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Feb 06 2012

Designer in Valley Metro bid-rigging scheme jailed

Diane Holdren will be sentenced in April after pleading guilty to submitting fake bids to Valley Metro

Roanoke Times (Virginia) - by Laurence Hammack

An interior designer who fabricated bids to land an office renovation contract with Roanoke's bus system pleaded guilty Tuesday.

Diane Holdren, owner of Holdren's Interiors, was sent to jail after her admission to stealing government funds. She is the first to be charged in a bid-rigging scheme at Valley Metro that remains under investigation.

Holdren, who faces up to 10 years in prison, is scheduled to be sentenced April30. She had asked to begin serving her time immediately.

"Your honor, I made a mistake, and I'm pleading guilty," a calm and composed Holdren told federal Judge Glen Conrad shortly before she was led away in handcuffs.

Her downfall began in 2008, when the city municipal auditor's office noticed that Holdren's firm was awarded most of the contracts for furniture and artwork for a $223,301 renovation of Valley Metro's headquarters on Campbell Avenue.

Documents unsealed last week in U.S. District Court charged Holdren with fabricating and inflating bids for the work, "thus guaranteeing that Valley Metro would have to pay more than the true costs associated with the project."

Several Valley Metro employees have been let go as a result of the auditor's investigation, including Holdren's husband, William "Chip" Holdren, who was the bus system's assistant general manager.

Diane Holdren is the only person to face charges so far. Assistant U.S. Attorney Charlene Day declined to comment Tuesday about the possibility of additional charges, saying only that the investigation is continuing.

In a statement, U.S. Attorney Timothy Heaphy pledged to "hold accountable any individual who misuses grant funds."

Holdren, 51, was charged with a federal crime because the cost of Valley Metro's office renovation was funded by a grant from the Federal Transit Administration.

"Ms. Holdren defrauded the American taxpayer when she submitted inflated bids to Valley Metro," Heaphy said. "She repeatedly submitted falsified information in an attempt to enrich herself with government money."

An earlier report from Municipal Auditor Drew Harmon put the total amount of the office renovation project at $233,301. But the exact amount that Holdren defrauded the government has yet to be resolved.

Under the terms of a plea agreement, the loss was put somewhere between $70,000 and $120,000. The exact amount will be determined later and could affect the punishment recommended by sentencing guidelines.

The plea agreement also allows for alternative forms of incarceration. That at least creates the possibility that Holdren could be placed on home electronic monitoring at her April 30 sentencing date. By then, she would have served three and a half months in jail.

Holdren also faces a fine of up to $250,000.

It's rare for white collar defendants to volunteer to go to jail, as Holdren did Tuesday.

"That's a very wise decision," Conrad said, indicating that it could be taken into consideration at her sentencing. The judge also put off a decision on whether to accept the plea agreement until the April sentencing hearing.

Holdren has cooperated with federal authorities since the investigation began, her attorneys said.

"I think she's accepted responsibility and she's ready to let the healing begin," said attorney Matt Broughton, who represented Holdren along with Scott Austin.

Authorities have said earlier that quotes from up to 16 vendors were fabricated to make it appear that there was competitive bidding for the office renovation project.

In fact, Holdren arranged the bids so that her business, run from her home in the southwest Roanoke County suburbs, would get the contracts at inflated costs. In some cases, she included shipping costs that did not exist, court documents allege.

The bid-rigging scheme led Roanoke City Council to impose greater oversight on the bus system, including appointing a new board of directors.

"Hopefully everything will work out and we can move beyond what happened," said Councilman Sherman Lea, head of the city audit committee. "Unfortunately the situation came up, and we dealt with it."

Valley Metro General Manager Carl Palmer, who took over after the allegations came to light, declined to comment. Lea said city officials are confident the problems are behind them now.

"We're very confident with what we're doing now and think that's history," he said. "Right now things couldn't be going better. I'm encouraged by everything that I see."

Staff writer Mason Adams contributed to this report.

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