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Allegations led to probe seven years ago

December 10, 2011|By ARNOLD S. PLATOU | arnoldp@herald-mail.com

Questions today about how money is being spent by Western Enterprise Fire Co. are similar to some raised in a government inquiry nearly a decade ago, The Herald-Mail has learned.

The 2004 inquiry, led by Washington County's then-director of emergency services, explored allegations that Western Enterprise "was not supporting fire protection efforts" in Hagerstown, according to an Oct. 8, 2004, letter that director Joseph Kroboth III sent the company.

Ultimately, Kroboth wrote then, it was agreed "that no disciplinary action" would be taken at that time, and that a follow-up meeting would be held early in 2005 to compare the "amount of public funds contributed to the company and the expenditures that directly support fire-fighting operations."

When the follow-up meeting was held, Kroboth said, he learned that Western Enterprise had met the standard and the inquiry was closed.

But he said that doesn't mean that the county would stop examining the company's financial reports.

"As the annual report is coming in, it should be implied that the intention was that they be reviewed," said Kroboth, who is now the county's public works director. "So that is how they'd be monitored" now and in the future."

In the newspaper's investigation this past year into the financial accountability of fire and rescue operations, several questions were raised about spending by Western Enterprise.

In interviews, James Schaffer, the company's longtime president and administrator, explained some expenses. But when asked about such expenses as the $23,528 spent on travel in 2008 and annual costs as high as $16,492 for what was called "volunteer relations," Schaffer said he didn't know "how the accountant does that."

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

Interviewed this month, Kroboth said he thinks the 2004 allegations against Western Enterprise were made to him by some of the paid members and leaders of the Hagerstown Fire Department.

Kroboth said that if he's remembering correctly, the questions in the city Fire Department began after the city bought two ladder trucks in the late 1990s. One was stationed at Pioneer Hook & Ladder Co. and the other at Western Enterprise, each of which contributed $100,000 toward its truck's cost.

Some of the volunteer members at Pioneer wanted to add certain pieces of equipment to their new ladder truck, but then-Fire Chief Gary Hawbaker "said you can't put it on, unless Western Enterprise also agrees" to add it to theirs, too, Kroboth said.

He said Hawbaker "had a policy, which I completely agree with, that whatever goes on one of the ladder trucks, must go on the other fire truck so that when they show up at a fire, they're equipped the same."

The problem came when "Western Enterprise, at the time, would not agree to some of the tools which were being proposed — which led to complaints to my office, which led to my investigation," Kroboth said.

In an April 15, 2004, letter that Kroboth released to the newspaper this month, he told Schaffer that his company's 2003 financial report to the county raised questions about the use of public funds given to the fire company.

So, for instance, Kroboth asked Schaffer to name the organizations to which Western Enterprise had reported it donated a total of $14,028 in the year 2000, $20,360 in 2001, $20,547 in 2002 and $21,605 in 2003.

In his Oct. 8, 2004, letter summing up the information received, Kroboth didn't list the groups that had received donations from the fire company. But he said the fire company had told him that all of the contributions in 2003 came from its gaming operations "and that no public funds were used."

In addition, in his April 2004 letter, Kroboth told Schaffer it appeared that the fire company had been buying items "that directly support your gaming operation. However, during the past four years we do not have a record of any capital expenditure that directly supports fire protection services.

"Can you please elaborate what, if any expenditures your company has paid that directly support the provision of fire protection?" Kroboth wrote. "If there has been any expenditures that directly supported fire protection, can you advise why they have not been identified on the financial summary?"

In his October 2004 summary, Kroboth said Western Enterprise received a total of $80,731.39 in public funds in 2004. This included a $20,000 basic subsidy from the county government, a $6,764.50 county reimbursement for utility bills the fire company paid, and $47,202.39 from the county Gaming Fund, as distributed by the county Volunteer Fire and Rescue Association.

The 2004 summary said that recently, the city fire department had asked Western Enterprise "to purchase fire-fighting equipment and to make a financial contribution toward the annual awards banquet for fire-fighting personnel.

"The Fire Company has indicated they do not agree that the equipment requested is needed," Kroboth wrote. "In the past, the Hagerstown Fire Department convinced the Fire Company to contribute toward the purchase of equipment that was (what Western Enterprise called) a'waste of money', such as thermal imaging cameras, etc.

"The Fire Company has advised that they will not contribute to the awards banquet since only they only have two active volunteers that would be recognized."

In this month's interview, Kroboth recalled that in his 2004 meetings with Western Enterprise officials "initially, they could not provide enough evidence" that at least the $80,731.39 in public funding had been spent to help firefighting efforts.

Kroboth said that at the follow-up meeting early in 2005, he learned that the company had made an additional effort in that area.

"They went out and made some procurements — new breathing apparatus to put on the fire engines — and that took them over that amount of" public funding that the company had received, Kroboth said. "That satisfied the requirement that I was seeking."

Had the fire company not been able to do that, Kroboth said in this month's interview, the county would have suspended its basic subsidies as well at its utility reimbursements to the company.

And, he said, the county would have sent a letter to the county Volunteer Fire and Rescue Association, asking it not to send Western Enterprise any more of the county Gaming Fund money until the county's spending standard was met.

Determining whether Western Enterprise is meeting the same standard today, is difficult.

But its mission is still the same, according to the company's 2010 financial report to the Internal Revenue Service (IRS).

In that report's Statement of Program Service Accomplishments, the fire company wrote, "The organization provides fire service and protection to the citizens in the Hagerstown, Maryland area and education in fire prevention."

During 2010, the IRS report shows, Western Enterprise received a total of $81,087 in public funding. In all, it received $149,830 that year and spent $116,678, its IRS report shows.

The report's standard line items are where the company has listed most of its expenses. The fire company has written in its own description of the other expenses.

But neither tells a lot, so it's hard to judge how many of the expenses helped with firefighting, fire protection and education in fire prevention.

Here is the report's list of all $116,678 in expenses: $4,397 firefighting supplies; $196 "meals - fire"; $17,893 in salaries and taxes; $855 legal; $3,020 accounting; $5,988 office expenses; $7,529 travel; $5,020 conferences, conventions and meetings; $18,978 depreciation, depletion, and amortization; $883 insurance; $3,931 miscellaneous expenses; $1,603 dues and association fees; $404 bank charges; $45,712 occupancy; and $269 "all other expenses."

Normally, additional insight into the expenses can be gained from looking at a different financial report. It's one that each local fire and rescue company is required to send to the county.

But Western Enterprise's is unreliable because, Schaffer has told the newspaper, he bases it on incomplete records. He said he does that because the county's report deadline is only three months after the end of a budget year.

So four additional spending details on his report to the county for 2010 may be accurate or maybe not.

They are that during the year, Western Enterprise spent: $15,660.15 on building maintenance; $300 on fund/membership drive; $7,017.74 for a capital expense on its building; and $6,000 for a capital expense on a vehicle.

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