the perils of weak oversight in economic development agencies... @mococouncil

Millions of dollars are missing. The sheriff is dead. A small Virginia town wants answers.

FRONT ROYAL, Va. — Before the $21 million allegedly went missing, before the sheriff put his gun in his mouth and fired, before Tuesday’s announcement that the entire top tier of the Warren County government had been indicted, there was the dream.

It was a dream of renewal for this town 70 miles from Washington, which fell on hard times after a rayon manufacturing plant closed in 1989, leaving 1,300 people jobless and 440 acres full of toxic waste.

Twenty-five years later, with the land cleaned up and Front Royal increasingly attractive to tourists and former city dwellers, officials announced plans for a data center and retail complex that would bring 600 jobs and act as a catalyst for other projects.

The deal was brokered by Jennifer McDonald, a longtime Front Royal resident who directed the Warren County economic development authority. Washington-area developer Truc “Curt” Tran pledged to finance it with $40 million from wealthy immigrant investors and a $140 million federal contract his technology company had secured. As an added bonus, Tran would fund a police training academy overseen by longtime Sheriff Daniel T. McEathron.

But those were lies, documents in Warren County Circuit Court allege.

Tran never had the money to build the data center project on the 30 acres his company bought from McDonald’s agency for $1, a civil lawsuit alleges. And the training academy was one of several hoaxes that, prosecutors and civil lawsuits claim, allowed Tran, McDonald, McEathron and others to siphon away millions in public funds, which they allegedly used to buy properties, pay bills and gambling debts, and enrich relatives and friends...

...The claims against them, industry groups say, reflect the perils of weak oversight in economic development agencies — quasi-public entities that oversee large, complicated transactions, and whose boards often lack the financial savvy and investor scrutiny that protect their corporate counterparts. In Montgomery County, Md., an economic development official pleaded guilty this year to embezzling $6.7 million. The head of economic development in St. Louis pleaded guilty to steering lucrative contracts to the county executive’s political donors. In New Jersey, a grand jury is investigating how $500 million in tax incentives went to firms that, in part, allegedly lied on their applications...

...“Somebody is finally listening,” said Salins, co-founder of the Warren County Coalition watchdog group. “It’s not every day that your entire government gets arrested. It’s so shameful.”..

https://www.washingtonpost.com/local/virginia-news/millions-of-dollars-are-missing-the-sheriff-is-dead-a-small-virginia-town-wants-answers/2019/09/24/1a0be2fe-c061-11e9-b873-63ace636af08_story.html?fbclid=IwAR1uz_bWlXSJ7YiTgWaeBWHU7Yid34x9_YRToMB9iFb1as6mSa2naLqeBG8

Fake invoices and gambling debts: How a county bureaucrat stole $6.7 million

Peter Bang was shaking.

The 20-year Montgomery County employee sat before the county attorney and his deputy in a conference room in Rockville, staring at the piece of paper in front of him. He was being placed on leave without pay for stealing more than $6.7 million in public funds over six years, by far the largest embezzlement scheme in the affluent suburb’s history.

Bang “was trembling; he was shaking the whole time,” Deputy County Attorney John Markovs said. “He lowered his head and seemed resigned to the fact he had been caught.”

Byung Il “Peter” Bang, a numbers and budget guy, was also an embezzler and a gambler, according to court filings — bringing hundreds of thousands of dollars to casinos across the country even as he wagered he would get away with stealing millions from Montgomery County coffers...

...“Neither the people below him or above him seemed to be able to answer questions about the department’s finances,” said Jacob Sesker, then the County Council’s economic development analyst.

Bang’s appearance added to the effect.

“He was always the best-dressed man in the room,” said Sesker, now a senior legislative analyst with the county. “It’s not that often you’re in a room full of people both in the public and private sector, and the best-dressed person is a bureaucrat.”..

...Bang then directed money from the county toward a false company that seemed to be created for the scam, with a name evoking the province: Chungbuk Incubator Fund LLC. He approved the LLC’s fake invoices, directing the county to hold the checks for him to pick up. The money went to bank accounts associated with Bang’s home address in Germantown.

The scheme ended after Montgomery privatized its economic development functions in 2016, doing away with Bang’s department — and his ability to direct funds with apparent impunity. Bang was transferred to the county’s finance department.

And there he might have stayed if the Internal Revenue Service hadn’t knocked on the county attorney’s door with a summons in April 2017...

https://www.washingtonpost.com/local/md-politics/fake-invoices-and-gambling-debts-how-a-county-bureaucrat-stole-67-million/2019/02/21/7c35e6a6-2641-11e9-90cd-dedb0c92dc17_story.html?fbclid=IwAR2F5aZfDW1piTiTJkZ9pUig_4vCHdWp4-e5aaV6WqyC2kGlDrTaKj7FQt0&utm_term=.1db97007b2bd

money, smarts and innovation haven’t always been enough to trump the “stiff challenges” to economic development

In terms of attracting business, Montgomery County has a list of enviable stats to trumpet: One-sixth of Maryland’s population lives there. It is one of the top 10 wealthiest counties in the country with the highest concentration of Ph.D.s in the nation. And it’s home to one-half of the state’s bio-tech firms.
But money, smarts and innovation haven’t always been enough to trump the “stiff challenges” to economic development, said Lily Qi, the county’s assistant chief administrative officer. Jobs lost in the recession paid more than the jobs gained in the recovery, and while the county is “big on innovation, we are not big on entrepreneurship. We are big on selling to the government,” she said.
Indeed, the county has a perception of a “giant suburb” with no walkability, high prices, and worse in this day and age of attracting and retaining young workers — “no cool,” she said...

