firsttransit.com

Chip Holdren (left) and Dave Morgan seen in a photo from First Transit's Web site. Valley Metro is operated by the Cincinnati-based company.

The former head of Valley Metro billed the bus system more than $14,000 for golf fees, premium cigars and restaurant meals that were sometimes saturated with beer and wine, according to a report from Roanoke's municipal auditor.

Charges that Dave Morgan made to his corporate credit card violated federal, state and local regulations, Municipal Auditor Drew Harmon wrote in a report delivered Friday to city leaders and law enforcement officials.

The report is just the latest scandal for Valley Metro, which is already under federal investigation of possible bid rigging related to an office remodeling project.

Using a credit card issued by the bus system, Morgan ran up at least 28 questionable bills at local and out-of-town restaurants -- averaging 13 alcoholic beverages per ticket, the report found.

The report also raised questions about whether Morgan might have received per diem payments for meals that had already been covered by his credit card.

An official with First Transit, the Cincinnati company that manages Valley Metro, said Friday that the company suspended Morgan after receiving a copy of Harmon's report.

"We're a professional company and we expect the behavior of our employees to be professional," company spokeswoman Glenda Lamont said.

Morgan had been reassigned by First Transit earlier this year, after authorities began investigating possible irregularities in the purchase of more than $223,000 in furnishings for Valley Metro's office.

The report from Harmon's office also raised questions about Morgan's record-keeping; some people listed as his dining companions said they never met with him over lunch or dinner.

On two occasions, the report stated, Morgan listed his guest as a "B. Clever."

Morgan spent $13,251 on meals from July 1, 2007, through June 30, 2008. He billed the bus system another $860 for golf fees and $171 for cigars, the report found.

It was unclear Friday how much of the expense was borne by city taxpayers, as Valley Metro receives its funding from federal, state and local governments and from user fees.

Questions about Morgan's expense account surfaced late last year.

In a 25-page report posted to the city's Web site, Harmon wrote that auditors noticed "frequent, large transactions at restaurants" while looking into possible irregularities with the Valley Metro remodeling project.

Based on Valley Metro documents and receipts obtained from some of the restaurants frequented by Morgan and his guests, Harmon's office put together a damning summary of what the report more blandly describes as expenses "not reasonable in nature."

Among the findings:

• Out of 30 restaurant receipts obtained, 28 showed that Morgan purchased beer or wine with meals for himself and guests. Federal policies that cover Valley Metro prohibit such purchases.
• Alcohol purchases represented 45 percent of the meal costs in the cases reviewed by Harmon's office.
• Morgan listed between one and nine guests for each meal, and receipts indicated that tickets were opened as early as 1:49 p.m. and sometimes not closed until 12:31 a.m.
• Some of the 29 people identified by Morgan as his guests told municipal auditors that they had not had lunch or dinner -- or drinks -- with the Valley Metro administrator. Attendance was confirmed in 42 percent of the meals and denied in 38 percent of them.
• Morgan was unable to name 12 people with whom he said he had dined. He twice listed a dinner guest as B. Clever. "He had no specific recollection of who this person is, and we can find no phone listing in the Roanoke area for a B. Clever," the auditor's report stated.
• Morgan received $1,185 in per diem payments for out-of-town meals that he had already billed to his credit card.

Although much of the report deals with Morgan's meal expenses, it also details two purchases he made of Valley Metro vehicles that had been retired from the company fleet.

Morgan paid nearly $9,000 less than the combined market value for a 1999 Ford Explorer and a 2002 Ford van, the report determined.

Morgan did not return a call Friday.

"We'll be prepared to respond to it, when and if called upon to respond to it," his attorney, Tony Anderson of Roanoke, said of the auditor's report.

Anderson said he had not had time to review Harmon's report in detail. But, he said, "it's my understanding that it doesn't allege any criminal violations."

Lamont declined to say what Morgan had been doing for the company before he was suspended Friday. She also would not say whether he will be paid while on suspension.

The credit card that Morgan used was not one of the purchase cards issued by the city to its employees and council members. Use of those cards generated controversy last year after it was disclosed that former City Councilman Alfred Dowe used his card to bill both the city and the state for some of his meals.

Dowe ended up resigning and pleading guilty to three misdemeanors of obtaining money by false pretenses.

In addition to the report on Morgan's meal expenses, Harmon's office also released a second report that updates the investigation into possible bid rigging.

That investigation involves $223,301 spent on furnishing and decorating Valley Metro's office on Campbell Avenue and the involvement of Holdren's Interiors.

Holdren's Interiors is owned by Diane Holdren, the wife of Valley Metro's former assistant general manager, William "Chip" Holdren.

Questions have been raised about whether proposals from other companies were fabricated to make it appear as if the funds were awarded after a competitive bidding process, according to search warrants filed in the case.

The furniture used for the remodeling was at least $55,000 above competitive market pricing, Harmon's report found, and the total cost of the project exceeded its budget by 123 percent.

Matthew Broughton, a Roanoke attorney who represents Diane Holdren, said his review of the report found little to do with his client's business. "The small portion of the one report that refers to Holdren's Interiors really presents nothing new," he said.

Both of Harmon's reports were forwarded to the U.S. attorney's office in Roanoke. Earlier this year, city Commonwealth's Attorney Donald Caldwell said a state investigation of possible bid rigging had been turned over to federal authorities.

Brian McGinn, a spokesman for the U.S. attorney's office, declined to comment Friday.

Roanoke Vice Mayor Sherman Lea also declined to comment in detail on Harmon's report, citing the pending investigation.

"Those are the numbers, and that's what we found," said Lea, who heads the city's audit committee. Lea said his biggest priority has been to make sure the audit's results were released.

"My push was to make sure we got it out to the public," he said, "because I don't want there to be any sense that this is being swept under the rug."