Audit uncovers abuses in Block probe After Sun report, inspectors find troopers forged signatures, improperly used funds

July 17, 1994|By Scott Higham and Eric Siegel | Scott Higham and Eric Siegel,Sun Staff Writers

State police troopers assigned to The Block probe spent $26,000 more than first reported, forged supervisors' signatures on expense forms and failed to document how tens of thousands of tax dollars were doled out, according to an internal audit critical of the operation.

Dozens of expense reports were missing from internal files, and memos explaining how the money was spent in downtown Baltimore's nude dance clubs were inexplicably removed from the agency's drug bureau, according to a copy of the audit provided to The Sun.

The audit -- the first full financial accounting of the operation -- also found that officers spent about $98,000 on "investigative" costs, mostly bar tabs, tips and "amusements" in the clubs on The Block. Nearly 90 percent of those expenses were not properly approved, the audit shows.

Two key undercover officers spent $48,998 on drinks, tips and drug buys. But nearly every felony drug charge the officers developed was dropped by prosecutors after the two were accused of having liaisons with women from the bars. Those accusations have since been sustained by internal affairs officers.

State Police Superintendent Larry W. Tolliver ordered his staff inspection unit to audit financial records of The Block probe and the drug bureau March 17 -- two days after The Sun reported a series of problems with the undercover drug operation and the Jan. 14 raid.

Colonel Tolliver said Friday that he since has ordered an internal affairs investigation to pursue some of the audit's findings. He also said he shuffled the command of the bureau, demoting the chief and transferring others.

"The material in this report has revealed many administrative deficiencies within the management and supervision of the Maryland State Police drug bureau," he said.

Drug bureau supervisors conceded there were financial reporting problems with the four-month probe dubbed "Operation Retake." In a response to the audit, they said they changed internal rules, located many of the missing expense forms and suggested that state police auditors may have mistakenly removed documents from the bureau's files.

On April 5 and April 28, the staff inspection team produced two audit reports. On May 31, the drug bureau responded to the findings.

Among the problems cited in the reports:

* The investigation cost taxpayers $26,165 more than the agency first reported. After the raid, police supervisors said the agency spent $116,439, based on figures from its finance division. But auditors found what they called a "large disparity" by going through drug bureau files and the division's petty cash accounts.

* The "vast majority" of 535 expense forms submitted by the 18 undercover officers in the investigation lacked proper authorization, and many were found to have forged signatures. Of the $133,000 spent on drinks, tips and drug purchases, only about $16,000 was properly approved by supervisors.

Officers provided "their own authorization by signing their supervisor's name to the document and securing only one of the two signatures necessary," the audit says. Names of troopers who filed the forged reports were not contained in the audit.

* None of the expense reports with forged signatures could be found in the drug bureau. Secretaries in the division recalled seeing the reports, but someone later removed them from the bureau's files, the audit report says.

Someone also removed from the drug bureau dozens of memos explaining the expenditures that had been attached to expense report forms, sources said. Duplicates of those memos were found in other state police divisions.

* Troopers routinely failed to file required documentation to explain the expenses incurred at clubs on The Block. Many expense forms contained vague explanations such as: "Investigative expenses incurred during Operation Retake for food, drinks and amusements," the audit says. This type of comment would raise questions with any auditor, the report says.

Last March, state police supervisors conceded it was not cheap investigating The Block, where customers pay as much as $20 for each drink they buy the dancers.

The audit reports, for the first time, provide a detailed breakdown of the troopers' spending. They show $98,085 in investigative expenses -- mostly bar tabs and tips for dancers, bartenders and doormen. An additional $34,921 was used to purchase drugs, the reports show.

The costliest day

From the beginning of the investigation in September, barely a day went by that troopers didn't spend hundreds -- and sometimes thousands -- of dollars on drinks, tips and "amusements," according to a computer analysis of audit figures by The Sun.

On 41 days -- nearly a third of the investigation -- officers spent more than $1,000 a day on "investigative" expenses, the analysis shows. On 11 of those days, they spent more than $2,000 a day.

The costliest day: Wednesday, Oct. 27, when troopers spent $2,967, mostly for drinks and tips.

The computer analysis also found some unusual spending patterns.

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