Couple claim loan agency action unfair Businessman linked to board members accused of taking idea

'There's nothing here'

Proposal was to build a microwave link to the Eastern Shore

March 09, 1997|By Scott Wilson | Scott Wilson,SUN STAFF

Last year, Jane and George Chamberlain approached the Anne Arundel Economic Development Corp. with a multimillion-dollar idea: Build a network of microwave towers that would bring dependable cellular telephone service, computer links and digital paging to the Eastern Shore.

The Annapolis couple -- an engineer and a laid-off marketing expert -- sought a $150,000 start-up loan from the semiprivate agency that helps entrepreneurs develop new businesses. They received a $25,000 loan that required their two-story home as collateral and a referral to a businessman with expertise in the field.

Ten months later, the Chamberlains are about to lose their home while Mark C. Sapperstein, introduced to the Chamberlains through the county agency, is "pursuing [the idea] in my own avenues with my own dollars," George Chamberlain said.

Sapperstein's business partners in another telecommunications venture include Jay I. Winer and Charles F. Delavan -- president and secretary of the Anne Arundel Economic Development Corp.'s board of directors.

"They basically referred us to themselves," said George Chamberlain, who was laid off two years ago from Digital Corp. at age 54. "I felt my proposal had the county's blessing. This kind of thing is unheard of."

The Chamberlains' allegations, dismissed by Sapperstein and board members as symptoms of a soured business partnership, raise questions about a corporation operating under county auspices.

Michael S. Lofton, the development corporation's chief executive officer, asked agency lawyers from the Baltimore firm Gebhardt & Smith to "look into our performance and advise us how to proceed." He said that an internal review last month absolved board members of any blame.

"Clearly, I'm concerned by Mr. Chamberlain's allegations," said Lofton, who acknowledged that no rules prohibit directors from referring loan applicants to business partners. "One of the things we do as a matter of course is to provide referral opportunities."

Sapperstein, partner with Winer and Delavan in a company that owns radio towers called West Shore Communications, said: "There's nothing here. Jay's not my partner [on this], Fred's not my partner. They do not benefit one iota. This is such sour grapes."

Sought bank loan

The story starts in May 1996 when the Chamberlains, who run a company out of their home called Link Telecommunications, approached NationsBank for a business loan. The bank denied the request but referred them to the development corporation.

County Executive Robert R. Neall created the agency in 1993. It operates outside the Anne Arundel charter, including the ethics code regulating conflict of interest. Under Lofton's leadership, it has received plaudits for attracting business, preserving county employment and nurturing the kind of fledgling industry that the Chamberlains pitched.

Last year, County Executive John G. Gary gave $1.3 million in public money to the agency for ventures, including the loan program that extended the $25,000 to the Chamberlains. Delavan and Winer are political donors to Gary, who appoints four of the agency's seven-member board. Gary appointed Delavan; Winer was chosen by the Gary appointees.

Microwave towers

The Chamberlains proposed building 13 microwave towers from Sykesville to Ocean City. The towers would cross several Local Access Transport Areas, or LATAs, for which businesses pay as much as $3,600 a month per data-carrying phone line. Data lines are used in computer and digital cellular phone networks.

Using microwaves, the network would help businesses save millions by "LATA jumping," while establishing the basics for a dependable cellular phone and digital paging service on the Shore. At present, users must rely on copper phone lines that fail during storms. Cellular telephone companies would lease space, called bandwidth, from the network.

'Money to be made'

"There is an enormous amount of money to be made in this," George Chamberlain said. Jane Chamberlain is president and engineer of Link Communications.

The Chamberlains were looking for someone with money to build the towers, buy the switching equipment and set up the company needed to run the network. George Chamberlain estimates that a successful network could be worth $20 million. The business itself would be worth more.

In return for the idea, the Chamberlains wanted to be exclusive brokers of the system hardware, worth about $10 million. Their take would have been roughly $1.5 million; they also wanted several hundred thousand dollars in consulting fees.

Loan application

On May 20, the Chamberlains mailed the agency their loan application, including resumes and federal tax returns, projected income statements and a business plan. They marked it confidential.

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