Purchasers who overpaid for items stripped of credit cards

9 SHA

Md. joins 4 other states in probe of Fla. supplier

December 16, 2004|By Michael Dresser | Michael Dresser,SUN STAFF

The State Highway Administration stripped nine procurement officials of their government--issued credit cards yesterday - months after auditors found that they purchased supplies at exorbitant prices.

SHA Administrator Neil J. Pedersen took the action one day after coming under fire at a General Assembly committee hearing for leaving the cards in the hands of employees who paid up to 28 times the retail price for common janitorial and maintenance items.

The auditors said Tuesday that three state agencies spent $1.4 million to purchase goods at inflated prices from 17 suppliers, including a Florida firm that has been accused of bribing thousands of civil servants in state and local governments across the country.

Bruce A. Myers, the state's chief legislative auditor, identified the company as Stone Cold Chemicals, whose owners face criminal charges in Florida and Georgia.

Agency records show that the SHA has done more than $425,000 in business with Stone Cold since 1997. Two other state agencies, the Department of Juvenile Services and the Department of Public Safety and Correctional Services, have also purchased items from the company, records show.

Law enforcement authorities in other states have charged that company salespeople enticed officials with gifts including fishing gear, a pornographic tape, NFL T-shirts and gift cards to such businesses as Home Depot, Victoria's Secret and Hooters. Officials in Florida estimate that Stone Cold may have bribed as many as 2,000 public officials in 48 states.

Transportation Secretary Robert L. Flanagan said the Stone Cold transactions amounted to "a national conspiracy" to defraud government agencies. "More than just Maryland, it was a national epidemic."

Flanagan strongly defended Pedersen's decision to leave the credit cards in the hands of the nine purchasing officials, saying that the administrators did so at the request of auditors to avoid tipping the employees to the investigation.

Flanagan, who said he "absolutely" retains confidence in Pedersen, said the employees' purchases were carefully monitored during the inquiry.

Flanagan said that since Tuesday's hearing, investigators in Florida and state auditors had authorized the release of information to the SHA that justified the decision to cancel the credit cards. The release will also allow administrators to make decisions about other possible disciplinary action, he said. "I expect the SHA will make appropriate judgments very quickly," he said.

Flanagan and Pedersen said that neither the highway agency nor the parent department has received subpoenas. Pedersen said subpoenas were unnecessary because the agency is cooperating with state investigators.

In launching an investigation involving Stone Cold, Maryland officials are joining law enforcement authorities in at least four other states.

In Georgia, where Stone Cold's business practices were first reported by a local television station in 2003, about 25 state and local government employees were charged in March with taking bribes from the company. Nine company officials, including chief executive Lloyd Glynn "Barney" Barnard, face felony charges.

In Florida, nine company employees and nine current or former government officials were arrested in September 2003. Barnard and three other Stone Cold employees, including his wife, were charged with racketeering, among other charges.

A former purchasing agent in the Pennsylvania Transportation Department was charged in March with taking kickbacks from Stone Cold for buying $175,000 in unneeded supplies.

Four Oregon transportation workers have lost their jobs and dozens are being questioned in a kickback investigation involving Stone Cold. The Oregonian in Portland reported that the case, which also involves purchases of supplies at inflated prices, is expected to go to a grand jury as early as this month.

In Maryland, criminal investigators in the attorney general's office are looking into whether state employees who bought products from Stone Cold and the other, so-far-unnamed companies might have been influenced by similar gifts. Myers identified Stone Cold because its indictments in Florida and Georgia are in the public record.

Officials at the company, whose Web site lists offices in Loganville, Ga., and Ponce Inlet, Fla., could not be reached for comment. The Georgia office's number had been disconnected, and repeated calls to the Florida office yielded busy signals.

In 2003, the Public Safety Department spent about $17,000 with the company in 19 separate credit card transactions, according to the comptroller's office. The Juvenile Services Department accounted for two credit card purchases at slightly more than $750. Neither department was cited by the auditors in Tuesday's hearing.

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