Fending off foreclosure threat, McLean and husband pay $253,000 to creditor

December 24, 1993|By Kim Clark and JoAnna Daemmrich | Kim Clark and JoAnna Daemmrich,Staff Writers

Baltimore Comptroller Jacqueline F. McLean, who faced the threat of bankruptcy for more than two months, has moved to pay one of her largest and most pressing debts.

Mrs. McLean and her husband, James, recently wrote checks totaling $253,000 to pay off one of their largest creditors, the Development Credit Fund Inc., attorneys for both sides said yesterday.

The fund, a Baltimore-based lender to high-risk, minority-owned businesses, expects the McLeans' checks to clear by early next week.

Stephen M. Goldberg, an attorney for the fund, said that once the debt is paid, he will lift liens against all of the McLeans' personal and business assets, including the former headquarters their now-defunct travel agency and their Colonnade condominium.

In March 1992, the McLeans pledged their personal and business assets when they borrowed $750,000 from the fund to bail out their struggling agency, Four Seas and Seven Winds Inc.

Two months ago, the fund filed documents in Baltimore City Circuit Court declaring the company and the McLeans in default of $392,000 and threatening foreclosure.

Mr. Goldberg said the $253,000 payment, along with other earlier payments would satisfy the loan, but he would not say whether the McLeans had negotiated a reduced settlement.

H. Russell Frisby, an attorney representing the McLeans in their dealings with the fund, said payments to the creditor from a travel agency that bought most of Four Seas' assets also went toward paying off the debt. He said he didn't know how the McLeans had raised the rest of the money.

Contacted by phone at home yesterday, Mr. McLean declined to say how he had raised the money.

The payment would free the McLeans from one of the pressures they cited this fall in explaining their ill-fated attempt to raise cash by selling their Federal Hill office building.

Baltimore developer Otis Warren Jr. has said that he offered in October to buy the former Four Seas headquarters after Mr. McLean told him he was being pressured by creditors, including the Development Credit Fund.

Mr. Warren offered the McLeans $550,000 in cash and an IOU of $100,000 for 12 W. Montgomery St. -- almost twice what it was worth empty -- because the city had agreed to a 10-year, million-dollar lease on the building.

Maryland's special prosecutor and the city Board of Ethics are scrutinizing Mrs. McLean's role in obtaining the Health Department lease for her family's building. It was listed on city documents as 11 W. Hughes St., the rear of the building. City officials canceled the lease last month after learning about Mrs. McLean's stake in it.

In addition, the grand jury is investigating allegations that Mrs. McLean, the city's third-highest official, paid $22,000 to a public relations consultant who apparently did no work.

Monday, Mrs. McLean took an indefinite, paid leave of absence while the investigations continue.

Later this week, it was discovered that paychecks to the consultant, Michele McCloud, had been deposited in two bank accounts set up for "Resources for Women," a group with the same address as a beauty salon belonging to Mrs. McLean's sister.

Other city checks, totaling more than $2,000, also have been paid to the group and deposited in the accounts. One of the accounts was set up by Mrs. McLean herself, and both accounts bear the signatures of Ms. McCloud and prominent lobbyist Carolyn Burridge, who said this week that her signatures had been forged.

Mrs. McLean has declined to answer questions about the lease or the missing employee.

Besides easing financial pressures, paying off the debt could affect one of Mrs. McLean's political disputes.

In an extensive interview Dec. 3, Mrs. McLean alleged that the fund was pushing her to the brink of bankruptcy as part of a political vendetta.

She said the fund declared Four Seas in default on the loan because she had held up a $2.5 million federal grant that the organization wanted.

Mrs. McLean said she asked the mayor to stop the grant because the fund had been treating her and other borrowers badly. She also charged that some top city officials were too cozy with the group.

"I said that is crazy," Mrs. McLean recalled. "First of all, you've got a group of individuals who have given a lot of folks . . . a lot of grief. In addition to that, Dan Henson is the founder" of the fund and runs the agency that would have doled out the grants.

Daniel P. Henson III, the city's housing commissioner, helped start the fund in 1983. His subordinate at the housing agency, David K. Elam, is a member of the fund's governing board.

Mrs. McLean called the fund's filing of a court judgment against her "just an attempt to try to discredit me."

Fund President Ackneil Muldrow has declined to comment on Mrs. McLean's charges.

Mr. Henson said in a recent interview, "I am incredulous. The idea that this is some sneaky concept to put this lady out of business is just not credible."

The only person who might have had a conflict of interest in the fund's dealings with the city, he said, was Mrs. McLean herself.

Mayor Kurt L. Schmoke also discounted Mrs. McLean's chargesHe eventually directed the federal grant money to the Baltimore Development Corp., a quasi-governmental group.

Even if Mrs. McLean's charges were true, the mayor said, "that doesn't absolve her from not disclosing her ownership" of the Federal Hill office building.

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