Saying that bad management is not a crime, state investigators said yesterday they would not pursue charges against the Maryland Preakness Celebration's executive director, who left the nonprofit festival deeply in debt after overspending its budget by more than $1 million.
The inquiry by the Maryland attorney general's office concluded that the director, Donna Leonard, paid numerous Preakness Celebration creditors with checks that bounced.
"Bad management, however, is not the same as criminal intent," the office said in a written statement summing up its four-month probe.
"This office's role was to look at this matter as criminal prosecutors and not as management consultants."
The celebration's board of directors has blamed Ms. Leonard for turning the events surrounding Maryland's famed Preakness race into a financial mess.
The board asked the attorney general to look into the matter in June when members discovered that she had run up huge debts for the weeklong series of events May 12-19.
Ms. Leonard did pay nearly $750,000 in bills, but when all receipts were in, another $1,050,000 was still owed to creditors.
The festival's events included street fairs, concerts, a ball, a parade and a hot-air balloon launch.
Maryland Preakness Celebration Inc. is a separate entity from the horse race around which its events are scheduled.
Ms. Leonard's lawyer, Charles E. Rosolio, said yesterday he wasn't surprised to hear that the criminal probe had ended without charges.
He accused the Preakness Celebration board of shirking its own financial responsibility by blaming Ms. Leonard for everything that went wrong.
"Donna repeatedly told board members that there were things that needed to be done [and that] otherwise, this thing had the potential to be a financial disaster. For them to say the financial problems came as an amazing shock is a bit disingenuous," Mr. Rosolio said.
One of the board's co-chairmen, Barry F. Scher, said that Ms. Leonard is still suspended without pay from the $70,000-a-year director's job.
The board will discuss her employment status at a meeting in two weeks, he said.
"The board feels they were victims, too. The board approved a budget of $750,000. Ms. Leonard spent almost twice that amount," said Mr. Scher.
He said organizers are trying to rebuild the festival for a comeback next year.
"We are aggressively going to be promoting the Preakness festival for 1996," he said.
"We have already obtained sponsors for practically all of our planned events for next year and worked out a payment plan to the hundreds of creditors from this year. We're aggressively working to get Preakness Celebration back on track."
Mr. Scher said payment proposal letters have been mailed out to all creditors, and board members are optimistic they will be able to repay at least part of the debt owed.
About $350,000 has been repaid to creditors in recent months, leaving about $700,000 in outstanding debt, said Mark Friedman, a lawyer representing the board.
Expected profits from next year's Preakness Celebration will be used to pay off more of the debt, he said.
Among the outstanding debts is a $30,000 pledge to the Maryland Special Olympics. Another $9,781 is owed to the Baltimore Association of Retarded Citizens, whose members stuffed, labeled and mailed more than 40,000 letters for festival organizers.
"We're going to pay back whatever we can. We've made substantial progress since June," Mr. Friedman said.
Mr. Friedman defended the board's decision to turn the matter over to the attorney general.
"When non-sufficient funds checks are issued, it's a serious matter that warrants investigation," Mr. Friedman said. "There were more than 10 checks that were drawn on insufficient funds or that stop-payment orders were made on."
For the creditors that have been left eating the cost of their goods and services, the criminal responsibility is a moot issue.
Elliot Zulver, owner of a Timonium rental store that supplied tents, folding chairs and tables for the festival, said he is owed $28,000. Yesterday, Preakness officials sent him a check for 10 percent of that amount, he said.
"I can't figure these people out. I don't know where the logic is in any of this," he said.