- The Washington Times - Sunday, October 9, 2005

John Ray, a lobbyist and a former D.C. Council member who led efforts to build a gambling palace in Northeast last year, charged $585 per hour for his legal services — a wage that has become a point of contention in his fallout with investors of the failed project, court records show.

U.S. Virgin Islands investors have called Mr. Ray’s fees “an extorted retainer replacing a negotiated success-based fee deal,” according to legal documents filed recently in D.C. Superior Court.

But court filings on behalf of Mr. Ray and the D.C.-based law firm where he works, Manatt, Phelps and Phillips LLP, state that the hourly deal came about only “after it had become evident that there would likely be challenges to the initiative.”

The gambling project was financed through U.S. Virgin Islands-based Bridge Capital LLC and North Atlantic Investments LLC, headed by investors Shawn Scott and Robert Newell. The project failed when organizers did not get the project on the November 2004 ballot.

Mr. Ray served as a lawyer and a lobbyist, organizing local efforts to win support among voters and local officials for the proposed gambling hall, which would have been erected on New York Avenue Northeast.

He also represented gambling advocates in hearings before the D.C. Board of Elections and Ethics last year after opponents challenged the validity of thousands of petition signatures collected in an effort to include the proposed gambling facility on the ballot.

When Mr. Ray first began work on the project in April 2004, the compensation plan called for a $100,000 retainer and additional payments of $75,000 to $300,000 based on meeting various goals — culminating in the construction of a $500 million gambling palace.

But the pay terms were changed to an hourly rate in May 2004, court records show.

Attorneys representing Mr. Ray and Manatt, Phelps and Phillips state in court filings that the later arrangement, approved by Mr. Newell, was needed because Mr. Ray had been asked to provide “legal services outside the scope” of his original contract.

Neither Mr. Ray nor an attorney representing him and Manatt, Phelps and Phillips returned telephone messages seeking comment for this article.

According to Mr. Ray’s attorneys, Manatt, Phelps and Phillips’ legal bills totaled more than $748,404, but only $239,840 of that has been paid.

Compensation to lobbyists in the District can range from less than $1,000 to hundreds of thousands of dollars.

In the project’s aftermath, Mr. Ray and the investors have engaged in a bitter legal battle, with each side seeking hundreds of thousands of dollars.

Last month, attorneys for Mr. Ray and Manatt, Phelps and Phillips requested that a D.C. Superior Court judge issue a stay on the arbitration proceedings before the D.C. Bar’s Attorney/Client Arbitration Board. A judge declined to issue a stay.

In legal documents, investors challenged Mr. Ray’s pay and the quality of his legal services.

In seeking a stay, Mr. Ray’s attorneys stated that an attorney for the investors violated confidentiality rules by discussing the matter with a local newspaper.

The arbitration proceedings are conducted in private, but the D.C. Superior Court filings shed light on the dispute between Mr. Ray and the offshore financiers.

According to the investors, Mr. Ray failed to present key evidence and witnesses at the hearings where the petitions were challenged before the D.C. elections board.

During those hearings, community activists challenged thousands of signatures in the petition-gathering effort. The D.C. Board of Elections and Ethics eventually issued more than $600,000 in fines over election-law violations.

According to the legal filings, Mr. Ray “proceeded to litigate … as if his political pull would carry him through, with no defense of any of the harder issues.”

Attorneys for Mr. Ray and the law firm disagree. “Despite Mr. Ray’s best efforts, the initiative could not be qualified because of inescapable problems arising from the signature-gathering efforts,” documents filed on behalf of Mr. Ray and Manatt, Phelps and Phillips state.

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