SCOTT BAUER Associated Press Writer | Posted: Thursday, April 29, 2004 12:00 am
LINCOLN, Neb. (AP) - The FBI and Nebraska State Patrol are investigating the state's anti-smoking program after an audit revealed possible illegal activity by a felon who was hired to help run the program while he was still behind bars.
Rock Mueller, a former Scottsbluff insurance agent, was on work release while serving a seven- to 10-year prison sentence on two felony theft charges when he was hired in 2001.
The audit released Wednesday reveals that while working for the state, Mueller also was employed by a company contracted by the state to do work Mueller was supervising, which is against the law. The audit also said Mueller altered bid documents to ensure that the company he was working for won the contract.
Ron Ross, then the director of Health and Human Services for the state, met Mueller while he was working with other inmates at the governor's mansion. Ross said Mueller approached him several times about being given a second chance.
"I signed a five-month contract with him just to make sure we could test him and do his job," Ross said. "The feedback we got back from everybody was positive."
Ross hired Mueller under contract, for $4,600 a month, beginning in April 2001. Mueller remained under contract with HHS through his release from prison in September 2001 until he was hired as an employee of HHS in 2003.
Mueller's wife works for the state personnel department, but Ross said he did not know that at the time of Mueller's hiring. Ross also said Mueller's wife had no influence on her husband being hired.
The audit was critical of Mueller's being hired under the initial contract without any bids being sought from others for the work.
Ross said not seeking bids was within the law because Mueller's initial contract was for $23,000, which is below the $25,000 minimum value required for bids to be sought.
Sometime after Mueller was hired, HHS found out that he was also working for Pioneer Development and Support Services, a contractor from Salt Lake City, hired by the state to run the tobacco cessation telephone line. Mueller's job with the state was overseeing that project.
The audit points out that under state law contractors cannot pay fees to a state employee and employees cannot use their office for personal financial gain.
Mueller was paid $73,931 in "marketing fees" and $4,349 in expenses over 19 months from Pioneer, the audit said.
The audit also said that after bids were received to find an operator of the tobacco cessation phone line, a system selection committee recommended the contract go to the Mayo Clinic and not Pioneer.
Despite the recommendation, the state entered into a $759,400 contract with Pioneer.
The audit determined that changes had been made to the bid scores that resulted in Pioneer winning the contract. The audit further found that Mueller had either made handwritten alterations to the bid scores or was aware of the changes that resulted in Pioneer being selected.
Ross said he did not know about any problems with Mueller until he was contacted by the Patrol earlier this year. Ross left HHS to become state treasurer in early January.
Ross said he also did not know that Mueller had twice been convicted of felony theft charges. Ross said he knew he had committed a white collar crime, but he did not find out until after he had been hired that it was theft.
Ross said after he found out about Mueller's background, he made sure he wasn't working directly with money.
"I thought we had things in place to keep an eye on him," Ross said. "He was sneaky."
Witek said the Patrol was looking into illegal activity beyond the concerns raised in the audit.
"There has to be a thorough investigation and the establishment of responsibility and accountability," said state Sen. Ernie Chambers of Omaha. "I believe that somebody is going to have to be held accountable for putting a thief in a position to steal yet again and this time from the public at large."
Once it was discovered that Mueller was working for the company that he was overseeing in his state job, HHS requested that the audit of the entire program be done, said health system spokeswoman Kathie Osterman. Mueller's last day working for HHS was Jan. 30, she said, but Osterman said she could not comment on whether he had been fired.
Pioneer's contract is being reviewed to see if there is a reason for it to be ended before it expires June 4, Osterman said.
The patrol investigation began in early January after a tip from a citizen was received, said State Patrol investigator Lt. Mark Funkhouser. He did not know when the investigation may wrap up.
"There's a lot of factors we have to deal with," he said.
Mueller, 50, was serving his second prison sentence for theft at the time of his hiring. His first conviction, out of Scotts Bluff County in 1987, was for stealing $205,411 from his employer, New York Life Insurance Co.
His second conviction in 1998 was for depositing more than $100,000 of checks from his employer, plumbing wholesale business Ferguson Enterprises, in his personal account.
While working for HHS, he was in charge of overseeing the tobacco quit line, teen tobacco prevention programs and programs targeting diverse populations.
The audit revealed a litany of other problems with the Tobacco Prevention and Control Program, including poor record keeping and a lack of financial monitoring.
Created by the Legislature in 2000 with funds from the multistate tobacco lawsuit, the program is to focus on tobacco prevention and public health.
On the Net: Auditor Kate Witek: http://www.auditors.state.ne.us/
AP-WS-04-29-04 1059EDT