Yet another scandal has tarnished Montgomery County Executive Marc Elrich’s administration. A Montgomery County Inspector General investigation unearthed payroll padding by Permitting Services Department inspectors falsely claiming extra COVID-19 pay.
Previously, Elrich’s $280,000 “Chief Administrative Officer” Andrew Kleine was found guilty of ethics violations. The County’s Ethics Commission concluded this after reviewing payments to Kleine from a county contractor connected with a book he had written. He resigned his position in August.[i]
In response to the COVID-19 emergency, the County agreed with its unions to give employees extra money. Two rates were set. Employees performing work categorized as front-facing received an additional $10 per hour, and employees performing back-office work got an extra $3 per hour. Both the Inspector General’s report and Elrich indicated that the County anticipated recovering the extra costs with Federal Government funds under the CARES Act.[ii]
About half of the Department of Permitting Services inspectors claimed the higher COVID pay, even when they lacked the required direct contact with the public. As a result, slightly more than $100,000 in bonus pay was received by almost 75 employees, an average of $1,420 per person. As a measure of the abuse’s extent, after the investigation’s existence became known, the number of department staff claiming the extra pay dropped to just five employees.
The $40 million agency has nearly 250 employees and is responsible for overseeing commercial building construction, land development, residential construction, zoning, and site plan enforcement.[iii] As much as any county agency, its mode of operation has given the County its reputation for having a very hostile business climate.
Montgomery County Council members reacted sharply to the scandal at a hearing earlier this week. “I believe there needs to be an independent investigation. I do not believe this should be internal,” said Council President Sidney Katz.[iv]
Councilmember Andrew Friedson called on County Administrative Officer Richard Madaleno to “fix this mess right now – no excuses and no delays.” He called it “not negotiable” that the County be reimbursed for all the overpayments and said the department “took advantage of the pandemic.”
Councilman Craig Rice called it “egregious” that employees were told not to worry about having their pay requests scrutinized. “It was wrong to utilize taxpayers’ dollars and just think that it doesn’t matter,” Rice said. “Tell that to the people who are standing in food lines, who are being evicted or having their utilities shut off.”
In contrast, the County Executive’s response to the scandal was at best lackadaisical. His statement claimed: “We don’t have any reason to suspect fraud, but if any fraud is identified, we will address it immediately.” [v]
For government employees, falsifying timesheets is a serious legal matter. The county employees involved are lucky the County had yet to make CARES Act claims to the Federal government. Had Federal dollars been used to pay the padded payroll, it could be treated as a Federal crime.
The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, established a Special Inspector General for pandemic recovery in the Treasury Department. The scope of the Special Inspector General’s remit is not just the Treasury Department’s conduct but extends to proper use and grant of funds to beneficiaries. In other words, this Special IG can investigate and refer prosecutions to DOJ focused on fraudulent use of CARES Act funds.[vi]
The Justice Department already uses its False Claims Act enforcement program to make $3 billion in recoveries annually. Those numbers will increase because of the new CARES Act Special IG and the enforcement program’s scrutiny of fraud schemes and abuse with funding, loans, and loan guarantees.
County Executive Marc Elrich’s attempts to minimize the IG’s findings are instructive to his personal priorities. He understates the illegality and fails to reflect the impact on the public. Instead, his response demonstrates his perspective that the County government exists primarily to benefit its public employees.
[i] https://www.washingtonpost.com/local/md-politics/top-montgomery-county-aide-resigns-after-being-cited-for-ethics-violations/2020/08/12/6555967c-dcb9-11ea-b205-ff838e15a9a6_story.html, and see https://theduckpin.substack.com/p/top-elrich-officials-book-deal-with
[iv] For County Council coverage, see https://www.mymcmedia.org/council-demands-reimbursement-outside-inspection-of-dept-of-permitting-services/
[vi] See Sec 4108, Pub.L.116–136; https://blog.volkovlaw.com/2020/04/the-cares-act-and-doj-prosecution-of-fraud/