Federal prosecutors are investigating Richard Schlesinger, absentee landlord of the condemned Riverdale Village, after an audit that examined whether he took profits from the Essex apartment complex while failing to pay a federally insured mortgage.
"We are looking at him; we are currently talking with HUD officials about their dealings with him," said Lynne A. Battaglia, U.S. attorney for Maryland.
She confirmed that her office had received from the U.S. Department of Housing and Urban Development an audit of Schlesinger's business relationships, but she declined to comment further.
One issue addressed by HUD is why Schlesinger collected thousands of dollars in federal rent subsidies after defaulting on the $5.4 million mortgage, according to people familiar with the investigation.
Such an investigation does not indicate any wrongdoing on Schlesinger's part, officials said, and involves only the half of the complex closest to Eastern Boulevard, the section HUD foreclosed on last year.
The other half, abandoned by more than 400 residents last week after utilities were shut off, is still owned by a Schlesinger-run company. It was mortgaged through a bank and was not backed by a HUD guarantee.
Schlesinger did not respond to requests for a telephone interview yesterday. His attorney, Ronald G. Kane of Bethesda, has not responded to several telephone calls this week.
Schlesinger, who lives in a beachfront mansion in Palm Beach, Fla., said Tuesday in a phone interview that he provided housing for poor people with nowhere else to go.
"The people who got the raw end of the stick were people who at least had affordable housing," he said. "Politically, it's easier to pick on me than the county."
He added that he wasn't taking the controversy over his abandoned Baltimore County apartment complex personally, noting, "It's a business."
In earlier interviews, he denied profiting from the World War II-era complex, saying he was the victim of bureaucrats and market changes. "I have not taken a dime from that property in years," he said in November 1995.
Schlesinger stopped making payments on the HUD-insured mortgage in early 1993, after federal officials rejected his application for a $44.7 million rehabilitation loan.
HUD officials said maintenance at Riverdale dropped off drastically at that point. In 1995, HUD paid off the $5.4 million mortgage on that part of the complex.
In April 1996, HUD limited Schlesinger's participation in federal housing programs in the mid-Atlantic region. He lost an appeal of that ruling two months later.
That August, HUD sent Schlesinger a letter of disbarment that prohibited him from participating in any federal projects nationwide.
Schlesinger also has troubles in Baltimore County, where he faces a July 2 hearing concerning $1.5 million in county fines for more than 850 livability code violations in the privately mortgaged half of the complex. He also failed to pay more than $600,000 in utility bills to Baltimore Gas and Electric Co., which led to the condemnation of that part of the complex June 11.
The sprawling complex, off the 1900 block of Eastern Blvd., once was home for more than 1,100 tenants. It has been the subject of residents' complaints about lack of heat, bad plumbing, falling plaster and insect infestation since the early 1980s.
County officials, in an effort to to speed up Eastside revitalization, have been trying for months to gain control of the Riverdale complex.
Last year, HUD foreclosed on half of the complex. Those 25 buildings have been emptied, and one was razed in January. Plans are to demolish the rest of those buildings this year and turn the land over to the county for redevelopment.
Schlesinger remains in control of the rest of the complex. He also continues to operate a small shopping center next to the apartments.
Capital Asset Research, a Florida company that paid the $211,000 in back property taxes on Riverdale, wants to foreclose on the privately mortgaged half of the complex.
County officials hope they can get Schlesinger to give up control and then work with Capital Asset Research to demolish the buildings and redevelop the 35-acre site.
Schlesinger said Tuesday, however, that he plans to redeem the property by paying off the taxes and that after demolition of the buildings he might hold on to the land for years.
Pub Date: 6/20/97