Baltimore Lost More Than $480K To Auction Company, According To New OIG Report
BALTIMORE (WJZ) -- Baltimore lost out on $480,000 from a company that auctioned vehicles for the city after the vendor failed to submit all the revenue it collected, according to a new report from the Office of the Inspector General.
The company was awarded a municipal contract in 2012 but continued to auction off vehicles for the Department of Transportation and Department of General Services after the agreement expired and was not renewed by the Board of Estimates, the report said.
In 2019, the Law Department filed a lawsuit against the company for $575,299 in missing revenue from four auctions the year prior and received a series of "good faith" payments totaling $70,000. After delays, the city last May agreed to accept $25,000 to dismiss the lawsuit.
City Solicitor James L. Shea, in a response letter, said the city took the smaller settlement after the owner of the company, who lives out of state, threatened to declare bankruptcy in Virginia.
The report detailed a "lack of controls" over the agreement with the auction company, such as letting the business collect and deposit bids--mostly paid in cash--without city oversight and missing records on both the part of the auctioneer and city agencies.
The auction company, which goes unnamed in the report, also deposited proceeds into its own account, rather than a city account, the report said.
According to the report, the mayor appoints members to the three-person Auction Advisory Board to interview applicants and approve licenses to conduct auctions in the city. The board can also investigate any auctioneers who violates city code.
But when Baltimore City agencies requested a hearing to revoke the license of the auction company in question, the board did not have three members, and the "de facto chairperson" was a mentor to the owner of the auction company and former employee.
With his license still intact, the owner of the auction company continued to hold private auctions in the city, the report said.
Shea agreed in his letter that the city needs to improve oversight of contracts to auction city property and said new Auction Advisory Board members must be appointed by the mayor and approved by the city council.
He also suggested raising the fee for an auction license to $500,000.
