Let's go another round here:
When enemies do different amounts of damage on subsequent rounds, you're meant to average the damage out over three rounds of using their best attacks. He needs to do 225 damage in the first 3 rounds in order to have CR 12 offenses.
5 superiority dice is 5d8, an average of 20.
He can do five attacks in the first round, which is 25*5, 125. So he'll do 145, on average, in his first round.
Second round, he'll do an average of 50, because he'll have used all five of his superiority dice.
Third round, he'll do an average of 50 again.
50+50+145=245.
So you're right, he's going to do 20 more damage than he ought to. It's easiest to cut those 20 points from his base attack damage, so I could remove 2 points from his average attack damage. 2*9=18, and that'll get him right about in range. Or remove 3 points and, as I indicated here , do 3d6+12.
Fighters nova pretty hard if you let them. I'd probably space out the superiority dice over three rounds, just to be nice, but I think the math is more or less good here.
As for the treasure, I generally don't like to have NPCs carrying around a bunch of incredible magical doodads. He keeps his stuff in a chest in his quarters, which is where the PCs are most likely to find him.
I get that you're mad, but I'm pretty sure he's doing roughly the amount of damage that the DMG calls for. By all means, though, show me where my math is wrong. If I'm wrong, I'd like to be set right.