Spicing It Up: Fells Point Smoke Shop Nabbed in Bath Salts Sting Helps in Fake-Pot Probe

by Van Smith

Published in City Paper, Aug. 29, 2012

Just-released records in Maryland’s federal court show the Dragon’s Den Smoke Shop in Fells Point and the Tobacco Shop in Bel Air are part of an ongoing drug investigation into the distribution of synthetic marijuana, sometimes marketed as “Spice” and “K2,” which was banned last year. The role each shop played is spelled out in a warrant for the seizure of more than $2.2 million from M&C Wholesale, a company in Laguna Niguel, Calif., south of Los Angeles, suspected of supplying synthetic marijuana to head shops, including the Dragon’s Den and the Tobacco Shop.

The seizure occurred July 25, the same day a multi-agency federal crackdown on banned designer drugs descended on 91 communities in 31 states, according to a U.S. Drug Enforcement Administration (DEA) press release. Dubbed “Operation Log Jam,” the operation netted nearly 100 arrests and the seizure of more than $36 million and more than five million packets of synthetic weed and “bath salts,” designer stimulants that also were banned last year. Baltimore was not among Operation Log Jam’s long list of targeted communities, but Laguna Niguel was, perhaps due to the M&C Wholesale money seizure.

Last winter, the Dragon’s Den was implicated in an undercover DEA operation that resulted in an indictment against a Baltimore man, Carlo D’Addario, for allegedly supplying bath salts to distributors in Virginia (“Undercover in the Dragon’s Den,” May 30). The disclosure of the shop’s role in the fake-pot investigation came in court filings made public on the afternoon of Aug. 21, after City Paper went to press with an Aug. 22 article about the sentencing of Holly Renae Sprouse, D’Addario’s co-defendant in the Virginia bath salts case (“Bath Time,” Mobtown Beat, Aug. 22).

Sprouse, after prosecutors filed a motion recognizing her “substantial assistance” in prosecuting D’Addario, received a lenient, 20-month prison sentence on Aug. 14 for her role in the alleged conspiracy. The trial in the case, initially scheduled for May, has since been rescheduled twice. D’Addario is currently set to stand trial starting on Oct. 22.

The investigation leading to the M&C Wholesale seizure began last September, according to the warrant, when a DEA undercover officer entered the Tobacco Shop and purchased a gram of “Hysteria,” a fake-pot brand, for $20. In November, the same undercover officer returned to the shop and purchased another three grams of Hysteria for $47. The place was raided in December, turning up invoices for its wholesale purchases of the substances, branded not only as Hysteria, but also “Black Sabbath” and “Game Over.”

Using contact information from the invoices seized from the Tobacco Shop, agents arranged for a confidential source to order fake-pot products from the wholesaler in early April, and have it delivered to the Dragon’s Den in Fells Point. Two packages arrived there on April 4 and 5, containing packages of “Dr. Feelgood,” “Game Over XXX,” “Brain Freeze,” and “Black Sabbath,” along with documentation of the purchases from M&C Wholesale.

The operation then began surveillance of M&C Wholesale’s offices in Laguna Niguel, watching on June 11 and 12 as operators and employees managed incoming and outgoing deliveries. Later, in July, investigators were contacted by a courier-service employee that made and picked up deliveries there, and had seen its operations. The courier informed them that the only activity going on inside was “eight to 10 individuals seated around a table handling piles of a green herb-like substance.”

The investigation also probed M&C Wholesale’s financial transactions, learning that it gets paid for providing supplies to smoke shops with names such as “Puff N Snuff,” “Happy Daze,” “Up in Smoke,” and “Sky High Smoking Accessories.” Payments would enter an M&C bank account at Wells Fargo. Then, on July 24—the day before the seizure—$2.2 million was transferred from that account to another Wells Fargo account, held in the name of individual who is a signatory of M&C Wholesale’s account.

CP searched federal court records as well as those in Orange County, Calif., where Laguna Niguel is located, and found nothing to suggest M&C’s owners and operators have been charged with any crimes. Two phone numbers for them were included in the warrant. One of the numbers has been disconnected, and messages left at the other were not returned.

According to the Operation Log Jam press release, the probe is a partnership of seven federal law-enforcement agencies—DEA, IRS Criminal Investigations, FBI, U.S. Immigration and Customs Enforcement, U.S. Postal Inspection Service, U.S. Customs and Border Protection, and U.S. Food and Drug Administration Office of Criminal Investigations—in tandem with “countless state and local law enforcement members.” DEA administrator Michele Leonhart is quoted, saying “this enforcement action has disrupted the entire illegal industry, from manufacturers to retailers,” and emphasizing that “we are committed to targeting these new and emerging drugs with every scientific, legislative, and investigative tool at our disposal.”

