Two fired state health officials improperly pledged health department money as collateral to obtain $155,000 in loans for projects sponsored by the now-defunct Maryland State Games program, state officials confirmed this week. The loans are in default, and taxpayers may be liable for the unpaid debt.
In one instance, an Ellicott City bank is asking for repayment of a $125,000 loan to the Maryland State Games Foundation, a quasi-public arm of the health department charged with promoting amateur athletics. The loan was made after the department's top deputy, John M. Staubitz, wrote a letter promising that federal grant money could be used to repay it.
In a second instance, the state Department of Economic and Employment Development says it is still waiting for repayment of a $30,000 loan to a table tennis promotion group in 1989 at the urging of James E. Narron, the former director of the Maryland State Games. Mr. Narron verbally guaranteed that his bosses at the health department would repay the loan in the event of default, DEED officials say.
As far as the borrowers are concerned, the $30,000 loan is not in default. They say they gave Mr. Narron a repayment check for that amount last May, but at his instruction made the check out to the Maryland State Games.
"I repaid the loan," said Martin E. Staehlin Jr., a Towson accountant and treasurer of the private, non-profit Tournament of Champions Inc., which borrowed the money to help stage an international table tennis championship in Baltimore last summer.
Mr. Staehlin said he personally delivered the repayment check to the State Games office in early May. The money was deposited in the State Games account but apparently used to pay other bills, according to legislative auditors.
State Health Secretary Adele A. Wilzack said yesterday through a spokesman that she had not given permission to make her department a guarantor of the loans. She said she was unaware of promises made by Mr. Staubitz and Mr. Narron and suggested the two men had violated departmental procedure.
"That's not how we do business," said the spokesman, Richard Proctor. He said lawyers for the department are now investigating the state's liability.
The two loans are the latest example of questionable financial dealings by Mr. Narron and Mr. Staubitz, who were fired last month by Ms. Wilzack after legislative auditors uncovered numerous instances of inappropriate spending by the State Games program. Ms. Wilzack recently disbanded the program after discovering that it had spent all of its yearly budget in less than six months.
Ms. Wilzack said this week that she would try to recoup at least $350,000 of the misspent money from the Maryland State Games Foundation. But the foundation, now in the hands of a court-appointed receiver, is nearly bankrupt.
Though the chief responsibility of Mr. Narron's office was to run ,, an annual sports competition for Maryland residents, he sought the $155,000 in loans mainly to pay the bills for the table tennis VTC tournament. While successful in attracting competitors, the event did not fare well financially. The group raised some $3,500 in private contributions and spent more than $400,000.
Mr. Staehlin estimated that Mr. Narron's office paid about $200,000 worth of bills for the event. That is about $70,000 more than legislative auditors have identified in spending by State Games officials on the ping-pong event. Health department officials continue to investigate whether other State Games-related bills were charged to and paid by other health department programs.