MTA official under criminal investigation after $6 million contract audit

An unidentified former official at the Maryland Transit Authority is under criminal investigation for contracting irregularities that cost the state some $6.3 million between 2010 and 2013, according to a state audit report.

In a "special review" released today, the Office of Legislative Audits said that "Interagency Agreements" between the MTA and Towson University's Division of Economic and Community Outreach (DECO) allowed for the hiring of up to 57 people—many of them former MTA employees—outside the normal budget and contracting processes.

A tip that came through the state's fraud hotline prompted the review, which found that "one MTA employee had unilateral control over the agreements including creating, approving and modifying the agreements, amendment, and related task orders," the 24-page review says. "In addition, one of these agreements included payments totaling approximately $200,000 for work performed by a company owned by this employee’s spouse."

The MTA terminated the employee before the auditors began their review, but referred the matter only to the State Ethics Commission. MTA did not do a thorough enough review, the auditors concluded, and did not refer the matter to the Office of the Attorney General's criminal division until the auditors told the secretary of the Maryland Department of Transportation what they had found.

The audit found that there were no real checks on what the official was doing. People were paid without anyone documenting that they had done the work. And some of the work was indeed dubious. "For example," the audit says, "the agreement provided that seven individuals had responsibilities related to a 'Roads Scholar Program,' including one individual, for which MTA paid a fee of $92,819 during fiscal year 2012, whose primary duty was to manage all aspects of the program. However, MTA management was unfamiliar with the program and subsequently advised us that the Program had not been active for several years . . ."

The audit says Towson's DECO program had little or nothing to do with the apparent fraud, other than being used as a conduit. "MTA was responsible for monitoring the work performed by these individuals without any apparent involvement by DECO," the audit says. DECO appears to be related to business planning, mapping, and social-media strategies, though its website is pretty spotty, with many dead links. A call to its director was not immediately returned. 

The Maryland DOT agreed with the audit's findings and said that it had instituted new "standard operating procedures" to prevent such occurrences in the future. 

An MTA spokesman asked for an email detailing City Paper's questions, then forwarded a statement from MTA CEO Robert Smith pending answering those questions. Here is that statement: 

“As Administrator of the Maryland Transit Administration, the activities detailed in the Office of Legislative Affairs review are completely unacceptable and totally inconsistent with our responsibility to serve the citizens of Maryland. 

Once the MTA became aware of the issues with this interagency agreement, MTA:

-referred issues with the agreements to the State Ethics Commission in August 2012

-terminated the employee who oversaw the employment services agreement in November 2012

-terminated the employment services agreement in November 2012;

-terminated the employment services agreement on June 30, 2013;

-referred certain matters with the agreements to the Criminal Division of the Office of the Attorney General in May 2013; and

-established a new Standard Operating Procedure (SOP) that became effective on December 1, 2014.

While these actions predate my tenure here, it is my responsibility to ensure they don’t happen again. Moving forward the MTA has amended its procedures to require additional scrutiny, oversight and approval of these types of agreements. We have also improved our record-keeping and payment authorization practices.”


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