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MaineHousing Review Finds no Evidence of Wrongdoing
05/25/2012   Reported By: A.J. Higgins

A review of the Maine State Housing Authority by a legislative watchdog agency has failed to turn up any evidence of fraud or misconduct by former MSHA Executive Director Dale McCormick. Investigators with the Legislature's Office of Program Evaluation and Government Accountability emphasized that they were concerned about protocols for expense accounts and the use of personal credit cards, saying those practices were inconsistent with state agency policies. But they also acknowledged that MSHA was not a state agency at the time of the review.

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Six months ago, Republicans were leading a full-scale assault on Maine State Housing Authority Executive Director Dale McCormick -- the last Democratic appointee in a GOP administration.

Armed with some eye-brow raising expense reports obtained by the conservative think tank, the Maine Heritage Policy Center, the GOP pressed the Legislature's Office of Program Evaluation and Government Accountability for a rapid review of MSHA's finances in January.

The results were announced today -- two months after McCormick submitted her resignation to the agency.

"We judged substantially all of the $4.3 million sampled by us to be generally consistent with Maine Housing's mission and its primary activities," said Beth Ashcroft, who oversees operations at OPEGA. "All of the business expenses appeared business related, based on documentation and explanations that we received, and we found no indications of fraud."

In her report to the Legislature's Government Oversight Committee, Ashcroft emphasized that her review of MSHA focused only on expense account reports and statements for two major credit cards that were reported over the last five years.

And while the OPEGA accountants did not find evidence of fraud they did identify practices they said were not typical of a state agency. Those activities included more than $127,000 spent on sponsorships or donations to 32 organizations, and another $330,000 for organizational and individual staff memberships to 41 organizations.

Ashcroft also questioned the need for 62 MSHA employees--that's almost half of the entire staff--to attend 89 conferences over the five-year period.

And then there was the food. Ashcroft said it was fairly common for MSHA to provide free food to its employees during office gatherings or training sessions. Nearly $10,000 was shelled out for business meals for employees and and managers who were not traveling.

In addition, nearly $60,000 worth of Hannaford food gift cards were distributed to employees -- sometimes in lieu of raises and sometimes to demonstrate employee appreciation. Because lawmakers on the oversight committee asked her to compare MSHA's practices to state agencies, Ashcroft said the expenses raised some eyebrows.

"Mostly because these types of expenses are either not typical for a state agency, or are not incurred by state agencies with the same frequency as we saw at MaineHousing," Ashcroft said. "Most all of them--or all of them I think I could say--might be something that would be perfect reasonable for a private business, particularly one that values its employees and is seeking to create a certain type of work environment for those employees."

But at the same time, Ashcroft also pointed out that MSHA was a not an exclusive state agency at the time of the review. It was a quasi-state agency, which operates differently--although the Legislature is attempting to change that.

Democrats on the panel are pleased the Republican-led effort failed to find a smoking gun that could have proved fraud at MSHA on a scale uncovered at the the Maine Turnpike Authority. State Sen. Nancy Sullivan, a Biddeford Democrat, says it is important for lawmakers to stay on top of financial practices that rely on tax dollars, but she regrets the way Republicans pushed for the investigation.

"I think that was driven by a lot of hyperbole, perhaps coming off the MTA, I'm not sure," she said. "But this former director was put under the spotlight, sort of forced to resign in order to move the agency forward. I don't think that's what's we want for a message going out to Maine government. I'm disappointed that happened."

Republican committee co-chair, Rep. David Burns of Whiting, says he is also pleased no fraud has been uncovered. But he is not disappointed with the way events have transpired at MSHA. Burns says OPEGA's work will result in better management practices at all state agencies.

"What I see here, having spent a large part of my life working in the state, is kind of a laissez faire attitude about somebody else's money, kind of a course of doing business the way you want to, even though it's somebody else's money," Burns said.

A public hearing on the OPEGA MSHA findings is scheduled for June 8.



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