In late 2008, records show, the District’s investment in the Peaceoholics project grew: Fenty urged the D.C. Council to support a $4.4 million loan so the nonprofit could buy and renovate four properties in Wards 5 and 6, which would produce a total of 35 units. Peaceoholics eventually used about $4 million of that money.
The properties, however, were different from the ones on the original list. The new list included an apartment complex on Meigs Place NE that had been purchased by a company headed by developer David Tolson, a business partner of Fenty’s longtime campaign treasurer, Ben Soto. Soto said he is not involved the Peaceoholics deal.
Tolson had his own connection to Hagler. In a 2007 transaction unrelated to the Peaceoholics project, Tolson’s company had lent Hagler $355,000 to finance a Southeast property. The seller was a company run by Edward Wilson, the Anne Arundel businessman, according to property records and interviews.
In early 2009, Peaceoholics added another new property to the list, a vacant building on Congress Street SE. The property had been purchased months earlier by a limited-liability company. The owner: Wilson.
In March 2009, the housing agency approved the purchase of the two properties, along with a third one owned by a D.C police officer.
For Tolson’s property, Peaceoholics paid $2.35 million — more than quadruple what Tolson’s company had paid about a year earlier.
For Wilson’s property, Peaceoholics paid $400,000 — four times what Wilson’s company had paid about seven months earlier at a tax sale.
Both Tolson and Wilson, however, said they did not profit.
Wilson, 58, said his interest in the Congress Street property began in 2005 when he bought the note on the property and assumed the role of lender. He said he paid off hundreds of thousands of dollars in liens, back taxes and other fees associated with the property before he became the owner in 2008.
“We didn’t even break even,” he said.
Tolson said that he had lost hundreds of thousands of dollars on a defaulted loan to the former owner of the property on Meigs Place, then paid thousands more for repairs to the property before Peaceoholics bought it.
Abraham said he found the Tolson property through one of Peaceoholics’ clients, a young man who had been working with Tolson. Abraham said he found the Wilson property after receiving a call from local mortgage banker Jose Strickland, 44.
“Everyone knew we had just gotten public money,” Abraham said. “People were just calling, wanting to meet. . . . Strickland said he had a building.”
Wilson and Strickland had done business together for years, records show, with Wilson’s company providing loans for a series of properties purchased by Strickland. Strickland did not return calls requesting comment. Soto, an attorney who has represented Strickland in the past, said he was unaware of Strickland’s involvement in the project.
Wilson said he paid Strickland a $38,000 “finder’s fee” after Peaceoholics bought his building. “The condo market had collapsed,” Wilson said. “We were glad to be rid of it.”
Tolson said Peaceoholics approached him about buying his building. He acknowledged knowing Hagler, saying Hagler had done construction work years ago for people who had borrowed money from Tolson.
Tolson said he was unaware of Hagler’s involvement in the Peaceoholics project.
‘I scratch your back’
With the properties in hand, Peaceoholics brought in Hagler to make renovations, with at least $315,000 earmarked to his company, according to a schedule of costs submitted to the city. Earley, the program officer at the housing agency, said staff members at the time thought Hagler had the ability to get the work done.
“I didn’t know about a bunch of things that Mr. Hagler apparently has been part of. If I’d known that, I would have been like, ‘Wait a minute. Let’s make sure these guys use a different contractor,’ ” Earley said.
In 2010, about a year after the city funded Peaceoholics, the group said it needed more money for renovations. Abraham said banks had refused to finance the work, so he accepted a $1.6 million loan from a company managed by Wilson, who had sold Peaceoholics the property on Congress Street. Wilson’s loan has an 18 percent interest rate for late payments.
“I said, ‘Hey, maybe we can finally make a little bit back on the loss” from the sale on the property, Wilson said.
In loan documents, Wilson insisted that Hagler be used “exclusively for all repairs and renovations.” And Wilson went a step further: He insisted that $400,000 be immediately paid to Hagler.
Abraham said he was fine with that. “I owed both of these guys,” he said.
Wilson said he made the $400,000 a stipulation so Hagler could get a “big jump” on construction. Wilson also said Strickland had wanted to bring Hagler into the deal.