As head of Salisbury State University's fund-raising organization, Robert Gearhart would do anything for his donors. He'd golf with them, send them cards on their birthdays, stand beside their sickbeds.

His attentiveness helped bring millions to the small state school, but Gearhart also used his position to help himself, according to university system auditors.

They say:

He forced university employees to do the work of his home-based consulting company on state time.

He used a university credit card to buy equipment for his boat and to get cash at a betting parlor.

He funneled $19,000 in no-bid work to companies that employed his son.

And as university system auditors closed in, he ordered foundation employees to shred documents that would have revealed his son's role in the business, according to statements the employees gave auditors.

When the university forced Gearhart to resign last year, donors returned the favors, pressuring the university to keep him on the state payroll.

Today, even though he works full time as the top fund-raiser for the University of South Carolina Spartanburg, almost 400 miles from Maryland, Salisbury State still pays him $36,000 a year.

Gearhart's case is an example of the unusual financial arrangements that can take root in the secrecy Maryland's public colleges demand for their private fund-raising organizations.

And taken with recent misspending of at least $100,000 by the Bowie State University Foundation, it raises questions about the oversight of the foundations.

The foundations, run by university officials out of state buildings, are not subject to the oversight of the state legislature or public information laws -- safeguards required of the universities themselves.

Gearhart concedes he made a few minor mistakes but says these should not overshadow his successes over a decade as one of the most efficient fund-raisers in the university system.

He argues he was driven out by a university president who wanted to stop his questions about the president's use of foundation money.

Maryland House Speaker Casper R. Taylor Jr. said he is troubled by the problems at Salisbury and Bowie State uni- versities. He suggested the state should have more oversight over foundations affiliated with the state government.

"Has the state prosecutor looked at these? Because he should," Taylor said. "These examples are very disturbing."

University officials argue that more oversight is unnecessary.

"There is a higher level of public scrutiny for our charity than for any other public charity in the state," said John K. Martin, president of the University of Maryland Foundation and the top fund-raising official in the system.

The foundations have volunteer boards of business leaders to monitor spending, pay accounting firms to conduct annual audits and file summaries of their assets and expenses with the secretary of state.

But critics say the accountants do not probe for the kinds of conflicts of interest and ethical questions that arose at Salisbury.

In a section of the Eastern Shore dominated by the poultry industry, Salisbury State is a 73-year-old former state teachers college trying to raise $13 million to transform itself into a nationally known liberal arts university.

Over a dinner of grilled Chilean sea bass with candles flickering in flowered centerpieces, university President William C. Merwin announced at a party for the school's top donors June 12 that it was 75 percent of the way to its goal.

"There's always a bit of fragrance that clings to the hand that gives the rose," Merwin said as his 120 guests nibbled on chocolate tea cups brimming with tiramisu.

The only sour note of the evening came when a foundation board member took the podium to mention the departure of Robert M. Gearhart Jr., who until June 1997 was the state-paid director of fund raising for the university and the head of its foundation.

Gearhart, a 55-year-old native of Johnstown, Pa., graduated from Syracuse University in 1963 with a music degree and dreams of becoming a bass-trombone player. But he soon found his basso-profundo voice carrying the tune that men in his family's furniture business sang for generations.

"I'm a salesman. That's all I am. It's something that very much runs in my family," said Gearhart.

Befriended local magnates

In 1983, Gearhart started pitching Salisbury State. With the polished manners of a luxury car salesman, he worked the golf courses and restaurants of the Eastern Shore, befriending local poultry magnates.

Before asking for money, he'd carefully research his prospects, rooting through courthouses for inheritance and land records.

Then, in casual conversation, he'd hint that he knew how much they could afford to give.

"It's not like telemarketing," Gearhart said. "It's go sit on the porch with people. It's go fishing with people, go golfing with them.

"It's holiday cards, birthday cards, thank-you cards. I do all of that with a very select group of people. They become your social life."

Charles R. Fulton, a former director of the Holly Farms chicken company and one of the university's top contributors, said Gearhart did a great job.

"He got $2.5 million out of me, didn't he? I'd say that's not a bad job," said the man for whom the university named its Fulton Hall for the arts.

But not long after a new university president, Merwin, took office in August 1996, he ordered a review of Gearhart's business practices.

