Theft probe has new tack

Charges are dropped, but auto auctioneers could face more later

`Victim of embezzlement'

Investigators accuse company of cheating Calvert of revenue

February 25, 1999|By Andrea F. Siegel | Andrea F. Siegel,SUN STAFF

Anne Arundel County prosecutors have dropped all charges against the owner of one of Southern Maryland's largest auto auction houses and are reworking much of their probe into whether Colonial Auction Services fleeced numerous local government and nonprofit agencies.

The probe, which once focused exclusively on Colonial's owner, Melvin E. Richards, now includes at least one employee whose Calvert County home was raided by investigators this month, prosecutors and Richards' lawyer confirmed.

Deputy State's Attorney William Roessler said yesterday he dropped the theft charges against Richards because the prosecutor's office was "doing additional investigation to see if it supports the current charges." But the work would not be finished in time for the trial, scheduled for March 2, Roessler said, nor could he estimate when the case might be ready.

FOR THE RECORD - A headline in yesterday's Anne Arundel County edition of The Sun referred to allegations that an automobile auction house shortchanged Calvert County of revenue. It should have referred instead to Charles County.
The Sun regrets the error.

"I think Mr. Richards has clearly been the victim of an embezzlement -- Mr. Richards and his customers," said Timothy F. Maloney, Richards' attorney

Prosecutors, however, did not say Richards was cleared. They said the investigation could lead to different or additional charges, but would not say against whom.

Richards, 56, whose company auctions vehicles in Upper Marlboro and Wayson's Corner, was charged with 56 counts of short-changing Charles County government in sales of its surplus and seized cars. Investigators there said he filed paperwork claiming that he sold the vehicles to dealers for thousands less than he did, pocketing the difference between the actual payment and doctored records.

The probe so far has indicated that as much as $200,000 may have been taken over several years, siphoned out in small and varying sums from individual car sales.

Since December, prosecutors and Maloney have been swapping information. Maloney said Colonial records that he gave the Anne Arundel State's Attorney's Office implicated an employee.

"The first thing that rang bells is that everything is computerized there. To carry out this scheme, you would have to have access to the computer," Maloney said. "Mr. Richards doesn't know how to operate the computer."

Colonial has about two dozen employees.

Investigators who searched the home of one of them found close to $70,000 in cash, and computer and auction records from Colonial, Maloney said. He said investigators following up on information from his office pointed to other questionable financial activities that do not implicate his client.

Investigators would not discuss what the search yielded or the directions of the probe.

Maloney said Colonial is trying to reconstruct several years' worth of auto auction records to find sales that showed a discrepancy between what the vehicles sold for and what sums were reported to the sellers.

"The company is going to make restitution to each of them," he said. Richards, he said, is hoping to rebuild his reputation and recapture business lost since his arrest last October.

Anne Arundel authorities are still sifting through Colonial's paper and computer files, which they seized last year. But the probe, like many white collar crime investigations, is a complicated web of extensive bank and other records as well.

In 1992, Richards was charged with making false entries on state forms that authorized the transfer of car titles. He received probation before judgment and cleared his record after a year, prosecutors said.

Pub Date: 2/25/99

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