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.


The “Dead Zone” Stirs: Belated renewal slated for West Baltimore Street

By Van Smith

Published in City Paper, March 11, 1998

For generations the 800-1000 blocks of West Baltimore Street in Poppleton have been a thorn in the side of city planning officials. Millions of dollars in public investment over several decades have been sunk into this stretch of once-historic cityscape that now consists largely of vacant lots, the legacy of neglected storefronts and rowhouses the city acquired and then demolished.

Today, nearly all of the city-owned properties on this three-block stretch are slated to be rebuilt as private homes or apartments, holding out the promise that the long-dormant corridor can be rehabilitated and returned to the tax rolls. But the city’s track record with regard to the neighborhood has made skeptics of area residents, who are taking a wait-and-see attitude about the fresh development plans for what many morosely call the “dead zone.”

On the north side of the 800 and 900 blocks, a development team made up of Atlantic Investment LLC; Struever Bros. Eccles and Rouse; and Banks Contracting wants to build 100 rowhouses with garages. “It’s what they call ‘Georgetown-style’ townhouses,” says Atlantic’s attorney, Claude Edward Hitchcock. Hitchcock did not say how much the development would cost to build, but “funding is the issue” in the company’s ongoing exclusive negotiations with the city Department of Housing and Community Development (HCD) over the properties.

The Atlantic site is located in the federal Empowerment Zone, a special district in which tax incentives and federal subsidies are available to boost job creation and urban renewal. The proposal was presented last summer to the Village Center of Poppleton (VCP), a nonprofit formed to oversee Empowerment Zone activities in the community.

Doris Hall, board chair of VCP, says the organization has “agreed in concept” with the Atlantic Investment team’s plan as presented to the group last summer, but she adds VCP hasn’t heard anything from the developers in “quite some time.” “If we don’t have some feedback,” Hall said during a March 6 meeting of the Village Center’s land-use committee, “we may want to change our commitment.”

Hitchcock says his perception is that the Poppleton community “is fairly excited” about the development because residents “did not want that street to be retail and did want additional middle-class families,” the market Atlantic is targeting. Hall agrees the middle-class flavor of Atlantic’s plan is in keeping with VCP’s desires: “We need more taxable income so that people vote more and have some influence” over the city’s decision-making process for the area.

Past plans to redevelop the Atlantic site have caused extensive controversy in the community. In 1979, a City Council bill to change the properties’ zoning from business to residential was defeated, but into the early 1990s HCD continued to base plans for the area on the defeated residential zoning. This irked residents who knew the land was zoned for businesses and hoped to see a commercial revitalization there.

In January 1991, the council considered a resolution calling for an independent audit of HCD’s use of federal Community Development Block Grants (CDBG) in Poppleton. The resolution, which did not pass, raised numerous questions about the city’s use of the federal funds. Poppleton residents say they’ve never gotten an adequate picture of how approximately $1.5 million in CDBG funds earmarked for redevelopment of what are now the Atlantic properties has been spent. In particular, concerns have been voiced about allocations of $100,000 for a temporary park in 1982 and $50,000 for public improvements in 1991, both in the 800 block of West Baltimore Street, where there is no tangible evidence of a park or recent improvements.

The $1.5 million does not include millions more in CDBG funds that went toward the relocation of the New Gold bottling plant, which stood at 926—944 W. Baltimore St. before it was demolished last month. In 1992, the federal Department of Housing and Urban Development criticized as “excessive” the city’s proposed use of $5.5 million in CDBG funds for the plant’s relocation. No plans have been announced for the former New Gold site.

Nearly $1 million more in CDBG funds has been sunk into preparing the 1000 block of West Baltimore Street for renovation and redevelopment. On this block, HCD is working with the Frederick Avenue Development Corp. on a proposal to demolish and redevelop four city-owned historic properties and renovate parts of two others. Frederick’s current plans are for apartments and some commercial space.

In January, the city Commission for Historical and Architectural Preservation approved the plan, which would save 1001 W. Baltimore St.–a circa-1830s structure the commission considers the most historic building remaining in the Poppleton area–and the arched facade of 1011 W. Baltimore. Frederick obtained development rights to these properties in 1993; at the same time it purchased 11 other properties on the same block for $150,000, about a quarter of their assessed value. Frederick offered to buy the 11 renovated properties after the previous developer defaulted on several city and state loans used to fix them up.

Frederick’s board chairperson, Leonard Moyer, did not return a reporter’s phone call. Neither did his attorney, Theodore Potthast.

Betsy Waters, president of the Hollins Market Neighborhood Association, said during the March 6 VCP committee meeting that her group wants “not to see any more rental developments” in its nine-block area of jurisdiction, which includes the Frederick proposal. But the neighborhood association has not taken an official stand on Moyer’s plans.

Some residents worry the two historic structures pegged for partial renovation, 1001 and 1011 W. Baltimore St., won’t survive the demolition of the surrounding properties. Their skepticism is based on an occurrence last month at nearby 946 W. Baltimore St. The historic, structurally sound corner building at that address was razed without a required permit when a city demolition contractor wrecked the former New Gold plant. Community leaders say they were told by city officials that the unpermitted demolition was an accident.

Moyer’s plans for the property have generated anxiety in the Hollins Market neighborhood since his company bought the parcels. In 1993, when Frederick acquired the 1000 block properties from the city, community leaders testified before the city Board of Estimates that they were worried Moyer would be an absentee landlord. Their concerns proved unfounded–Moyer can be seen on his property daily, perched in a chair on the sidewalk or chatting with passersby. And he has kept up his properties, although court records show Frederick is currently being sued by a contracting company that alleges Frederick owes $25,000 in unpaid bills for renovations done in 1994.

Ultimately, according to Hall, VCP hopes to see the West Baltimore Street corridor in Poppleton become a “corridor of health-related businesses and offices,” a strategy grounded in the hope that the proximity of the University of Maryland Medical Center and Bon Secours Hospital will attract health-care businesses. She also expresses hope that a land-use plan currently being prepared by VCP, to be completed in the coming months, will provide the impetus for actual redevelopment and bring to an end decades of controversial and thus far fruitless efforts to revitalize West Baltimore Street.