Consultants raised questions about Gearhart's "secret" operation of the foundation, which had fostered "distrust," according to a 1997 report by Washburn & McGoldrick Inc. of Latham, N.Y.

Critical audit report

In June 1997, university system auditors issued a report that accused Gearhart of "improper activities" and "potential conflicts interest."

The auditors criticized Gearhart for giving $19,000 in no-bid business during 1996 and 1997 to companies for which his son, Brian K. Gearhart, worked as a salesman. The Easton-based businesses, the Protocol Group and Active Image Screen Printing Inc., sold the foundation promotional items such as gold and silver medallions with the university's logo.

Gearhart ordered his staff to shred documents to hide his son's role in the business, according to an account Gearhart's employees gave auditors.

The audit also says Gearhart ordered university employees on state time to do the work of his home-based fund-raising consulting company.

Gearhart set up his Advanced Resources Corp. to sell his consulting services at the rate of $500 a day to nonprofit organizations not connected to Salisbury State. The company also marketed, at $495 a copy, a book that Gearhart plagiarized from a university fund-raising guide, according to audit records.

The report says Gearhart used for personal purposes a university Visa card paid for out of a presidential discretionary account provided by the foundation.

The money for this account came from what auditors in a December 1996 report called a potentially "misleading" 10 percent fee that the foundation levied on donations without telling contributors.

Some of the expenses questioned by the auditors and the foundation's bookkeeper include: a $100 cash advance at an off-track betting parlor in Johnstown, Pa., in 1996; $330 worth of equipment for Gearhart's boat, including a depth finder and weather monitor, in 1995; $1,040 for an Amtrak trip to Florida with his fiancee to solicit donations in 1996; and baseball cards for his collection.

Gearhart eventually repaid the foundation for his personal expenses. But in some cases, he covered the charges only after the foundation's bookkeeper questioned him, according to auditors.

Wouldn't do it again

In an interview in South Carolina requested by The Sun, Gearhart denied trying to cover up the business he was giving to his son's companies.

"Yes, my son worked as a salesman for these companies on commission," said Gearhart. "But whether he benefited from it financially, I don't know. In retrospect, although it felt right at the time, I won't do something like that again."

Brian Gearhart said he worked for these companies on salary, not commission, and didn't make any money from the deals.

"I have a bad taste in my mouth about this whole thing," Brian Gearhart said. "I didn't do anything wrong, and he didn't do anything wrong."

Robert Gearhart admitted using state employees for his consulting business, which he said lost $3,000 to $4,000. But he said he had a right to sell the book marketed by the company.

Gearhart accused the university president of trying to discredit him for raising questions about the president's own alleged misuse of foundation money.

Gearhart said Merwin ordered him to give thousands of dollars of legal work to the husband of the president's assistant, a friend of Merwin's who chaired the selection committee that helped pick the president.

"I worked at that university for 16 years, and they did a real good job of ruining my reputation," Gearhart said.

Shortly before Merwin called for the investigation of Gearhart, Gearhart wrote a letter to the university's top financial officer complaining that the payments to Merwin's assistant's husband were "suspect" and a "potential conflict of interest," according to the Nov. 12, 1996, confidential memorandum, which was obtained by The Sun.

Merwin admits that it looked bad for him to direct foundation legal work to the firm of Thomas F. Johnson Jr., the husband of Karin Johnson, who chaired his selection committee. The payments totaled $2,375 between November 1996 and February 1997, according to university records.

Merwin said he won't guide work to that firm again. But he added that his investigation of Gearhart was not revenge.

In March 1997, Merwin signed an agreement with Gearhart that required him to resign but kept paying him $36,083 per year as a "full-time" consultant.

These payments have continued even after Gearhart moved to South Carolina in June 1997 to work full time as the associate chancellor for development in Spartanburg.

Merwin explained that Gearhart's responsibility is to keep in contact with two donors.

As a newcomer to the Eastern Shore from New York, Merwin said, he faced resistance from local donors -- particularly those in the poultry industry -- who opposed Gearhart's departure.

"They said, 'You can't just let him go! Keep him on in some capacity.' I always try to treat donors like friends.

"That's really what Bob Gearhart and people like him do for a living, they try to make friends," Merwin said. "Fund raising is a strange business."

Pub Date: 8/13/98