Faced with charges of lying about a lucrative consulting deal with former state Sen. Larry Young, the Baltimore Urban League agreed yesterday to pay a $40,000 fine and fund $157,000 worth of organizational changes to settle a suit brought by the U.S. government.
The consent agreement, filed in U.S. District Court late yesterday, appears to end one of several probes of Young and the consulting contracts he secured while serving as chairman of a key legislative panel in Annapolis.
The agreement bars the Urban League from hiring politicians or appointed officials as consultants to work on federal grants. It also requires the nonprofit group to fund a series of steps to prevent abuses, including the hiring of an auditor and accountant, and establishing a review process of major contracts.
The agreement settled a civil complaint federal prosecutors filed under the U.S. False Claims Act. It charged the Urban League and Young with "knowingly" submitting fraudulent bills and using falsified records to "conceal" payments to the federal government.
Urban League President Roger Lyons, who crafted the consulting deal with Young, and Linda S. Thompson, the board chairman who signed the consent agreement, could not be reached for comment last night.
Young not part of agreement
Young, also named as a defendant in the complaint, did not sign the agreement. The settlement resolves civil claims against Young and his consulting firm, the LY Group.
"He is not a party to the agreement," said Gregg L. Bernstein, Young's lawyer. "The league took it upon itself to resolve the matter, and he is certainly pleased."
Asked if Young would repay the Urban League for the $62,500 in consulting fees and expenses he collected as a private consultant, Bernstein said: "I don't expect that to happen."
Federal officials estimated that Young received $40,000 more in fees than he should have collected under federal grant guidelines.
The settlement stems from two grants totaling $600,000 that were awarded to the Urban League by the U.S. Department of Energy in 1996 and 1997. Under the grants, the Urban League held a series of seminars across the country on utility deregulation and its impact on the minority community.
Young was named as project director and he collected a fee through the LY Group, a for-profit firm he ran out of his West Baltimore district office. The Urban League told Energy Department officials that Young would be paid $60 an hour. But according to the 10-page complaint, Young was paid fees that climbed as high as $300 an hour -- a violation of federal law.
Despite the Urban League's statements to the Energy Department, "defendants wrongfully agreed to pay defendant Young a consulting fee based on a contingency fee arrangement in direct contravention" of federal rules, the complaint states.
Asked if there would be any further action by the federal government stemming from the Energy Department grant, first assistant U.S. attorney Stephen M. Schenning said: "The government's concerns with the Urban League have been resolved by this consent decree."
Under the agreement, the auditors hired by the Urban League must notify the federal government immediately if they discover any breach of law or regulation.
Schenning added that Young is not under criminal investigation for his consulting arrangement with the Urban League. He declined to say whether the former state senator is under federal investigation for any other allegations of criminal wrongdoing.
In addition to the fees paid to Young, the complaint charges that the Urban League improperly paid another consultant, Julia Anderson, one of Young's closest political allies and friends. Anderson collected $3,000 for work performed before the grant was awarded.
According to the complaint, Lyons instructed Anderson to resubmit her invoice to show that the work was performed after the grant's award date. She complied, submitting an invoice that "falsely indicated that the services were rendered from Jan. 15, 1996 to May 15, 1996," the complaint says.
Last year, federal investigators opened a criminal and civil investigation into the Urban League and Young's consulting arrangement. They examined what work Young's company performed for the Urban League. They also investigated why Young promised to bill the Urban League a "special" $85 an hour rate, but instead charged as much as $300 an hour.
A federal audit of the Urban League grant released last year under the U.S. Freedom of Information Act found a series of problems with the LY Group contract. Among them:
* There was no formal consulting agreement between the LY Group and the Urban League.
* There were no detailed records of services the LY Group claimed it provided to the Urban League, other than invoices that say: "For consulting services rendered."
* The LY Group had a percentage fee arrangement with the Urban League in violation of federal law.