http://thedailyrecord.com/2016/05/03/across-md-towns-and-counties-work-to-find-the-new-cool/?utm_source=WhatCounts+Publicaster+Edition&utm_medium=email&utm_campaign=AM+Insider+050416&utm_content=Across+Md.%2c+towns+and+counties+work+to+find+the+%E2%80%98new+cool%E2%80%99

Testimony at County Council Public Hearings on the Operating Budget

Testimony from the Public Hearings on the Montgomery County Operating Budget, April 11th, 2012:

Thank you. I’m Paula Bienenfeld. Tonight I have three minutes so I want to make three points.

First, I want to express my deep gratitude and thanks to Senator Brian Frosh and his informed constituents. I thank Senator Frosh for voting against the draconian MOE legislation which every other member of our Montgomery County delegation voted for. I also thank Senator Frosh for coming out against the bill which would give the student member of the Board of Education the additional voting power over financial matters. As you know this legislation would mean that 13 and 14-year-old children in middle school would have more control over the county’s budget than you, our council members, would, given that the BOE controls more than half of our entire budget. While the bill failed in this session it is likely to come up again in the next session.

My second point regards the cronyism and secrecy – the back-room and unrecorded deals that are rampant in this county. No-bid contracts, in which millions of dollars are spent; this pattern has to end to get our fiscal house in order. The Montgomery County Civic Federation, of which I am the Education Committee Chair, is working on the Checkbook Online Project. We want to see Checkbook Online put in place in the county government and in the public school system. Checkbook Online is used nationwide including in the Miami-Dade County Public School system, the fourth largest school system in the country; and, closer to home, in Goochland County, Virginia. According to officials in Goochland County, implementing Checkbook Online cost the county next to nothing to put up online. As MCPS claims to be ‘data-driven,’ the same can be expected from them as well as from you, the County Council. I understand Checkbook Online actually saves government agencies money, as more eyeballs on the finances means more opportunities to identify waste and provide solutions. We ask that you put Checkbook Online on the county website within this fiscal year. As Justice Louis Brandeis wrote, “Sunlight is said to be the best of disinfectants.” The Civic Fed will be working on the Checkbook Online Project this year and we ask other civic organizations, and the Council, to join us in bringing the county’s secret books into the sunlight. We are all responsible for how we spend our taxpayer dollars.

Third, in looking to the future I ask that you put in place a professional economic development group and not rely on the well-known Montgomery County Crony System. Each year the Washington Business Journal publishes the list of regional economic development offices and the number of jobs they have created in the last fiscal year. This year again our Department of Economic Development fell short when compared with other areas. In Montgomery County, the Montgomery County Department of Economic Development created 556 jobs. By comparison, the Fairfax County Economic Development Authority, led by a professional in the field, created 8,765 jobs. The Prince George’s County’s Economic Development Corporation created 1,191 jobs. It is time to end the secret deals and the cronyism in this County.

Thank you.

MoCo v. Fairfax, Pr. Geo. Dep'ts. of Economic Development --how are we doing?

The recent Washington Business Journal (March 23-29, 2012) has published their annual list comparison of regional Economic Development agencies. How well is Ike Leggett's appointment, Steve Silverman doing?

Here's the comparison:

Montgomery County Department of Economic Development
Annual Budget: $6.25Million
Previous Annual Budget: $6.68Million
Percent Change: -6.56%
Date fiscal year ends: June 30, 2012
Jobs created in last Fiscal Year: 556
Senior Local Executive: Steve Silverman, Director

Fairfax County Economic Development Authority
Annual Budget: $7.05Million
Previous Annual Budget: $6.8Million
Percent Change: 3.68%
Date fiscal year ends: June 30, 2012
Jobs created in last fiscal year: 8,765
Senior Local Executive: Gerald L. Gordon, President and CEO

Prince George's County Economic Development Corporation
Annual Budget: $7.54Million
Previous Annual Budget: $9.83Million
Percent Change: -23.23%
Date fiscal year ends: June 30, 2012
Jobs created in last fiscal year: 1,191
Senior Local Executive: Gwen S. McCall, President and CEO

Them That's Got: Leggett Appointments

Ike Leggett appointed Steve Silverman to the position of Director of the Montgomery County Department of Economic Development in 2009. Salary, $180,000. How does the Department measure up to similar departments in neighboring areas? This past Friday’s Washington Business Journal has the answer. Research was conducted by Lindsay Smith. Thanks, Ms. Smith!

Here is how Steve Silverman is doing: Current Annual Budget: $6.8 million. Previous annual budget: $10.8 million. Jobs created in the last fiscal year: 1,999. The fiscal year ends on June 30, 2010.

Fairfax County Economic Development Authority: Current Annual Budget: $6.5 million. Previous annual budget: $6.5million. Jobs created in the last fiscal year: 6,283. The fiscal year ends on June 30, 2010.

Arlington Economic Development: Current Annual Budget: $4.55 million. Previous annual budget: $4.74 million. Jobs created in the last fiscal year: 5,077. The fiscal year ends on June 30, 2010.