“Jose brought me the deal, and Jose was partners with Hagler,” Wilson added. “I said: ‘Okay. That seems fair. I scratch your back. You scratch mine.’ ”
When Wilson provided the loan money, city housing officials agreed to put up as collateral all three of the properties that Peaceoholics had purchased with city money, putting Wilson in the first position to claim the properties if Peaceoholics defaulted on his loan.
“That sounded like a sweet deal,” Wilson said. “I hold the upper hand.”
Hall, the new housing agency director, said the agency should not have offered all three buildings as collateral. “It doesn’t make sense to me,” he said.
At the housing agency, the Peaceoholics deal was overseen by project manager Ray Slade, who in addition to managing redevelopment projects for the city has for years taken part in real estate transactions as a private citizen.
Records show Slade, 57, of Upper Marlboro has purchased about 17 properties in the District and Prince George’s County since 1995, with a total price of more than $3.5 million. He started at the housing agency in 2003 and earns $115,000 annually, city records show.
In recent years, records show, Slade has sold or transferred properties to two of his co-workers at the housing agency: Earley, chief program officer, and another manager who left the agency last year.
Slade, who city sources said will be placed on administrative leave, did not return calls or respond to a letter sent to his home seeking comment.
When asked about the transactions, Hall said, “Just to know that I have a staffer who has . . . real estate transactions and that I have people who work together doing business together, that is a no-no.”
In late 2010, Slade sounded the alarms at the housing agency about needing a new developer for the Peaceoholics project, writing in a memo to Edmonds, then the agency’s head, that the nonprofit was flailing and the deal was on the ropes.
He recommended the housing agency do a “due diligence review” of a new borrower: Hagler’s newly created company. Two months later, Slade said the vetting of Hagler’s company was “75-80 percent complete and has been favorable to date.”
Slade also recommended the city immediately send as much as $900,000 in additional funds to Wilson to pay down Peaceoholics’ construction loan.
Slade sent his recommendations through Earley, who in 2009 had been given sole ownership by Slade of a property in Northwest they had jointly purchased two years earlier for $359,000, records show. Earley said it was a private transaction and had nothing to do with his work for the city.
The housing agency signed off on the transfer of the three buildings to Hagler and the payment to Wilson without approval by the D.C. Council. Earley said he did not think the deal needed approval.
The housing agency released Peaceoholics from the project with no liability.
“The very fact that this transaction was approved by the council, then later changed in a major way and not resubmitted, raises questions of law and procedure,” council member Graham said.
Hall acknowledged that the housing agency’s vetting of Hagler was poor, saying, “There are shortcomings of our due diligence not just that we need to fine-tune but we need to revamp.”
However, Hall said the city’s investment is protected because Hagler owes the city all of the money invested in the project so far, a total of $5.5 million.
But Hagler also owes Wilson more than $1 million — and Wilson’s loan is backed by the three buildings. Hagler is behind on his payments, and Wilson said he could foreclose at any time, which would diminish or even eliminate the city’s investment.
On Friday, Hagler was supposed to meet with tenants to discuss their complaints about a lack of maintenance and shoddy repair work. The night before, however, he showed up and made fixes.
“He apologized,” said tenant Ronald Bell. “He said he’s been having a lot of issues.”
Researcher Jennifer Jenkins contributed to this report.