Testimony from council members in grand jury probe is postponed

Spending board scraps expense account, creates reimbursement system

May 13, 2004|By Doug Donovan and Laura Vozzella | Doug Donovan and Laura Vozzella,SUN STAFF

Federal prosecutors postponed the scheduled grand jury testimony yesterday of Baltimore City Council members whose personal and professional dealings are the subject of a wide-ranging grand jury probe, according to a source familiar with the investigation.

In other action yesterday, the city's spending board scrapped the council's long-standing expense account system that U.S. Attorney Thomas M. DiBiagio has been examining as part of his eight-month investigation.

"It was time to make sure we were being accountable and responsible," council President Sheila Dixon said yesterday.

A federal grand jury convened yesterday in U.S. District Court on Lombard Street, but no council members appeared. A source familiar with the investigation said that testimony scheduled yesterday by at least one council member had been postponed due to a scheduling conflict. The source asked not to be identified due to the federal probe's sensitive nature.

It is not clear if all 19 council members have received subpoenas to testify and whether a few appeared before the grand jury last month or have met with DiBiagio and his investigators, sources said.

But a formal schedule of testimony from nearly half the council members was set to begin this week and is scheduled to continue each week through next month, sources said.

Council members have repeatedly refused to comment on the investigation, as has DiBiagio's office. Only Dixon has said she was not subpoenaed to testify.

Testimony is expected to center on five years' worth of documents that DiBiagio subpoenaed in September and October from all council members, including Dixon.

The documents relate to information detailing council members' acceptance of gifts and loans, their outside income, campaign accounts, hiring practices and relationships with two local businessmen.

Federal prosecutors are also examining the expense-account system that paid council members $5,000 a year each with no oversight and permitted them to keep as income whatever was not spent on city business. Failure to report the pocketed cash or money spent for noncity business as income could breach tax laws, several experts have said.

The Board of Estimates voted yesterday to eliminate the expense system and established a new procedure that takes effect immediately. The new policy discontinues the practice of advancing expense money to council members and to Mayor Martin O'Malley and Comptroller Joan M. Pratt.

The elected officials are no longer allowed to keep unspent funds as income. The officials will have to provide receipts before being reimbursed.

O'Malley called for an immediate end to the practice in March, after The Sun reported that DiBiagio was examining the expense accounts. The board's action formalized O'Malley's decision. The mayor was traveling yesterday and did not attend the board meeting.

The new policy spells out what qualifies as a legitimate city expense and what does not, something that was vague under the old rules.

Among the items that do not qualify are health club and country club memberships, charitable and political contributions, and meals and entertainment not related to city business.

Under the old system, in place since 1968, council members were automatically advanced expense money in quarterly checks that, in recent years, amounted to $5,000 a year. Dixon received $7,000, Pratt received $5,000 a year and O'Malley got $15,000.

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