Category: Libel Law

Hot Contract: City bribery scandal tied to influential father and son

By Van Smith

Published in City Paper, Jan. 26, 2005

Mark Sapperstein owns 113 W. Hamburg St., an 8,000-square-foot commercial building in Sharp-Leadenhall. The South Baltimore property, though devoid of signs, houses Allstate Boiler Service, a company owned by Gilbert Sapperstein, Mark’s 73-year-old father.

On Jan. 7, Allstate Boiler’s bookkeeper and office manager, Ida Marie Beran, pled guilty in a bribery case involving the company’s contract with the city to provide boiler services for municipal agencies. Also pleading guilty was Cecil Thrower, a city Department of Public Works employee since 1984 who worked at the Back River Wastewater Treatment Plant in Essex.

The case ties an established name in Baltimore’s business and political class—that of the Sapperstein family—to an ongoing criminal investigation.

In the statement of facts filed in the case, which was brought by the Office of the State Prosecutor, Beran and Thrower admitted that they conspired together to inflate invoices under Allstate Boiler’s contract with the city. While Thrower received somewhere between $1,500 and $2,000 for his part in the scheme, Beran received nothing—though her employer received “well over” $120,000 in excess payments as a result of the fraudulent bills, according to case documents.

The court record further explains that the conspiracy began in approximately 1998, at which point “Mr. Thrower was approached by the business owner who employed Ms. Beran [who] suggested to Mr. Thrower, ‘From time to time you could do something for us and perhaps we could do something [for] you.’ . . . [O]n more than one occasion, while acting at the instruction of and in concert with her employer, Ms. Beran prepared the envelopes containing cash for Thrower and provided them to other employees for delivery to Thrower.”

The case documents make no mention of Allstate Boiler or the Back River plant. Department of Public Works spokesman Robert Murrow, however, confirmed for City Paper that the city contract defrauded in the scheme has been held by Allstate for “like 20 years” to provide boiler work for any city agency that needs such services, and that the inflated bills were for work at Back River.

Allstate, which has been in business since 1965, also holds the boiler contract for the Baltimore City Public School System, according to city schools spokeswoman Vanessa Pyatt, though she says the contract is “set to expire in February.”

State prosecutor Robert Rohrbaugh confirms that, “absolutely, this is a continuing investigation,” though he could “neither confirm nor deny” that the investigation continues to focus on Allstate Boiler or the Sappersteins. Rohrbaugh’s reticence aside, the record makes clear that Allstate, not Beran, benefited from the longstanding bribery scheme.

Mark Sapperstein acknowledged to City Paper that Allstate Boiler Service is located at his property, but he declined comment about the company or the bribery scandal. Gilbert Sapperstein did not return calls for comment left at Allstate, and contact information for Beran could not be found. Thrower’s phone at his West Baltimore residence has been disconnected.

Mark Sapperstein is a major player in local real-estate circles. He’s a partner in Silo Point, a $200 million proposal to convert a derelict grain elevator in Locust Point into a residential-retail development. On Jan. 13, the Baltimore Development Corp. awarded development rights to a city-owned parcel at Calvert and Lombard streets to Mark Sapperstein and his partners, who planned to turn it into a $71 million apartment complex called Cityscape. In 2002, he and his partners constructed a $13.5 million parking garage at Calvert and Lombard. Last spring, Sapperstein purchased 200 acres on North Point in eastern Baltimore County, where he plans to build luxury single-family homes on the Bauer Farm tract, where British troops in the War of 1812 marched en route to face Baltimore militias.

Gilbert and Mark Sapperstein, through their respective companies, have been active as donors to campaigns of elected officials. Since the fall of 1999, the two, along with Mark Sapperstein’s wife and several Sapperstein companies, gave at least $33,270 to the campaign committees of various elected officials.

