Mark R. Vogel's arrest on a cocaine-possession charge in Virginia last week came as his financial empire -- built on a dizzying flurry of land deals in suburban Washington over the past six years -- showed the first signs that the owner of Maryland's two harness racetracks is in financial difficulty.
After amassing a fortune estimated at between $45 million and $75 million in only a few years, Mr. Vogel has defaulted on two loans, leading to the auction next week of one of his multimillion-dollar Prince George's County projects. And, now, his attempt to buy another track in Atlantic City appears unlikely to materialize.
James Murphy, general manager at Mr. Vogel's Rosecroft Raceway in Prince George's County, said yesterday that Mr. Vogel has been unable to secure the financing needed to purchase the Atlantic City Racecourse, a thoroughbred track. The track's price tag is $17 million.
Mr. Murphy, who is also the general manager at the Atlantic City track, said he had sent a letter to the track's board of directors. "In the letter, I just explained to them that unofficially Mark has until Sept. 30 to get the financing," Mr. Murphy said. "If he doesn't get it by then, then the purchase would be off for good."
Mr. Murphy said Mr. Vogel had told him he "had worked out something to acquire the money . . . but obviously the closer it goes to the deadline, the less likely [the purchase] will happen."
Yesterday, Mr. Murphy canceled a meeting with officials of Timonium race course on Mr. Vogel's long-desired but politically controversial proposal to conduct intertrack betting at the fairgrounds on races held at Rosecroft.
The cancellation came on the heels of news reports that Mr. Vogel, 42, was arrested by Fairfax County, Va., police and charged with possession of cocaine. He is free now on $10,000 bail.
Agents of the federal Drug Enforcement Agency were involved in the arrest last Thursday. Sources familiar with the investigation said they were watching Mr. Vogel in connection with an investigation under way for several months.
Until recently, Mr. Vogel appeared to be riding high on a string of brilliantly executed land deals in the Maryland and Virginia suburbs of Washington. But lately, his record of success showed signs of faltering.
Last month, Mr. Vogel and Rosecroft were slapped with $410,000 court judgment when they fell behind in payments to the former general manager of Rosecroft, William Miller II. The payments were part of a negotiated settlement reached with Mr. Miller when he was abruptly fired in December 1989, according toMiller attorney E. William Furey.
According to Mr. Furey, the court order was used one night last month to divert a Brinks Armored Car Co. truck delivering cash to the Oxon Hill track, Mr. Furey said.
"When they received that garnishment, they called the truck and told them to not make a delivery. We got paid as a result of that," Mr. Furey said. "We got their attention."
Once Mr. Miller received $110,000 plus $5,000 in attorney's fees, agreed to return to the payment schedule outlined in the negotiated settlement. Mr. Furey said the amount of the total settlement was confidential. But he added, "There is still some money due."
The money dispute with Mr. Miller attracted the attention of Maryland's Racing Commission, which already had complaints about vendors not receiving prompt payment from the Rosecroft track, according to racing sources. The commission had repeatedly asked Rosecroft representatives during public sessions if vendors who do business with the track were getting paid and horsemen were receiving their purses. The commission was assured that everything was under control.
But reports about financial problems with a Vogel business venture in Prince George's County and the Miller episode prompted commission members to consider ways to ensure that money from Rosecroft would not be used to bail out any of Mr. Vogel's other ventures, according to industry sources.
Yesterday, Ken Schertle, executive director of the racing commission, met with an accountant representing one of Mr. Vogel's businesses, the sources said. When asked about that meeting, Mr. Schertle said, "I don't think it wouldbe appropriate to comment on that."
But Mr. Murphy, the manager of Rosecroft, said yesterday, "Rosecroft is making money. It's a comfortably profitable operation."
In regard to Mr. Vogel's real estate interests, Jefferson Bank and Trust Co. recently entered a judgement against him after he defaulted on a $724,446 loan. Next week, land Mr. Vogel owns at the Villages of Belmont in Upper Marlboro is set to be auctioned off to pay a $4.3 million mortgage debt.
These enterprises represent only a small part of Mr. Vogel's investments -- about 20 development ventures, including both commercial and residential properties in metropolitan Baltimore and Washington.