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July 3, 2010

USA v. Kane: False claims lawsuit raises Qs

Gubernatorial hopeful Robert L. Ehrlich Jr. and his running mate Mary Kane faced difficult questions Friday about the federal lawsuit that has been filed against her husband's firm, prompting the Kane Company to release series of statements about the business and its legal troubles.

At issue is a 12-count complaint alleging The Kane Company failed to pay workers fair wages, doubled billed and inflated prices on government contracts. The Maryland Democratic Party has jumped on the issue, sending out a series of emails questioning Kane’s fitness for office given the details of the complaint.

Asked about the suit during a joint interview with Ehrlich Friday on WUSA9-TV, Kane said: "That is something that I'm not involved in and needs to be decided through the court system.”

The TV reporter pointed out that Kane served on the company's board of directors from 1997 to 2003, a time when the fraud is alleged to have occurred. Kane stammered.

"That is something you have to direct that question to. I am not privy to that information. I get up every day an ..."

Pressed again she said: "It is a privately held concern. When we bought the company at first, yes, I was. But I did not do any of the day to day running of the company. It was just … I did not. I went to work every day."
Kane worked at the law firm Ethridge, Quinn, McAuliffe, Rowan & Hartinger during her last three years on the board. Before that she was in law school.

The Kane Company put out a statement Saturday explaining that she sat on the Board of Directors because John Kane wanted his wife to “be aware of the strategic activities” in case he died.

According to the press release, her position was unpaid, did not involve daily management of the firm, and the job ended when she was appointed to work in the Secretary of State’s office.

Ehrlich said in the WUSA9 TV interview that he is not worried about the federal suit and hinted that he would not have picked Kane had he thought it would be a distraction.

"If this was going to be a big issue she may not be sitting here,” he said. “But we're certainly satisfied with it."

The former Republican governor blamed the Maryland Democratic Party for pushing the issue, saying they have "throw up everything they can possibly think of."

According to a Kane Company’s press release, the federal suit stems from a 5-year-old complaint by a "disgruntled former employee" who was fired for "unsatisfactory performance" and "would stand to gain" financially if the company has to pay damages. The complaint was filed under the False Claims Act, a statute designed to encourage whistle-blowers by allowing citizens to join in federal civil actions.

The Kane news release provided a detailed defense to the charge that the company underpaid workers on some federal contracts, saying the federal government failed to include wage schedules on some task orders.

“They did not establish a wage determination schedule, so we followed our normal pay procedures,” according to the release.

The release continued: "The Kane Company is completely confident that there will be no discovery of intent to underpay our employees. That's just not the way we treat our staff."

In an interview, Kane Company Chief Operating Officer Ron Meliker said the company has conducted an internal review and uncovered no instances of double billing. The federal prosecutors are alleging that workers signed in at one job site, worked at a different place, then collected double pay.

Meliker also denied that the company inflated prices when negotiating with the federal government.

Meanwhile, John Kane Thursday emailed Attorney General Douglas Gansler promising that his company would not bid on any state contracts if Ehrlich and his wife win the election
Posted by Annie Linskey at 3:05 PM | | Comments (6)
Categories: Candidate Watch 2010


So Ms. Kane, a lawyer, sat on the Board of Directors during the period in which her company is alleged to have defrauded the federal government and underpaid employees, and she pleads (rather inarticulately, I might add) ignorance? Why isn't this story on the front page?

Maryland, Govern Martin O’Malley and Local Officials order Search for Evidence so it can be Destroy-

Maryland, Govern Martin O’Malley and Local Officials order Search for Evidence so it can be Destroy-

Why was John Kane's e-mail to AG Doug Gansler an afterthought in this story? That seems more like the lede.

Anyway, who cares what her husband's company does? That's like arguing Martin is responsible for every defendant Katie O'Malley has acquitted. It is a ridiculous line of logic. I really hope the MDGOP doesn't stoop to the negative lows that O'Malley has sunk to.

James, you're ignoring the fact that Ms. Kane is an attorney and sat on the company's Board when these alleged improprieties took place- was she complicit or just sloppy? Neither one speaks too well of her . . .

The Ehrlichs and Kanes ignored a charge in the lawsuit directly relevant to this year's election:

The charge that the Kanes used a small minority owned business as a front to obtain for themselves federal contracts reserved for minorities.

While the Kanes were allegedly using a minority front to obtain federal contracts for themselves, Bob Ehrlich's administration set up a key supporter, Washington lawyer Sandy Roberts, as a multi-million dollar do-nothing minority concessionaire at BWI airport. And Mr. Roberts wasn’t the only Ehrlich insider to secure questionable minority contractor status when he was governor:

GOP strategist Carol Hirschburg, pursuing a $110 million state computer contract, obtained fast-track minority certification from the Ehrlich administration that was later found to be improperly awarded and was withdrawn.

Joanne Vatz, the wife of longtime Ehrlich supporter Prof. Richard Vatz, started a computer business months after Mr. Ehrlich became governor, obtained minority certification, and landed several no-bid state contracts.

Ehrlich website designer Aaron Kazi similarly secured minority business certification soon after Mr. Ehrlich and Mr. Steele were inaugurated, leading to a number of state contracts and participation in the same $110 million deal with Ms. Hirschburg.

The convicted felon, Alan Fabian, didn’t need minority certification to win a computer contract from the Ehrlich administration under suspicious circumstances, which Mr. Ehrlich tripled to $2.2 million without competitive bidding after Mr. Fabian hired Mr. Ehrlich’s associate, David Hamilton.

Mr. Ehrlich and Ms. Kane need to answer for their abuse of minority set aside programs benefiting their supporters and themselves.

- Steve Lebowitz, Annapolis

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About the bloggers
Annie Linskey covers state politics and government for The Baltimore Sun. Previously, as a City Hall reporter, she wrote about the corruption trial of Mayor Sheila Dixon and kept a close eye on city spending. Originally from Connecticut, Annie has also lived in Phnom Penh, Cambodia, where she reported on war crimes tribunals and landmines. She lives in Canton.

John Fritze has covered politics and government at the local, state and federal levels for more than a decade and is now The Baltimore Sun’s Washington correspondent. He previously wrote about Congress for USA TODAY, where he led coverage of the health care overhaul debate and the 2010 election. A native of Albany, N.Y., he currently lives in Montgomery County.

Julie Scharper covers City Hall and Baltimore politics. A native of Baltimore County, she graduated from The Johns Hopkins University in 2001 and spent two years teaching in Honduras before joining The Baltimore Sun. She has followed the Amish community of Nickel Mines, Pa., in the year after a schoolhouse massacre, reported on courts and crime in Anne Arundel County, and chronicled the unique personalities and places of Baltimore City and its surrounding counties.
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