Turnpike authority board under scrutiny, too, after director accused of financial impropriety

By Eric Russell, BDN Staff
Posted July 22, 2011, at 1:13 p.m.

AUGUSTA, Maine — Board members for the Maine Turnpike Authority failed in their responsibility to hold the agency’s former director accountable even if they had no knowledge of any financial wrongdoing, according to lawmakers.

The authority, which oversees more than 100 miles of turnpike in Maine and collects $100 million annually in tolls, has been under fire over the alleged actions of Paul Violette, the agency’s director from 1988 through May of this year.

A civil lawsuit filed by the authority earlier this week demands that Violette repay $450,000 in misappropriated public funds. More specifically, Violette is suspected of purchasing more than $185,000 in gift cards with Maine Turnpike Authority money and then using those cards largely for personal enjoyment.

On several occasions, Violette reportedly stayed in lavish hotels such as the Chateau Frontenac in Quebec City and dined at expensive restaurants such as Fore Street in Portland on nonauthority business.

He also is accused of racking up more than $140,000 in credit card charges for personal use that he never paid back and for receiving approximately $185,000 in vacation and sick days that he was not entitled to.

Many — including several key lawmakers — have wondered how Violette seemingly was able to defraud the agency for so long without any board member having knowledge of wrongdoing.

“The board members who were in office at the time really fell down on their fiduciary obligation to the organization and to the public,” said Sen. Roger Katz, R-Augusta, co-chairman of the Legislature’s Government Oversight Committee, which has probed allegations against Violette.

Rep. Donald Pilon, D-Saco, a member of the same committee, said the board simply failed to carry out its own policies to ensure that Violette and the agency were held accountable.

“They never even reviewed [Violette’s] expense account,” Pilon said. “I think, had someone been watching the farm, there would have been some red flags.”

Lucien Gosselin of Lewiston, an authority board member for the last 14 years, agreed that he and others probably could have done more, but he also maintained that there was never a reason to suspect anything.

“I think this falls under the category of hindsight being 20-20,” Gosselin said Thursday. “The board operated in a position of trust. We had no reason to suspect [Violette] was being dishonest.”

Questions remain

The allegations against Violette only came to light earlier this year after Sen. Dawn Hill, D-York, asked for an investigation when residents in her district complained about the possible replacement of a turnpike tollbooth.

Hill said her biggest problem was the arrogance shown by Violette and other MTA staff members. As a member of the Government Oversight Committee, Hill asked the Office of Program Evaluation & Government Accountability — essentially the Legislature’s investigative office — to look into the turnpike authority.

The result was a lengthy investigation, which led to a report, which led to a forensic audit, which led to Violette stepping down, which led to the lawsuit.

That lawsuit, filed this week in Cumberland County Superior Court, aims to recoup approximately $450,000 from Violette. Although it contains painstaking details about how much money was spent and where it was spent, the suit does not name anyone besides Violette.

Based on the amount of money believed to have been spent, though, could there have been others who benefited from Violette’s alleged indiscretions? Could there have been others who knew what was going on? Is it possible that Violette simply was using the authority’s credit cards to live the high life?

Violette still has not commented publicly on any of the allegations against him. His attorney, Peter DeTroy of Portland, said Thursday that he could not comment on the case against his client or whether anyone else might have known about the alleged conduct.

“Certainly, those are good questions to be asking,” he said.

Gosselin, however, said board members had no way of knowing that Violette was misleading them.

Every month or so, the seven board members of the Maine Turnpike Authority receive a packet of information updating them on the affairs of the quasi-state agency. That is followed by a board meeting during which they meet with the authority’s executive director to go over that packet of information and ask questions.

In that sense, the turnpike authority board is not unlike many other boards, committees and commissions: As long as things are going well, there is no reason to ask tough questions.

Sen. Hill said she has served on boards before and understands how the MTA board members could have been misled by Violette. Still, even if they didn’t know it was happening, board members and staff members likely benefited from Violette’s cavalier spending. If board members — or lobbyists, or possibly contractors — stayed at the same hotels or dined at the same restaurants as Violette and let him pick up the tab, some might argue that they were complicit.

Sen. Katz said board members were asked about their involvement during Government Oversight Committee hearings and all denied knowledge of Violette’s suspected conduct.

“We had no direct evidence of anyone’s involvement other than [Violette] and we have to trust the board members who have said they didn’t know anything,” Katz said. “But there were records that we were not able to get access to.”

A flawed system

Most agree that the biggest problem that led to Violette’s alleged indiscretions was a lack of internal auditing.

Procedurally, Gosselin said the authority closely monitored all expenses or invoices over $40,000. Any transactions under $40,000 were chosen randomly. For an agency that logs more than 200,000 transactions every year, there was no way to sift through every single one of them for suspicion of impropriety.

Since Violette resigned in May, the Maine Turnpike Authority has been steered in a new direction that attempts to remedy the insufficient oversight.

Current interim Director Peter Mills, a longtime former lawmaker, said in a lot of ways, the turnpike authority is similar to a large bank in terms of the amount of transactions that it oversees.

Under Mills’ leadership, the authority is now going to be run like a bank.

There is now a compliance auditor on retainer that reports directly to the board, not the director. Similarly, the chief financial officer will report to the board, not the director. The number of credit cards authorized by the agency has been reduced from 50 to 15.

Mills said it’s important for the public to understand that the amount of money misappropriated equals about one-twentieth of 1 percent of the total Maine Turnpike Authority budget. That doesn’t mean it’s not important, Mills said, it just means it was hard for an auditor to track.

In that sense, Violette was smart to allegedly siphon away small amounts over the course of several years in order to avoid attracting the attention of an auditor.

“Maine is fortunate that it can run on trust as much as it does,” he said. “I think this is an anomaly.”

Dan Wathen, the current chairman, was named to the board after Violette stepped down, so he couldn’t speak to the allegations against the former chairman.

“There is still a lot work to be done, but people shouldn’t forget that, as a basic operation, this is a well-run agency,” he said.

Moving forward

Sen. Katz said as far as he’s concerned the role of the Government Oversight Committee in the turnpike authority probe is largely complete.

But that doesn’t mean more information might not still be hanging out there.

In addition to that lawsuit, the state Attorney General’s Office is investigating the claims against Violette for possible criminal prosecution. All documents associated with that investigation, including the forensic audit, are sealed and confidential per state statute outlined by the Attorney General’s Office.

Whether or not any other names will surface in connection to Violette, many lawmakers still think the authority’s board dropped the ball.

“If I had been on the board during the time, I would not be proud of my work,” said Katz.

Pilon said, if nothing else, now might be a good time for some members of the turnpike authority board to step down to allow some new blood in.

Gosselin said he likely will not remain on the board but is confident in the direction the authority is headed, despite the black eye left by Violette.

“The agency is going to come out better and stronger and more transparent,” Gosselin said. “But it may be some time before we can regain the public’s trust.”

Wathen, who like Mills was brought in specifically to help clean up the mess, agreed that the authority needs to build trust again.

The fallout could leave lawmakers with additional, broader questions: Will the turnpike authority mess lead to more scrutiny of other quasi-government agencies such as the Maine Housing Authority? Will the Government Oversight Committee ask OPEGA to conduct additional reviews?

“I think this should at least cause those other quasi-government agencies to sit up and take notice,” Hill said.

http://bangordailynews.com/2011/07/22/politics/turnpike-authority-board-under-scrutiny-too-after-director-accused-of-financial-impropriety/ printed on July 24, 2014