Saying no proof has surfaced of any criminal wrongdoing, an attorney for the Preakness Celebration's executive director said yesterday that his client's reputation has been unjustly damaged by the specter of a state investigation into the celebration's $1 million deficit.
The board of directors for Maryland Preakness Celebration Inc. suspended the director, Donna Leonard, without pay last week and announced that it had asked the state attorney general's office to investigate how the deficit occurred. But the board has refused to say if it has found any evidence of misappropriated funds.
"I've asked the board to tell me what facts precipitated this action, which in effect has destroyed this woman's reputation," said Charles E. Rosolio, Ms. Leonard's attorney. "Donna's still in shock over the whole thing. It's really unfair."
Mr. Rosolio said the board has taken the unusual step of beginning a criminal investigation based on someone's lack of financial success.
"The failure to pay a creditor is not a criminal act. Bad business judgment, even if there was any, is not a crime in this state," Mr. Rosolio said.
Deputy Attorney General Ralph S. Tyler III said his office is awaiting specific information on outstanding bills and expenditures from the Preakness Celebration board. "I've requested, and they've agreed to provide, information substantiating that the goods and services they show as payable were, in fact, purchased," Mr. Tyler said. "And they are also doing an accounting of whether there were checks that were written without sufficient funds."
Mark J. Friedman, an attorney hired by the Preakness Celebration board to deal with the deficit problems, said yesterday that he is trying to document where the money was overspent. But he said the celebration's bookkeeping was sloppy and it may take several days to compile an accurate list of creditors.
That list, which will include about 100 businesses paid by the Preakness Celebration for catering, advertising, musical performances and other services, will be turned over to the attorney general's office, Mr. Friedman said.
He said that the board was not trying to portray Ms. Leonard as the "fall guy" in the losing venture this year, but is simply concerned with documenting where the money went. The board said Ms. Leonard overspent her $750,000 budget by nearly $1 million.
"We're looking at the invoices that have come in to the Preakness office. In the frenzy of putting on a celebration like this, it's probably understandable that there might be some follow-up recordkeeping that needs to be done. But this goes beyond that," Mr. Friedman said.
He added that the deficit has left the Preakness Celebration in a very awkward position, with creditors calling and demanding money the organization doesn't have.
"A lot of them are calling, and they're upset because they were led to believe that payment was forthcoming. I'm hopeful they'll give us an opportunity to try to rectify the situation," Mr. Friedman said.
Preakness Celebration Inc. was founded seven years ago to coordinate a week of events leading to the running of the Preakness Stakes each May. Preakness officials said the events were poorly handled and, in particular, they pointed to a two-day jazz festival at Rash Field that drew low attendance. The officials said Ms. Leonard should have called off the money-draining event when it rained on the second day.
Mr. Rosolio was incredulous about such comments.
"It's not a crime to fail. Did Donna Leonard cause the rain?" Mr. Rosolio said. "It's ludicrous. Donna did the best she could to try to make it all successful. The financial failure was not a result of her not working as hard as she could, and no one has told us that she did anything improper or criminal."
About two years ago, Ms. Leonard was hired away from Advantage International, one of the world's largest sport event marketing firms. As marketing director, she was responsible for promoting events such as the U.S. Open golf tournament.
The managing partner of Advantage International, Francis H. Craighill III, described Ms. Leonard as "incredibly hard-working, dedicated, loyal and extremely honest." He said he found it difficult to believe that she would intentionally do anything wrong.
"I never had a complaint about her," Mr. Craighill said. "If anything, she probably tried to do too much, tried to take on more than could be done physically in the hours that were available."
Preakness Celebration board co-chairman Barry F. Scher said Ms. Leonard "has expressed a desire to work with us, and we will be meeting with her at some point."
Mr. Scher said the board's accountant and lawyer still are "going over all the creditors to find out what services were performed" -- at the attorney general's request.
"We don't know some of them," he said, adding that the board "had no idea of what happened with these expenses -- nor did the board approve the expenses."