When confronted with evidence of what one city contracting official later described as “admittedly fraudulent” behavior between two private construction companies, the District government and private employees working on its behalf ignored the problem, then eventually quietly offered to broker a settlement between the feuding companies that would have cost taxpayers $250,000.

That’s what more than 500 emails LL obtained through the Freedom of Information Act show. The records also indicate that the commission tasked with enforcing the city’s local business development program punted on a chance to investigate the alleged fraud involving a joint venture that managed more than $50 million worth of construction at the newly renovated Anacostia Senior High School.

And the emails directly contradict earlier statements made by Department of General Services Director Brian Hanlon, whose agency oversees most city-funded construction projects, about when he became aware of potential problems at Anacostia. Hanlon has been adamant in stressing how committed he is to providing meaningful participation on construction projects for locally owned companies recognized by the city as Certified Business Enterprises. But the emails show that commitment apparently didn’t extend to the Anacostia job.

Maryland-based Forrester Construction and EEC of DC partnered on three city-funded construction projects worth more than $100 million, including the Anacostia project. Because EEC is a CBE, it was supposed to be the majority partner on the projects. Instead, Forrester controlled each one, managed all the finances, and kept almost all the profits, according to EEC’s owner and documents submitted to D.C. Superior Court and the D.C. Council. The two companies sued each other over their respective share of the joint venture’s revenues but are currently in the process of settling, according to Forrester’s lobbyist.

“This is a sham,” said At-Large Councilmember David Catania of the joint venture when the council grilled one of Forrester’s owners at a recent hearing. That executive, David Forrester, insisted that the joint ventures were all legitimate, but declined to offer any details, citing the lawsuits.

The Office of the Attorney General is currently reviewing Forrester and EEC’s partnerships to determine what, if any, penalties the District will assess for potentially subverting city contracting law.

But earlier this year, a private attorney working on the city’s behalf tried to solve the problem by “floating” a settlement between the two companies that would have resolved their differences, but would have put the District on the hook for “roughly $250k.” Tom Bridenbaugh, an attorney at Leftwich and Ludaway, emailed Hanlon on May 2 to say that he’d met with representatives from both companies (he said the companies’ officials, especially Forrester’s, were “the most quarrelsome and irritating folks”). Bridenbaugh said he’d proposed a penalty for both companies for violating the contracting laws that would prevent them from forming joint ventures “for a 2 to 3 year period – I was vague on the duration.”

Neither Hanlon or Bridenbaugh responded to requests for comment. It’s unclear how the $250,000 in District funds would have been spent to resolve the dispute between Forrester and EEC. One possible clue: On May 23, Bridenbaugh sent another email to Hanlon, saying Forrester had agreed to increase its “offer to EEC” by $300,000, leaving the two companies $250,000 apart. Which sounds to LL like city taxpayers, for some reason, would have been the ones to make up the difference between what the two companies each thought they were entitled to.

Ward 8 Councilmember Marion Barry, whose ward includes Anacostia High, says he was never informed of any potential settlement, especially one involving District funds.

“On its face, it doesn’t seem right,” Barry says.

Indeed, why should the District have to pay any funds to a joint venture that was allegedly scamming the city? It’s not like city officials didn’t know there were serious problems with the partnership between Forrester and EEC. In June, an advisor to Hanlon warned that DGS “may be asked what actions have been taken … to punish this admittedly fraudulent behavior.”

And the ability of Bridenbaugh, who isn’t a city employee, to offer a settlement that would have cost taxpayers $250,000 underscores the power concentrated in the hands of a few private contractors. Last year the city’s inspector general said Bridenbaugh shouldn’t even be working on school construction projects because he’s the son-in-law of a high-ranking official at Turner Construction, a behemoth involved in several city projects. That relationship presents the appearance of a potential conflict of interest, the IG warned. But the city has ignored the IG’s recommendation and instead says Bridenbaugh recuses himself from anything related to Turner.

Another private contractor with outsized responsibility is Will Mangrum, a vice president at Brailsford & Dunlavey who plays a central role in managing school construction contracts. The emails LL obtained show that Mangrum ignored an early sign of trouble at Anacostia.

Last November, a lawyer for EEC emailed a letter to DGS saying Forrester had complete control of the joint venture’s books and bank account, in an apparent violation of city law. When a DGS employee sent the letter to Mangrum, he didn’t appear to be bothered.

“Being that this is a dispute between the contractor and their sub, there isn’t much we can do,” Mangrum wrote in an email that was copied to Hanlon and other DGS officials on Nov. 12, 2011.

On paper at least, EEC was supposed to be the 51 percent majority partner in the joint venture managing the Anacostia job, not a subcontractor. And the allegations that Forrester was in control of the project’s finances should have set off some alarms. At the council hearing, Catania asked Hanlon whether he agreed that whoever “controls the checkbook” controls the project. “I would agree,” Hanlon said. (Mangrum didn’t respond to requests for comment.)

But Hanlon says neither he or any of his staff recall seeing EEC’s November letter.

“Perhaps it got misdirected in the mail,” Hanlon told LL two months ago. “It is quite possible that a letter addressed in such a manner got misplaced or did not get to the right people.”

But LL’s FOIA shows that besides Hanlon, six other DGS officials received copies of the letter within a day after it was written. One employee even sent an email summarizing the letter that was forwarded to Hanlon.

Finally, the emails show that the city commission tasked with enforcing the city’s CBE laws had little interest in actually doing so. After EEC filed a formal complaint against Forrester, a lawyer for the Small and Local Business Opportunity Commission wrote in June that the commission wasn’t going to investigate any alleged fraud because the certification for all three joint ventures between the two companies had expired.

“This is their idea of cooperation/enforcement?” Bridenbaugh wrote Hanlon.

Mayor Vince Gray, as part of an effort to overhaul the city’s CBE laws, is seeking to disband the commission and give the Department of Small and Local Business Development more power to punish potential wrongdoers. For the Anacostia project, that move appears to come too late.

Photo by Darrow Montgomery