Maryland prosecutors have launched a criminal investigation of a state oyster-replenishment project that auditors say skirted procurement laws and sent at least $284,000 in no-bid fees to an Annapolis consultant over an 11-month period.
The investigation by the attorney general's office centers on the $1 million rebuilding of the Piney Point oyster cultivation facility in St. Mary's County in 1996 and 1997, a project that state officials acknowledge was mishandled in a rush to produce oysters to satisfy the terms of a federal grant.
General Assembly auditors, who are finishing a regularly scheduled review of the Department of Natural Resources, came across evidence of possible criminal conduct connected with the project and referred the matter to prosecutors in the attorney general's office, DNR officials said.
It is not clear which aspect of the project is being investigated. An earlier audit by the DNR raised significant concerns, ranging from a lack of competitive bidding to scant financial oversight. The internal 1997 audit was recently made public at the request of The Sun.
Working with an Anne Arundel County grand jury, the attorney general's office has issued at least two subpoenas for records, including one last month to the Maryland Watermen's Association, which was designated, at least nominally, to run the project.
Prosecutors have also subpoenaed records from Michael Willinsky, the Annapolis consultant who oversaw the Piney Point project under a series of no-bid grants and contracts, nearly all of which were funneled through the watermen's association.
Carolyn H. Henneman, head of the attorney general's criminal investigation unit, confirmed that the subpoenas were issued but refused to discuss the investigation.
Larry Simns, president of the watermen's association, defended his group's handling of state funds and said it has given the requested records to prosecutors.
"We cooperated with them every way we could because we don't have anything to hide," Simns said. "Nobody has said what, if anything, we've done wrong."
'I did nothing wrong'
Willinsky, a Canadian who was brought to Maryland by DNR officials to lead the Piney Point effort, defended his actions, blaming the investigation of his finances on unnamed DNR officials intent on discrediting him.
"I know I did nothing wrong," Willinsky said in an interview. "I know every item we did is accounted for. This is a witch hunt."
Interviews with current and former DNR officials and outside experts, the internal audit and other agency records give this account of the project's history:
Willinsky came to Maryland in 1996 at the urging of Dorothy Leonard, then the DNR fisheries director, to help boost the department's production of oysters. Maryland had received a $2.5 million federal grant that required the state to raise millions of juvenile oysters.
As part of the effort, Willinsky and other consultants recommended that the department rebuild and expand a small, run-down oyster nursery the state owned at Piney Point.
State officials concluded that Willinsky would be the right person to lead the rebuilding effort, which he estimated would cost $341,000.
Although he had little if any academic training or work experience in aquaculture, Willinsky impressed Leonard and others in Maryland with his energy and vision for restoring the oyster population, considered one of the keys to improving water quality in the region.
Willinsky, who has advanced degrees in dentistry and pharmacology, said he has essentially taught himself about raising oysters. He brought in experts from as far away as New Zealand to work with him, Willinsky said.
Normally, any state work costing more than $25,000 must be bid competitively.
But agency records make clear that DNR officials wanted to find a way to fund the project to guarantee Willinsky's involvement and avoid delays that are part of a bidding process.
The department opted to pay for the project with a series of grants, which are not subject to competitive bidding. State grants, though, may not go directly to for-profit entities such as Willinsky's company, so they were given instead to the nonprofit Maryland Watermen's Association.
$1 million in grants
During an 11-month period ending in July 1997, DNR gave the watermen's association just over $1 million in six grants to rehabilitate Piney Point and an oyster hatchery at Deal Island.
DNR officials insisted that the watermen's association hire Willinsky's firm, Coastal Engineering Inc., to handle the project, state records show.
Willinsky's company received $895,700 in 1996 and 1997 from the watermen's association. The association retained $84,000 of the grant funds, money that Simns said was used to pay watermen who helped with the project. Another $24,000 went to other consultants.
By several accounts, Willinsky worked hard to complete the Piney Point rehabilitation, rounding up labor wherever he could find it -- including inmates from the St. Mary's County jail, whom he would pay in pizza.
Sometimes working around the clock, Willinsky's team repaired a greenhouse the size of a football field, installed an expensive conveyor system and set up an oyster-cultivation operation.
Willinsky clashed repeatedly with many in the DNR, and by 1997 top officials had called for a review of the project as questions buzzed about its unorthodox financing.
The highly critical review by DNR auditors concluded that the use of the watermen's association as a conduit to Willinsky's company "could be construed as an intention to circumvent procurement laws."
DNR Secretary Sarah Taylor-Rogers was deputy secretary during the Piney Point rehabilitation. She said the use of the watermen's association to pay Willinsky was necessary to move quickly.
'Tight time constraints'
"That was the best arrangement we could think of at the time because we were under tight time constraints," Taylor-Rogers said.
The DNR auditors estimated that Willinsky collected at least $284,000 in consulting fees for the Piney Point rehabilitation and related work.
The auditors said they could not say for certain how much Willinsky's company was paid because he refused to open his books, saying that as a subcontractor to the watermen's association, he had no obligation to cooperate.
Willinsky disputed both findings.
He said his company retained about $72,000 during the 11-month project and used the rest of the money to pay vendors and subcontractors. He also maintained that he cooperated with the DNR auditors.
The state grants, which were handed over in lump sums, included virtually no requirements for financial oversight, giving Willinsky and the watermen's association unchecked authority to spend the money, according to the audit.
"We cannot satisfy ourselves to the propriety of the $1 million in expenditures," the auditors concluded.
Willinsky acknowledged the accuracy of one of the auditors' findings -- that he paid cash to workers on the project, a deviation from state practice.
He estimated that he paid out more than $100,000 in cash but said he had permission from DNR officials. Willinsky said he kept timecards for the workers but did not withhold taxes or other items from the payments.
Two of the key supporters of Piney Point no longer work at the DNR. Dorothy Leonard, the former head of fisheries, returned to a post with the federal government. John R. Griffin, the department's former secretary, was fired by Gov. Parris N. Glendening in July for reasons unrelated to Piney Point.
'A little sloppy'
Griffin acknowledged in a recent interview that the project was "a little sloppy."
But he and his successor, Taylor-Rogers, said Piney Point has proved to be a successful oyster nursery.
The Maryland Oyster Roundtable, a group of scientists, environmentalists and others involved in the oyster recovery effort, estimates that the facility has produced about 76 million young oysters since 1997.
Willinsky "certainly delivered on the Piney Point hatchery," Taylor-Rogers said.
Willinsky's role at Piney Point ended in 1997, but he is continuing to collect consultant's fees indirectly from the DNR.
In April, the department agreed to pay half of the cost of a $79,000 study of possible sites for a proposed commercial oyster hatchery on the lower Eastern Shore. Willinsky is a key consultant for $22,000.
One of his subcontractors is Leonard, the former DNR official who was instrumental in getting him to lead the Piney Point project. She is being paid $3,000, according to state records.
Pub Date: 9/19/99