Confidential settlement unraveling amid dispute

Telecom towers suit challenged economic development deals

March 17, 2002|By Andrea F. Siegel | Andrea F. Siegel,SUN STAFF

A private court settlement reached last fall was supposed to end an allegation against a successful Baltimore businessman that he stole a former Annapolis couple's idea for building a telecommunications empire.

Instead, a dispute over its confidentiality is unraveling the agreement and revealing details that were supposed to be secret, such as the $40,000 amount of the settlement.

The lawsuit brought in 1999 by George and Mary Jane Chamberlain claimed that the Anne Arundel Economic Development Commission introduced them to Mark Sapperstein after they sought a loan from the agency.

The couple accused Sapperstein of later making a fortune off their idea while they landed in financial ruin.

Their accusations and lawsuit in Anne Arundel Circuit Court seeking $15 million came amid scrutiny of the EDC's lending practices. The Chamberlains were among others that alleged that the EDC, which operates outside the county charter but is supported in part with county dollars, engaged in questionable financial practices and insider deals.

Shortly after taking office, County Executive Janet S. Owens took control of the board, replaced several members and demanded policy changes to prevent conflicts of interest. The board tightened its ethics and loan policies.

Neither side would talk about the six-page settlement that had been secret. But court documents indicate the dispute has not ended.

Last week, Sapperstein and his former companies posted an appeal bond, a preliminary step to filing an appeal.

According to court documents, the settlement included a secrecy provision. A day after the settlement conference, the Chamberlains announced on their now-closed Web site that their company's lawsuit against Sapperstein "has been settled for an undisclosed amount of money."

After they signed the agreement nearly two weeks later, the notice was removed from the Web site. Sapperstein claimed in court documents the Chamberlains' announcement violated the settlement's secrecy provision.

The Chamberlains countered in court pleadings that if they didn't receive the $40,000 in a month, as the agreement said, they would seek court enforcement of it. In asking a judge to enforce it, they attached to their motion a copy of the settlement agreement, which entered it into public documents.

Last month, over Sapperstein's protests, Judge Michael E. Loney upheld the agreement and ordered the judgment against Sapperstein and his former businesses.

Neither Sapperstein nor his attorney, Kathleen M. McDonald, responded to telephone messages. Reached at her New Hampshire home, Mary Jane Chamberlain said the couple would not discuss the case.

"All I can say is the record is the record," said William R. Voltz, the Chamberlains' lawyer.

Typically, saying a case was resolved for an undisclosed sum tells people very little, because it is not an admission of liability and does not say who got the better deal, said Kenneth Lasson, University of Baltimore School of Law professor and expert in alternative dispute resolution.

Parties can settle to avoid the cost and bother of litigation, not because they bear any responsibility in the matter, he said.

The settlement in this case is small, considering the Chamberlains filed a multimillion-dollar complaint and claimed in court papers that they believed the network would bring in $17 million to $25 million over 10 to 15 years.

The allegations date back to the mid-1990s, when the Chamberlains, with their company Link Telecommunications Inc., proposed developing a network of microwave towers to carry cellular telephone and related communications services from Baltimore to Ocean City.

With their home required as collateral, they received a $25,000 loan from the EDC and a referral to Sapperstein, who was then a business partner with EDC President Jay I. Winer and Secretary Charles F. Delavan in a company that owns radio towers.

Winer, initially named as a defendant in the lawsuit, was not served with court papers and so had no role as a defendant.

Delavan was not sued.

EDC rules did not bar directors from referring loan applicants to business partners.

The Chamberlains instigated a county Ethics Commission probe. The review did not address all their concerns, but it cleared Winer and Delavan of wrongdoing.

The Chamberlains claimed that after they met with Sapperstein, he parlayed their ideas into a business venture that he sold to a Florida company for more than $8 million. They went into financial ruin, they said.

In the past two years, judges whittled the lawsuit from 10 counts to three. The complaints that survived were the key ones, alleging fraud, violation of trade secrets laws and unjust enrichment.

In depositions, George Chamberlain conceded that there had been no explicit agreement between Link and Sapperstein. Link also would have had to show how much profit would have been anticipated.

Sapperstein argued that he did not build the setup Link proposed.

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