Federal grand jury subpoenas Stadium Authority documents

Probe believed to reflect earlier legislative audit

July 03, 2004|By Tricia Bishop and Ed Waldman | Tricia Bishop and Ed Waldman,SUN STAFF

A scathing legislative audit report that suggested criminal misconduct and led to the resignation of the Maryland Stadium Authority's executive director has spurred a federal grand jury investigation, officials said yesterday.

Chairman Carl A.J. Wright said the authority received a federal grand jury subpoena this week requesting documents related to those outlined in a report released in February by the Office of Legislative Audits, but he didn't know the specifics of the preliminary investigation.

"I just know that what they're looking at is our contracts relative to what was in the audit and our former executive director," he said, adding that he expects his attorneys to meet with investigators to narrow the focus.

The audit, which covered the time between Dec. 20, 2000, and Dec. 31, 2002, showed that the authority had awarded $66 million in construction contracts without following normal bidding procedures, failed to properly oversee its board and kept sloppy records.

Backdated memos documenting a $15,000 bonus given to former Executive Director Richard W. Slosson were also found, as were instances when Slosson -who earned more than $250,000 a year - accepted gifts from companies doing business with the authority.

Slosson, who did not return phone calls yesterday, resigned in March as the authority was under fire from legislators looking for more control over the body.

"The authority has already enacted comprehensive reforms which correct the deficiencies that were described in the audit," said Wright, who became chairman in July. The authority will cooperate with investigators, he added.

This month, the authority adopted a new policy for procurement that Del. Dan K. Morhaim, chairman of the House government operations subcommittee, called a "great first step."

Morhaim, a Baltimore County Democrat, had backed bills this session that would bring more government oversight to the authority and that would require its procurement policies to align more closely with the state's. Yesterday he said he hadn't heard about the investigation and couldn't comment on whether it was needed.

"That's something for the people doing the investigation to determine," Morhaim said.

The authority is "not subject to [state] procurement [rules] like all the other agencies of government are," Maryland Attorney General J. Joseph Curran Jr. said last night. Curran's office was notified of the subpoena earlier this week. "They are exempted by statute from the [state] procurement laws, unlike any other state agency," he said.

The stadium authority has handled millions of dollars worth of public projects, including Oriole Park at Camden Yards, M&T Bank Stadium, a convention center in Ocean City and the expansion of the Baltimore Convention Center, and was involved in the recent renovations of the Hippodrome Theatre in Baltimore.

In their critical report, the auditors said that a $41.5 million contract awarded by the authority in June 2001 was not advertised and that only two companies were invited to bid. A second contract for $23.4 million awarded in December 2002 was not advertised and had only two bidders, they said.

The auditors also pointed out that there was no documentation of the bid openings or formal evaluation of the bids.

"Without sufficient competition, the Authority lacks assurance that it is awarding contracts at the best value to the State," the auditors from the Office of Legislative Audits said in their report.

The report alleged that Slosson had accepted hospitality from a contractor doing business with the authority, in violation of state ethics laws. It recommended that the stadium authority board refer that matter to the State Ethics Commission.

In May 2002, Slosson played golf at a private club in another state as the guest of the contractor and stayed at the contractor's home overnight. At the time, the contractor was doing business with the authority, and the situation was not disclosed on the executive director's disclosure form, according to the audit.

In a response included in the audit report, the authority said, "The Executive Director wrote a personal check to pay for the non-reimbursable expense. A reprimand will be placed in the Executive Director's personnel file, and he has apologized for his actions and promised that he will be more careful in the future."

"When you play golf with a contractor, it doesn't always look good," Wright acknowledged when the audit report was released. "You can do it; you just have to pay for it yourself. He has reimbursed the money. We're moving on."

The stadium authority's board, which has primary oversight responsibility, had not formally approved the authority's budgets, the auditors said. Total annual budgeted expenditures for fiscal 2002 were $116 million and for 2003 were $125 million.

The authority had not prepared annual rent calculations for any of its facilities, so it could not be readily determined whether the authority owed the state money.

Bonuses totaling $36,500 were paid to management without an established bonus program and budgetary disclosure. "It appeared that certain documents were fabricated to support the bonus paid to the executive director."

The authority could not substantiate how it determined the amount of administrative costs it billed to another agency for managing two of its projects.

Project funds totaling more than $19 million were commingled in the authority's working fund account in violation of state law and the comptroller's established procedures.

Proceeds from the sale of Memorial Stadium memorabilia totaling $164,589 were not transferred to the state's general fund as required.

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