Brown submitted his resignation letter after revealing his plans to fellow councilmembers in a closed-door meeting. A special council meeting is scheduled for June 13 to select a new interim chair.
"I have made some very serious mistakes in judgment for which I will take full responsibility," Brown wrote in a letter Wednesday to the Council secretary, a copy of which was obtained by The Associated Press. He added later, "I have behaved in ways that I should not have. I was wrong, and I will face the consequences of that conduct."
Brown, 41, is charged with a single count of bank fraud, accused of overstating his income by tens of thousands of dollars on applications submitted for a home equity loan and for a boat. He was charged via criminal information, a document that generally signals a defendant has agreed to plead guilty. A plea hearing is set for Friday in U.S. District Court in Washington.
Federal bank fraud carries up to 30 years in prison, but Brown is expected to receive a far lighter punishment.
He declined to answer questions or comment on the case following a meeting with councilmembers, but said he would make a statement Thursday. Brown's lawyer, Frederick Cooke, declined comment, and the U.S. Attorney's office said it would have no comment.
"I'm shocked by the news; I am disappointed and saddened," Gray, who preceded Brown as council chairman, said of the charge in a written statement. He added, "I served with him my entire time on the Council. Never would I have imagined something like this would occur."
Federal authorities had also been investigating Brown for alleged financial improprieties in his 2008 campaign, but Wednesday's charge is unrelated to the campaign and focuses solely on his personal financial dealings.
Brown also stumbled early on as chairman, when it was revealed that he was leasing a fully loaded Lincoln Navigator SUV that he had specifically requested and that cost the city nearly $2,000 a month. His staff had already rejected one SUV because it didn't have the interior he wanted. A report from a fellow councilmember found that Brown had "inappropriately requested" the SUV and that city officials had broken the law by leasing it to him. He returned the vehicle to the city.
Political consultant Tom Lindenfeld, who is friends with Brown, said the criminal charge did nothing to clean up perceived municipal corruption since it dealt with Brown's personal, rather than public, life.
"I think that if we're going to take people who have been arrested out of office, it should (be for) public corruption, and I don't see it here," he said.
Either way, the charge and Brown's resignation create further turmoil in D.C. politics.
It comes five months after then-Councilmember Harry Thomas Jr. pleaded guilty to embezzling more than $350,000 in government funds earmarked for youth sports and arts programs. He resigned and was sentenced to more than three years in prison. Thomas was replaced on the council in a special election last month.
Two former Gray campaign aides pleaded guilty in a separate investigation last month to charges stemming from illicit payments made to encourage a minor candidate in the 2010 race to lambast then-incumbent Adrian Fenty, who was seeking re-election. One aide, Howard Brooks, admitted lying to the FBI about the payments while the other, Thomas Gore, admitted funneling the money and destroying evidence of the transactions. Gray has denied wrongdoing.
The D.C. Council is an unusual governmental body, functioning as both a municipal board and a state legislature. Its 13 members vote on legislation and a multi-billion-dollar budget that touches all corners of city life. The chairman has special powers as well, doling out committee assignments, convening meetings, overseeing the budget process and introducing legislation at the mayor's behest.
Under D.C. regulations, the Board of Elections is to certify the seat as vacant within five working days of receiving notice of Brown's resignation. An interim council chairman will be selected from among four at-large councilmembers at a meeting scheduled for June 13. A special election to replace Brown on the council would likely take place this fall.
D.C. Councilmember Jim Graham, speaking before the council meeting, said the charge ends what had been a period of uncertainty.
"It's an opportunity for real change," he said, adding that he was hopeful about the future.
"I believe, though, optimistically, that we have the resources within the council, within this government, to pull out of this and to reach a point ... where something positive is going to happen," he said
Brown, a native Washingtonian who says he'd worked to revitalize neighborhoods and strengthen environmental laws, was elected to the council in 2004 and ascended to chairman in January 2011, after Gray became mayor.