Internal Controls

Daniel Gordon, former chief energy trader for Merrill Lynch & Co., is being investigated on suspicion of embezzling $43 million from the world's largest securities firm in 2000 by disguising the theft as an energy trade, according to a letter written by a U.S. Justice Department prosecutor and interviews with Canadian law enforcement officials. Merrill Lynch, based in New York, hasn't disclosed the loss in public filings. Gordon sent the money in 2000 to a Caribbean-incorporated shell company he controlled, according to the Justice Department letter.

Baltimore's search for a new schools chief abruptly shrank to a two-woman contest yesterday when the third finalist withdrew from consideration even as the school board was weighing its choices. A. Skipp Sanders, second-in-command of the state Department of Education, had impressed several school board members and Mayor Martin O'Malley with his determination to prove that underachieving city schools could perform as well as other Maryland schools. Sanders' withdrawal narrows the choice of the city's third schools chief in as many years to Bonnie S. Copeland, the Baltimore director of a nonprofit educational group, and Carmen Varela-Russo, an associate superintendent of a large Florida school system.

NEW YORK -- Just when General Electric Co. thought that it had put its investment banking subsidiary, Kidder Peabody & Co., on solid footing, a seemingly rogue bond trader caused it to take a $350 million pretax charge to its first-quarter earnings.On Sunday night, Kidder announced that it had fired Joseph Jett, the 36-year-old head of its government bond trading desk, and reassigned six other employees.It said that Mr. Jett had engaged in a series of phantom trades related to stripped government bonds that had caused the firm to record $350 million in profits over the last year that had not been earned.

The new president of the Maryland chapter of the National Multiple Sclerosis Society said yesterday that the nonprofit organization has put new procedures in place to prevent theft after an employee allegedly stole $269,000 over five years."

TC A Howard County Police Department employee was fired last week after a routine audit of the property section uncovered the gradual theft of more than $3,000 in cash.No criminal charges have been filed. Police are continuing their investigation of the theft, in which small amounts were stolen several times during 1989. Records for other years are also being investigated."I am extremely disappointed it happened," said Police Chief James N. Robey. "We are reviewing our entire process down there to assure it won't happen again."

Baltimore County Savings Bank announced plans yesterday to reorganize as a fully public company in hopes of raising enough capital to put the bank on solid footing with regulators and depositors after it lost money in an alleged check kiting scheme last year. The bank, which operates as a mutual holding company, said the funds it expects to raise in a public offering would give management more flexibility as it implements a new business plan. The bank has been operating under new management since shortly after losing $10.7 million in the check kiting scheme, which according to court filings allegedly involved now-defunct A&B Check Cashing in Baltimore.

For two decades, the Maryland Stadium Authority has been something of a golden child within state government. Set up as a quasi-public agency, the authority built downtown Baltimore's showplace stadiums quickly and efficiently with less red tape and more flexibility. The results were a huge success. Even 15 years after its opening, Oriole Park at Camden Yards is still considered one of Major League Baseball's finest venues. But a critical legislative audit released last week has tarnished the MSA's image.

With memories still fresh of a summer air travel season that easily ranked worst ever for delays, cancellations, lost baggage and general passenger misery comes word that federal workers have been breaking the rules by booking premium seats at taxpayer expense. Back in the cheap seats, where most taxpayers ride, the outrage is palpable. President Bush, who recently promised relief from the torture of the air, should include a crackdown on such abuses as part of his package. Now, that could be the fatigue and frustration talking.

Baltimore County Savings Bank's parent company said yesterday that it has been taken off federal regulatory supervision of its operations, a major step forward as it works to stabilize its long-term finances after a costly check-kiting scheme. BCSB Bankcorp Inc. said late yesterday that the Office of Thrift Supervision has terminated special oversight that had been in place since December 2005. The federal agency took action after finding flawed internal controls. In particular, it said the bank needed to improve its processes for identifying customers at high risk of unlawful activity.

WASHINGTON -- A federal watchdog agency has criticized the Navy for providing sketchy documentation to justify its proposed list of base closings and wants officials to explain the realignment plan.The General Accounting Office said yesterday that the Navy had "insufficient documentation" to support its proposed list, which calls for the closings of a military laboratory in St. Mary's County, Md., and the realignment of three other Navy labs in the state.The GAO's criticisms are a boon to Maryland lawmakers, who for months have protested the Defense Department's inclusion of military laboratories on the closings list.