Undercover in the Dragon’s Den: Virginia “Bath Salts” Investigation Nabs Fells Point Smoke Shop

by Van Smith

Published in City Paper, May 30, 2012

Last December, about two months after synthetic stimulants used in “bath salts” were put in the same class of federally banned substances as heroin and cocaine, two customers plunked down $675 for some at the Dragon’s Den Smoke Shop in Fells Point. They did the same in January, buying packets of powder branded as “Speedy Gonzalez,” “Incredible Hulk,” “Taz,” and, during the January visit, “Bugs Bunny.” Each time, the guy they bought it from, Carlo D’Addario, explained that some people smoke the stuff while others snort it, according to court documents.

Those two visits to the Dragon’s Den gave the “customers,” who were part of a drug probe and had recorded what transpired on audio and video, evidence for an indictment and search warrants. The court documents spell out how, since last July, law enforcers with the Augusta County, Va., Sheriff’s Office and the Richmond, Va., and Baltimore offices of the U.S. Drug Enforcement Administration (DEA) had targeted D’Addario, building a case that he is a source of now illegal bath salts sold in Virginia.

On March 1, the investigation culminated with raids on the Dragon’s Den and D’Addario’s home on Pot Spring Road in Timonium and the unsealing of the indictment, first filed on Feb. 22, against D’Addario and his co-defendant, a Virginia woman named Holly Renae Sprouse.

In the past two years or so, the sudden popularity of bath salts, which were lawful, taxed commodities typically found in convenience stores, gas stations, head shops, and the like, has coincided with a spike in medical emergencies reported as related to its abuse, including violent and self-destructive reactions that have grabbed headlines. The feds and many states have consequently outlawed them.

The banned compounds have names comprised of lengthy combinations of numbers and letters, but popularly they are known as MDPV, 4-MEC, and MDMC (also called methylone). (For the hard-core chemists out there, who probably already know this, they are related to cathinones, alkaloids found in the khat plant.) The effects of these designer drugs are said to be similar to other stimulants such as methamphetamine and ecstasy, and are described in a DEA fact sheet as “feelings of empathy, stimulation, alertness, euphoria, and awareness of senses.” One of them, methylone, was patented in 1996 as an antidepressant.

“First there was ‘K-2’ and ‘Spice,’” says Mark Campbell, supervisor of Virginia’s RUSH Drug Task Force, based in Harrisonburg, Va., referring to synthetic cannabis, which also became a craze, prompted scares due to reports of medical emergencies, and was listed as a controlled substance. “Now it’s ‘bath salts,” Campbell continues. “It’s the ‘in’ thing right now. The perception has been that it is legal and that there are no health issues, and that just couldn’t be further from the truth.” Users, Campbell says, tend to be young, and they don’t just snort or smoke bath salts, which come in powder form; they also “put it in a spoon, heat it up, and turn a solid to liquid” to inject intravenously, like heroin.

Campbell says the profit margin from dealing bath salts is “ridiculous.” The court documents in D’Addario’s case say that street prices range from $40 to $100 per gram, and that each gram contains eight to 40 doses. At those prices, the 20.6 grams allegedly sold by D’Addario for $675 in the undercover operation at the Dragon’s Den on Dec. 13, 2011, at $33 a gram, could have been quite profitable.

The take from the March 1 raids of the Dragon’s Den, according to court records, was prodigious: more than 100 containers—jars, packets, boxes, and the like—labeled with names such as “Dragon’s Breath,” “Bayou Blaster,” “Get Twisted,” “Zombie Matter,” and “Super Villain.” Among the items agents seized from D’Addario’s Timonium home are “suspected K-2 spice,” “tablets” of other drugs, a “tally sheet” of transactions, and an “undetermined” amount of U.S. currency in a “basement safe.”

D’Addario’s co-defendant, Sprouse, pleaded guilty on May 8 and her sentencing is scheduled for August. The factual statement attached to Sprouse’s guilty plea does not name D’Addario, but mentions her “Baltimore supplier” and says she was arrested twice last year—in August and October—in connection with bath-salts possession, and after the second arrest she began to assist law enforcers in their probe. If D’Addario does not plead guilty, but instead chooses to assert his innocence before a jury, his trial is scheduled to take two days starting June 28.

D’Addario’s attorney, Andrew Carter Graves, said he and his client would have no comment for this article. City Paper called the Dragon’s Den and spoke to a woman, who said she was the manager and called herself Chrissy. She offered to try to get in contact with D’Addario, whom she described as the shop’s owner, and put the call on hold. A few minutes later, a man picked up the phone, refused to disclose his first or last name, and explained, “We were told not to talk to you.” When asked who gave those instructions, he said, “the DEA guy in charge of the investigation.”

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.