RALEIGH — The State Bureau of Investigation is probing whether officials at the N.C. Division of Motor Vehicles accepted improper gifts and meals from employees of Verizon Business, which holds a lucrative no-bid contract to provide computers to state inspection stations.
Investigators also are seeking to determine whether the state paid Verizon for hundreds of computers that were never delivered, at a cost of more than $1,700 each.
DMV Commissioner Mike Robertson, who took office March 2, requested the SBI's help after determining that criminal acts might have occurred at the division before his arrival.
Two high-ranking DMV administrators responsible for overseeing the agency's multimillion-dollar contract with Verizon left their jobs May 1. State records publicly available do not indicate whether they resigned or were fired.
A spokesman for Verizon Business said Friday the company is cooperating with the state investigation and will take disciplinary action against five employees from its sales staff that worked with the DMV. Those employees violated the company's code of conduct by providing meals to state employees and could face termination, said Jack Hoey, vice president of media relations.
All told, Verizon's DMV contract is worth $51.5million through 2012.
Commissioner Robertson, who worked as an SBI agent for 22 years, said the criminal investigation is directed at both current and former DMV employees.
"I came over here with a fresh set of eyes," Robertson said Friday. "I think my job is to run DMV like a business. The best way to run the state's business is the right way."
Among the commissioner's concerns is that DMV employees might have received state reimbursements for meals that were actually paid for by another party. Asked if that other party was Verizon, Robertson declined to answer, citing the ongoing SBI investigation.
Records released by DMV show that the agency launched an internal investigation Jan. 26 into whether six employees accepted free tickets from Verizon for Gov. Beverly Perdue's Inaugural Ball earlier that month. The inquiry soon focused on Brian K. Bozard, director of the division's license and theft bureau, and Deborah Brewer, the bureau's assistant director.
Both Bozard and Brewer have left the agency. Neither of them could be reached for comment Friday.
The two helped oversee DMV's massive contract with Verizon, which was expanded in May 2008 to include implementation of the agency's new e-Sticker inspection program. The program allows for electronic tracking of inspection data and ends the need for windshield stickers.
Bozard and his wife, along with Brewer and her boyfriend, sat at Verizon's corporate table during the gala, according to the records. Brewer said she bought tickets from a Verizon employee she described as a personal friend. Brewer gave a ticket to Bozard, though it is not clear that it was one that she paid for.
Brewer provided a copy of a personal check written to "Verizon Business" for $475. However, that check, dated Jan. 1, was not cashed until Feb. 10, well after Brewer was notified she was under investigation, according to a copy of her bank statement she provided to DMV.
When he was questioned, Bozard said he had no idea the ticket Brewer gave him had come from Verizon, though he admitted sitting at the corporate table. Brewer said she had bought tickets from Verizon, rather than the ball organizers, because the corporation had "better seats" than she would have otherwise been able to get.
On Feb. 16, acting DMV Commissioner Joseph R. John Sr. closed the investigation, saying in letters to the six employees involved that allegations of wrongdoing were "not sustained."
But Robertson said he read the internal report about the inaugural ball tickets shortly after coming to DMV in March and it raised several issues in his mind. He re-interviewed Bozard and Brewer.
"Was there something wrong with DMV employees being at a political event seated with a primary vendor?" he asked in an interview Friday. "That was a red flag. I obviously had questions about the origins of the tickets."
The e-Sticker inspection program, launched last Nov. 1, required new computers and other electronic equipment at all state inspection stations, which then numbered about 2,800. DMV's inspections service contract dates to a 1997 "sole-source" agreement with MCI World Com, which Verizon bought in 2006.
Though DMV records indicate that some employees asked whether the agency should have sought competitive bids from other vendors to help launch e-Sticker, then-Commissioner William C. Gore Jr. signed a third extension of the 1997 contract.
The 2008 amendment paid the company a $5.3million "down payment" for the 3,000 inspection computers, as well as a $1.70 "transaction fee" from each inspection.
Soon after the new inspection system was announced in 2008, about 1,000 service stations decided to quit performing inspections rather than convert.
That left the state needing only 1,800 computers of the 3,000 it contracted Verizon to provide. Hundreds of the computers, which had been paid for, apparently were never delivered to the state.
Robertson said Verizon has indicated that as many as 700 computers intended for North Carolina are sitting in one of the company's warehouses in Arizona. He said DMV could not currently account for all 3,000 computers.
In addition to the $5.3million DMV paid upfront for computers and software, Verizon has earned $6.1 million in transaction fees in the 10 months since the new inspection program launched.
So far, DMV has not sought to recoup any of the money paid to Verizon for the computers it doesn't need.
Verizon's contract with DMV calls for it to store the computers not in use.
The company said it is working closely with DMV to perform a complete audit of where all 3,000 computers are.
"Could there be some here or some there that were broken or lost in transit? I don't know," Verizon's Hoey said. "But based on our investigation right now, we have no reason to believe there's any wrongdoing from our end. At the end of the day, the state paid for 3,000 devices, and the state will have 3,000 devices, you can rest assured on that."
michael.biesecker@ newsobserver.com or 919-829-4698