Nearly a year after state and federal prosecutors launched separate investigations of former state Sen. Larry Young, the U.S. attorney's office has made an unusual proposal to combine the cases and transfer them to a federal grand jury, according to sources close to the investigation.
The proposal comes as a state grand jury in Anne Arundel County nears the end of its examination of the West Baltimore Democrat, who was expelled from the Senate in January. The grand jury is expected to vote in the next few weeks on whether to indict Young on bribery and possibly other charges.
In the federal system, Young and his defense attorneys face a formidable threat. The federal government has far more resources than the state, and federal laws carry stiffer penalties for public-corruption crimes.
Under the proposal by U.S. Attorney Lynne A. Battaglia, made in late October, the state's case would be transferred to a federal grand jury in Baltimore. That panel has been examining several allegations against Young, including claims that he misused his office by serving as a paid consultant to Coppin State College in Baltimore.
State Prosecutor Stephen Montanarelli would be designated as an assistant U.S. attorney and would work alongside the prosecutor directing the federal investigation, Assistant U.S. Attorney Barbara S. Sale.
The state's investigators also would be designated as federal agents for purposes of the Young investigation, which would allow them to review secret testimony taken by the federal grand jury and documents gathered by FBI and Internal Revenue Service agents assigned to the case.
The sources said Montanarelli has not responded to the offer.
Montanarelli declined to discuss the proposal this week, as did First Assistant U.S. Attorney Stephen M. Schenning. David R. Knowlton, special agent in charge of the FBI in Maryland, also declined to comment.
The proposal could give more impetus to the investigation, but law enforcement experts said the timing is unusual. They also noted that Montanarelli's office was created to examine state public-corruption cases of the kind the office is developing against Young.
Traditionally, the federal government has an advantage in investigating complex cases because it has far more resources, said David Marston, former U.S. attorney in Philadelphia. He said it is unusual for federal prosecutors to consider coordinating state and federal investigations nearly a year after they began.
'The right move'
Jervis S. Finney, a former U.S. attorney who was lead lawyer in the legislative ethics investigation of Young, said the proposal "sounds like the right move. Joint federal and state investigations and prosecutions are often very appropriate for focus, efficiency and conservation of law enforcement resources."
David B. Irwin, a former federal prosecutor who specializes in white-collar defense work, said, "From the standpoint of Larry Young, it's not a good thing to have the FBI and the IRS on your tail."
Probe began last year
The state investigation of Young began late last year, spurred by an investigation by The Sun that found the 24-year politician was charging up to $300 an hour in consulting fees to represent companies with business interests in Maryland. Young collected those fees directly or through corporations he controlled and ran out of his publicly financed district office in West Baltimore.
Early in its investigation, the state prosecutor's office focused on PrimeHealth Corp., a Lanham-based health maintenance organization that won a state license and multimillion-dollar contract to serve Medicaid patients in Maryland. The license and contract were made possible because of Young's assistance.
Records show that Young met at least three times with top state officials on behalf of the corporation. Key members of the Glendening administration also were intimately involved in PrimeHealth's efforts to become an HMO.
In an affidavit filed in Superior Court in Washington early this year, investigators in Montanarelli's office stated that PrimeHealth's financial records showed Young might have been paid more than $90,000 in bribes.
The affidavit also says that checks made out to cash had "SLY" written on the memo line. According to the affidavit, someone had tried to erase or obliterate the notations, which investigators say stood for "Senator Larry Young."
This week, the state grand jury hearing the case in Annapolis took testimony from a PrimeHealth official, Anthony "Ike" Isama. A former employee of an affiliated company, Diagnostic Health Imaging Systems Inc., also testified.
In recent weeks, several other PrimeHealth officials have appeared before the panel under grants of immunity. They include Edward A. Thomas, the company's president, and Christian Chinwuba, a radiologist who owns 81 percent of the company. They have declined to comment.
About a month after The Sun's article appeared on Dec. 3, the federal government began its investigation. The federal grand jury in Baltimore soon turned away from the PrimeHealth case, focusing instead on Young's $5,000-a-month consulting contract with Coppin State College and the former senator's relationship with Willie Runyon, a millionaire who owns American Ambulance & Oxygen Co.
Other possible paths for federal investigators include a consulting arrangement Young had with the Baltimore Urban League to help administer a U.S. Energy Department grant and a consulting contract the former senator had with Merit Behavioral Care Corp., which tried to secure a state mental health contract from the Glendening administration.
Young, according to college records, collected $38,500 in fees from the college under an unusual verbal arrangement with Coppin President Calvin W. Burnett. Young also was an assistant to Runyon, lobbying for ambulance contracts, while chairman of a powerful Senate health-care subcommittee.
Coppin fees questioned
An internal audit conducted by the University System of Maryland questioned whether Young did any work to earn the fees he collected from Coppin.
Burnett told the legislative committee that investigated Young that he hired Young to perform several functions, including raising scholarship money, helping the college set up a police training academy and winning funding for health-related programs.
Young's supporters recently credited the former senator with winning a grant for Coppin's School of Nursing from the state Department of Health and Mental Hygiene. The $75,000 grant was awarded in 1997 through the University of Maryland, Baltimore County, state records show.
Lance Billingsley, chairman of the university system's governing board, said in a recent interview that he was not aware of any renewed interest by federal prosecutors in Young's arrangement with Coppin. Burnett has declined to comment.
If Montanarelli keeps the Prime-Health case, Young could be indicted on charges of bribery and official misconduct. If convicted, he could face 12 years in prison on each count.
In U.S. District Court, the sentences are considerably stiffer. If the case is transferred to federal court, Young could face as much as 20 years on each count if convicted of money-laundering, mail and wire fraud, theft from a program that receives federal money and violations of the Hobbs Act, which penalizes official misconduct.
If Young is convicted of any counts, there is no possibility of parole in the federal system.
Armed with the possible stiff sentences, prosecutors would be in a stronger position to win Young's cooperation in a wider corruption investigation.
The legal experts said the former senator, a key figure in influential political circles, could take the investigation into other areas of Maryland government.
Pub Date: 11/12/98