Judge orders Riverdale owner to pay back misspent funds

March 16, 2000|By Michael James and Joe Nawrozki | Michael James and Joe Nawrozki,SUN STAFF

A federal judge has ordered former Baltimore County real estate baron Richard M. Schlesinger to pay $185,000 to the federal government for misusing housing funds that he was supposed to have spent on badly needed repairs and upkeep on his property.

The ruling also paves the way for a trial in U.S. District Court in Baltimore in which prosecutors will try to collect up to $600,000 more in damages they say Schlesinger owes because of gross mismanagement at Riverdale Apartments in Essex. The development was left in such disrepair that county officials tore it down in 1998.

"What the court found was that Schlesinger allowed the residents at Riverdale to live in squalor as he misused project funds, while he lived in Florida in a $16 million oceanfront mansion," said Assistant U.S. Attorney Perry F. Sekus, chief of the office's civil division.

The order by Judge Andre M. Davis found that Schlesinger, who runs more than 20 housing projects around the nation, failed to maintain Riverdale "in good repair" even though his property was insured by the U.S. Department of Housing and Urban Development. He also had received an unconditional $5.6 million loan guaranteed by HUD.

Schlesinger's lawyer, Greg Bernstein, said he is conferring with Schlesinger about what to do next.

"It's a very complicated case and a complicated opinion, and we are studying it," Bernstein said. "We're trying to determine where we go from here."

Court papers show that Schlesinger has been barred for three years from receiving HUD funds for any of his real estate holdings. A HUD official wrote that Riverdale and another Schlesinger development in Baltimore County, Rolling Ridge Apartments, had "deplorable physical conditions" that violated HUD standards.

About 400 residents of Riverdale were forced from their apartments in 1997 after Schlesinger failed to pay $600,000 in utility bills, leading the county executive to charge that the landlord was motivated by "pure greed" and had left taxpayers footing the bill for a multimillion-dollar cleanup.

All the while, Schlesinger was living in a mansion in Palm Beach, Fla. A property listing describes his home as "an exquisite three-story Mediterranean villa designed by renowned architect Maurice Fatio" with a tennis court, elevator service, sauna , wine cellar, wet bar and beach house.

Schlesinger has maintained that his business has suffered, and he has reported multimillion-dollar losses in income during the past decade, court papers said.

Prosecutors, however, said that "his management company has done quite well."

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