Two former Baltimore police officers admitted in court yesterday to covering up an arson-for-profit scheme masterminded by a group of property owners, who allegedly burned a string of rowhouses and pocketed $100,000 in insurance.
Prosecutors say the scheme, in which four other participants were indicted yesterday on arson and conspiracy charges, killed two people in 13 fires set or attempted over the past three years.
In two courtrooms and at a news conference yesterday, federal authorities alleged a broad scheme in which those charged bought low-cost inner-city rowhouses, evicted tenants, purchased inflated insurance policies and then had the buildings burned. Those indicted include the head of a detective agency on East Lombard Street and the owner of a real estate company based in Baltimore's Greektown.
The former police officers -- Gary L. Budny, 45, and his stepson, Ian F. Budny, 25, -- admitted yesterday in guilty pleas that they knew about a plan to torch one side of a city block and failed to report it. And after keeping the scheme secret, Gary Budny pleaded with his reluctant son to use his badge to help the plot along.
Three times, Ian Budny refused -- even after being offered a $5,000 bribe. The fourth time, he admitted, he agreed to clear that block of witnesses and write an official report that would deflect attention from the true culprits. On that report, he wrote the likelihood of solving the fires was "poor."
Attorneys for the Budnys said their clients regretted their actions and were cooperating with prosecutors. Ian Budny's attorney, Henry L. Belsky, said his client "feels total remorse about what he did. Nobody feels worse about this than Ian Budny. It was an aberration in what this guy is all about."
The Budnys pleaded guilty to conspiracy to commit arson. Each could be sentenced to five years in jail, but the terms could be substantially reduced because officials said the two are cooperating with prosecutors. They were released on their own recognizance pending a sentencing hearing.
Vernard Darnell Jones, a 38-year-old heroin addict taking refuge in a vacant house, died in a July 10 fire at 1311 N. Rose St. Arlene Pinti had a heart attack the day of a blaze at the detective agency at 1934 E. Lombard St. and died a week later. She lived next door.
Investigators said they did not believe the arsonists intended to kill. But prosecutors will argue that because the fires killed people, the four men indicted for causing them should serve life in prison.
"This was an arson-for-profit case," said U.S. Attorney Lynne A. Battaglia. "We're talking about people's greed."
Robert Richard Milligan, 33; his brother, Gary M. Milligan, 35; Paul J. Bebber, 29; and Thomas W. Smith III, 36, were indicted on multiple counts of arson and conspiracy.
Robert Milligan is the chief corporate officer of A.L.S. Inc., based at 628 S. Savage St., which had ties to all the properties involved. Smith owned Alert Detective Agency at 1934 E. Lombard St., which burned on the Fourth of July, 1995. Bebber owned 827 N. Bradford St. -- another of the properties that burned.
Federal prosecutors say the fires began Nov. 16, 1993, at 1311 N. Rose St. A series of fires, insurance purchases and sales followed until the plan came full circle on July 10, 1995 -- back to 1311 N. Rose St., where this time the fire killed Jones.
The indictments charge that Robert Milligan and Smith took out $50,000 worth of insurance on 505 N. Linwood Ave. on Sept. 8, 1994, then had it burned a month later. Bebber had $50,000 worth of insurance on property he bought for $12,000; it caught ** fire nine days after he purchased it.
Prosecutors said Bebber suffered burns in the fire at the detective agency.
In each case, Joint Insurance Association, a fund set up to assure that inner-city properties can get insurance, held the policies on the buildings, the indictments say.
Officials said the insurance policies totaled about $1 million, but only one-tenth of that was paid out before investigators got wind of the scheme 17 months ago.
Gary Budny met Robert Milligan 13 years ago when the officer stopped in at a Crazy John's restaurant at 303 W. Baltimore St., where Milligan was the manager. The friendship continued when Milligan opened his own Crazy John's at 1300 Gough St., which burned April 20, 1995.
That spring, Gary Budny overheard Robert Milligan talking to Bebber "about having Milligan's North Rose street properties burned in order to collect the insurance proceeds," according to a statement of facts filed in court yesterday.
Milligan asked Gary Budny to ask his son to help with the scheme. "Ian Budny refused that overture," and two more like it, the court papers say.
On July 1, 1995, Gary Budny told his son that there were likely to be fires at several houses in the 1300 block of N. Rose St. owned by A.L.S., and asked if he would clear the block of witnesses and write the report.
Ian Budny finally said yes.
He rode through the block in his police cruiser between 10: 30 p.m. and 11 p.m., spotting only one man. "They made eye contact, and the white male retreated from the street," the court papers say. "Ian Budny understood that that individual was an associate of Milligan's and was at that location to commit an arson."
The officer left for another call and returned to find 1305 N. Rose St. on fire, with gasoline poured in four other buildings. He wrote a report noting the apparent arson and a black leather jacket and gas can left behind.
Ian Budny resigned from the force Tuesday. Federal agents arrested the Milligans Wednesday night in Towson. They had an initial appearance in U.S. District Court yesterday and were ordered held until Monday, when a bail hearing is scheduled.
Smith was already in jail yesterday on a drug charge; Bebber is in a federal prison in Indiana on gun charges stemming from an arrest in Baltimore.
Pub Date: 11/22/96