May 08--Taxpayer money intended for Roanoke's bus system was spent by its general manager on cigars, golf fees, restaurant meals, beer and wine, federal prosecutors allege.
Dave Morgan, who no longer heads Valley Metro, was charged in documents unsealed Monday with stealing or converting government money.
Morgan pleaded not guilty to the charge, which carries up to 10 years in prison, during a brief hearing in U.S. District Court in Roanoke.
He was allowed to remain free after the hearing.
The charges against Morgan stem from an investigation that began three years ago. In 2009, a review by Roanoke's municipal auditor found that Morgan billed the bus system more than $14,000 for golf fees, premium cigars and restaurant meals that were sometimes saturated with beer and wine.
Court papers accuse Morgan, now 46, of taking more than $1,000 from the Federal Transit Administration, which funnels federal dollars to local bus companies such as Valley Metro.
Although the document contained few details, Assistant U.S. Attorney Charlene Day confirmed that the federal investigation was prompted by Municipal Auditor Drew Harmon's report.
The investigation by the auditor's office found that Morgan used a company credit card issued in his name to run up at least 28 questionable bills for himself and guests at local and out-of-town restaurants, averaging 13 alcoholic beverages per ticket.
Charges to Morgan's corporate credit card violated federal, state and local regulations, according to the report, which was forwarded to federal prosecutors.
Morgan's attorney, Tony Anderson of Roanoke, declined to comment after the hearing.
The charges against Morgan are the latest in the bus system's continuing legal woes. Last week, interior designer Diane Holdren was sentenced for her role in a bid-rigging scheme in which contracts for an office renovation at Valley Metro's headquarters were steered to her business.
Holdren was sentenced to four months in jail and four months of house arrest, a relatively lenient punishment that was influenced by her agreement to assist prosecutors in an ongoing investigation of Valley Metro.
Prosecutors said in court last week that Holdren's assistance would lead to additional charges. But it was not clear whether Morgan's case was the one they were alluding to.
After the bid-rigging investigation came to light, Morgan was reassigned by First Transit, the Cincinnati company that manages Valley Metro. He was later fired after the municipal auditor's report came out.
In court Monday, Morgan said he is currently working for Virginia Regional Transit, which provides bus transportation in Northern Virginia.
An official with Virginia Regional Transit would not comment on whether the company was aware of the charges against Morgan, which did not become public until Monday.
But many of the details of spending irregularities were included in the municipal auditor's report. Among the findings:
-- Out of 30 restaurant receipts obtained by investigators, 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.
-- Morgan was unable to name 12 people with whom he said he had dined. On expense forms, he twice listed a dinner guest as B. Clever.
"He had no specific recollection of who this person is," the auditor's report stated, "and we can find no phone listing in the Roanoke area for a B. Clever."
Copyright 2012 - The Roanoke Times, Va.