The officer, Hilton Burton, was demoted in August 2011 as commander of the special operations division and transferred to the medical services branch.
In a whistleblower notice filed with the city this month, Burton alleges the two-rank demotion to captain was punishment for testifying before the city council there was nothing inappropriate about the escort provided Sheen in April 2011.
Officers from the special operations division escorted Sheen from Dulles International Airport in northern Virginia to a stand-up performance at Constitution Hall in Washington.
The escort attracted wide media attention when Sheen posted on it on Twitter. According to a city inspector general's report in July 2011, he tweeted: "n car with Police escort in front and rear! driving like someone's about to deliver a baby! Cop car lights #Spinning!"
The former star of the TV series "Two and a Half Men" also posted a photo purportedly showing the speedometer of the SUV he was in reading about 80 mph, the report said.
BAD PUBLICITY CITED
The event's promoter was billed $445.68 for the escort service, the report said. The unit's duties include providing escorts for dignitaries visiting Washington.
Burton said in the notice he was punished because Police Chief Cathy Lanier was unhappy "with the negative publicity that the Charlie Sheen escort had created."
She also was upset by his contention celebrity escorts had been provided during the years she headed the special operations division, he said.
Burton is seeking restoration of his former rank and payment of damages along with back pay and benefits.
Lanier said in a statement on Thursday Burton's demotion was based on "a review of command decisions, including several critical incidents" and a recommendation from his supervisor.
The inspector general's report last year said the Sheen escort was routine. It faulted the officers for failing to coordinate with Virginia police and called for tighter procedures in providing escorts.
(Editing by Daniel Trotta)
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