March 31 (Bloomberg) -- Washington Mayor Vincent Gray’s re-election campaign is being overshadowed by a federal investigation into how he won office four years ago.
Polls show Gray, 71, faces a close Democratic primary race tomorrow as federal investigators continue a probe into his 2010 campaign’s finance tactics. Gray has said he did nothing wrong and that he’d remain in office should he be indicted.
The more than two-year-old investigation is the dominant issue in the race, overshadowing the city’s booming economy, soaring housing prices and increasing population. The probe, along with the conviction of three D.C. council members on corruption charges since 2012, is tarnishing the image of a city that had been on the ascent.
“All of that seems to be slipping away,” said Terry Lynch, executive director of the Downtown Cluster of Congregations, a non-profit group that provides services to the poor. “There’s certainly that huge cloud over the city.”
For years, Washington was an icon of municipal dysfunction. Two decades ago, then-Mayor Marion Barry was captured on videotape smoking crack in a hotel room and sentenced to six months in prison.
The city of 632,000, a federal territory under the control of Congress, has waged unsuccessful efforts to win statehood.
In the 2010 campaign, Jeffrey Thompson, a businessman, funneled more than $660,000 as part of an illegal “shadow campaign” to help elect Gray, prosecutors have said.
Prosecutors and Thompson, who pleaded guilty this month to violating campaign finance laws, have said the mayor knew about the illegal donations.
In 2012, two Gray campaign aides pleaded guilty in connection with payments made to another 2010 mayoral candidate to stay in the race and attack then-mayor Adrian Fenty.
The investigation has been a boon to Gray’s chief opponent, city council member Muriel Bowser, 41, one of eight Democrats seeking the mayor’s office. A Washington Post poll from March 20 to March 23 found that she had the support of 30 percent of likely voters, more than twice the backing she had in January. Gray’s support was unchanged at 27 percent.
“They want a fresh start in the mayor’s office and a mayor who’s focused on the growing challenges of the city,” Bowser said. “They want a mayor that they can trust.”
The primary election typically seals the election, as the city is dominated by Democratic Party voters.
Federal investigations have gone beyond Gray.
Former City Council member Michael A. Brown last year pleaded guilty to accepting bribes. In 2012, the former chairman of the city council, Kwame Brown, pleaded guilty to bank fraud and violating campaign finance laws.
Also in 2012, then-City Council member Harry Thomas Jr. pleaded guilty to theft and tax charges in a scheme to divert $353,000 of taxpayer money for his personal benefit, including for clothes, vehicles and trips.
Gray, who served on the D.C. council before becoming mayor, has distanced himself from the investigations and questioned the credibility of Thompson.
“Who do you believe?” Gray said in a speech to supporters on March 11. “A greedy man attempting to save himself, or me, a public servant who has dedicated his entire career to giving back to our communities?”
Chuck Thies, Gray’s campaign manager, said his opponents are using the investigation to distract voters from Gray’s management of the city.
“Efforts to insinuate it into the campaign have been made by our opponents, the media, and in the opinion of some, the U.S. attorney,” he said. “Voters are going to have to filter through all that noise.”
Washington’s economic boom has been fueled by federal government spending. Even as new restaurants, condos and offices have altered the city’s landscape, persistent pockets of poverty linger.
The average price of single-family homes sold in Washington increased 13 percent in the year ended in September to $713,000, according to the city’s chief financial officer.
The city had a budget surplus of $321 million in the fiscal year that ended in September. Washington’s general-obligation bonds -- backed by the city’s promise to repay, instead of specific funds -- carry the third and fourth-highest ratings from Moody’s Investors Service and Standard & Poor’s, respectively. As recently as the late 1990s, the debt carried a junk credit rating, a sign of fiscal distress.
The probe “has really taken a toll” on Gray and his popularity with voters, said Kevin Chavous, who served in Washington’s city council from 1993 to 2005, and unsuccessfully ran for mayor in 1998. “By most independent yardsticks, the city is doing well.”
To contact the reporter on this story: William Selway in Washington at firstname.lastname@example.org
To contact the editors responsible for this story: Stephen Merelman at email@example.com Justin Blum, Michael Shepard