Of the total, $9,650 went to Mayor Martin O’Malley (D), $8,000 went to Baltimore County Executive Jim Smith (D), and $4,250 went to Gov. Robert Ehrlich (R). Nearly all of the rest went to legislators representing Baltimore City and Baltimore County. At the federal level, Gilbert Sapperstein donated $250 each to U.S. Rep. C.A. “Dutch” Ruppersberger (D-2nd District) and the Republican National Committee. Mark Sapperstein gave $1,000 to U.S. Sen. Joseph Biden (D-Del.) and $500 each to Ruppersberger, U.S. Sen. Barbara Mikulski (D), and Virginia Congressman Eric Cantor (R-7th District). Mark Sapperstein’s wife also gave $500 to Cantor.

Gilbert Sapperstein, according to several sources familiar with the workings of the Baltimore City Board of Liquor License Commissioners, is known as a go-to guy for prospective liquor licensees looking to break into the bar business. As a secured creditor for bars that fail, he assumes control of properties and liquor licenses and thus can procure opportunities for new entrepreneurs. According to liquor board documents, for example, Sapperstein was a secured creditor in a March 2003 license transfer for Mary’s Place in West Baltimore. Often, sources say, bar owners who are indebted to Sapperstein, who has been in the poker-machine business for years, agree to keep his poker machines in their establishments.

Both Sappersteins have had run-ins with the law for gambling-related charges. Gilbert, whose Star Coin Machine Co. is housed at 113 W. Hamburg with Allstate Boiler, faced 107 gambling-related charges in state courts in the 1980s and ’90s relating to Star Coin’s poker machines, though prosecutors declined to prosecute nearly all of them. In two cases, he received probation before judgment and was fined $1,475. Mark Sapperstein was charged with four gambling-related counts in 1989, though prosecutors chose not to pursue the cases. State records indicate that Mark Sapperstein’s poker-machine company, Mark’s Vending, has been inactive for more than a decade.

In 1984, Gilbert Sapperstein faced 18 housing-code violations for properties he owned in the city, receiving probation before judgment for 16 of them while prosecutors declined to pursue the remaining two charges. In 2003, Gilbert Sapperstein was charged with 10 housing-code violations in connection with a rowhouse he owned at 3203 Fleet St., receiving probation before judgment and $170 in fines. He sold the property shortly afterward.

Last April, Gilbert Sapperstein sold one of his properties in the Hollins Market neighborhood—the former Tom Thumb/Gypsy’s Café property, which in 2000 collapsed amid ill-conceived renovations. Two of his other properties in the same Southwest Baltimore neighborhood on Carrollton Avenue—one of which housed the Club Medusa, a hipsters’ after-hours social club, in the 1990s—are for sale. In July, he sold a property at 1600 W. Baltimore St., which houses a tavern called Good Times.

Currently for sale in the 800 block of West Cross Street is the property that housed Foul Ball Bar and Grille, which is owned by 2001 Eastern Ave. LLC, one of Gilbert Sapperstein’s companies. The Fells Point address the company is named after houses the Colonial Inn (owned by the same company). In Baltimore County, Gilbert Sapperstein owns 9727 Pulaski Highway, a large restaurant currently under renovation, and 2123-25 Sparrows Point Road, a strip club and bar.

The list of Sapperstein properties—many of them with liquor licenses attached—could go on and on.

In the 1990s, Mark and Gilbert Sapperstein were named, along with dozens of other parties, in a civil Racketeer-Influenced and Corrupt Organizations (RICO) lawsuit brought by Donald D. Stone, a self-described surfer dude who alleged that the Sappersteins, their business partners and lawyers, and the law-enforcement bureaucracy in Maryland and Florida conspired to keep him from shedding light on their allegedly corrupt schemes. The case, which was filed separately in federal courts in Maryland and Florida, went nowhere. That outcome has not kept Stone from posting potentially libelous statements about the Sappersteins and others on the internet—though, so far, Stone says he has not been sued.

