FBI Agent, D.C. Developer Found Guilty Of Bribery In Affordable Housing Scheme
A real estate developer was found guilty Friday of bribing an FBI agent and a D.C. official to provide him with insider information on tenants that would give him an advantage in affordable housing deals.
Brian Bailey, a developer and former real estate agent with Tristar Realty, was found guilty of giving a District employee thousands of dollars in bribes to provide him with the names of tenants whose properties were going up for sale through D.C.'s Tenant Opportunity to Purchase Act, the U.S. Attorney's office for the District of Columbia announced Friday.
The decision came after federal prosecutors filed a criminal complaint against Bailey in the U.S. District Court for the the District of Columbia on April 24, 2019.
Bailey also convinced FBI agent David Paitsel to provide him with contact information for the tenants obtained through an FBI database so that he could reach out and buy their rights of first refusal to a sale of the building, according to the complaint. Bailey then acquired and flipped several buildings for a profit and paid Paitsel a cut of the proceeds.
Bailey was found guilty of two counts of bribery and two counts of conspiracy. Paitsel was also found guilty of one count of receiving bribes in a decision announced Friday. A sentencing date for Bailey and Paitsel has not been set.
The D.C. Department of Housing and Community Development employee involved in the scheme, Dawne Dorsey, pleaded guilty in June 2019 after the case became public.
In the standard Tenant Opportunity to Purchase Act process, when an owner wants to sell a multi-unit building, they must provide each tenant in the building and the DHCD with a copy of the offer of sale for the property. That document includes the names of tenants at the property, which are considered confidential.
But between May 2017 and January 2018, Bailey paid Dorsey to provide him with copies of the offers of sale for several properties that included the tenants' names. Bailey then emailed Paitsel the names of the tenants, who looked them up in the FBI's CLEAR database and emailed contact information back to Bailey.
The initial complaint against Bailey lists three properties where the process was completed in full, one in Eckington, one in Columbia Heights and one in the Logan Circle/Shaw area.
Bailey netted a profit at each property, including more than $250K from a rowhouse located at 3021 15th St. NW, according to the complaint.
Bailey had acquired a tenant's right of first refusal at that property for $10K, after which he emailed Paitsel: "“Hey Bro … I owe you 5k!!! I found [“T.M.”] of 3021 15th Street NW. He assigned his rights over to me. I’m going to flip the contract to another investor who has already escrowed the money to purchase the property.”
Following payment for that property, Bailey gave Paitsel a check for $5K from a PNC bank account listed under his name, according to the complaint.