No answers, no money

A volunteer fire company that refused last year to explain to The Herald-Mailmore than $100,000 in expenses might face questions this year from the Washington County government.

A majority of the county commissioners said in late March that they will press Western Enterprise Fire Co. for an explanation before the county sends the volunteer-owned Hagerstown company any more public aid.

“There should be some explanation,” Commissioner Jeffrey Cline said. “I was surprised in today’s world of disclosure that someone wasn’t willing or able to bring full disclosure” to this.

Commissioners William McKinley, John Barr and Cline said in separate interviews with the newspaper that they will push for answers before sending any more subsidies to Western Enterprise.

Told the commissioners have such questions, newly elected fire company President Mike Kline told the newspaper March 26, “OK, they can come.”

But Kline refused to comment on the situation. “Don’t call me no more,” he said.

The commissioners’ push for accountability is the latest attempt by public officials to find out more about the inner workings of the fire company.

The state’s attorney for Washington County is reviewing the results of an investigation by Maryland State Police into alleged improprieties involving gaming at Western Enterprise, according to Lt. Tom Woodward, commander of the Hagerstown barrack.

“It’s currently under active review by my office,” State’s Attorney Charles Strong said Friday. “I hope to conclude the matter shortly.”

The investigation was requested by city Police Chief Arthur Smith after a preliminary investigation by the county Office of Community Grant Management. The probe centers around questions of whether the fire company violated state gaming law by paying people to help conduct gaming, and whether individuals were profiting from the gaming.

In the meantime, it’s now been five years since the fire company has sent any of its own volunteers out to fight a fire.

The paid crew members that the city fire department assigns to Western Enterprise’s station do respond. And the station itself does house a city fire engine and ladder truck, as well as a Community Rescue Service ambulance and crew.

But none of the members that Western Enterprise recruited, trained and outfitted over the years has gone to fight a fire since April 2007, which raises questions about some of the fire company’s spending in recent years, city Fire Chief W. Kyd Dieterich said previously.

“Why does a company that doesn’t have any riding members have these types of expenses for training or travel or what have you?” Dieterich asked late last year.

“I don’t question them attending the conventions, it’s just the amount of money” that’s being spent, Dieterich said. “It’s like, wow!”

Ignore the reports?

This year, the county government is budgeted to give Western Enterprise a $24,500 basic operating subsidy. The county gives the same amount to each of the other five volunteer-owned fire companies in the city.

The county gives each of the 21 fire and rescue companies outside the city a basic operating subsidy of $48,000 a year. The amount is higher largely because the rural companies must buy their own firetrucks and ambulances, whereas the city government buys the fire and ladder trucks used in the city, and the six companies in the city generally contribute a portion of the cost.

In addition, each of the 27 fire and rescue companies countywide gets an equal share of the money distributed by the county Volunteer Fire and Rescue Association from the county gaming fund. This year, each of the companies is getting about $27,447 from the fund — which contains some of the tip-jar gaming profits earned by businesses and private clubs.

During a yearlong investigation by The Herald-Mail into the financial accountability of local fire and rescue operations, the leaders at Western Enterprise said repeatedly they weren’t interested in talking to the newspaper.

From January 2011 through last fall, then-president and paid Administrator James Schaffer bristled at questions, hung up repeatedly during telephone interviews and alleged the city government and the firefighters union are “out to get our money. ... Some of these people they want to run everything. You’re getting no information out of us.”

Last winter, when current President Kline was chairman of the company’s board of trustees, Kline said he’d told current and former officers and members not to talk to the newspaper. And he told the newspaper not to try to reach them.

Schaffer did tell the newspaper it should ignore the financial reports he sends the county government.

“I know there are discrepancies there,” Schaffer said, explaining that he reports figures to the county before all his records are in. Therefore, he said, the reports to the county aren’t accurate and he never updates them.

Instead, he told the newspaper to rely on the Form 990 financial reports Western Enterprise, as a tax-exempt organization, must send the Internal Revenue Service every year. He said an accountant does the IRS report, based on the complete year’s figures.

The fire company’s reports to the county and to the IRS have conflicted on such information as gaming. One year, the county was told the company grossed $149,594 on fundraisers including gaming, while the IRS was told the gross revenue from gaming alone topped $300,000.

Schaffer said the county should look only at the 990s, too.

