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Investigation finds Baltimore’s auction board chairman improperly accepted compensation from vendors; longtime auctioneer denies wrongdoing

An investigation by the Baltimore Inspector General’s Office concluded the chairman of the city’s Auction Advisory Board accepted improper payments to help unlicensed auctioneers host auctions in the city.

Inspector General Isabel Mercedes Cumming determined Chairman Jonathan Melnick agreed to let an unlicensed vendor use his company to conduct auctions in exchange for payment, according to a report released this week. The vendor won a contract in 2018 to sell abandoned vehicles and city-owned vehicles at an online auction.

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Melnick vehemently denies any impropriety. He said the inspector general’s report is fundamentally wrong.

Any compensation Melnick said he received was for conducting auctions in association with out-of-state auction companies. That cooperation included accepting liability for the auctions and lending his company’s insurance and bonding, Melnick said.

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Under city requirements, auctioneers cannot be licensed in Baltimore unless they are Maryland residents for at least two years. For that reason, Melnick said auctioneers who are licensed in Baltimore routinely conduct auctions with companies based outside of Maryland and receive compensation for doing so.

“This is not an uncommon practice,” Melnick said. “I am not selling my license.”

Cumming said she stands by the report.

The three-member board is appointed by the mayor to review the qualifications of applicants for city auction licenses and make recommendations to the administration. The board also is charged with investigating any violations to the auction code and reporting findings for possible license suspensions or revocations.

In the report, Cumming said Melnick offered to resign, writing in the report that “he has operated for many years with the understanding that he could allow others to operate under his license, so long as he accepted total liability during the auctions.”

Cumming called Melnick’s actions “successful acts to profit off his City license and position.” And as such, she said, the acts violated the city code, as well as Melnick’s position of trust.

Melnick is no longer a member of the board.

Mayor Bernard C. “Jack” Young’s office recommended the entire board be replaced.

In an email attached to the report dated April 27, Young’s chief of staff, Kimberly Morton, said the inspector general’s report prompted a review of the board’s operating procedures and the drafting of new ones to “ensure resolution of this point of failure.”

Morton said the city must also investigate how a contract was awarded to an unlicensed company in the first place.

According to the inspector general’s report, a Feb. 7, 2019, letter “states that the Vendor would pay the Chairman $1.00 per vehicle auction for the City (approximately $400 per month), plus a $1,600 per year flat fee (the City’s fee for a one-year auction license), equating to approximately $6,400 per year.”

Cumming wrote that neither Melnick nor the unnamed vendor could say who first proposed the deal, but that “both parties agreed there was an arrangement.” Both Melnick and the vendor told the inspector general the agreement was never executed and no compensation was exchanged.

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The vendor ultimately was awarded its own license.

On at least five other occasions, however, Cumming said Melnick "accepted $500 in gift cards and between $250 and $500 in cash for allowing other unlicensed auctioneers to use his own City license.”

Melnick, who said he has done business in the city since 1975 and served on multiple nonprofit boards, said he was forthcoming in an interview with the inspector general. He said he was disturbed that he never received any follow-up communication about the report’s release, only learning about it when a reporter called him.

The inspector general’s report inappropriately tarnishes a reputation he worked hard to build, Melnick said.

Besides the findings related to Melnick’s dealings, the report says board members served much longer than allowed. Board members are to serve no more than eight years, or two mayoral terms.

But Melnick has served since 1996, when he was most recently sworn in under Mayor Kurt Schmoke. Although Melnick is no longer on the board, city officials did not clarify the status of other members.

According to the report, Melnick said the board has not held any formal meetings in more than a decade. Melnick said he also had no communication regarding his role on the board from the last three mayors. He told Cumming the second member of the board is not responsive and the third position has been vacant for more than 20 years.

A law department review found that the second member was never actually sworn in, and therefore never an official member of the board. The 1996 swearing-in was found to be the city’s most recent.

“Currently, there does not appear to be anyone legally appointed to the [board], however, the Chairman has been allowed to operate the [board] for decades," the report says.

Melnick said he held the unpaid board position as a courtesy to the mayors he served.

“No good turn goes unpunished," he said.

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