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Dave Morgan has paid restitution of $10,416 for the operating money he stole while head of Valley Metro.
LAURENCE HAMMACK | The Roanoke Times; Dave Morgan
Tuesday, June 25, 2013
A judge sentenced the former general manager of Roanoke’s bus service Tuesday to 30 days in jail for stealing agency funds, saying he broke the public’s trust and failed as an agency leader.
While noting reports of Dave Morgan’s key contributions to public transit, Judge Glen Conrad said the flip side of Morgan’s story is his guilty plea to theft of government funds.
“The simple fact of the matter is you stole from the government,” Conrad said.
Conrad sentenced the 48-year-old former general manager of Valley Metro to two and a half years of probation with the condition that he spend a month behind bars — a fraction of the six-month maximum Morgan had faced. Conrad did not specify where or when Morgan would be incarcerated, leaving that to probation officers. Morgan remained free Tuesday.
Before announcing the sentence, Conrad learned that Morgan has paid restitution of $10,416 to make the government whole for the operating money he stole while head of Valley Metro, a position he held for more than 10 years.
Though he could have fined Morgan $10,000 on the felony theft charge, the judge said he wouldn’t impose a fine because Morgan is in financial distress. He is jobless and the family home in Roanoke County is in foreclosure, Morgan said. He and his wife, Kimberly, filed bankruptcy in January, court records show. The Federal Transit Administration has barred him for three years from participating in any federally funded project.
Morgan — described as the driving force behind such popular services as the Smart Way bus connecting the Roanoke and New River valleys — used his Valley Metro credit card to buy food and alcohol in restaurants for himself and others, purchase cigars and play golf at public expense in 2007 and 2008, according to a city audit.
Using money that included federal grant funding, Morgan charged meals and beverages over 12 months totaling $13,251, or an average of $255 a week, the audit said.
During 28 outings for which investigators obtained receipts from the restaurants, 45 cents of every dollar spent went to alcohol. Morgan also spent system operating money to the tune of $170 for gift cards, $171 for cigars and $860 for golfing fees.
In addition, he collected per-diem compensation for some meals that he also charged on the bus system credit card, and he bought surplus bus system vehicles for personal use at below market rate, the report said. He spent $823 on gasoline when on paid leave and during holidays off, the report said.
After an internal investigation, First Transit, the Cincinnati-based company that manages Greater Roanoke Transit Co., which operates Valley Metro, fired Morgan in 2009. His tenure at Valley Metro, which began in 1997, had been otherwise marked by progress including expansion of Valley Metro’s budget and service area. He launched the Star Line Trolley that connects downtown with the Carilion Clinic campus and served on industry boards and committees.
Federal authorities charged Morgan with one felony count of stealing government funds in May 2012 and he pleaded guilty the next month. His sentencing had been delayed several times.
Tuesday, Conrad asked Morgan if he viewed his credit card spending as having advanced the mission of the agency, in that he was entertaining others engaged in public transit service. Morgan said yes. Conrad said he found Morgan’s position hard to accept.
“I can understand the gasoline, but golf, cigars, alcohol? None of those things are permitted. You just messed up,” Conrad said.
Valley Metro, a city-owned, regional bus service with 200,000 monthly riders, was hit by two scandals during Morgan’s tenure as general manager.
Diane Holdren, who ran an interior design business, used bid-rigging to illegally steer contracts to her firm during renovations at Valley Metro’s headquarters that cost $223,301. In early 2012, she pleaded guilty to stealing government funds. She was sentenced to four months incarceration followed by four months of house arrest and fined $3,000.
First Transit has paid roughly $189,000 to reimburse the Federal Transit Administration for public money that was lost by the transit service as a result of the scandals. It will receive the restitution paid by Morgan as partial compensation. Holdren was ordered to pay restitution of $45,728, the amount prosecutors said the government lost through the lack of competitive bidding.
Holdren, who has completed her sentence, resurfaced Tuesday. She took the witness stand at the judge’s direction and answered his and others’ questions about rigging bids to win the renovation contract.
Holdren confirmed she previously told authorities that Morgan advised her how to put together her scheme. She said he told her to fabricate bids — bids that made it appear that multiple vendors were competing for the renovation contract.
Holdren also testified that Morgan led her to former procurement officer Matt Wynn, and that Wynn provided help.
In his testimony, Morgan denied helping Holdren and referring her to Wynn, saying he didn’t know anything about her scheme before investigators detected it.
A former police investigator on the case testified that he found no evidence that Wynn helped Holdren, though top bus system officials removed Wynn after the bid-ridding investigation began. The bus system also removed Holdren’s husband, then-assistant general manager William “Chip” Holdren. Neither Wynn nor Chip Holdren was charged with a crime.
Conrad and the attorneys asked repeatedly whether the investigation ever showed that Morgan received any of the money Holdren siphoned off from the agency. Morgan’s only benefit was a renovated office building in which he worked, testimony showed.
Conrad said it’s conceivable that Holdren lacked the sophistication to rig bids submitted to Valley Metro without help. However, Conrad said he couldn’t tell from evidence whether Morgan was directly complicit with Holdren.
The judge scolded Morgan’s leadership. As the agency head, Morgan was responsible for providing comprehensive oversight and that included monitoring Holdren, Conrad said.
“You failed in that respect,” he said.
The judge told Morgan he abused the public’s trust. Morgan said that, with 22 years in the transit industry, he was embarrassed to be so labeled.
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