Arson plot baffled law enforcers Burglar gave ATF, police break in case

6 were convicted

2 died in fires set for insurance


Months after a series of fires tore through poor East Baltimore neighborhoods -- killing two people and forcing residents from their homes -- investigators Charles "Chick" Horney and Jim Tanda were at a standstill.

They knew it was a conspiracy. They lacked the proof.

Then Robert Reagan, a burglar arrested for breaking into a strip club on The Block, broke the case for them. He outlined an arson scheme in which, from 1993 to 1995, he and some partners were buying cheap rowhouses, inflating the insurance and burning the buildings down.

Over the past two months, six people -- including two former Baltimore police officers -- have been sentenced for their roles in the conspiracy that lasted nearly two years and resulted in 13 arsons or attempted arsons in East and Southeast Baltimore.

The federal Bureau of Alcohol, Tobacco and Firearms calls the serial arson-for-profit ring one of the most extensive in Maryland history, not for the money collected, about $157,000, but for its complexity and scope.

In 1995, Tanda and Horney were sorting through 13,000 documents. They became near-experts in real estate transactions and insurance contracts, but it took Reagan to confirm their theory.

And it was Reagan who gave them a bonus, a bombshell dropped almost as an afterthought at the end of several hours of interviews with police in March 1996.

"I thought you would like to know," the informant said, according to Horney, "there are two city cops involved."

The case, already considered important enough by the government to call in a team of arson investigators who had worked the World Trade Center and Oklahoma City bombings, had now grown to scandalous proportions.

It was eight months before a federal grand jury handed up indictments and many more months until the guilty pleas and sentencing. Gary L. Budny, 45, was sentenced Wednesday to two years in prison. His stepson, Ian F. Budny, 25, received 15 months on Thursday.

Robert "Ricky" Milligan, 33, a Baltimore man with a wife and two daughters who had never been convicted of a crime, was sentenced to 17 years in prison. His brother, Gary, labeled a career criminal, got 22 years. Thomas W. Smith III was sentenced to 20 years. Paul J. Bebber got 24 years.

What has emerged from reviewing more than 800 pages of court documents and interviews with Tanda and Horney, the two primary police investigators, is a three-year caper by a group of suspects who had known each other since childhood.

'Not altar boys'

"They intermingled at social events, jobs and criminal outings," said Tanda. "These were not altar boys who decided to divert one day and take somebody's lunch money."

Smith -- who police said once tried to get a farm subsidy by putting two pigs in his backyard dog house -- took over Alert Detective Agency when his father died but ran into financial trouble.

Bebber was passed off by Robert Milligan as an experienced real estate specialist from Tennessee who wanted to build Section 8 housing in East Baltimore.

Gary Budny, a 23-year veteran on the police force who earned two commendations for rescuing people in fires, fell into the wrong crowd. He met Robert Milligan at Crazy John's, where he regularly stopped during breaks in his patrol. "Free coffee turned into free food turned into other favors," Tanda said.

Robert Milligan, described as the leader, owned A.L.S. Inc., a real estate company based in a Greektown rowhouse that police said was a front.

It was Robert Milligan's constant financial trouble -- the mortgage holders of his Rose Street properties were after him to pay his bills -- that led to the plan to burn down the houses, according to prosecutors.

The slow pace of the fires drew little attention at first. But as money problems grew, the blazes became more frequent and careless, leaving a trail that raised suspicions with insurance adjusters, who stopped paying money, and left two people dead, which raised the scrutiny by police.

"The guys got too aggressive," Tanda said. "They threw caution to the wind, tried to burn down an entire block and lives got lost. They see the pot of gold at the end and they'll do anything to get their one hundred thousand."

Mistakes were made

Along the way, the schemers recruited an insurance agent and two police officers, but they also set off a sometimes bumbling set of events that would seem implausible had they been a movie plot line:

To burn the detective agency, Bebber sloshed gasoline throughout the house and then sprayed the interior with gasoline from a bug sprayer. After letting the fumes permeate the house during a sweltering July day, he lighted a torch, triggering an explosion. "It's like checking your gas tank with a Bic lighter," Tanda said. "What he did was experience a bomb."

Conspirator Gary M. Milligan took Bebber home, put him in a bathtub, covered him with ice and water and gave him alcohol to drink. Bebber went to the hospital the next day, telling doctors that he had been injured while burning a shed.

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