Prosecutors investigate oyster project

Criminal probe targets $1 million restoration of Piney Point facility

Audits raise questions

State acknowledges work was hurried to satisfy grant terms

September 19, 1999|By Thomas W. Waldron and Timothy B. Wheeler | Thomas W. Waldron and Timothy B. Wheeler,SUN STAFF

Maryland prosecutors have launched a criminal investigation of a state oyster-replenishment project that auditors say skirted procurement laws and sent at least $284,000 in no-bid fees to an Annapolis consultant over an 11-month period.

The investigation by the attorney general's office centers on the $1 million rebuilding of the Piney Point oyster cultivation facility in St. Mary's County in 1996 and 1997, a project that state officials acknowledge was mishandled in a rush to produce oysters to satisfy the terms of a federal grant.

General Assembly auditors, who are finishing a regularly scheduled review of the Department of Natural Resources, came across evidence of possible criminal conduct connected with the project and referred the matter to prosecutors in the attorney general's office, DNR officials said.

It is not clear which aspect of the project is being investigated. An earlier audit by the DNR raised significant concerns, ranging from a lack of competitive bidding to scant financial oversight. The internal 1997 audit was recently made public at the request of The Sun.

Working with an Anne Arundel County grand jury, the attorney general's office has issued at least two subpoenas for records, including one last month to the Maryland Watermen's Association, which was designated, at least nominally, to run the project.

Prosecutors have also subpoenaed records from Michael Willinsky, the Annapolis consultant who oversaw the Piney Point project under a series of no-bid grants and contracts, nearly all of which were funneled through the watermen's association.

Carolyn H. Henneman, head of the attorney general's criminal investigation unit, confirmed that the subpoenas were issued but refused to discuss the investigation.

Larry Simns, president of the watermen's association, defended his group's handling of state funds and said it has given the requested records to prosecutors.

"We cooperated with them every way we could because we don't have anything to hide," Simns said. "Nobody has said what, if anything, we've done wrong."

`I did nothing wrong'

Willinsky, a Canadian who was brought to Maryland by DNR officials to lead the Piney Point effort, defended his actions, blaming the investigation of his finances on unnamed DNR officials intent on discrediting him.

"I know I did nothing wrong," Willinsky said in an interview. "I know every item we did is accounted for. This is a witch hunt."

Interviews with current and former DNR officials and outside experts, the internal audit and other agency records give this account of the project's history:

Willinsky came to Maryland in 1996 at the urging of Dorothy Leonard, then the DNR fisheries director, to help boost the department's production of oysters. Maryland had received a $2.5 million federal grant that required the state to raise millions of juvenile oysters.

As part of the effort, Willinsky and other consultants recommended that the department rebuild and expand a small, run-down oyster nursery the state owned at Piney Point.

State officials concluded that Willinsky would be the right person to lead the rebuilding effort, which he estimated would cost $341,000.

Although he had little if any academic training or work experience in aquaculture, Willinsky impressed Leonard and others in Maryland with his energy and vision for restoring the oyster population, considered one of the keys to improving water quality in the region.

Willinsky, who has advanced degrees in dentistry and pharmacology, said he has essentially taught himself about raising oysters. He brought in experts from as far away as New Zealand to work with him, Willinsky said.

Normally, any state work costing more than $25,000 must be bid competitively.

But agency records make clear that DNR officials wanted to find a way to fund the project to guarantee Willinsky's involvement and avoid delays that are part of a bidding process.

The department opted to pay for the project with a series of grants, which are not subject to competitive bidding. State grants, though, may not go directly to for-profit entities such as Willinsky's company, so they were given instead to the nonprofit Maryland Watermen's Association.

$1 million in grants

During an 11-month period ending in July 1997, DNR gave the watermen's association just over $1 million in six grants to rehabilitate Piney Point and an oyster hatchery at Deal Island.

DNR officials insisted that the watermen's association hire Willinsky's firm, Coastal Engineering Inc., to handle the project, state records show.

Willinsky's company received $895,700 in 1996 and 1997 from the watermen's association. The association retained $84,000 of the grant funds, money that Simns said was used to pay watermen who helped with the project. Another $24,000 went to other consultants.

By several accounts, Willinsky worked hard to complete the Piney Point rehabilitation, rounding up labor wherever he could find it -- including inmates from the St. Mary's County jail, whom he would pay in pizza.

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