Healthy Start probe yields no charges

Paper trail lacking

audit found program mismanaged funds

`There is nothing to act on'

Officials won't say whether investigation has formally ended

April 13, 2000|By Walter F. Roche Jr. | Walter F. Roche Jr.,SUN STAFF

Despite the discovery of millions of dollars in unpaid bills and more than $750,000 in improper expenditures, no criminal charges will be brought in a more than yearlong investigation of a federally funded Baltimore program to help needy pregnant women.

Assistant State's Attorney Elizabeth Ritter confirmed yesterday that she had informed the board of Baltimore's Healthy Start program at a meeting Tuesday of the decision not to seek indictments in the case.

"At this time, we've declined prosecution because there is nothing to act on," Ritter said.

Ritter would not say whether the investigation had formally ended and declined to comment further.

City Health Commissioner Peter L. Beilenson said in an interview that it was "infuriating," but that without a paper trail nothing further can be done. He said it was especially troubling because Baltimore's program has been used as a national model and has produced substantial improvements in caring for pregnant women.

"A small group of people have foisted a scam on this very important program. They are likely to get off scot-free," Beilenson said.

At least three officials involved in the administration of the program were terminated, suspended or transferred, however.

Audit reports released yesterday by city officials in response to a public-records request show that hundreds of bills, many of them to a small group of companies, were paid without proper documentation. In addition, millions of dollars in apparently legitimate bills were never paid.

Beilenson said that as a result of the unpaid bills, several lawsuits have been filed against Baltimore City Healthy Start, Inc., the nonprofit corporation set up by the city to run the program. Those suits include a claim for about $1.4 million from Johns Hopkins Hospital.

"We discovered dozens of checks that were made out but never mailed because the money wasn't there to cover them. We didn't have the money because the money went elsewhere," Beilenson said. "There clearly was extremely poor management."

Among the abuses noted by Beilenson were excessive purchases of items that might otherwise appear legitimate. The program, he said, paid for thousands and thousands of sticky note pads and "enough diapers to diaper the state of Maryland."

"There was outrageous conduct on the part of some vendors," he said.

In a report prepared for federal officials, city officials said $789,782 had been paid out improperly. In addition, unpaid bills totaling $2.5 million were uncovered in the review.

The audit reports by a private firm cited evidence of duplicate payments, no-bid contracts and "unreasonable and impractical expenditures."

The auditors, like city officials, found cases where checks to vendors were written and recorded but never mailed.

"The held checks resulted in an unrecorded liability of $337,992," the audit states.

Beilenson said that since the problems were uncovered well over a year ago, a new board has been appointed and new administrators installed. Among other things uncovered in the unraveling scandal was that the original board held few if any meetings and that no records of board actions were kept.

Under the new system, Beilenson said, all expenditures, "even for $5," get multiple reviews and he reviews and often questions the payments.

Barbara Squires, who took over as chief operating officer of the program, last year said federal officials have supported the efforts to clean up the program and have required additional reporting and closely monitored the recovery efforts.

"They put us on a short leash," Squires said.

Beilenson said city officials also discovered that annual audits required by the federal government had not been performed. If they had been, he said, the problems would have been detected much sooner.

With criminal actions ruled out, Beilenson said, the new board is considering whether to try to recoup any of the money through civil suits. The legal costs for such an effort could be substantial, he said.

Among the expenditures questioned in the audits were payments of $273,943 to Qualls Office Supplies of Baltimore. Tyrone Qualls, who owns the business, did not respond to a request for comment.

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