MVSD State objects to deal

The attorney general says she will not approve the settlement.
By PEGGY SINKOVICH
VINDICATOR TRUMBULL STAFF
NILES -- Despite objections from the state attorney general, a lawyer for the Mahoning Valley Sanitary District is going forward with a settlement agreement reached with a former district construction project manager.
Charles Richards said Wednesday he'll submit the settlement to the 6th District Court of Appeals for approval. "We reached a settlement with Gilbane Building Co., and we're going forward," he said.
Attorney General Betty Montgomery, meanwhile, fired off several letters Wednesday to Richards and Atty. William C. Wilkinson, who represents Gilbane, saying the settlement does not comply with state law and "has no force or effect."
Montgomery says state law "expressly prohibits any settlement of any claim for money that is the subject of an audit report without the written approval of the attorney general." The letter further notes that her office was not consulted nor involved in the negotiations.
"We do not approve and will not approve this settlement," Montgomery says in her letter to Richards.
"Allegations of illegal expenditures of public money made against the Gilbane Building Co. in the special audit raised serious and troubling questions regarding its actions through the course of the capital improvements program," Montgomery's letter says.
"The position of the Attorney General's Office remains unchanged. ..."
The lawsuit
The district supplies water to about 300,000 Mahoning Valley residents and had been a party in a suit filed by the attorney general's office on its behalf, to recover $2.4 million from the Rhode Island-based Gilbane Building Co.
Gilbane filed a countersuit against MVSD for $260,000 for work that was completed.
A federal judge dismissed Montgomery's lawsuit in October. Montgomery says she is appealing.
Even though the judge dismissed the suit filed by Montgomery, Gilbane's countersuit against MVSD remained, Richards said.
"Gilbane still wanted their $260,000, and the MVSD board of directors asked me to negotiate a settlement," Richards said.
The board voted this week to settle all claims. In return, Gilbane agreed to drop its bid for the $260,000.
Gilbane served as construction manager on MVSD's $50 million capital improvement project until the company was removed from the job after a 1997 special state audit of the district.
The audit concluded Gilbane was being paid for work never performed. The contract provided for periodic payments to the company, regardless of the progress of work, said William Burgess, a member of the MVSD board.
The federal judge, who dismissed the case, said the payments were not illegal, Burgess said.
Montgomery also stated in her letter to Richards that if her lawsuit is successful and she is able to recover money from Gilbane, that money will be returned to MVSD customers.
Richards said part of the negotiated settlement states that if Montgomery is successful, the board will return the money to Gilbane.
"We have requested on three separate occasions to meet with her, but she has never met with us," Richards said. "We also requested cooperation with her assistant, and he refused."
1997 special audit
The Gilbane case was among three lawsuits resulting from the 1997 special audit.
Last month, the attorney general voluntarily dismissed one of the other cases against former MVSD director Frank D. DeJute, although the office reserved the right to refile the case.
The case against another former director, Ed Flask, has been postponed while Flask goes through bankruptcy proceedings.
sinkovich@vindy.com