Photo by dbking

In a report released this morning, Councilmember Jim Graham (D-Ward 1) charged developers involved in the sale and rehabilitation of buildings formerly owned by the youth outreach organization Peacoholics with misappropriating District funds between 2008 and 2011, and said employees of the D.C. Department of Housing and Community Development might be involved with the fraud.

Graham’s report comes the same day as a long story by the Post’s Nikita Stewart and Debbie Cenziper detailing the transaction history of three apartment buildings in low-income neighborhoods. Since 2008, when DHCD gave Peaceoholics $4.6 million to buy and renovate buildings on Meigs Place NE, Oklahoma Avenue NE and Congress Street SE, the Post reported, “the project became something of a spending free-for-all for developers and contractors who knew redevelopment money was out on the street and in the hands of a novice nonprofit with unchecked authority to spend it, records and interviews show.” The buildings were meant to be renovated into housing for at-risk youths.

In his office today, Graham revealed some of his own findings, stemming from a hearing he chaired last October following the District auditor’s report on grants awarded to Peaceoholics by the Children’s Youth Investment Trust Corporation and the Department of Youth Rehabilitation Services.

During that hearing, Graham’s report states, he discovered that Peaceoholics had also received nearly $5 million from DHCD out of the trust from the agency’s Strategic Housing Intervention Program that serves at-risk youth.

“The losers were at-risk youth,” Graham told reporters in his office today. “The winners were whovever could make a buck. And they made a lot of bucks.”

Specifically, Graham was referring to Richard Hagler, a Calvert County developer who Stewart and Cenziper report has filed for bankruptcy three times since 2000 and is unlicensed to do home improvement work in both the District and Maryland. The properties were originally purchased by Peaceoholics from two other developers—Edward Wilson of Anne Arundel County, who sold the group the Congress Street property, and David Tolson, who sold the group the building on Meigs Place. Peaceoholics purchased the buildings for several times what Wilson and Tolson had paid just a few years earlier.

“This was about buying and selling and rehabbing property,” Graham said today. He said DHCD conducted minimal oversight when Wilson loaned Peaceoholics $1.6 million in 2010 at an 18 percent interest rate. When the organization defaulted on the loan, DHCD transfered control of the properties to Hagler, with Wilson holding a $1.9 million lien.

Graham said he is also looking into allegations that following the 2010 mayoral primary in which then-Mayor Adrian Fenty was defeated, DYRS and the Children and Family Services Agency, which oversaw the renovations, walked away from the projects.

Peaceoholics’ founders, Ron Moten and Jauhar Abraham, were vocal backers of the Fenty administration. (Both are currently running for office, Moten in Ward 7 and Abraham in Ward 8.) Graham’s report states both have been cooperative in the investigation.