A lord of the slums takes an apprentice

Links: A paper trail through a web of corporations reveals a lucrative merger of real estate and drugs. In poisoned surroundings, a mother and son pray for deliverance.

December 19, 1999|By Jim Haner | Jim Haner,Sun Staff

Long before it was owned by the "King of Baltimore" -- before the rats moved in and the junkies bled all over the bathroom and the baby got poisoned in the parlor -- the Formstone rowhouse at 1120 N. Milton Ave. was already well on its way to rack and ruin.

It had sheltered a succession of blue-collar immigrant families through most of the century, providing them a thin slice of the American dream, until a decade ago when it fell into the hands of Pick'n Chick'n Inc.

James M. Stein, proprietor.

The 42-year-old speculator has owned, rented and sold more than 1,000 rowhouses in the city over the past 15 years -- mining a personal fortune from the wreckage of the city's slums from his offices on a quaint, tree-lined stretch of Conkling Street in Highlandtown.

During that time, his properties have shown up in the investment portfolios of five convicted drug dealers, the medical records of 75 lead-poisoned children and in at least nine suspected arsons. More than 50 have been condemned as unfit for human habitation.

"The worst of the worst," declares Larry Little, chief of the city's demolition program. "Block by block, address by address, you're looking at properties that were rundown for so long that they've been stripped of any value. They're not safe for a dog to live in."

Operating in relative anonymity behind a wall of more than 70 companies, Stein has benefited from an understaffed and antiquated city enforcement system that is unable to detect patterns of abuse by large-scale, corporate landlords.

But a computer-assisted analysis by The Sun of more than 10,000 pages of records from police, housing, health, tax and court agencies shows that Stein has a long history of questionable dealings that will soon be subjected to the glare of official scrutiny for the first time.

That's because he is the silent real estate partner of George A. Dangerfield Jr. -- the 30-year-old, self-proclaimed "King of Baltimore" who milled the profits from a cocaine ring into a slum housing empire that federal prosecutors are now seeking to seize.

Sentenced two weeks ago to more than a decade in prison, Dangerfield declined repeated requests for an interview. And Stein twice refused to comment about their relationship. But family, friends and former employees paint a consistent portrait of a master gamesman and his young apprentice trading on the dregs of the city's real estate market.

"Jim taught George everything he knows about the business," says Angie Jackson, 30, Dangerfield's niece and business manager. "How to set up his corporations, which lawyers to use, which inspectors to watch out for -- everything."

Before they were done, Dangerfield would be one of Baltimore's largest slumlords, enforcing his leases with paid thugs and routinely shutting off his tenants' heat when they fell behind on their rent, records show.

"He's a hero right now to a lot of the young dope hustlers," said Housing Commissioner Daniel P. Henson III in a November interview before he left office. "But ever since we first read about this guy in the paper, a big piece of the story has been missing.

"I've been asking myself all along, how did a high school dropout learn to play the real estate market? How does a rank amateur become one of the 10 worst slumlords in the city?"

Here's how:

Dangerfield purchased a third of his portfolio of 125 rental houses on installment plans from Stein, paying him thousands of dollars a month toward one day owning them outright.

In the meantime, Dangerfield was free to rent out the substandard dwellings to poor families desperate for shelter -- and to plow his criminal profits into his seemingly legitimate holdings.

In the bargain, he also signed agreements that made his 24 companies responsible for all repairs, lawsuits or injuries in the often-decrepit dwellings, while Stein continued to hold the titles free of liability.

One result is that families with claims against Dangerfield might have to wait decades for relief, attorneys say, while Stein is legally free to repossess many of the houses and sell them again if he chooses.

"It may be appalling," says Rena Steinzor, a University of Maryland law professor. "But there's nothing illegal about it.

"There's nothing in our state law that says you can't sell houses to drug dealers -- unless you know you're being paid with drug money. And there's nothing preventing you from taking back the properties if the guy stops making payments while he's in prison."

Of immediate concern for federal prosecutors will be untangling the contractual relationship between Dangerfield and Stein -- and figuring out which houses Dangerfield actually owns.

"Suffice it to say that we are investigating the ownership of everything held by Mr. Dangerfield," says U.S. Attorney Lynne A. Battaglia. "And any silent partners he may have will be addressed in the appropriate manner at the appropriate time. But we have no intention of turning our back on this problem. The stakes are too high."

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