Ex-MARTA CEO Abused Credit Cards

Provided By: The Atlanta Business Chronicle
Last Modified: 8/21/2006 11:43:04 AM

While MARTA suffered through some of the worst deficits in its history, then-General Manager and CEO Nathaniel Ford and his secretaries charged nearly $150,000 over his five years in office to a pair of MARTA credit cards that the transit authority's board never knew existed, according to new internal and external audits of his spending.

Ford, who left MARTA in January to become executive director of San Francisco's Municipal Transportation Agency (MTA), primarily charged business-related expenses -- meals and drinks at fine restaurants, trips to industry conventions across the country, etc. -- but these should have been curtailed in light of MARTA's financial troubles, said board Chairman Ed Wall.

Other expenses were of a purely personal nature -- $454 at a golf pro shop, for example, or $335 in clothing from Men's Wearhouse, even a $58 visit to the dentist -- and should never have been charged at all, said state legislators who conducted the external audit, especially considering that Ford failed to reimburse MARTA for some of them when he departed.

Jonnie Keith, MARTA's internal auditor, determined Ford had reimbursed the authority for about $10,500 in personal expenses charged to the cards during his tenure. Keith questioned many other charges, however. In response, Ford sent MARTA a check for $1,000, with the understanding that he might be asked to repay more later, Keith said.

Supporting documents for thousands of dollars in other expenditures were incomplete or unavailable when MARTA turned the records over to the legislature for its review. An accountant retained by lawmakers to audit the documents has since questioned dozens of expenses, including several of those that caught Keith's eye.

"If we find something else, we'll ask for that too," Keith said.

And Ford, who was paid an annual base salary of $205,000 by MARTA, was not the only person in the executive office who treated taxpayer dollars as his own, the audits show.

One of his secretaries, Stephanie Smart of Kennesaw, used the cards to pay for roughly $6,000 in utility bills, car rentals, gas, groceries and other personal items, Wall said. Smart, who left MARTA at the end of 2005, agreed to repay the entire $6,000, which she primarily charged on the card held by another Ford secretary, Iris Anthony, Keith said.

Anthony went on disability leave at the end of 2005 and sued Ford in January, alleging sexual harassment and abusive behavior.

Lawmakers concerned
Ford, who "is recognized as a rising star in the transit industry," according to the MTA's Web site, did not respond to several requests for comment by Atlanta Business Chronicle. MTA spokeswoman Maggie Lynch said she felt the audits were intended to tear down Ford's accomplishments at MARTA's helm.

The revelations about Ford's spending follow a separate, unprecedented inquiry into millions of dollars in MARTA corporate spending launched by state lawmakers in 2005 after the GOP gained control of both the House of Representatives and Senate for the first time since Reconstruction.

State Rep. Jill Chambers, a Republican from Atlanta and chairwoman of the legislative committee that oversees MARTA, says she is "very concerned" about Ford's spending.

"If you can get away with it, human nature is you just go ahead and push it to the limit," she said.

State Rep. Harry Geisinger, R-Roswell, Chambers' second-in-command on the oversight committee and a member of the original committee in the 1970s, in February asked the authority to release Ford's credit card records under state sunshine laws.

That proved no easy task, since Ford apparently took many of the records with him when he left, Wall said. MARTA ended up asking the credit card companies -- Bank of America Corp. (NYSE: BAC) and SouthTrust Corp., now part of Wachovia Corp. (NYSE: WB) -- to provide some of the statements, and others are still unaccounted for, Wall said.

Georgia Revenue Commissioner Bart Graham, who sits on the MARTA board, said that apart from the exorbitant -- if technically allowable -- business expenses, Ford should not have been using the cards.

At Wachovia Capital Markets LLC, where Graham worked prior to becoming revenue commissioner, "it was a terminable offense for putting any personal item on the corporate card, even if you paid it off at the end of the month," Graham said. "It's unbelievable that there was such little oversight and accountability."

Any unreimbursed personal expenses on the cards could constitute unreported personal income for Ford, Graham said, and as such might be subject to penalties and interest.

The board chairmen during Ford's tenure never saw the credit card statements, said Wall, who became chairman in January. The chairmen did review Ford's expense reports, which included some of the credit charges.

Rick Simonetta, MARTA's general manager from 1994 through 1999, also used the cards, but that use was never a problem, Wall said.

Interim General Manager Richard McCrillis, who succeeded Ford, terminated both cards earlier this year, as well as Ford's memberships in the 191 Club, Buckhead Club and Commerce Club (which were not billed on the cards).

McCrillis also implemented tighter regulations on executive spending, and his own expenses are directly reviewed by Keith before they go to the board.

Bone's and Chops
The transit authority's non-union employees got no raises during most of the Ford regime, and many were laid off amid a slew of service cuts and annual deficits as high as $21 million. In fact, the authority in July reported its first operating profit in nine years on increased ridership and higher revenue from the sales tax that supplies most of its funding.

But despite MARTA's dire financial situation, and admonishments by the board to keep spending in check following a pricey holiday party and a group trip to Las Vegas, Ford racked up thousands of dollars on the cards traveling to and staying in Canada, California, Florida, Sea Island, Washington, D.C., and other destinations.

He also used them to pay for his wife's airfare and hotel stays when she accompanied him, which could in no way be considered a business expense, Wall said.

Ford spent thousands more at top-drawer Atlanta steakhouses like Bone's, Chops and Morton's, and other high-end restaurants like Bluepointe, Fogo de Chao and Soto, where he met with prominent local politicians, candidates for MARTA positions and others. He also used the cards to cover other meals that had no business purpose whatsoever, Wall said.

"We counseled Nat not to eat at Bone's and Chops anymore," Wall said. "The board thought that situation had been dealt with, and clearly it had not."

In addition, Ford put hundreds of dollars in office supplies on the cards, like a $100 portable keyboard for his PDA, rather than going through MARTA's procurement process or buying them himself and applying for reimbursement. He charged hundreds more in executive leadership books, like "Execution: The Discipline of Getting Things Done," according to the audits.

Though MARTA provided him with a cell phone, Ford recorded hundreds of dollars in long-distance charges on the cards while out of town. While staying at hotels, he put personal items like in-room video rentals, drinks and trips to the gift shop on MARTA's tab, though documents show he repaid at least some of them.

And though the authority encouraged employees to book travel as cheaply as possible, he infrequently used online services like Travelocity or Orbitz, instead shelling out hundreds of dollars to travel agents, records show.

The credit card statements also often took too long to reach MARTA's accountants for timely payment, costing the authority hundreds in late fees and finance charges, according to spokeswoman Joselyn Baker.

When managers misappropriate money, others are likely to follow their example, said Paul Lapides, director of the corporate governance center at Kennesaw State University. He suggested a complete audit of MARTA expenditures might be in order.

"Misuse of a company credit card is no different than stealing money," Lapides said. "If this was happening, isn't it likely that somebody put in a purchase order so that a friend got paid? Were checks being cut elsewhere in the company without approval? These are all things that should be looked at."