Builder faces loss of state contract Prosecutors seek theft indictment

The Maryland attorney general's office asked the state to rescind a $4.5 million construction contract yesterday because it is trying to have the winning bidder indicted for theft.

During a meeting of the Board of Public Works, state Deputy Attorney General Ralph S. Tyler recommended the board strip LoZito Contracting Inc. of a job to build a wing onto the Maryland Rehabilitation Center in Baltimore.


The board awarded the contract to LoZito, a Cockeysville firm, on Aug. 11. A week later -- apparently unbeknown to board members -- Louis LoZito Jr., a former officer of the company, was charged by state prosecutors with theft in excess of $50,000.

Mr. Tyler said yesterday that his office plans to go before a grandjury to seek an indictment against both Mr. LoZito Jr. and the company.


Louis LoZito Sr., who recently took over the business, denied wrongdoing by his son or the firm. "This company's never been charged [with] anything," he said.

Embarrassed by the news and at a loss as to how to handle the problem, the board -- made up of the governor, the state treasurer and comptroller -- postponed a decision until its next meeting scheduled for Oct. 6.

"It's a very difficult one for me," said Gov. William Donald Schaefer.

"This is the first time we've had a case like this to my knowledge," said Comptroller Louis I. Goldstein, who took office in 1959.

The contract includes a 53,700-square-foot wing for the center, which is located at 2301 Argonne Drive in North Baltimore. The new building will house programs offering technology and independent living training for severely disabled people, including those with spinal and traumatic head injuries.

Although the contract was awarded last month, construction had not yet begun.

James S. Jeffers, assistant state superintendent for rehabilitation services, said that if the project is delayed beyond the end of the year, the state would lose about $500,000 in federal matching funds. Yesterday the center canceled a groundbreaking ceremony scheduled for tomorrow morning.

The rehabilitation center contract is the latest in a series of controversial awards by the state. Critics have charged that lobbyists and legislators have interfered with the awarding of several contracts, including one for lottery comput- ers.


At issue yesterday was whether a criminal investigation and a criminal charge against a former corporate officer should disqualify a company from receiving a state contract.

William F. C. Marlow Jr., a Towson attorney representing the elder Mr. LoZito, said taking the contract away would be blatantly unfair.

"Until you are a convicted felon, you have a right to a state contract," he said. "If [the company] defaults on the subcontracts, we're all going to find ourselves in court."

Governor Schaefer asked, "Aren't we taking his rights away now by prejudging him?"

Martin W. Walsh Jr., secretary of the Department of General Services, didn't think so. He said the standards for rescinding a contract are not as strict as those in a court of criminal law.

Mr. Walsh recommended the board grant the contract to the second-lowest bidder, Roy Kirby & Sons of Baltimore.