McLean got city to OK lease for family's building

December 04, 1993|By Kim Clark and JoAnna Daemmrich | Kim Clark and JoAnna Daemmrich,Staff Writers

Baltimore Comptroller Jacqueline F. McLean slipped past top city officials a million-dollar deal in which the Health Department would lease the former headquarters of her family's debt-plagued travel business -- without revealing that she and her husband own the building.

The lease was rushed through the Board of Estimates in late October, while the McLeans had a tentative agreement to sell the building to help pay off the business' heavy debts.

The deal would have shifted the city's geriatric nursing service from rent-free offices at Montebello Rehabilitation Hospital to the McLeans' Federal Hill building, at an annual cost of more than $106,000, according to documents and interviews with city officials.

Mrs. McLean, who oversees the city's Real Estate Department, introduced the proposal Oct. 27 and voted in favor of the lease. The rest of the five-member board, which must approve all city contracts, went along.

A month later, the board rescinded the lease after learning that it had been proposed under a nonexistent address and that the building still was owned by Four Seas & Seven Winds Inc., which is controlled by James H. McLean. Mrs. McLean has a small interest in the company.

"I was stunned. There definitely should have been some sort of disclosure," said City Solicitor Neal M. Janey. "I've been there six years, and I can't remember anything like this."

Mrs. McLean's failure to reveal her interest in the property raises ethical questions and has prompted a investigation by Maryland's special prosecutor.

Agents for State Prosecutor Stephen Montanarelli have summoned at least two city employees to appearbefore a Baltimore grand jury Thursday. They also seized records yesterday, City Hall sources said, and collected taped minutes of the Oct. 27 board meeting.

The other four board members, including council President Mary Pat Clarke and Mayor Kurt L. Schmoke, said they were unaware that the lease was for the Four Seas building. All were astonished to learn that they had approved a lease on a building owned by the McLeans.

Recalling her discovery of the building's ownership, Mrs. Clarke said, "I couldn't believe it. We had just voted for property owned by the comptroller and leased it to the city."

Mr. Schmoke, who doesn't remember voting on the issue, called the lease "highly unusual." "I'm troubled because of the failure to disclose information to all of us at the time of the initial vote. It's very clear we did not have the full information."

In an extensive interview with The Sun yesterday, Mrs. McLean wavered between defiance and apologies, at times insisting that she did nothing wrong and at other moments admitting a mistake.

Her husband had arranged to sell the building to prominent developer Otis Warren Jr., and the lease was with Mr. Warren, not the McLeans, she noted.

"In my mind, it was no longer an issue with my husband's company, and that erased all of it. I honest to God just didn't think about it. Call me stupid, but I didn't think about it."

She said revealing her interest would have made no difference to board members.

'I do apologize'

Informed that her fellow board members had told The Sun that such information was important and that knowing of it might have changed the vote, Mrs. McLean said, "I do apologize to them if that is the way they feel."

Members said they were confused about the lease because a document read by Mrs. McLean to the board listed the building's address as 11 W. Hughes St., the rear of the building. That side of the building is not recognized by the Postal Service as an address, Mr. Janey said.

Mrs. McLean said she had "no idea" why some city documents list the address as 11 W. Hughes St. instead of the more recognizable 12 W. Montgomery St. "I certainly didn't try to deceive [board members] or manipulate them," she said.

She said she wanted the lease to be approved by the board because "Otis [Warren] needed to have the lease in order to go to settlement" and buy the building.

Mr. McLean could not be reached for comment last night.

The McLeans needed the money from the sale to pay off debts incurred by their travel agency.

Mrs. McLean and her husband founded the business in 1975. She has not been actively involved since the late 1980s but she retains a 2 percent interest in the company and personally guaranteed at least one major business loan.

Although they sold most of the company Sept. 1, the McLeans were left with hundreds of thousands of dollars in debts.

In October, as they tried to sell Four Seas' vacant headquarters, they faced, in addition to their regular bills and a mortgage on their condominium at the Colonnade:

* A court judgement of $341,681 for allegedly defaulting on a debt of $341,681 owed to the Development Credit Fund Inc., a nonprofit Baltimore-based community bank that had bailed Four Seas out in 1992.

* Federal tax liens totaling $193,032 for failure to pay the withholding taxes of Four Seas' employees in 1992. (The tax liens were paid off last month.)

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