February 23, 2010

Audit faults St. Mary’s College of Md. for land deal

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By Andy Rosen
Andy@MarylandReporter.com

A legislative audit accuses St. Mary’s College of Maryland of improperly purchasing a tract of land near its campus from a person affiliated with the college, in a matter that has been referred to the criminal division of the Office of the Attorney General.

The public honors college vehemently denies the charge, and faults the report by the Office of Legislative Audits for factual errors in its examination of the sale. The report was made public on Tuesday.

The audit says the school spent $800,000 on a property, which came from an unnamed person related to the college. In the transaction, auditors say the tract was valued at $1.6 million, and the school accepted the remaining value of the land as a gift.

But auditors fault the school for using only an appraisal made by the seller in evaluating the transactions, and further scolds St. Mary’s for not disclosing the non-monetary gift portion of the deal to the state’s Board of Public Works.

In a strongly-worded response to the audit, St. Mary’s officials say they twice got advice from the State Ethics Commission, and allowed the Attorney General’s office to handle the deal in an arm’s-length transaction

At issue is a letter that the school sent to the seller, which acknowledges an appraisal done on that person’s behalf. But the school says it used its own calculations about the value of the land, and paid less than that.

“This appraisal stated that the value of the land was determined using assumptions developed by the seller; the related report contained numerous disclaimers, including statements that the report should not be used by anyone other than the seller, and that the conclusions and valuation of the property would be different if actual future conditions (such as development plans) were to be different from those assumptions provided by the seller,” The audit report reads.

The BPW approved the deal in April 2008..

The college says it initiated its own investigation “given the seriousness of the assertions” and used Richard E. Timbie, an attorney at Caplin & Drysdale in Washington, D.C. on a pro bono basis. The response quotes from Timbie’s report.

“In my opinion, the College’s representatives acted lawfully and in the College’s best interest throughout the process of negotiating the purchase and obtaining a BPW approval,” his report reads. “The inappropriate language in the College’s acknowledgement letter did not reflect any intentional wrongdoing, much less any criminal violation, on the part of the College or its agents.”