CHARLESTON, W.VA. -- A Cross Lanes marketing firm used federal grant money to purchase alcohol, stay at a luxury Ritz-Carlton and pay for a hotel "pet fee" charged by convicted felon Martin Bowling, according to a state review.

Comar Inc., which publishes MetroValley magazine, also hired consultants who "falsified" invoices and were paid $10,000 for work allegedly performed before the company was awarded the grant.

WorkForce West Virginia has ordered Comar to return $19,400 of a $100,000 federal "set-aside" grant the firm received last year.

"A closeout meeting will take place between Comar and WorkForce in the upcoming weeks," said agency spokeswoman Jama Jarrett. "At that time, there will be a reconciliation of expenditures and unspent money with appropriate refunds made to WorkForce West Virginia."

The review comes amid state and federal investigations into federal grant money distributed by former WorkForce West Virginia employment programs manager Mary Jane Bowling, who resigned earlier this month.

Bowling, who administered the federal grants, distributed grant money to Comar that was ultimately used by her son, Martin Bowling, who worked as Comar's chief technical officer until he was sentenced to prison in March on a computer fraud charge.

Comar also redirected $10,000 in grant money to Martin Bowling's fiancée, Mandi Rae Felty, and Christine Gardner, who lives with Mary Jane Bowling and runs West Virginia State University's Economic Development Center.

Last week, WorkForce West Virginia ordered Comar to return the $10,000 in consulting fees.

Comar CEO Albert Hendershot responded that the "two invoices for $5,000 presented to us were falsified, and we had no way to know that these expenditures were not allowed under the grant agreement," according to the state review. Felty and Gardner helped to write the grant, according to documents submitted by Comar.

Comar also must return another $1,600 in "disallowed" expenditures and $7,768 in cash from the grant that it has yet to spend.

Hendershot could not be reached for comment last week.

In the review, WorkForce West Virginia concluded that Comar had "sub-standard" financial records and no procedures to track cash disbursements.

The review team found that invoices didn't support Comar's expenditures. Some transactions couldn't be traced to Comar's accounting system.

Comar also failed to provide a copy of an audited financial statement for the past year, as the federal grant required.

"The organization told us that there were no written policies and procedures," the state grant reviewers wrote. "The results of these inquisitions and other tests indicated that the company had a deficiency in overall internal controls."

Comar said it has since contracted with an accounting firm, Toothman and Rice, to establish a system to account for company costs.

"We believe that all allowed expenditures were supported with receipts [or they would not have been considered allowed]," Hendershot wrote in response to the review.

The review included 11 questioned grant expenses, which "have been determined to be disallowed."

On four occasions, Martin Bowling submitted invoices for conferences and hotel stays that exceeded the amount allowed under federal "per-diem" expense regulations.

Comar employees also ran up a $300 bar bill during a stay at the Ritz-Carlton hotel in Cleveland, last September.

A month earlier, Martin Bowling charged the federal grant $75 in pet fees while staying at the Radisson Hotel in Research Triangle Park, N.C. Bowling owns a dog and four cats. It's unclear which animal he brought along on the trip.

The review team also cited Hendershot and Comar worker Matt Crist for reportedly inappropriately charging entertainment expenses to the federal grant.

Crist told the Gazette that the $50 in disallowed expenses was for a charity event he attended during a grant-funded trip in October 2008. He said a Comar accountant mistakenly charged the expense to the federal grant when he turned in his receipts.

The review team questioned Comar for allegedly spending $10,000 to establish a "Promise Scholar Social Network" Web site, where recipients of the scholarship could interact on-line. The site apparently was never developed. Promise Scholarship officials said last week they were unaware of the proposed Web site.

The FBI, state Legislature's Commission on Special Investigations and WorkForce West Virginia started investigating Mary Jane Bowling and Comar in the wake of Gazette-Mail reports about the $100,000 grant and another $1 million grant request that was later withdrawn.

The U.S. Attorney's Office has subpoenaed Comar and WorkForce West Virginia employees to testify Wednesday before a federal grand jury about Martin and Mary Jane Bowling.

In November 2008, Martin Bowling was convicted of computer fraud after he admitted using stolen credit card information to purchase movie tickets, artwork, Cuban cigars and other merchandise over the Internet. His three-year prison sentence was reduced in April to five years probation with a year of home confinement.

The Bowlings repeatedly have turned down requests for interviews.

WorkForce West Virginia, formerly known as the Bureau of Employment Programs, serves as the state's employment training office.

In the wake of the review, the agency has changed some of its management procedures, Jarrett said.

"These changes were implemented to more equitably distribute work flow and to ensure compliance with all applicable rules and regulations," she said. "WorkForce West Virginia has and will continue to review and audit all grants in accordance with generally accepted accounting principles. The agency continues to be committed to providing detailed attention to all grants administered."

Reach Eric Eyre at erice...@wvgazette.com or 304-348-4869.