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Audit uncovers abuses in Block probe After Sun report, inspectors find troopers forged signatures, improperly used funds

THE BALTIMORE SUN

State police troopers assigned to The Block probe spent $26,000 more than first reported, forged supervisors' signatures on expense forms and failed to document how tens of thousands of tax dollars were doled out, according to an internal audit critical of the operation.

Dozens of expense reports were missing from internal files, and memos explaining how the money was spent in downtown Baltimore's nude dance clubs were inexplicably removed from the agency's drug bureau, according to a copy of the audit provided to The Sun.

The audit -- the first full financial accounting of the operation -- also found that officers spent about $98,000 on "investigative" costs, mostly bar tabs, tips and "amusements" in the clubs on The Block. Nearly 90 percent of those expenses were not properly approved, the audit shows.

Two key undercover officers spent $48,998 on drinks, tips and drug buys. But nearly every felony drug charge the officers developed was dropped by prosecutors after the two were accused of having liaisons with women from the bars. Those accusations have since been sustained by internal affairs officers.

State Police Superintendent Larry W. Tolliver ordered his staff inspection unit to audit financial records of The Block probe and the drug bureau March 17 -- two days after The Sun reported a series of problems with the undercover drug operation and the Jan. 14 raid.

Colonel Tolliver said Friday that he since has ordered an internal affairs investigation to pursue some of the audit's findings. He also said he shuffled the command of the bureau, demoting the chief and transferring others.

"The material in this report has revealed many administrative deficiencies within the management and supervision of the Maryland State Police drug bureau," he said.

Drug bureau supervisors conceded there were financial reporting problems with the four-month probe dubbed "Operation Retake." In a response to the audit, they said they changed internal rules, located many of the missing expense forms and suggested that state police auditors may have mistakenly removed documents from the bureau's files.

On April 5 and April 28, the staff inspection team produced two audit reports. On May 31, the drug bureau responded to the findings.

Among the problems cited in the reports:

* The investigation cost taxpayers $26,165 more than the agency first reported. After the raid, police supervisors said the agency spent $116,439, based on figures from its finance division. But auditors found what they called a "large disparity" by going through drug bureau files and the division's petty cash accounts.

* The "vast majority" of 535 expense forms submitted by the 18 undercover officers in the investigation lacked proper authorization, and many were found to have forged signatures. Of the $133,000 spent on drinks, tips and drug purchases, only about $16,000 was properly approved by supervisors.

Officers provided "their own authorization by signing their supervisor's name to the document and securing only one of the two signatures necessary," the audit says. Names of troopers who filed the forged reports were not contained in the audit.

* None of the expense reports with forged signatures could be found in the drug bureau. Secretaries in the division recalled seeing the reports, but someone later removed them from the bureau's files, the audit report says.

Someone also removed from the drug bureau dozens of memos explaining the expenditures that had been attached to expense report forms, sources said. Duplicates of those memos were found in other state police divisions.

* Troopers routinely failed to file required documentation to explain the expenses incurred at clubs on The Block. Many expense forms contained vague explanations such as: "Investigative expenses incurred during Operation Retake for food, drinks and amusements," the audit says. This type of comment would raise questions with any auditor, the report says.

Last March, state police supervisors conceded it was not cheap investigating The Block, where customers pay as much as $20 for each drink they buy the dancers.

The audit reports, for the first time, provide a detailed breakdown of the troopers' spending. They show $98,085 in investigative expenses -- mostly bar tabs and tips for dancers, bartenders and doormen. An additional $34,921 was used to purchase drugs, the reports show.

The costliest day

From the beginning of the investigation in September, barely a day went by that troopers didn't spend hundreds -- and sometimes thousands -- of dollars on drinks, tips and "amusements," according to a computer analysis of audit figures by The Sun.

On 41 days -- nearly a third of the investigation -- officers spent more than $1,000 a day on "investigative" expenses, the analysis shows. On 11 of those days, they spent more than $2,000 a day.

The costliest day: Wednesday, Oct. 27, when troopers spent $2,967, mostly for drinks and tips.

The computer analysis also found some unusual spending patterns.

In January, for instance, the troopers spent $17,216 on investigative costs, most of it within the first two weeks of the month.

But they bought just $290 worth of drugs.

The pattern was repeated in the expense accounts filed by several officers, the computer analysis shows.

