U.S. suit against husband's firm could be problem for Ehrlich running mate

Gubernatorial candidate Robert L. Ehrlich Jr. and Mary Kane, his choice for lieutenant governor, campaign in Silver Spring.
Gubernatorial candidate Robert L. Ehrlich Jr. and Mary Kane, his choice for lieutenant governor, campaign in Silver Spring. (Jacquelyn Martin/associated Press)
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By John Wagner
Washington Post Staff Writer
Sunday, July 4, 2010

If elected lieutenant governor of Maryland, a major part of Mary D. Kane's portfolio will be economic development, a reflection of her work fostering business growth across the country, former governor Robert L. Ehrlich Jr. (R) said last week as he introduced his running mate.

But in the few days since her debut, Kane has been peppered with questions about a company very close to home: a major office moving business run by her husband -- and on whose board of directors she used to sit -- that the U.S. Justice Department has accused of widespread fraud in its pursuit of contracts with federal agencies.

A complaint being pursued in federal court alleges that for years the Kane Co., the largest office mover in the Washington area, paid workers less than required by federal contracts and submitted "false and fraudulent documents" indicating that it was in compliance. The company has said the allegations are without merit. If the allegations are proved, it could face millions in civil penalties.

Kane, a former Maryland secretary of state, has taken a leave of absence from a job at the U.S. Chamber of Commerce to join Ehrlich's ticket. According to a state-issued biography, she was a member of the Kane Co.'s board of directors from 1997 to 2003, when much of the alleged conduct is said to have taken place.

Since becoming a candidate, she has sought to distance herself from the company and deflect questions about the lawsuit, in the apparent hope that the company's legal challenges will prove no more than a minor distraction in Ehrlich's rematch against Gov. Martin O'Malley (D).

"My husband owns it," Kane, who is a lawyer, told The Washington Post when asked about the company Thursday after a campaign event. She referred additional questions to the company, saying she has not had day-to-day involvement with its operations.

Pressed about the matter in a television interview Friday, Kane said she was "very proud" of her husband and his company, but she declined to comment on the lawsuit. "That is something I'm not involved in and needs to be decided in the court system," she told WUSA-TV (Channel 9).

The Post first reported on the lawsuit a year ago, shortly after a court document was unsealed that indicated the Justice Department's involvement.

Democrats seize issue

The Maryland Democratic Party has seized on the issue since Ehrlich announced his choice of running mate Wednesday night on Facebook. The Democrats have issued numerous news releases and urged reporters to ask the Republican ticket about it.

Although the Ehrlich campaign has sought to play down the matter, Ehrlich and Kane have been queried about the lawsuit in media interviews. And the Kane Co. has scrambled in recent days to put out "fact sheets" providing its side of the story. One asserts that the 40-year-old company has "a history of paying all employees properly and fairly and treating our staff with respect and dignity."

The company and Ehrlich's campaign said John M. Kane, the company's president and chief executive, owns 100 percent of the company's stock, although ownership has been a source of some confusion. In the WUSA interview, Mary Kane referred to a point at which "we bought the company." Afterward, an Ehrlich spokesman said those words were "a figure of speech, not an indication of actual ownership."

Also, a financial disclosure statement filed by Mary Kane last week with the State Ethics Commission indicates that she holds a 50 percent "joint interest" in the Kane Co. A statement by the Ehrlich campaign said the disclosure refers only to the share of the company she would receive if the couple divorced.

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