Part of Stone’s investigation into the Sappersteins focused on an Anne Arundel County deal for cell-phone towers that led to a lawsuit against Mark Sapperstein and his business partners by George and Mary Jane Chamberlain, who moved from Annapolis to New Hampshire before filing the complaint in 1999. The lawsuit, which has since been settled, alleged that Mark Sapperstein and two partners, both of whom also sat on the Anne Arundel County Economic Development Commission, stole the couple’s idea for dominating the communications-tower industry. The terms of the settlement are confidential, though the amount paid to the Chamberlains—$40,000—later leaked out. The lawsuit was filed shortly after Mark Sapperstein sold his communications-tower companies to a Florida company for $8 million in 1998.

Investigators are keeping mum about where they might be headed as they scour the books. Only time will tell whether the Sappersteins are in the clear or headed for more trouble as the case progresses.

 

Rendering Unto Oprah: How Dead Pets, Bad Brains, and Free Speech Landed Me in Amarillo

By Van Smith

Published in City Paper, Mar. 11, 1998

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Bored and listless in the morning heat of Labor Day 1994, I jumped on an opportunity to catch a Hagerstown Suns minor-league baseball game with a friend. Oddly enough, this spur-of-the-moment foray into Western Maryland marked the beginning of a saga that eventually led me, 3 1/2 years later, to Amarillo, Texas, where I testified last month in the U.S. District Court case of Texas Beef Group vs. Oprah Winfrey.

Sitting next to us that Labor Day afternoon in Hagerstown’s Municipal Stadium were two guys who said they were truck drivers for the local rendering plant, where, they explained, ingredients for dry pet food are made partly from dead pets they pick up from the local chapter of the Society for the Prevention of Cruelty to Animals (SPCA).

We were at once aghast, amused, and skeptical. “No, really, it’s true,” they said blandly, sensing our doubts. “We pick up dead pets from the SPCA and take them to the plant. The plant cooks up the carcasses and other things to make stuff that goes into pet food. Honest.”

I was deeply affected by this information. During the drive back to Baltimore I couldn’t stop talking about the horrid, poetic perversion of it all. “It’s soylent green for pets,” I exclaimed. Remorsefully I recalled that as a kid I was known to eat dry dog food–strictly on an experimental basis, of course. If I had known I might have been eating refried Rover, I’d have tamed my curiosity.

Over the ensuing months I started to gather what little documentation I could find about rendering. I learned it is a necessary and little-known industry that cooks and processes huge quantities of waste fats and proteins–mostly animal tissues and used restaurant grease. From the fat, renderers make yellow grease and tallow; from the protein comes meat-and-bone meal, which is used primarily in dry animal feed.

I visited Earl Watson, then the director of the Baltimore City Animal Shelter, and discovered that the city pays Valley Proteins, a rendering company with a plant in Curtis Bay, to cart off its euthanized pets and road kill. Then I spoke with Valley Proteins plant manager Neil Gagnon in the first of several conversations about rendering that eventually led to an August 1995 guided tour of the plant with City Paper photographer Michelle Gienow. She and I also spent a day following Valley Proteins truck driver Milt McCroy from the animal shelter to Parks Sausage to Ruppersberger Meats on Pennsylvania Avenue.

These experiences became the backbone of a September 1995 City Paper cover story titled, “Meltdown: What Happens to Dead Animals at Baltimore’s Only Rendering Plant.” Among other things, the story established that dead pets and road kill are part of the raw-materials mix at Valley Proteins’ Curtis Bay plant for meat-and-bone meal, some of which is sold to pet-food manufacturers.

I’ve had little peace on the rendering front since.

First, there were the horrified readers. People for the Ethical Treatment of Animals wrote in, concerned that sodium pentobarbital–the poison used to euthanize unwanted pets at the animal shelter–is getting into pet food. A fan of Gienow’s work was upset that the paper ran her photos of barrels full of dead pets waiting to be rendered. A critic even argued that I shouldn’t have written about pets going into pet food because Valley Proteins President J.J. Smith, interviewed for the article, said he doesn’t like to talk about it. One woman called me in tears, fearful that her dead pooch had ended up in dog food.

