Henson alters view of deals Use of federal funds to hire contractor is no longer defended

HUD probe continues

Housing commissioner expresses reservations about his decisions

March 22, 1998|By John B. O'Donnell | John B. O'Donnell,SUN STAFF

A month after getting a legal opinion that cautioned him about hiring a Baltimore contractor with ties to a convicted felon, housing commissioner Daniel P. Henson III approved the award of the first of a series of contracts that would amount to nearly $4 million.

Henson's decision paved the way for Botech Inc. to get lucrative, publicly funded jobs despite the fact a key employee, Timothy Lanocha, had been convicted of lying to a grand jury about his role in making illegal payments to Henson's staff.

Botech is now the focus of a federal investigation aimed at determining whether its work for Henson's agency over a two-year period violated a ban imposed in 1995 on Lanocha. It prohibited him from winning contracts financed by the federal government.

Until now, Henson has steadfastly defended the contract to Botech, citing among other things the legal opinion he received. On Friday, however, he expressed some reservations, suggesting he would not have approved the deal had he known the extent of Lanocha's role in the firm, as reported by The Sun in January.

The federal probe could lead to sanctions against Baltimore, including the withholding of federal funds that had been earmarked for Lanocha's firm. That would force the city to pay for the entire cost.

The tale of Botech's work for Baltimore's housing agency is an illustration of how a contractor banned from taxpayer subsidized contracts can maneuver to circumvent that ban.

On at least four occasions, public officials have been told that Lanocha has a key role in Botech. He has been variously described as field operations manager, crew chief overseeing site managers, the person who "solves all problems at the job site," and coordinator of field crews. Once on the payroll, he was described in January as a consultant to the firm.

Carlos E. "Bob" Oreamuno, Lanocha's father-in-law, incorporated Botech in May 1994, choosing Claude Edward Hitchcock, an attorney close to Mayor Kurt L. Schmoke, as registered agent. The incorporation came in the midst of a federal probe of Lanocha Construction Inc., which was headed by Lanocha. According to Dun & Bradstreet, his wife, Cristina Lanocha, was treasurer of Botech.

Oreamuno, a federal retiree, and his daughter own 90 percent of the firm's stock. Joseph L. Mills Jr., the sales and marketing manager, owns the remaining 10 percent, according to company documents.

Oreamuno, 64, told the city's minority contractors' office in early 1995 that Lanocha encouraged him to go into the construction business.

The U.S. Department of Housing and Urban Development barred Lanocha, his brother William Lanocha Jr., and their firm from federal work between February 1995 and February 1997. The two had admitted giving gifts and money to employees of Henson's agency while their firm received some $3 million in no-bid work. In February 1995, they pleaded guilty to lying to a federal grand jury.

Three months later, a nonprofit developer picked Botech to do renovation work worth $668,000, about half of it financed with federal funds dispensed by Henson's department. An then aide urged Henson to get a legal opinion, warning him that "the agency could be embarrassed and criticized if the convoluted relations of the Botech company were to become public knowledge."

Henson's agency had already begun awarding small contracts to Botech. Nevertheless, he waited until November to request the opinion, which he received the next month from W. Hayes Brown III, a city lawyer.

Brown said the involvement of Oreamuno and Cristina Lanocha in Botech "standing alone, should not disqualify" the firm. But he did not sanction the contract.

Instead, he recommended "that you further investigate this project to insure the complete divorcement of the contractor from the suspended brothers and their company" and "to make sure that the suspended persons and company do not control, participate or benefit from" Botech work on the project.

Citing federal regulations, Brown said that some indications of a linkage that could prohibit Botech from doing the work were "patently present," including the presence "of interests among family members" and the fact that Botech was formed during the federal probe of Lanocha.

Brown recommended that Henson determine if Botech and Lanocha shared facilities, equipment and employees and determine the status of Timothy Lanocha in relation to the project.

In January 1996, Oreamuno wrote to Henson's agency. He said Timothy Lanocha was a Botech employee who would have no supervisory role in the rehab project.

Lanocha, he added, had "officially resigned his position" with his family firm on Nov. 1, 1994. "Neither Botech, Inc. nor Timothy Lanocha have any involvement with it [the Lanocha firm] at all, share no facilities, equipment or employees, and there is no interlocking management or ownership between the companies."

Henson accepted the Botech assurances and without further investigation approved the contract.

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