The Baltimore construction company entangled in the federal indictment against a former state senator has agreed to pay the city more than $800,000 in restitution, conceding the company used a sham minority-run firm to secure municipal contracts.
The proposed agreement between Poole and Kent and the city also imposes a ban on city contracts until at least this fall. The company also pledged to increase its use of minority and women-owned firms by $1 million in three years, once the firm is eligible to bid on contracts over $25,000 in October.
Today, the Board of Estimates is scheduled to consider the settlement agreement between the city and Poole and Kent, a well-known plumbing and steam-fitting contractor that has won multimillion-dollar state and local projects, including the Ravens football stadium, a juvenile prison and a major airport terminal expansion.
When told about the terms of the settlement, Arnold Jolivet, president of the American Minority Contractors and Businesses Association Inc. in Washington and a founder of the Maryland Minority Contractors Association, said, "I've been around for 22 years, and I've never seen such a fine."
Poole and Kent's minority subcontracting problems were exposed in October when federal prosecutors charged its former president, W. David Stoffregen, with bribing former state Sen. Thomas L. Bromwell Sr. The indictment also accused Stoffregen of setting up Bromwell's wife in a no-show job at the woman-owned subcontractor in exchange for the senator's influence. Namco, the subcontractor, was secretly controlled by Poole and Kent, prosecutors said.
Bob Chlopak, a spokesman for Poole and Kent, declined yesterday to talk about the pending agreement.
News of the draft settlement follows the city's recent struggles with Utech, the embattled Baltimore contractor under state investigation for its ties to City Council President Sheila Dixon. Its president surrendered her firm's minority certification status with the city this month.
The qualification process aims to verify that contractors and subcontractors applying for city contracts have the financial and professional capacity to perform the work.
It is generally required before approval of contracts worth more than $25,000 in "construction, maintenance, repair or demolition of physical facilities," according to the city's contractor qualification rules.
Last month, the five-member Board of Estimates, controlled by Mayor Martin O'Malley and chaired by Dixon, stripped Utech of its contractor qualification. The city found that Utech, or Union Technologies, lied a year ago about its abilities when it applied for qualification, which the board approved.
Speaking about Poole and Kent, Thomas B. Corey, chief of the city's Minority and Women's Business Opportunity Office, did not classify the payment to the city as a fine.
"It's an agreed upon way of making the city whole for participation that didn't occur but that should have," Corey said.
Board of Estimates documents indicate that Poole and Kent has paid half of the amount as a down payment. City Solicitor Ralph S. Tyler confirmed that the partial payment has been made, but it is conditioned on today's board vote.
The amount appears to be based largely on documents filed in the federal case of a former Poole and Kent executive, Michael Forti. According to court papers in that case, Namco is alleged to have completed at least $770,696 worth of city construction work on behalf of Poole and Kent.
Corey said the total amount will be the highest the city has received from a company found to have cheated on the minority-inclusion rules.
The city sets goals on most of its contracts for contractors to share certain percentages with minorities and women.
City law requires Corey's office to set minority subcontracting goals on most government contracts as a way to make up for past discrimination in public work. Contractors such as Poole and Kent must meet those goals by hiring subcontracting firms owned by minorities and women that are certified by Corey's office.
Corey's agency also monitors companies that try to obtain the minority subcontractor stamp by setting up figureheads as owners.
"We do monitor the program, and we do impose sanctions when we find violations, especially one as egregious as this," Corey said.
Speaking generally about minority contractors, O'Malley said in an interview that "it has been our policy to allow [contractors] to make up their goals on future contracts, and get square, rather than foreclosing them from any opportunity to participate."
But he added, "The exception to that being if there is a willful or fraudulent effort to violate [minority-inclusion] ordinances."
Defending the agreement, Tyler said last night that the company had changed its ways.
"There has been a substantial reorganization, restructuring of the company," Tyler said. "It's not the same company today as the one that committed these acts."
He added: "If you had a company that engaged in intentional misconduct and there was no evidence that the company had changed, there would have been a much longer period of disqualification."
Corey said Poole and Kent's qualification certificate with the city expired in September and that the city decided not to renew it because of the company's legal problems. The company also withdrew its application, according to the draft agreement.
According to Corey, the company approached the city this year and asked to try to find a way to allow it to begin bidding again.
Corey said his office had been investigating Namco as a possible front when the FBI alerted it to that agency's investigation.
"We were not able to prove that it was a front. We cooperated with them [the FBI] because we felt this company was a front," he said. "They used their greater resources than ours, and you see the result."
After a two-year investigation, Bromwell and his wife, Mary Patricia, were charged in October with trading his political influence for a lucrative, no-show job for her and off-the-books construction work on the couple's Baltimore County residence. They have pleaded not guilty.
Once one of the most powerful Democratic politicians in the state, Bromwell leads the Maryland Injured Workers' Insurance Fund, a quasi-public workers' compensation agency whose board is appointed by the governor.
Stoffregen, who once ran Poole and Kent, also pleaded not guilty. Their joint trial has been scheduled for February of next year.
Jolivet, of the minority contractors association, called the settlement agreement with Poole and Kent a positive sign.
"If someone violated the minority ordinance and they admit to it and voluntarily agree that this is a proper remedy, I think it's the appropriate thing for the city to do," he said.