The initial aftermath was followed by a steady flow of interest from faraway places. Canadian journalists started contacting me after Anne Martin, a pet-food activist from Nova Scotia, used an excerpt of my article in her book Food Pets Die For. Local television news shows in Texas, Connecticut, and Kansas used the CP piece and Gienow’s photos to do their own stories. 20/20, the ABC newsmagazine, chewed up hours of my time trying to arrange a lengthy exposé of the pets-in-pet-food phenomenon, then quietly abandoned the effort.

Amid all of this, in March 1996, another wrinkle was added to what I knew about the rendering biz. The British government announced 10 people had died from new-variant Cruetzfeld-Jacobs disease (nvCJD), a human form of mad-cow disease. I soon learned that I had missed a very important point about rendering in “Meltdown”: infected meat-and-bone meal caused the spread of mad-cow disease in Great Britain. And now the disease appeared to be crossing the species line into humans. Suddenly rendering seemed to be an inadvertently insidious industry tied to a mysterious medical threat, not a sensible and profitable recycling measure, as I had previously reported. (In July of last year I made up for this oversight with another article, “Bad Brains: Maryland’s Role in the Mystery of Cannibal Brains, Mad Cows, and an Emerging Food Scare.”)

Enter Oprah. On the April 16, 1996, broadcast of The Oprah Winfrey Show, the Humane Society’s Howard Lyman, a former rancher turned food-safety advocate, declared that U.S. rendering practices are just like Britain’s, so one mad cow unwittingly rendered into feed for other cattle could cause an outbreak here just as it did there. Voluntary precautions the U.S. rendering industry had taken to prevent an outbreak in this country weren’t working, he said. And he pointed out that pets and road kill enter the cattle-feed mix. Winfrey swore off hamburgers after Lyman said a U.S. mad-cow epidemic would “make AIDS look like the common cold.”

Texas cattlemen were outraged. Four of them, led by Paul Engler of Cactus Feeders, sued under an untested law, the Texas False Disparagement of Perishable Food Products Act of 1995, that makes it easier for perishable-food producers to win libel suits over statements that criticize their products. (During the trial the judge dismissed that basis for the suit, leaving Engler to pursue the suit as a case of common-law business disparagement, which is very hard to prove.) Labeling Lyman’s statements “exaggerations, untruths, and innuendo,” Engler claimed to have lost $6.7 million as a result of lagging sales after Winfrey’s show aired.

Late last winter, I got a call from Leslie Ashby, one of Oprah’s lawyers. She said she had a copy of “Meltdown,” which seemed to corroborate some of Lyman’s statements about rendering. She flew up to Baltimore to meet with me and Michelle Gienow and obtain the negatives of Michelle’s numerous, gory photographs. She asked us if we would be willing to testify about what we saw of the rendering industry. “Sure,” we said.

Having been unsuccessfully sued for defamation myself, I felt it was important for my information and Michelle’s photos to be available to a jury–especially since the case involved a law that places new restrictions on speech. Besides, based on what I knew about rendering, Lyman’s statements appeared substantially accurate, if scant in some important details.

So I flew down to Amarillo to testify on Feb. 18 as the opening witness in Oprah Winfrey’s defense. Michelle unfortunately couldn’t make it, but her photographs were the main exhibit–about 50 of them, displayed one at a time on a big screen with my play-by-play commentary corroborating statements Lyman made on the show.

Cross-examining me, the cattlemen’s lawyers asked questions about Dykes to Watch Out For, a comic City Paper runs, perhaps believing the jury would think poorly of a journalist who works for a newspaper that carries a lesbian comic strip. Then they trotted out a copy of a satirical, self-deprecating sketch I wrote about myself that is tucked away somewhere on CP‘s Web site (“no respectable, buttoned-down company” would hire me “to do anything of significance,” it says). The jury thought it was funny.

But never did the attorneys try to discredit “Meltdown” or “Bad Brains.” In fact, Engler came up to me after my testimony, shook my hand, and said he thought I did a fine job on the stand and that my articles were topnotch. This from a guy whose lawsuit I’d just punched several holes in (and who went on to lose; the jury returned a verdict in Winfrey’s favor on Feb. 26).

Never say they aren’t good sports down in Texas.