Legislative audit raises questions about car sale

Purchase by state property manager's spouse to be reviewed


The spouse of a Department of General Services official who oversees the sale of surplus state property was allowed to purchase a used car directly from a Maryland agency at a price below what it likely would have sold for at auction, according to an audit released yesterday.

Legislative auditors said the June sale "appears to have violated state ethics law and a prior ethics opinion" and referred the matter to the State Ethics Commission for review.

The transaction -- which came to auditors' attention through a tip to a fraud hot line -- prompted General Services Secretary Boyd K. Rutherford to order policy changes in January. He halted the practice of selling some state vehicles directly to the public, rather than at auction. And he prohibited the sale of any other surplus state property to relatives of or businesses associated with an employee involved in the disposal of such property.

The audit report does not identify the "senior management official" at DGS involved in the sale of the car, but says the individual "had oversight responsibilities" for the Maryland State Agency for Surplus Property."

Dave Humphrey, a spokesman for general services, declined to identify the official involved. "It's a personnel issue," he said.

The audit report said the state vehicle was sold for $1,047. The reports did not identify the make, model or year, but Humphrey said it was a 1998 Chevrolet Cavalier with just under 120,000 miles.

Auditors said the selling price was based on consumer trade-in value for the vehicle-- the same method used for other direct sales to the public -- which is usually less than the actual market value.

The State Agency for Surplus Property began selling certain surplus state vehicles directly to the public, rather than at auction, in February 2004, auditors said. The agency had sold 168 vehicles directly for "in excess of $390,000" as of Dec. 31, according to the audit report.

But auditors found that the state received significantly more revenue when surplus vehicles were sold at auction. They compared similar makes and models with similar mileage sold around the same time and found that some sold at auction fetched nearly twice as much as others sold directly to the public.

Auditors said the agency relied on "word of mouth" for people to become aware of surplus vehicles available for sale.

Humphrey said the sale price for the car that was purchased by the manager's spouse was consistent with that of comparable vehicles that were also sold directly to the public. "Secretary Rutherford has responded to the audit, we've done what we needed to do, and we now await a reply from the ethics commission," Humphrey said.

State ethics law generally prohibits public employees or their relatives from participating in transactions involving the agency that could benefit them economically.


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