Developers subpoenaed in probe of City Council

Federal prosecutors ask minority businessmen to disclose grants, gifts

April 24, 2004|By Doug Donovan | Doug Donovan,SUN STAFF

Federal prosecutors have subpoenaed two Baltimore businessmen - including a school board appointee of Mayor Martin O'Malley - for documents detailing their dealings with City Council President Sheila Dixon and three former city officials, according to sources familiar with the investigation.

Minority developers Ronald H. Lipscomb and Brian D. Morris have provided U.S. Attorney Thomas M. DiBiagio with records reflecting any income, loans or grants they received from the city and any gifts they gave Dixon and the other city officials, sources said.

The subpoenas signal that a months-long investigation that began last year with an examination of the City Council's finances may be widening into the city's efforts to assist minority-owned companies. On Tuesday, The Sun revealed that several council members will begin testifying before a grand jury this month about documents they gave investigators last year.

Subpoenas for documents do not indicate that the recipients are targets of an investigation. The subpoenas do not identify the businessmen, Dixon, and the three former city officials as subjects of the investigation, according to sources.

"Receiving a subpoena [for documents] indicates that the government feels you have important information to bring to bear on the investigation," said Andrew C. White, a white-collar defense attorney and a former federal prosecutor who is not representing anyone involved in DiBiagio's investigation.

But, he added, it does appear that DiBiagio may suspect government officials are involved in "improper financial dealings" with businesses.

Arnold Jolivet, a minority business advocate, said Lipscomb and Morris are two of the city's "finest citizens" who have been "stand-up, above-board citizens all their lives."

"I can guarantee you these gentlemen will come out of this with flying colors," Jolivet said.

Lipscomb could not be reached for comment. Reached by telephone, Morris declined to comment.

The attorney for both, Gerard Martin, also declined to comment.

Lipscomb is president of Doracon Contracting, a business listed in the city's database of certified minority-owned companies.

Morris is an O'Malley appointee to the city school board and the chief executive officer of Legacy Unlimited LLC, a financial services holding company, according to his biography on the Baltimore City Public School System's Web site. O'Malley also named Morris as the interim director for the Mayor's Office on Minority Business Development in 2000.

O'Malley, who has made assisting minority-owned companies a high priority of his administration, has frequently heralded the pair as models of those efforts. The mayor issued an executive order in 2000 urging city agencies to award 35 percent of their work to minorities and women. The city also enforces an ordinance that sets minority participation goals on a contract-by-contract basis.

Morris and Lipscomb were chosen by the city in 2002 to develop the $34 million, 21-story Zenith residential tower at Pratt and Paca streets. In July, the city approved a tax break for the project, which had been expected to begin construction this year but hasn't completed financing.

The federal subpoenas to Lipscomb and Morris, issued in February, asked for documents related to any city contracts received from 1999 until early this year. They also sought information on any gifts provided to Dixon and to former real estate officer Anthony J. Ambridge, now a developer and partner with Lipscomb, and two former O'Malley appointees, Owen Tonkins and Gary M. Brooks, according to sources familiar with the investigation.

Ambridge, Brooks, Dixon and Tonkins were not available for comment yesterday.

Brooks left his position Dec. 30 as chief executive of the Baltimore Community Development Finance Corp., a city-related lending agency. Tonkins, who succeeded Morris, left at the same time after nearly three years as head of the Mayor's Office of Minority Business Development.

O'Malley said through a spokesman that he had no knowledge of the subpoenas and that DiBiagio is the only person who can answer any questions about the investigation. DiBiagio's office routinely does not comment on investigations.

Lipscomb and Ambridge are also partners in the $11 million development project picked by the city to restore the old Railway Express building on St. Paul Street. That partnership also included contractor Kenneth Banks, developer Stanley Keyser and architect Ed Hord.

Lipscomb is also involved in a $97 million residential complex being built at President and Aliceanna streets along the Inner Harbor. The project, Spinnaker Bay, recently received a 20-year tax break from the Board of Estimates, on which O'Malley and Dixon serve.

The project is a joint venture that includes John Paterakis Sr.'s H&S Properties Development Corp., Lipscomb's Doracon Contracting and Bozzuto Development Co.

Morris, who has not been as active in development projects as Lipscomb, was appointed to the Baltimore City Public School System's nine-member school board last summer.

It is unclear exactly how Lipscomb and Morris play into DiBiagio's investigation.

Investigators subpoenaed council members last fall seeking information dating back five years that detailed council members' acceptance of gifts and loans, their outside income, hiring practices and relationships with companies that do business with the city.

Federal prosecutors are also examining an expense account system that paid council members $5,000 a year with no oversight and permitted them to pocket as income whatever part of that money was not spent on city business.

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