxpayers will also be left in the dark about why the city renewed this highly questionable lease for 10 more years even before the audit was completed.
The overbillings were discovered by a New York consulting firm that scrutinized more than 30 city leases. Their audit, which resulted in the collection of more than $1 million in improperly billed expenses, was called for after 2100 MLK Associates billed D.C. an additional $3 million.
Of the 30 landlords audited, only Peebles' company was sued under the D.C. False Claims Act, prompting him to accuse then-D.C. Attorney General Peter Nickles of engaging in a "political vendetta." But Peebles also had his own political agenda, given that he'd spent nearly $100,000 to help Mayor Gray defeat former Mayor Adrian Fenty. A public trial would have exposed any base political motives on either side.
Peebles also claimed that two spreadsheets submitted to the city were not really bills but merely explanatory in nature, a claim rejected by an auditor in a sworn deposition and by Judge Cordero, who noted that MLK Associates failed to provide any documentary evidence to support his assertion.
In 2010, then at-large Councilman Phil Mendelson told The Washington Examiner that overbilling was a "systemic problem" and could be avoided if the District kept better track of its bills. Now that he's the council's chairman, he should make it a priority to do something about it.