But one problem the newspaper discovered is that the county wasn’t routinely examining the financial reports Western Enterprise had been sending it — so the county wasn’t aware of discrepancies.

Key questions

In the newspaper’s own review of the forms filed by Western Enterprise, the key questions centered largely on two kinds of expenses.

The two — “travel” and “volunteer relations” — are listed in varying years between 1998 and 2010 on the Form 990s.

Beginning with 2008, the year after city Fire Chief Dieterich said Western Enterprise stopped sending its own volunteer firefighters out on alarms, the fire company began listing “travel” expenses.

In 2008, Western Enterprise listed a travel expense of $23,528.

Schaffer said that was for a tour bus trip, among several the fire company has organized for members and friends. He said the cost was covered entirely by ticket sales, but he didn’t know why that year’s IRS report listed only the cost, not the income.

He also said he didn’t know what the “volunteer relations” are that the company listed on its IRS reports from 1998 through 2007. Those expenses ranged as high as $16,492 and over the 10 years, totalled $111,232.

Asked about those expenses, Schaffer said he didn’t understand how the company’s accountant had filled out the IRS reports, even though every report from 1998 through 2010 appears to bear Schaffer’s signature, verifying their accuracy.

Schaffer refused to authorize the accountant to explain the expenses to the newspaper.

Seeking answers

Asked whether Western Enterprise ought to explain such expenses before the county sends this year’s $24,500 basic operating subsidy, commissioners Barr, McKinley and Cline said yes, the fire company should answer the questions first.

As with all the volunteer companies, Barr said: “We want full transparency, and we’re going to withhold our funding until we get it.”

Commissioner Ruth Anne Callaham said pushing for answers before sending more money “sounds like a very reasonable request, (but) I don’t think it’s going to happen.

“I think the service that volunteer companies provide is just too valuable. You try to ask for deeper accountability,” but only so much can be asked of volunteers, she said.

However, Callaham said, the county should have Budget and Finance Director Debra Murray, whom the commissioners consider to be their chief financial officer, make the county’s accountability standards plain to Western Enterprise.

“I think a very frank discussion with our CFO and their accountant needs to take place,” Callaham said.

Commissioners President Terry Baker said he will push for answers as to how Western Enterprise spends the public revenues it receives. He said he isn’t sure whether the county should hold back those revenues until its questions are answered.

“The only thing I can make them accountable for is the public money,” Baker said. “So they’re going to have to show us how they spend the public money they receive.

“I don’t think we have the right to (ask how the fire company spends its other revenue). We could ask, but they don’t have to give it to us,” Baker said.

Police investigate

Since the newspaper reported its findings on Western Enterprise in December, the fire company has been in some transition.

Kline, the chairman of its board of directors last year, defeated Schaffer in the company’s election for president later that month.

Hagerstown Fire Chief Dieterich, who said Schaffer is no longer the company’s administrator, either, said Kline has “reached out to see how we can better work together in the future. He’s asked and offered (to meet), and I intend to take him up on his offer.”

State police have investigated the fire company to help determine whether it violated state gaming law.

The call for an investigation began late last year after The Herald-Mail learned that Western Enterprise had been writing checks to a business that was providing workers to sell tip jars in the fire company’s gaming operation.

The president of a for-profit cheer and dance business told the newspaper the fire company had been sending a monthly check to his business in return for the parents of youth cheerleaders working in the fire company’s gaming operation.

The money was used to help families offset the cost of cheer and dance training and competition, the businessman said.

After the newspaper asked the county Office of Grant Management — which issues gaming licenses — about the situation, office Director Jim Hovis began a preliminary investigation.

Under the law, gaming may be held “for the exclusive benefit of a qualified organization if an individual or group of individuals does not: (1) benefit financially from the gaming event under this subtitle; or (2) receive any of the proceeds from the gaming event under this subtitle for personal use or benefit.”

That means “no one can personally benefit from the proceeds of a gaming event,” Hovis said. “And it also says that charitable gaming events must be managed and operated by the members of the charity for the exclusive benefit of that charity.”

City Police Chief Arthur Smith, on the advice of the county state’s attorney, turned to the state police on Dec. 16.

Local barrack commander Woodward said on Feb. 23 that the investigation was conducted and the findings had been submitted to the state’s attorney’s office “for evaluation and consideration and recommendation concerning charges.”

“They may evaluate and say it wasn’t a criminal (matter) ... or they may evaluate and say there’s something to charge with,” Woodward said.