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Hotline gives state whistle-blowers a place to call

Tips to auditors force changes at state agencies

By Michael Dresser, The Baltimore Sun

4:15 PM EST, December 31, 2011

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It's just an ordinary phone, the hotline that tips the state of Maryland's bloodhounds that something's amiss in one of the agencies. It isn't red, there are no special bells and whistles, but it does get answered.

And when it does, it can set off a chain of events that can topple long-entrenched bureaucrats and even — in extreme cases — put people in jail.

The number of the hotline is 1-877-FRAUD-11 — or 1-877-372-8311 if you prefer. Along with its online counterpart, the phone number connects callers with the Office of Legislative Audits, an independent agency that serves as the General Assembly's check on fraud and waste in state agencies.

In recent months, the auditors have used hotline tips to expose several well-publicized instances of financial misconduct in state government. One call helped lead to the indictment of a former Department of Natural Resources employee on charges of stealing $46,000 in state funds. Another, involving a suspicious pattern of bidding by two Maryland Department of the Environment contractors, led to a recommendation that the attorney general have his criminal investigators take a look.

It's all in a day's work for chief auditor Bruce Myers and his investigators. Myers, a soft-spoken man whose gentle demeanor masks a stern determination to protect public resources, said his team welcomes calls from state employees or contractors with tales to tell.

"We'd be more than happy to discuss any issue with them, and we can assure them they will remain anonymous and that we'll take what they say seriously," he said.

Myers and two of his senior investigators — who asked not to be identified or photographed because of ongoing investigations — spoke recently about their role in state government and how they use the hotline.

Auditors don't require informants to give their names — though they prefer when people do — and never reveal their sources. But one tipster who has gone public is Jim Hagerty, a former State Highway Administration employee. He says information he provided through the hotline helped lead to some findings in a July audit of that agency, notably that a former SHA construction chief had been asking agency contractors for contributions to a golf tournament in which he had a stake.

Hagerty said his experience with the auditing office was a mixed bag. He said he received so little feedback from the auditors that he thought they were ignoring him. Hagerty added that he was disappointed that it took more than two years between his tip and the audit's release. But when he finally saw the report, he liked the results.

"They were very professional. They cut right to the crux of the matter," Hagerty said.

The auditors' findings prompted departures from the agency's senior ranks. The results, outlined in reports released in July and December, have forced top state transportation officials to overhaul the way the agency doles out lucrative state contracts and to re-examine the sometimes cozy relationship between the highway agency and its consultants.

The legislative auditing office is located in the state office complex in Baltimore, "separated from the politics" of Annapolis, Myers said. The office, a semi-autonomous part of the Department of Legislative Services, employs about 100 professionals — 40 of whom are certified public accountants. Twenty are accredited as certified fraud examiners.

More than half of the staff works on routine "fiscal compliance" audits, the regular reviews each state agency undergoes every third year. But when a hotline call comes in, it can set off a special investigation. Maybe a half-dozen reports each year involve a criminal referral, Myers said.

When state employees go to work, they are likely to pass a bulletin board with a sign informing them that the hotline is available 24 hours a day, seven days a week, to report fraud or abuse. Myers said the agency set up the hotline in 2003 at the urging of the legislature's Joint Committee on Audits.

At the time, the auditors expected to get about 200 tips a year through the phone, the website and other means. But they've received an average of more than 300 tips a year, with the final 2011 tally expected to reach 360. About three-quarters of the tips come in by phone, and most of the rest come through the hotline website, http://www.ola.state.md.us/top_pgs/Fraud%20Hotline/fraud_main.html.

When the phone rings during business hours, it is likely to be answered by one of the two auditors who joined Myers, who has headed the office for 14 years, at the interview.

The auditors said some callers give investigators their names while others prefer to remain anonymous. Some call with only the sketchiest information, but others provide specific times and dates of reported malfeasance, along with the names of alleged wrongdoers. Whenever an audit is reported in the news media, there's a spike in calls, they said. After the first SHA audit came out in summer, traffic nearly doubled.

By law, the auditors have the right to examine the books of any state agency. Most state officials know that and are cooperative, auditors say. But every now and then, they run into resistance. Meyers said that happened at the SHA before Transportation Secretary Beverley Swaim-Staley ordered an end to any obstruction.

To conduct a proper audit, the investigators have to do more than just add up numbers. They have to learn the internal processes of each agency so they can tell whether things are being done properly. In many cases, they're looking not just for evidence that money has been misappropriated but for weaknesses that could be exploited in the future.

Even when the auditors find something apparently nefarious going on, their reports are anything but exciting. They tend to recount what they've found in a nothing-but-the-facts manner. And to the frustration of some readers, they don't name names in their public reports— though they'll make an exception for law enforcement.

The office is careful to avoid drawing conclusions that aren't backed up by evidence, even under pressure from their bosses in the General Assembly. In early December, when Myers appeared before the Joint Audits Committee to talk about the SHA reports, he came under questioning from both parties. Some Democrats attempted to excuse some of the agency's failures to follow procedures as cutting corners to get work done. Meanwhile, a Republican tried to get Myers to draw broad conclusions about a culture of corruption. Myers firmly refused to either minimize or embellish the conclusions in the reports.

"You've got to be very objective," he said.

Myers said only about two or three of every 10 tips the auditors get through the hotline are specific about alleged wrongdoing. But even the vague reports are useful, he said, because an accumulation of such messages from one agency can suggest problems.

Not every caller is a hero. Some people call to make spurious allegations against someone against whom they hold a grudge. It's important to keep and open mind and let the facts speak for themselves, the auditors said.

While a career as an auditor of state government agency may not be something people dream of as children, Myers' employees say it's fascinating work. They say the job can take them virtually anywhere in the state, from a department secretary's office to a construction trailer to a state park on the Eastern Shore to a salt dome in Western Maryland.

In what other job, one auditor asked, can you go from exposing teachers who are sex offenders to uncovering a failure to suspend drunk drivers' licenses to discovering that dead people are receiving Medicaid benefits?

The auditors say they're confident the work they do is important to the people of Maryland. Just the possibility that they will come around to check the books prevents some state workers from ever taking the first step toward fraud, auditors say.

"A lot of these fraudsters, if they get away with it, they'll increase what they're doing. If you steal 100, you'll steal 1,000," Myers said.

michael.dresser@baltsun.com