State should not back down on recovery of MVSD money

Last year, we had high praise for U.S. District Court Judge George Smith in Columbus after he reversed his own ruling that had outlawed special audits by the state auditor's office. If only we knew then what we know now -- that Judge Smith seems to lack an understanding of how government is supposed to work.
How else to explain his shocking decision last week that the Gilbane Building Co. of Rhode Island does not have to repay the Mahoning Valley Sanitary District $2.4 million it received for work it never did? In Smith's view, the contract between the MVSD and the Gilbane Co. was deficient, which is the fault of the water district, not the company. Thus, Gilbane has a right to whatever payment the contract calls for -- even if no services were performed for the money.
The ruling must not go unchallenged. The ramifications are enormous for all public entities that do business with the private sector.
As Auditor Jim Petro puts it: "It's a terrible message, that you can't collect. There's an acknowledgment that this is a very, very bad deal. In his opinion, the judge said there weren't services rendered under the monthly retainer contract, but that was the risk the public entity took."
We strongly agree with Petro's contention that when it comes to public dollars, "there has to be a legitimate value for payment made."
Appeal: The state of Ohio, which had filed a lawsuit to recover the $2.4 million from the Gilbane Co., has appealed Smith's ruling to the 6th U.S. Circuit Court of Appeals. There are legitimate public policy issues that cannot be ignored.
"We take the view, and will continue to take the view, that public expenditures are made in exchange for services that render a value," said Petro, whose office conducted the special audit of the MVSD. That audit resulted in findings for recovery of more than $2 million against former directors Edward A. Flask of Poland and Frank DeJute of Niles, the Gilbane Co., which served as the contractor on a $50 million capital improvements project at the MVSD water purification plant in Mineral Ridge, and vendors doing business with the district.
As a result of the findings and a criminal investigation, Flask pleaded guilty to nine criminal charges relating to his service on the board. He received a slap-on-the-wrist sentence of 90 days in the Trumbull County Jail.
Flask's civil trial is scheduled to begin Monday in the Mahoning County Courthouse. Ohio Attorney General Betty Montgomery said last week her office is ready to go forward with the trial.
Gratuities: We are hard-pressed to understand how the federal judge in Columbus could ignore Flask's guilty pleas to criminal charges in his deliberations. After all, the contract that the MVSD entered into with Gilbane was signed by Flask, who admitted, among other things, that he accepted improper gratuities from Gilbane. Did it not cross Judge Smith's mind that the contract could have been written in such a way that it ultimately worked to Gilbane's advantage?
Smith should reverse his decision. The Gilbane case must be viewed in the context of the entire MVSD civil and criminal investigation.