Court documents released last May suggest that Bob Ehrlich and Michael Steele's second biggest contributor used a state contract awarded under questionable circumstances during Mr. Ehrlich's and Mr. Steele's Maryland tenure to defraud $4 million from Baltimore based Provident Bank (recently merged with M&T Bank).
The key document is a plea agreement with federal prosecutors signed by Alan Fabian
of Cockeysville, Maryland, who is serving a 9-year federal sentence for stealing $40 million in an unrelated computer leasing scheme. The plea agreement was withheld from public view under a court imposed seal, but it was later released in Mr. Fabian’s bankruptcy case.
The Ehrlich-Steele Contract
In May 2006, the Ehrlich-Steele administration tripled a state computer contract awarded to a company owned by Alan Fabian from $700,000 to $2.2 million without competitive bidding. It was a peculiar action because Mr. Fabian had won the contract only 11 months earlier, in June 2005, by under-bidding three competitors that state evaluators determined to be better qualified to do the work. Five other competitors were eliminated because state evaluators determined they were not qualified to do the work, and a sixth withdrew.
Two of the qualified competitors pinned the cost of the job at just under $1 million and the third bid just over $1 million, but Alan Fabian’s company won the contract even though he was the least qualified because he offered to do the work for almost half that price, $589,000. Then, only eleven months later, without competitive bidding, the Ehrlich-Steele administration tripled Mr. Fabian’s contract to $2.2 million, which was double the price offered by the more qualified competitors that he edged out the year before.
In the end, Mr. Fabian billed the state for only $980,000, an amount that was pinpointed by two of the contractors in their original offers.
The plea agreement with federal prosecutors may explain why Mr. Fabian needed the Ehrlich-Steele administration to raise the contract, originally awarded at $700,000, all the way to $2.2 million, even though in the end he only billed the state for $980,000.
The Provident Bank Loan
Mr. Fabian’s federal plea agreement says that on June 27, 2006, Baltimore based Provident Bank approved a $1.2 million line of credit to his company. A week later, on July 7, 2006, according to the plea agreement, Provident raised Mr. Fabian’s line of credit to $2 million. This action was only weeks after the Ehrlich-Steele administration tripled his state contract to $2.2 million.
The plea agreement goes on to say that Mr. Fabian ultimately defaulted on the loan as his fraud unraveled, causing Provident Bank to sustain a $4 million loss.
Close Ties to Ehrlich and Steele
Federal and state campaign disclosures show that Mr. Fabian was one of the Ehrlich-Steele administration’s top contributors, donating $285,000 to campaign committees benefitting the pair over their 4-year tenure in his own name, his wife’s name, and through various businesses he controlled. He bundled at least $100,000 more from employees and associates.
Although a steady contributor, Mr. Fabian embarked on an unmatched giving frenzy in the weeks before and after the Ehrlich-Steele administration tripled his state contract, contributing $95,000 of his own money and bundling an additional $50,000 in contributions to Mr. Steele from friends and associates. He held a high profile fundraiser at his Cockeysville home for Mr. Steele on June 23, 2006, featuring a surprise guest, Karl Rove. The invitations were likely sent within days of the Board of Public Works action to triple Fabian’s state contract.
At the time, Mr. Fabian was also the finance chairman for Mr. Steele’s campaign for the United States Senate seat being vacated by Sen. Paul Sarbanes, which Mr. Steele lost to then-Rep. Ben Cardin.
Months before the Ehrlich/Steele administration tripled the contract, Mr. Fabian hired Gov. Ehrlich’s campaign fundraiser and close friend, Baltimore lawyer David Hamilton, to serve as counsel to his firm. Court documents include a letter to Mr. Hamilton from Mr. Fabian’s criminal lawyer in October 2006, revealing that Mr. Hamilton was aware of the federal probe of Mr. Fabian’s affairs that led to the indictment and guilty plea. Attorney-client privilege likely prohibited Mr. Hamilton from alerting Mr. Ehrlich or Mr. Steele to the matter, but we can only speculate whether or not he counseled Mr. Fabian to refrain from pursuing state business under the Ehrlich-Steele contract and distance himself from the Steele and Ehrlich campaigns. Mr. Fabian did quite the opposite.
Flying Air Fabian
Mr. Steele’s senate campaign disclosed 6 reimbursements to Mr. Fabian’s company for "Travel," and the Republican Governors Association
disclosed a $54,000 contribution from Mr. Fabian’s company labeled "In Kind Air Travel." Court records show that Mr. Fabian used some of the money from his lines of credit to pay for a private charter jet. A spreadsheet obtained from the governor’s office through Maryland's Public Information Act shows that Mr. Ehrlich and Mr. Steele made several trips to Republican events around the country by "Private Airplane" coinciding with the dates on the campaign disclosures.
Neither Mr. Steele nor Mr. Ehrlich listed any gifts of air travel on their personal financial disclosures during their tenure. While it may not have been illegal for Mr. Ehrlich or Mr. Steele to fly around the country in Mr. Fabian's private charter jet while their administration was busy awarding him a contract under suspicious circumstances and then tripling it to $2.2 million without competitive bidding, it is certainly unethical and crying out for exposure.
- Steve Lebowitz, Annapolis
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