Site of fatal fire linked to flipping case

Members of family that owns Dundalk house named in court

Five tenants died in blaze

Landlord's name part of plea agreement signed in fraud case

October 06, 2001|By John B. O'Donnell | John B. O'Donnell,SUN STAFF

Members of a family that owns a Dundalk house where a mother and four children died in a fire have been named in federal court as participants in an illegal property flipping conspiracy.

A document signed by a prosecutor and a defendant who pleaded guilty in federal court in June says "John and Ed Ogonowski," among others, were part of a "conspiracy ... to obtain loans for the purchase of real property" in Baltimore "by submitting false and fraudulent documentation as part of the loan applications."

The statement of facts was part of a plea agreement signed by Andrew Michael Bogdan, who pleaded guilty to conspiracy to make false statements and to commit wire fraud in a flipping case, and Barbara S. Sale, an assistant U.S. attorney who prosecuted him.

Court records show that members of the Ogonowski family bought about 70 houses in recent years -- mostly in the city. Steven Jernigan of Abingdon sold most of the houses soon after he purchased them -- and for substantial price increases.

Sale would not comment on the case or say who is under investigation. Nor would she say whether the Ed Ogonowski named in the statement of facts is Edmund Ogonowski Sr., one of the owners of the house that burned, or his son Edmund Jr., who with another son, John, manages rental properties, including the house that burned.

The telephone of Edmund Ogonowski Sr. has been disconnected. None of the other Ogonowskis responded to telephone messages.

John Ogonowski's lawyer, Carl Gold, declined to comment.

So, too, did Alan Bussard, Jernigan's lawyer, except to say of the statement signed by Sale and Bogdan, "That's their opinion."

The fire Sept. 28 in the 6800 block of Dunbar Road in Dundalk killed Michelle Ferguson, 38, and her daughters Ina Johnson, 11, India Johnson, 9, Asia Jones, 2, and Ariel Jones, 1.

Family members said Ferguson was using the stove to heat the house because the furnace was defective.

Edmund Ogonowski and his wife, Susan, own the house. They bought it in August 2000 from Jernigan for $74,000 and signed a mortgage for $62,900. Jernigan had purchased the house in May from the U.S. Department of Housing and Urban Development for $42,000 after the previous owner defaulted on a mortgage insured by the Federal Housing Administration, a HUD agency.

Ferguson rented the house under the federal Section 8 program, which pays most of the rent.

The house was cited in July for eight housing violations, including evidence of problems with the furnace. After the landlord did not fix the problems, the Baltimore County Department of Social Services agreed to give Ferguson a Section 8 voucher so she could move. She picked up the voucher two days before the fire.

Edmund and Susan Ogonowski bought another house in the 6800 block of Dunbar Road from Jernigan on Nov. 10, 1999, for $79,000. Jernigan had paid $47,000 for the house six weeks earlier.

"Seventy-nine thousand is clearly the highest price paid on that block," said Ken Strong, who tracks property flipping for the Community Law Center.

Hot spot for flipping

Most of the Ogonowski properties in the city are in the area north of Patterson Park that has been a hot spot for property flipping in the past five years.

In December 1999, the state reduced tax assessments for 3,700 properties in that area by nearly 25 percent after concluding that fraudulent real estate transactions were inflating its valuations.

The reduction saved owners about $1 million a year in taxes.

"The Patterson Park neighborhood has been and continues to be ground zero for flipping and mortgage scams in Baltimore City," said Strong. "It's had a terrible effect on that community with increased foreclosures and all of the personal impacts that has."

Foreclosures common

Many property flips have been to investors, some of whom have lost houses to foreclosures. More than 45 foreclosure suits have been filed against Bogdan since early last year.

The Ogonowskis have lost a few properties to foreclosures, court records show.

Annette Ogonowski owns most of the family's city houses.

In June, after the city took her to court over code violations at some houses, she signed an agreement to fix the problems. Also signing were Edmund and John Ogonowski, her brothers, who manage the properties.

How it worked

In the Bogdan case, the statement of facts gave an example of a Bogdan deal:

"A homeowner would sell his or her Baltimore City rowhouse to a middleman such as Steven Jernigan for $20,000. Mr. Jernigan would in turn sell it to Mr. Bogdan as an investment property, with a contract price of $60,000.

"Bogdan and Jernigan would obtain a commercial loan for 80 percent of the contract price, or $48,000. In fact, the sale price agreed upon between Bogdan and Jernigan was much less, say $28,000. At settlement, Bogdan would receive $48,000 from the lender, would transfer $28,000 to Jernigan, who would pay off the original seller, and thus make a profit of $8,000."

It said Bogdan "walked away from settlement with a rental property and $20,000."

The statement said that Bogdan borrowed $3 million on 68 properties and that lenders lost about $1.6 million on those deals. Bogdan agreed to cooperate with prosecutors and has not been sentenced.

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