For example, Cpl. Gary Manos, who has been implicated in claims of misconduct, spent $11,631 on drinks, tips and "amusements" during the investigation. But he purchased just $260 worth of drugs.

Another officer spent $2,385 on "investigative" expenses. He bought just $90 worth of drugs and was named as the arresting officer in one case stemming from the investigation -- a $10 marijuana buy, court records show.

In most drug probes, investigative expenses exceed drug buys. But the auditors of The Block operation said "closer monitoring" of the investigation would have discovered the "large disparities" in the expense reports of some troopers.

Only one trooper spent more on drug buys than on investigative expenses. That officer spent $11,761 on drinks, tips and other expenses, but purchased nearly $21,200 worth of drugs.

The biggest spender in the operation was Sgt. Warren Rineker, audit figures show. He filed expenses totaling $37,107 -- $26,936 on mostly drinks and tips, $10,171 on drug buys.

He is the same officer who spent the night in a hotel with the wife of a Block club owner. He resigned from the force in May during an internal affairs probe into his conduct. With the sergeant's credibility tarnished, prosecutors dropped nearly every criminal charge he filed.

Prosecutors also dropped most of the criminal charges brought by Corporal Manos -- the trooper who spent $11,631 and bought $260 worth of drugs. Claims that he tipped a nude dancer $100 to have sex with his partner in the Harem club have been upheld by internal affairs detectives, and he faces an administrative hearing to determine disciplinary action.

Spending defended

Together, Sergeant Rineker and Corporal Manos filed expenses

totaling more than $48,000 -- about 37 percent of the money spent by all of the troopers during the undercover investigation, the audit figures show.

Drug bureau supervisors defended the spending.

In a written response to the audit, they said they had to blanket The Block with cash to "gain the confidence" of drug dealers. They said credit card receipts seized from the bars during the raid showed that customers spent about the same amount of money per night as the officers -- an average of $140 at one club; $423 at another.

But drug bureau supervisors conceded that troopers did not follow department regulations.

They said they would amend their rules to require better accounting procedures and faster turnaround times for filing expense reports. They also said they found most of the missing expense forms and suggested that some may have been "inadvertently" lost by the auditors.

Wonderful tippers recalled

The state police expense accounts were a big hit on The Block.

Dancers, doormen and bartenders said business was never better, according to dozens of interviews by The Sun. The undercover officers gave doormen $20 tips to pick up pizzas. They showered dancers and doormen with pocket money. One even offered to loan money to a doorman so he could buy a Harley Davidson motorcycle.

Dancer Sheryl Burshiem says Sergeant Rineker gave her $100 so she could get a fur coat out of storage. She says he gave her another $100, which she used to buy a snake. She was never charged with a crime and says the sergeant rarely asked her if she could supply him with drugs.

"Several times, he gave me large tips," she says. "On two different occasions, he gave me $100 bills. On other occasions, he tipped me 10s and 20s. Altogether, he gave me between $300 and $400."

Doorman Charles Mitchell, who is facing drug charges arising from the investigation, says the officers were wonderful tippers. He says Corporal Manos even promised him a $1,000 cash loan && to help him buy the Harley Davidson Sportster. But the deal fell through, and he never borrowed the money.

LTC Dancer Lena Harrison, also facing drug charges, says another undercover officer gave her hundreds of dollars between October and December 1993. "He gave me $700 to play the poker machines," she says. "Occasionally, he would stay there and play with me."

Some dancers say they have no idea how much the officers spent on them.

"They were spending a lot of money all over the place," says dancer Holly Hellen, who was not charged in the case. "Serious money."

AUDIT OF BLOCK INVESTIGATION

Here are key findings from an internal state police audit of The Block investigation and responses from the agency's Bureau of Drug Enforcement:

* The investigation cost $26,165 more than the finance department first reported.

Response: The missing money was documented in drug bureau files, the best source of how much money was spent.

* Signatures on expense forms were forged; others were rubber-stamped.

Response: The drug bureau conceded it did not follow proper procedures.

* Officers did not receive proper authorization for most of the money they spent.

Response: The bureau will tighten internal procedures.

* Many memos explaining expenses were missing from bureau files.

Response: Although memos were missing, duplicates were located in other divisions.

* Expense forms did not contain detailed explanations of how the money was spent.

Response: Supervisors will amend internal rules to require more explanation.

* Officers were not properly supervised.

Response: Officers were properly supervised and required to provide weekly updates.

Total cost for investigation and raid $318,604*

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